SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. _______________){1}
Lexington Healthcare Group, Inc.
- -------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
- -------------------------------------------------------------------------------
(Title of Class of Securities)
52909K 10 8
- -------------------------------------------------------------------------------
(CUSIP Number)
Stephen Zamansky
Day, Berry & Howard LLP
CityPlace I, Hartford, Connecticut 06103-3499
(860) 275-0100
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 22, 1997 and April 1, 1998
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box / /.
Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 11 Pages)
**FOOTNOTES**
{1} The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject
class of securities, and for any subsequent amendment containing
information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, SEE the NOTES).
<PAGE>
Page 2 of 11 Pages
CUSIP No. 52909K 10 8 13D
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Jack Friedler, Harry Dermer and Mary Archambault, as a group
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO, PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
7 SOLE VOTING POWER
NUMBER OF 2,772,000 shares (see Item 5)
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0 shares
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH 2,772,000 shares (see Item 5)
10 SHARED DISPOSITIVE POWER
0 shares
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,772,000 shares (see Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
67.2%
14 TYPE OF REPORTING PERSON*
OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 3 of 11 Pages
CUSIP No. 52909K 10 8 13D
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Jack Friedler
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
7 SOLE VOTING POWER
NUMBER OF 2,026,500 shares (see Item 5)
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0 shares
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH 2,026,500 shares (see Item 5)
10 SHARED DISPOSITIVE POWER
0 shares
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,026,500 shares (see Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.1%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 4 of 11 Pages
CUSIP No. 52909K 10 8 13D
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Harry Dermer
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO, PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
7 SOLE VOTING POWER
NUMBER OF 685,500 shares (see Item 5)
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0 shares
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH 685,500 shares (see Item 5)
10 SHARED DISPOSITIVE POWER
0 shares
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
685,500 shares (see Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.6%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 5 of 11 Pages
CUSIP No. 52909K 10 8 13D
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Mary Archambault
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
7 SOLE VOTING POWER
NUMBER OF 60,000 shares (see Item 5)
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0 shares
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH 60,000 shares (see Item 5)
10 SHARED DISPOSITIVE POWER
0 shares
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
60,000 shares (see Item 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.5%
14 TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Item 1. Security and Issuer.
The class of equity securities to which this Statement on Schedule 13D
relates is the Common Stock, par value $.01 per share (the "Common Stock"),
of Lexington Healthcare Group, Inc. (the "Company"), a Delaware corporation
whose principal executive offices are located at 1577 New Britain Avenue,
Farmington, Connecticut, 06032.
Item 2. Identity and Background
This Statement is being filed by Jack Friedler, Harry Dermer and Mary
Archambault (together, the "Filing Persons").
Mr. Friedler resides at 4747 Collins Avenue, Miami Beach, Florida
33140. Mr. Friedler is the Chief Executive Officer and Chairman of the
Board of Directors of the Company, a nursing home company providing long-
term and subacute care.
Mr. Dermer resides at 725 Town Hill Road, New Hartford, Connecticut
06057. Mr. Dermer is the President, Chief Operating Officer and a Director
of the Company.
Ms. Archambault resides at 230 Geraldine Drive, Coventry, Connecticut
06238. Ms. Archambault is the President of BALZ Medical Services, Inc.
("BALZ"), an institutional supplier of healthcare products and supplies, and a
subsidiary of the Company, located at 362 Industrial Park Road, Middletown,
Connecticut 06457. Ms. Archambault is also an Executive Vice President and
Secretary of the Company.
During the past five years, none of the Filing Persons has been
convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors). During the past five years, none of the Filing
Persons has been a party to a civil proceeding of a judicial or an
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to
such laws.
Each of the Filing Persons is a citizen of the United States of
America.
Item 3. Source and Amount of Funds or Other Consideration.
On or about May 13, 1997, Mr. Friedler acquired 1,846,500 shares of Common
Stock from the Company in exchange for a 75% interest in Lexington Health
Care Group, LLC (a nursing home company) owned by Mr. Friedler and his
wife. On May 22, 1997, Mr. Friedler acquired 108,000 shares of Common
Stock from the Company in exchange for his 25% interest in Professional
Relief Nurses, Inc. (a provider of home nursing services) and 72,000 shares
of Common Stock from the Company in exchange for his 24% interest in BALZ.
On or about May 13, 1997, Mr. Dermer acquired 615,500 shares of Common
Stock from the Company in exchange for his 25% interest in Lexington Health Care
Group, LLC. On May 22, 1997, Mr. Dermer acquired 60,000 shares of Common
Stock from the Company in exchange for his 20% interest in BALZ. On July
25, 1997, Mr. Dermer purchased 10,000 shares of Common Stock in open market
transactions at a purchase price of $3.75 per share. The funds used to
purchase such shares were Mr. Dermer's personal funds.
On May 22, 1997, Ms. Archambault acquired 60,000 shares of Common
Stock from the Company in exchange for her 20% interest in BALZ.
Item 4. Purpose of Transaction.
The Filing Persons acquired all of the shares of Common Stock owned by
them for investment purposes. The Filing Persons currently are considering
selling all of the shares of Common Stock owned by them in a single private
transaction, and are jointly investigating and negotiating such a sale. If such
a sale occurs, any or all the Filing Persons may resign from their current
positions as officers and directors of the Company. Based on the availability
of such a transaction, the terms upon which such transaction may be effected,
the Filing Persons' ongoing evaluation of the business, prospects and financial
condition of the Company, the market for and price of the Common Stock, other
opportunities available to the Filing Persons, offers for their shares of Common
Stock, general economic conditions and other future developments, each of the
Filing Persons reserves the right to change his or her plans and intentions at
any time, as he or she deems appropriate. In particular, each Filing Person
may, subject to the restrictions discussed in Item 6 below, decide to sell or
seek the sale of all or part of his or her present or future beneficial holdings
of Common Stock, or may decide to acquire additional Common Stock, or securities
convertible into or exchangeable for Common Stock, either in the open market, in
private transactions, or by any other permissible means. Each of the Filing
Persons also may decide to enter into derivative transactions relating to the
Common Stock. Any such transactions may be effected at any time and from time
to time.
Item 5. Interest in Securities of the Issuer.
(a) As of the date hereof, Mr. Friedler beneficially owns 2,026,500
shares of Common Stock, representing approximately 49.1% of the shares of
Common Stock outstanding, Mr. Dermer beneficially owns 685,500 shares of
Common Stock, representing approximately 16.6% of shares of Common Stock
outstanding, and Ms. Archambault beneficially owns 60,000 shares of Common
Stock, representing approximately 1.5% of the shares of Common Stock
outstanding. Together, the Filing Persons beneficially own 2,772,000
shares of Common Stock, representing approximately 67.2% of the shares of
Common Stock outstanding. As a result of certain activities and agreements
described in Item 6 below, the Filing Persons may be deemed to be a "group"
for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and Rule 13d-5(b)(1) thereunder. Each Filing
Person disclaims beneficial ownership of the shares of Common Stock owned
by each of the other Filing Persons and, pursuant to Rule 13d-4 under the
Exchange Act, expressly declares that the filing of this statement shall
not be construed as an admission that he or she is, for purposes of Section
13(d) or 13(g) of the Exchange Act, the beneficial owner of any of such
shares.
As of the date hereof, Mr. Friedler and Mr. Dermer each owns options
to purchase 60,000 shares of Common Stock and Ms. Archambault owns options
to purchase 40,000 shares of Common Stock. The options are not currently
exercisable and are not due to become exercisable within the next 60 days.
The options are therefore not included in the shares of Common Stock
reported to be beneficially owned by the Filing Persons. However, as
discussed in Item 6 below, all such options will vest and become
exercisable upon a person or group becoming, or obtaining the right to
become, the beneficial owner of 30% or more of the outstanding voting
securities of the Company. Mr. Friedler, acting either alone or together
with the other Filing Persons, could cause such an event to occur by
selling a sufficient amount of his shares of Common Stock to a single
person or group.
(b) Except as otherwise described in Item 6 below, each Filing Person
has the sole power to vote and to direct the vote and the sole power to
dispose and to direct the disposition of the shares of Common Stock
beneficially owned by him or her.
(c) Except as set forth in Item 3 above, no transactions in the
Common Stock were effected by the Filing Persons since the Company's
formation.
(d) No other person is known by the Filing Persons to have the right
to receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, any shares of Common Stock beneficially owned by
any Filing Person.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
The Filing Persons currently are considering selling all of the shares
of Common Stock owned by them in a single private transaction. While there
is no formal agreement among the Filing Persons and the Filing Persons are
not obligated to effect such a sale or to act in concert, the Filing
Persons are jointly investigating and negotiating such a sale and have
jointly engaged legal counsel to assist them in connection therewith.
Mr. Friedler, Mr. Dermer and the Company are parties to a Stockholders
Agreement dated as of October 30, 1996 (the "Stockholders Agreement"), relating
to the shares of Common Stock owned by Mr. Friedler and Mr. Dermer. The
Stockholders Agreement provides that Mr. Friedler and Mr. Dermer may not
transfer, sell, distribute or otherwise dispose of such shares except (i) in a
public offering or ordinary brokerage transaction in accordance with Rule 144
under the Securities Act of 1933, as amended, (ii) as a gift to certain family
members, (iii) upon the transferor's death or (iv) in a private sale
transaction. If Mr. Friedler or Mr. Dermer proposes to sell any of the shares
of Common Stock covered by the Stockholders Agreement in a private sale
transaction, the other stockholder will have (i) the right of the first refusal
to purchase such shares on the proposed terms and (ii) the right to participate
in such sale on a pro rata basis in proportion to the number of shares of Common
Stock subject to the Stockholders Agreement owned by him. Mr. Friedler and Mr.
Dermer also have agreed in the Stockholders Agreement to vote for the election
of the other, or his designee, as a director of the Company and to take other
reasonable action to provide that each of Mr. Friedler and Mr. Dermer, or their
designees, are elected as directors of the Company.
The foregoing description of the Stockholders Agreement is subject to,
and is qualified in its entirety by reference to, the Stockholders
agreement, which is filed as an exhibit to this Statement on Schedule 13D.
Each of the Filing Persons has executed a letter agreement (each, a
"Lock-Up Agreement" and, collectively, the "Lock-Up Agreements") to Mason
Hill & Co., Inc., dated May 16, 1997, in connection with the initial public
offering of the Company's Common Stock. Pursuant to the Lock-Up
Agreements, each of the Filing Persons has agreed that, prior to May 14,
1999, he or she will not sell, assign, pledge, hypothecate or otherwise
dispose of any shares of Common Stock or other securities of the Company
owned by him or her, or subsequently acquired through the exercise or
issuance of any options, warrants or rights, split or other distribution of
stock, or grant of options, rights or warrants with respect to any such
shares of Common Stock, without the prior written consent of Mason Hill &
Co., Inc., provided, however, that the Filing Persons can transfer any of
such securities without such consent in a private transfer if the
transferee agrees to be bound by an identical lock-up provision.
The foregoing description of the Lock-Up Agreements is subject to, and
is qualified in its entirety by reference to, the form of Lock-Up
Agreement, which is filed as an exhibit to this Statement on Schedule 13D.
Pursuant to the Lexington Healthcare Group, Inc. 1997 Stock Option
Plan (the "Stock Option Plan") and Option Agreements, dated December 17,
1997, between the Company and each of the Filing Persons (collectively, the
"Option Agreements"), the Company has granted options to purchase
60,000 shares of Common Stock to each of Mr. Friedler and Mr. Dermer and
options to purchase 40,000 shares of Common Stock to Ms. Archambault.
Except as provided below, the options will vest and become exercisable as
to one-third of the shares of Common Stock covered thereby annually,
commencing on December 17, 1998, if the option holder is an employee of the
Company on such date. The options are not transferrable, have an exercise price
of $2.625 per share and will expire on the earlier of December 16, 2003, or
three months after termination of the optionee's employment with the Company.
Each of the Option Agreements provides that all of the options granted
thereunder will vest and become immediately exercisable on the date immediately
preceding a change of control, as defined in such agreements. As defined, a
change of control includes, among other things, any person or group becoming, or
obtaining the right to become, the beneficial owner of 30% or more of the
Company's outstanding voting securities. Mr. Friedler, acting either alone or
together with the other Filing Persons, could cause a change of control to occur
by selling a sufficient number of shares of Common Stock to a single person or
group.
The foregoing description of the Stock Option Plan, the Option Agreements
and the options granted to the Filing Persons thereunder is subject to, and is
qualified in its entirety by reference to, the Stock Option Plan and the Option
Agreements, which are each filed as exhibits to this Statement on Schedule 13D.
Except as described in this Statement on Schedule 13D, none of the
Filing Persons knows of any contracts, arrangements, understandings or
relationships (legal or otherwise) between any of the persons named in Item
2 or between such persons and any other person with respect to any
securities of the Company, including, but not limited to, transfer or
voting of any of the securities, finder's fees, joint ventures, loan or
option arrangements, puts or calls, guarantees of profits, division of
profits or loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
(1) Joint Filing Agreement.
(2) Stockholders Agreement.
(3) Form of Lock-Up Agreement.
(4) Stock Option Plan.
(5) Option Agreement, dated December 17, 1997, between the Company
and Jack Friedler.
(6) Option Agreement, dated December 17, 1997, between the Company
and Harry Dermer.
(7) Option Agreement, dated December 17, 1997, between the Company
and Mary Archambault.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: May 13, 1998
/s/ Jack Friedler
Jack Friedler
/s/ Harry Dermer
Harry Dermer
/s/ Mary Archambault
Mary Archambault
EXHIBIT 1
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(k) promulgated under the Securities
Exchange Act of 1934, as amended, the undersigned agree to the joint filing
of a Statement on Schedule 13D (including any and all amendments thereto)
with respect to the shares of Common Stock, par value $.01 per share, of
Lexington Healthcare Group, Inc. and further agree to the filing of this
agreement as an Exhibit thereto. In addition, each party to this Agreement
expressly authorizes each other party to this Agreement to file on its
behalf any and all amendments to such Statement on Schedule 13D.
Date: May 13, 1998
/s/ Jack Friedler
Jack Friedler
/s/ Harry Dermer
Harry Dermer
/s/ Mary Archambault
Mary Archambault
EXHIBIT 2
STOCKHOLDERS AGREEMENT
AGREEMENT made as of the 30th day of October, 1996, by and among
Lexington Healthcare Group, Inc. a Delaware corporation with a business
address of 35 Park Place, New Britain, Connecticut 06052 (the
"Corporation"), Jack Friedler, an individual residing at 1041 Church Hill
Road, Fairfield, CT 06432 ("Friedler"), and Harry Dermer, an individual
residing at 725 Town Hill Road, New Hartford, CT 06057 ("Dermer").
Friedler and Dermer are sometimes hereinafter referred to collectively as
"Stockholders" and individually as Stockholder.
RECITALS
WHEREAS, the authorized capital stock of the Corporation consists of
16,000,000 shares of common stock, par value $______ per share (the "Common
Stock"); and
WHEREAS, Friedler owns 1,846,500 shares of Common Stock and Dermer
owns 615,500 shares of Common Stock (collectively referred to as the
"Shares");
WHEREAS, the Stockholders desire to promote their joint interests and
the interests of the Corporation by imposing certain restrictions and
obligations on themselves and on the Corporation and on the Shares held by
each of them;
WHEREAS, the Stockholders believe it to be in their best interests and
in the best interests of the Corporation that the Shares owned by the
Stockholders be transferrable only upon compliance with the provisions of
this Agreement; and
WHEREAS, the Stockholders and the Corporation anticipate that the
Corporation will soon be consummating an initial public offering of its
securities;
NOW, THEREFORE, in consideration of the mutual obligations contained
herein and other good and valuable consideration, the Stockholders hereby
agree as follows:
1. Definitions.
(a). The word "Affiliate" shall mean any Person controlling, or
controlled by, another Person and for purposes hereof shall include all
relatives by blood, marriage or adoption.
(b). The word "Agreement" shall mean this Stockholders Agreement, as
it may be amended from time to time pursuant to the terms hereof.
(c). The term "Bona Fide Offer" shall mean any offer made by a Person
not a party to this Agreement or an Affiliate thereof to any Stockholder to
purchase Shares; provided, however, that said offer must include an
agreement by the Transferee to purchase Shares owned by the non-selling
Stockholder to the extent the "come along" provisions of Section 3 hereof
are exercised by such non-selling Stockholder. In the event a Bona Fide
Offer shall provide for the exchange of assets other than cash or cash
equivalents, either the Bona Fide Offer shall include the fair market value
of said assets if such fair market value is publicly available and readily
ascertainable or the Transferor shall submit with the Offer to Sell
relating to such Bona Fide Offer an appraisal prepared by a qualified
independent third party evidencing the fair market value of the assets to
be exchanged as of the date of the Bona Fide Offer.
(d). The word "Person" shall mean (and include) an individual, trust,
fiduciary, partnership, corporation, association or any other legal entity.
(e). The term "Offer to Sell" shall refer to an offer made pursuant
to, and as defined in, Section 2(b).
(f). The term "Offered Shares" shall mean the shares of Common Stock
of the Corporation included in an Offer to Sell.
(g). The term "owned by," referring to the owner of Shares, shall
refer to the Person recorded on the stock record books regularly maintained
by the Corporation as the owner of such Shares.
(h). The word "transfer" shall include the sale, assignment, gift,
devise, pledge, encumbrance or other disposition of any Shares, whether
absolute or conditional, temporary or permanent, outright or in trust,
voluntary or involuntary.
(i). The word "Transferee" shall refer to any holder of Shares
transferred to him by a Stockholder.
(j). The words "Transferor" or "Selling Stockholder" shall refer to
any Stockholder desiring to make a transfer of his Shares.
2. Restrictions on Transferability of Shares Held by the
Stockholders and Permitted Transfers.
(a). Each of the Stockholders hereby agrees not to transfer, sell,
distribute or otherwise dispose of the Shares, now owned or hereafter
acquired. Notwithstanding the foregoing, either Stockholder may: (i) sell
all or any part of his Shares publicly in a public offering or ordinary
brokerage transactions in accordance with Rule 144 promulgated pursuant to
the Securities Act of 1933, as amended ("Act"); (ii) transfer all or any
part of his Shares, without consideration, to a spouse, lineal descendent,
parent or to a trust for the benefit of the Stockholder and/or any of the
foregoing ("Family Members") subject to compliance with the provisions of
Section 5 hereof; (iii) make a private sale of any Shares owned by him only
pursuant to a Bona Fide Offer and after compliance with the terms and
conditions of Section 2 of this Agreement; or (iv) transfer his Shares upon
his death subject to the provisions of Section 4 hereof. Any purported
transfer of any Shares by any Stockholder or any successor to any
Stockholder which violates any provision of this Agreement will be invalid,
and the Corporation will not transfer any of such Shares on its books, nor
will any of such Shares be entitled to vote or receive dividends thereon,
during the period of any such violation. Such disqualification will be in
addition to, and not in substitution of; any other legal or equitable
remedies to enforce such provisions. The Corporation and its officers,
directors and employees shall not be liable to any person for any action or
refusal to act taken under the provisions of this Section 2(a).
(b). (i) If either Stockholder desires to transfer his or her Shares
(a "Selling Stockholder"), in a private sale in connection with a Bona Fide
Offer, the Selling Stockholder must give the remaining Stockholder thirty
(30) days written notice of his intention to sell ("Offer to Sell") at the
address as set forth on the books of the Corporation. An Offer to Sell
shall be in writing and shall include the number of Shares which the
Transferor intends to transfer, the name and address of the prospective
Transferee, the terms of such transfer and a copy of any written agreement
or other document setting forth the information herein required. A copy of
the Bona Fide Offer shall be delivered with the written Offer to Sell. The
Offer to Sell shall constitute an offer to sell the Offered Shares to the
other Stockholder at the price and upon the terms and conditions as are set
forth in the Bona Fide Offer. If the Bona Fide Offer provides for the exchange
of assets other than cash or cash equivalents, the Offer to Sell to the
Stockholder shall be deemed to be an Offer to Sell the Offered Shares at the
fair market value of the assets to be exchanged, determined as of the date of
the Bona Fide Offer.
(ii) The remaining Stockholder will thereupon have the option, to
be exercised in writing, within thirty (30) days from the giving of the
Offer to Sell ("Exercise Period") to purchase all or any portion of the
Offered Shares. The Selling Stockholder shall not be obligated to sell any
of the Offered Shares to the non-selling Stockholder unless all of the
Offered Shares are purchased by the non-selling Stockholder.
(c). If an Offer to Sell is not accepted by the other Stockholder, the
Transferor may transfer the Shares to the prospective Transferee named in
the Offer to Sell in strict accordance with the terms therein stated, at a
price not less than, and on terms and conditions not more favorable to such
Transferee than, are set forth in the Offer to Sell, free and clear of the
terms and conditions of this Agreement. A transfer to a Transferee after an
Offer to Sell is not accepted shall be consummated and the Shares
transferred to the Transferee within thirty (30) days after the expiration
of the Exercise Period. If the Transferor shall fail to make such transfer
within such thirty (30) day period, or if he shall propose to sell the
Offered Shares at a lower price or on more favorable terms to the
purchaser, the Offered Shares shall again become subject to all the
restrictions contained in this Agreement, and the Selling Stockholder shall
again make the Offered Shares available to the remaining Stockholder for
purchase in the manner set forth herein.
3. Come Along. In the event the non-selling Stockholder determines
not to exercise the right of first refusal granted pursuant to Section 2,
the non-selling Stockholder shall have the right to cause the Transferee to
purchase from the non-selling Stockholder the same percentage of the Shares
owned by the non-selling Stockholder as is equal to the fraction, expressed as a
percentage, the numerator of which is the number of Offered Shares and the
denominator of which is the total number of Shares owned by the Selling
Stockholder prior to such sale; subject to the adjustment specified in this
Section 3 ("Come Along"). The non-selling Stockholder shall exercise the Come
Along by giving the Selling Stockholder and the proposed Transferee notice of
such exercise within the Exercise Period, but not later than the date upon which
the non-selling Stockholder gives notice of his non-exercise of the right of
first refusal if notice of non-exercise is given. Upon receipt of the notice of
exercise of the Come Along, the Transferee shall have the option to purchase the
aggregate number of Shares specified in the Bona Fide Offer to be purchased from
the Selling Stockholder and the other Stockholder, pro rata or to increase the
number of Shares purchased by such amount (with a concomitant increase in the
purchase price, but otherwise on the same terms and conditions contained in the
Bona Fide Offer) so that the other Stockholder is selling the same percentage of
his Shares as the percentage sold by the Selling Stockholder. The Transferee's
election shall be made within fifteen days of the receipt by the Transferee of
the other Stockholder's exercise of the Come Along.
4. Death of a Stockholder. The transfer of Shares upon the death of
a Stockholder to such Stockholder's estate and from the estate to the
beneficiary of such estate or to the distributee under law, shall be
permitted, provided however, the Shares so transferred shall remain subject
to the terms and conditions of this Agreement and such Shares shall be
voted as provided in Section 5 hereof as if; and to the same extent, that
the transfer were a transfer to a Family Member.
5. Transfer To Family Members. A transfer, without consideration,
may be made to a Family Member, as provided in Section 2, provided that the
Family Member to whom such transfer is made agrees in writing for the
benefit of the Stockholder other than the Transferor that such Family
Member will vote the Shares owned by him/her/it on all matters upon which
the Shares of the Corporation are voted in the same proportion as the
Shares owned by Friedler and Dermer are voted. If either Friedler or
Dermer own no Shares, the Shares owned by the Family Member shall be voted
in the same manner as the Shares owned by the Stockholder owning Shares are
voted. As used in this Section, the term "voted" shall include action
taken by written consent, in addition to a vote in person or by proxy.
6. Rights to Serve as or Designate Directors. For as long as either
Friedler or Dermer remains a Stockholder of the Corporation, each agrees to
vote the Shares owned by him for the election of the other as a Director of
the Corporation or for the person designated a Director in his stead. To
the extent not inconsistent with law, each will take all action reasonably
necessary (including to vote as a director for a management slate of
directors which includes the other Stockholder or such other Stockholder's
designee) to carry out the intention that each of the Stockholders (or
their respective designee) be elected as a director of the Corporation.
7. Endorsement on Certificates. Upon execution of this Agreement,
the certificates of stock subject thereto shall be surrendered to the
Corporation and the stock certificates representing the Shares shall bear
the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or
under state securities laws and may not be sold or
transferred unless registered under said act and applicable
state securities laws or unless, in the opinion of counsel
satisfactory to the Corporation, the transfer qualifies for
an exemption from the registration provisions thereof. In
addition, this certificate of stock and the shares
represented hereby are held subject to the terms and
conditions contained in an agreement by and among the
Stockholders of the Corporation and the Corporation dated as
of , 1996, and all amendments thereto, and
may not be transferred except in accordance with the terms
and provisions thereof. A copy of such agreement will be
furnished by the Corporation upon request."
Upon endorsement, the certificates shall be delivered to the
Stockholders, who shall be entitled to exercise all rights of ownership of
such stock, subject to the terms of this Agreement. All capital stock of
the Corporation hereinafter issued to the Stockholders shall bear the same
endorsement.
8. Termination of Agreement. This Agreement shall terminate upon the
occurrence of any of the following events;
(a). The cessation of the Corporation's business;
(b). Adjudication of the Corporation as a bankrupt, the execution by
it of an assignment for the benefit of creditors, or the appointment of a
receiver for the Corporation;
(c). Voluntary, involuntary or judicial dissolution of the
Corporation; or
(d). Only Friedler or Dermer owns Shares and no Shares are owned by a
Family Member or a deemed Family Member.
Upon the termination of this Agreement, each Stockholder shall
surrender to the Corporation the certificates for his shares, and the
Corporation shall issue to him in lieu thereof new certificates for an
equal number of shares without the endorsement set forth in Section 7.
9. Equitable Remedy. The parties hereby declare that it is
impossible to measure in monetary terms the damages which shall accrue to a
party hereto by reason of another party's failure to perform any of the
obligations under this Agreement. Therefore, if any party hereto shall
institute any action or proceeding to enforce the provisions hereof; any
person (including the Corporation) against whom such action or proceeding
is brought hereby waives the claim or defense therein that there is an
adequate remedy at law, and such person shall not urge in any such action
or proceeding the claim or defense that such remedy at law exists.
10. Miscellaneous.
(a). Any notice or other communication required or permitted to be
given to any party hereunder shall be deemed given when delivered
personally or by overnight courier or other delivery service providing
documentary evidence of delivery, or five (5) days after mailing by
certified mail, return receipt requested, to the parties at the addresses
as set forth above, or to such other address as the respective parties may
designate by notice given pursuant to this Agreement.
(b). This Agreement shall be binding upon the parties hereto and their
heirs, executors, administrators, successors and assigns. Each Stockholder
in furtherance thereof shall execute a will directing his executor to
perform this Agreement and to execute all documents necessary to effectuate
its purposes, but the failure to execute such will shall not affect the
rights of any Stockholders or the obligations of any estate, as provided in
this Agreement.
(c). This Agreement contains the entire agreement of the parties and
supersedes all prior agreements, written or oral. No change in or
modification of this Agreement shall be binding unless the same shall be in
writing and signed by the parties hereto.
(d). This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut.
(e). Any controversy or claim arising out of or relating to this
contract shall be determined by arbitration in accordance with the
International Arbitration Rules of the American Arbitration Association.
The place of arbitration shall be New York City.
(f). Whenever from the context it appears appropriate, each item
stated in either the singular or the plural shall include the singular and
the plural, and pronouns stated in either the masculine, feminine or neuter
genders shall include the masculine, feminine and neuter genders.
(g). This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which together constitute
one and the same instrument.
11. Severability. It is agreed that in the event any provision of
this Agreement or the application thereof to any person or circumstance
shall be adjudged to be invalid or unenforceable according to any
applicable laws, the remaining provisions of this Agreement and the
application thereof to any person or circumstances shall not be affected
thereby and shall be enforced to the fullest extent permitted by law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
LEXINGTON HEALTHCARE GROUP, INC.
/s/ Harry Dermer President
By:
Title:
/s/ Jack Friedler
Jack Friedler
/s/ Harry Dermer
Harry Dermer
EXHIBIT 3
May 16, 1997
Mason Hill & Co., Inc.
110 Wall Street
New York, New York 1005
Re: Lexington Healthcare Group, Inc.
Dear Sir or Madame:
The undersigned, a beneficial owner of the common stock of Lexington
Healthcare Group, Inc. (the "Company"), understands that the Company has
filed with the Securities and Exchange Commission a registration statement on
Form S-1 (No. 333-15849) for the registration of Common Stock and redeemable
warrants (the "Redeemable Warrants") of the Company (the "Registration
Statement") in connection with a public offering of such securities. The
undersigned further understands that upon the effectiveness of the
Registration Statement, the Company and Mason Hill & Co., Inc. (the
"Underwriter") entered into an underwriting agreement (the "Underwriting
Agreement") in connection with such public offering.
In order to induce the Underwriter to proceed with such public offering,
the undersigned agrees, for the benefit of the Company and the Underwriter,
that should such public offering be effectuated, the undersigned will not,
without the prior written consent of the Underwriter, sell, assign, pledge,
hypothecate or otherwise dispose of, directly or indirectly, any shares of
Common Stock or other securities of the Company owned by the undersigned, or
subsequently acquired through the exercise or issuance of any options,
warrants or rights, split or other distribution of stock, or grant of
options, rights or warrants with respect to any such shares of Common Stock,
during the twenty-four (24) month period commencing on the effective date of
said public offering. Notwithstanding the above provision, the undersigned
may transfer any of such securities in a private transfer provided that the
transferee agrees to be bound by an identical lock-up provision and that the
securities transferred to the transferee shall bear an appropriate
restrictive legend. Furthermore, the undersigned will permit all
certificates evidencing the undersigned's shares of Common Stock or other
securities to be endorsed with the appropriate restrictive legends, and will
consent to the placement of appropriate stop transfer orders with the
transfer agent for the Company.
In the event that the Registration Statement becomes effective, the
undersigned agrees to be bound by the provisions of this Agreement.
Very truly yours,
_________________________________________
Printed Name
_________________________________________
Signature
_________________________________________
If the signatory is an entity, print name
and title of individual signing
_____________________________________
Please indicate number of shares of
Common Stock owned.
Please list any options, warrants,
rights or convertible securities owned
and the number of shares of Common
Stock issuable upon the exercise or
conversion of such securities:
_____________________________________
Options
_____________________________________
Warrants
_____________________________________
Rights
_____________________________________
Convertible Securities
EXHIBIT 4
LEXINGTON HEALTHCARE GROUP, INC.
1997 STOCK OPTION PLAN
As adopted May 1, 1997
<PAGE>
1. PURPOSE OF PLAN; ADMINISTRATION
1.1 Purpose.
Lexington Healthcare Group, Inc.'s 1997 Stock Option Plan
(hereinafter, the "Plan") is hereby established to grant to officers and
other employees of Lexington Healthcare Group, Inc. (the "Company") or of
its parents or subsidiaries (as defined in Sections 424(e) and (f),
respectively, of the Internal Revenue Code of 1986, as amended (the
"Code")), if any (individually and collectively, the "Company"), and to
non-employee directors, consultants and advisors and other persons who may
perform significant services for or on behalf of the Company, a favorable
opportunity to acquire common stock, $.01 par value ("Common Stock"), of
the Company and, thereby, to create an incentive for such persons to remain
in the employ of or provide services to the Company and to contribute to
its success.
The Company may grant under the Plan both incentive stock options
within the meaning of Section 422 of the Code ("Incentive Stock Options")
and stock options that do not qualify for treatment as Incentive Stock
Options ("Nonstatutory Options"). Unless expressly provided to the
contrary herein, all references herein to "options" shall include both
incentive Stock Options and Nonstatutory Options.
1.2 Administration.
The Plan shall be administered by the Board of Directors of the
Company (the "Board"), if each member is a "Non-Employee Director" within
the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended ("Rule 16b-3"), or a committee (the "Committee") of two or more
directors, each of whom is a Non-Employee Director. Appointment of
Committee members shall be effective upon acceptance of appointment.
Committee members may resign at any time by delivering written notice to
the Board. Vacancies in the Committee may be filled by the Board.
A majority of the members of the Committee shall constitute a quorum
for the purposes of the Plan. Provided a quorum is present, the Committee
may take action by affirmative vote or consent of a majority of its members
present at a meeting. Meetings may be held telephonically as long as all
members are able to hear one another, and a member of the Committee shall
be deemed to be present for this purpose if he or she is in simultaneous
communication by telephone with the other members who are able to hear one
another. In lieu of action at a meeting, the Committee may act by written
consent of a majority of its members.
Subject to the express provisions of the Plan, the Committee shall
have the authority to construe and interpret the Plan and all Stock Option
Agreements (as defined in Section 3.4) entered into pursuant hereto and to
define the terms used therein, to prescribe, adopt, amend and rescind rules
and regulations relating to the administration of the Plan and to make all
other determinations necessary or advisable for the administration of the Plan;
provided, however, that the Committee may delegate nondiscretionary
administrative duties to such employees of the Company as it deems proper;
and, provided, further, in its absolute discretion, the Board may at any
time and from time to time exercise any and all rights and duties of the
Committee under the Plan. Subject to the express limitations of the Plan,
the Committee shall designate the individuals from among the class of
persons eligible to participate as provided in Section 1.3 who shall
receive options, whether an optionee will receive Incentive Stock Options
or Nonstatutory Options, or both, and the amount, price, restrictions and
all other terms and provisions of such options (which need not be
identical).
Members of the Committee shall receive such compensation for their
services as members as may be determined by the Board. All expenses and
liabilities which members of the Committee incur in connection with the
administration of this Plan shall be borne by the Company. The Committee
may, with the approval of the Board, employ attorneys, consultants,
accountants, appraisers, brokers or other persons. The Committee, the
Company and the Company's officers and directors shall be entitled to rely
upon the advice, opinions or valuations of any such persons. No members of
the Committee or Board shall be personally liable for any action,
determination or interpretation made in good faith with respect to the
Plan, and all members of the Committee shall be fully protected by the
Company in respect of any such action, determination or interpretation.
1.3 Participation.
Officers and other employees of the Company, non-employee directors,
consultants and advisors and other persons who may perform significant
services on behalf of the Company shall be eligible for selection to
participate in the Plan upon approval by the Committee; provided, however,
that only "employees" (within the meaning of Section 3401(c) of the Code)
of the Company shall be eligible for the grant of Incentive Stock Options.
An individual who has been granted an option may, if otherwise eligible, be
granted additional options if the Committee shall so determine. No person
is eligible to participate in the Plan by matter of right; only those
eligible persons who are selected by the Committee in its discretion shall
participate in the Plan.
1.4 Stock Subject to the Plan.
Subject to adjustment as provided in Section 3.5, the stock to be
offered under the Plan shall be shares of authorized but unissued Common
Stock, including any shares repurchased under the terms of the Plan or any
Stock Option Agreement entered into pursuant hereto. The cumulative
aggregate number of shares of Common Stock to be issued under the Plan
shall not exceed 450,000, subject to adjustment as set forth in Section
3.5.
If any option granted hereunder shall expire or terminate for any
reason without having been fully exercised, the unpurchased shares subject
thereto shall again be available for the purposes of the Plan. For
purposes of this Section, where the exercise price of options is paid by
means of the grantee's surrender of previously owned shares of Common
Stock, only the net number of additional shares issued and which remain
outstanding in connection with such exercise shall be deemed "issued" for
purposes of the Plan.
2. STOCK OPTIONS
2.1 Exercise Price; Payment.
(a) The exercise price of each Incentive Stock Option granted under
the Plan shall be determined by the Committee, but shall not be less than
100% of the "Fair Market Value" (as defined below) of Common Stock on the
date of grant. If an Incentive Stock Option is granted to an employee who
at the time such option is granted owns (within the meaning of section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of capital stock of the Company, the option exercise price shall be
at least 110% of the Fair Market Value of Common Stock on the date of
grant. The exercise price of each Nonstatutory Option also shall be
determined by the Committee, but shall not be less than 85% of the Fair
Market Value of Common Stock on the date of grant. The status of each
option granted under the Plan as either an Incentive Stock Option or a
Nonstatutory Option shall be determined by the Committee at the tine the
Committee acts to grant the option, and shall be clearly identified as such
in the Stock Option Agreement relating thereto.
"Fair Market Value" for purposes of the Plan shall mean: (i) the
closing price of a share of Common Stock on the principal exchange on which
shares of Common Stock are then trading, if any, on the day immediately
preceding the date of grant, or, if shares were not traded on the day
preceding such date of grant, then on the next preceding trading day during
which a sale occurred; or (ii) if Common Stock is not traded on an exchange
but is quoted on Nasdaq or a successor quotation system, (1) the last sales
price (if Common Stock is then listed on the Nasdaq Stock Market) or (2)
the mean between the closing representative bid and asked price (in all
other cases) for Common Stock on the day prior to the date of grant as
reported by Nasdaq or such successor quotation system; or (iii) if there is
no listing or trading of Common Stock either on a national exchange or
over-the-counter, that price determined in good faith by the Committee to
be the fair value per share of Common Stock, based upon such evidence as it
deems necessary or advisable.
(b) In the discretion of the Committee at the time the option is
exercised, the exercise price of any option granted under the Plan shall be
paid in full in cash, by check or by the optionee's interest-bearing
promissory note (subject to any limitations of applicable state
corporations law) delivered at the time of exercise; provided, however,
that subject to the timing requirements of Section 2.7, in the discretion
of the Committee and upon receipt of all regulatory approvals, the person
exercising the option may deliver as payment in whole or in part of such
exercise price certificates for Common Stock of the Company (duly endorsed
or with duly executed stock powers attached), which shall be valued at its
Fair Market Value on the day of exercise of the option, or other property
deemed appropriate by the Committee; and, provided further, that, subject
to Section 422 of the Code, so-called cashless exercises as permitted under
applicable rules and regulations of the Securities and Exchange Commission
and the Federal Reserve Board shall be permitted in the discretion of the
Committee. Without limiting the Committee's discretion in this regard,
consecutive book entry stock-for-stock exercises of options (or
"pyramiding") also are permitted in the Committee's discretion.
Irrespective of the form of payment, the delivery of shares issuable
upon the exercise of an option shall be conditioned upon payment by the
optionee to the Company of amounts sufficient to enable the Company to pay
all federal, state, and local withholding taxes resulting, in the Company's
judgment, from the exercise. In the discretion of the Committee, such
payment to the Company may be effected through (i) the Company's
withholding from the number of shares of Common Stock that would otherwise
be delivered to the optionee by the Company on exercise of the option a
number of shares of Common Stock equal in value (as determined by the Fair
Market Value of Common Stock on the date of exercise to the aggregate
withholding taxes, (ii) payment by the optionee to the Company from the
aggregate withholding taxes in cash, (iii) withholding by the Company from
other amounts contemporaneously owed by the Company to the optionee or (iv)
any combination of these three methods, as determined by the Committee in
its discretion.
2.2 Option Period.
(a) The Committee shall provide, in the terms of each Stock Option
Agreement, when the option subject to such agreement expires and becomes
unexercisable, but in no event will an Incentive Stock Option granted under
the Plan be exercisable after the expiration of ten years from the date it
is granted. Without limiting the generality of the foregoing, the Committee
may provide in the Stock Option Agreement that the option subject thereto
expires 30 days following a Termination of Employment (as defined in
Section 3.2 hereof) for any reason other than death or disability, or six
months following a Termination of Employment for disability or following an
optionee's death.
(b) Outside Date for Exercise. Notwithstanding any provision of this
Section 2.2, in no event shall any option granted under the Plan be
exercised after the expiration date of such option set forth in the
applicable Stock Option Agreement.
2.3 Exercise of Options.
Each option granted under the Plan shall become exercisable and the
total number of shares subject thereto shall be purchasable, in a lump sum
or in such installments, which need not be equal, as the Committee shall
determine; provided, however, that each option shall become exercisable in
full no later than ten years after such option is granted, and each option
shall become exercisable as to at least 10% of the shares of Common Stock
covered thereby on each anniversary of the date such option is granted; and
provided, further that if the holder of an option shall not in any given
installment period purchase all of the shares which such holder is entitled
to purchase in such installment period, such holder's right to purchase any
shares not purchased in such installment period shall continue until the
expiration or sooner termination of such holder's option. The Committee
may, at any time after grant of the option and from time to time, increase
the number of shares purchasable in any installment, subject to the total
number of shares subject to the option and the limitations set forth in
Section 2.5. At any time and from time to time prior to the time when any
exercisable option or exercisable portion thereof becomes unexercisable
under the Plan or the applicable Stock Option Agreement, such option or
portion thereof may be exercised in whole or in part; provided, however,
that the Committee may, by the terms of the option, require any partial
exercise to be with respect to a specified minimum number of shares. No
option or installment thereof shall be exercisable except with respect to
whole shares. Fractional share interests shall be disregarded, except that
they may be accumulated as provided above and except that if such a
fractional share interest constitutes the total shares of Common Stock
remaining available for purchase under an option at the time of exercise,
the optionee shall be entitled to receive on exercise a certified or bank
cashier's check in an amount equal to the Fair Market Value of such
fractional share of stock.
2.4 Transferability of Options.
Except as the Committee may determine as aforesaid, an option granted
under the Plan shall, by its terms, be nontransferable by the optionee
other than by will or the laws of descent and distribution, or pursuant to
a qualified domestic relations order (as defined by the Code), and shall be
exercisable during the optionee's lifetime only by the optionee or by his
or her guardian or legal representative. More particularly, but without
limiting the generality of the immediately preceding sentence, an option
may not be assigned, transferred (except as provided in the preceding
sentence), pledged or hypothecated (whether by operation of law or
otherwise), and shall not be subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or
other disposition of any option contrary to the provisions of the Plan and
the applicable Stock Option Agreement, and any levy of any attachment or
similar process upon an option, shall be null and void, and otherwise
without effect, and the Committee may, in its sole discretion, upon the
happening of any such event, terminate such option forthwith.
2.5 Limitation on Exercise of Incentive Stock Options.
To the extent that the aggregate Fair Market Value (determined on the
date of grant as provided in Section 2.1 above) of the Common Stock with
respect to which Incentive Stock Options granted hereunder (together with
all other Incentive Stock Option plans of the Company) are exercisable for
the first time by an optionee in any calendar year under the Plan exceeds
$100,000, such options granted hereunder shall be treated as Nonstatutory
Options to the extent required by Section 422 of the Code. The rule set
forth in the preceding sentence shall be applied by taking options into
account in the order in which they were granted.
2.6 Disqualifying Dispositions of Incentive Stock Options.
If Common Stock acquired upon exercise of any Incentive Stock Option
is disposed of in a disposition that, under Section 422 of the Code,
disqualifies the option holder from the application of Section 421(a) of
the Code, the holder of the Common Stock immediately before the disposition
shall comply with any requirements imposed by the Company in order to
enable the Company to secure the related income tax deduction to which it
is entitled in such event.
2.7 Certain Timing Requirements.
At the discretion of the Committee, shares of Common Stock issuable to
the optionee upon exercise of an option may be used to satisfy the option
exercise price or the tax withholding consequences of such exercise, in the
case of persons subject to Section 16 of the Securities Exchange Act of
1934, as amended, only (i) during the period beginning on the third
business day following the date of release of the quarterly or annual
summary statement of sales and earnings of the Company and ending on the
twelfth business day following such date, or (ii) pursuant to an
irrevocable written election by the optionee to use shares of Common Stock
issuable to the optionee upon exercise of the option to pay all or part of
the option price or the withholding taxes made at least six months prior to
the payment of such option price or withholding taxes.
2.8 No Effect on Employment.
Nothing in the Plan or in any Stock Option Agreement hereunder shall
confer upon any optionee any right to continue in the employ of the
Company, any Parent Corporation or any subsidiary or shall interfere with
or restrict in any way the rights of the Company, its Parent Corporation
and its Subsidiaries, which are hereby expressly reserved, to discharge any
optionee at any time for any reason whatsoever, with or without cause.
For purposes of the Plan, "Parent Corporation" shall mean any
corporation in an unbroken chain of corporations ending with the Company if
each of the corporations other than the Company then owns stock possessing
50% or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain. For purposes of the Plan,
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other
than the last corporation in the unbroken chain then owns stock possessing
50% or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
3. OTHER PROVISIONS
3.1 Sick Leave and Leaves of Absence.
Unless otherwise provided in the Stock Option Agreement, and to the
extent permitted by Section 422 of the Code, an optionee's employment shall
not be deemed to terminate by reason of sick leave, military leave or other
leave of absence approved by the Company if the period of any such leave
does not exceed a period approved by the Company, or, if longer, if the
optionee's right to reemployment by the Company is guaranteed either
contractually or by statute. A Stock Option Agreement may contain such
additional or different provisions with respect to leave of absence as the
Committee may approve, either at the time of grant of an option or at a
later time.
3.2 Termination of Employment.
For purposes of the Plan, "Termination of Employment" shall mean the
time when the employee-employer relationship between the optionee and the
Company, any Subsidiary or any Parent Corporation is terminated for any
reason, including, but not by way of limitation, a termination by
resignation, discharge, death, disability or retirement; but excluding (i)
terminations where there is a simultaneous reemployment or continuing
employment of an optionee by the Company, any Subsidiary or any Parent
Corporation, (ii) at the discretion of the Committee, terminations which
result in a temporary severance of the employee-employer relationship, and
(iii) at the discretion of the Committee, terminations which are followed
by the simultaneous establishment of a consulting relationship by the
Company, a Subsidiary or any Parent Corporation with the former employee.
Subject to Section 3.1, the Committee, in its absolute discretion, shall
determine the affect of all matters and questions relating to Termination
of Employment; provided, however, that, with respect to Incentive Stock
Options, a leave of absence or other change in the employee-employer
relationship shall constitute a Termination of Employment if, and to the
extent that such leave of absence or other change interrupts employment for
the purposes of Section 422(a)(2) of the Code and the then-applicable
regulations and revenue rulings under said Section.
3.3 Issuance of Stock Certificates.
Upon exercise of an option, the Company shall deliver to the person
exercising such option a stock certificate evidencing the shares of Common
Stock acquired upon exercise. Notwithstanding the foregoing, the Committee
in its discretion may require the Company to retain possession of any
certificate evidencing stock acquired upon exercise of an option which
remains subject to repurchase under the provisions of the Stock Option
Agreement or any other agreement signed by the optionee in order to
facilitate such repurchase provisions.
3.4 Terms and Conditions of Options.
Each option granted under the Plan shall be evidenced by a written
Stock Option Agreement ("Stock Option Agreement") between the option holder
and the Company providing that the option is subject to the terms and
conditions of the Plan and to such other terms and conditions not
inconsistent therewith as the Committee may deem appropriate in each case.
3.5 Adjustments Upon Changes in Capitalization; Merger and
Consolidation.
If the outstanding shares of Common Stock are changed into, or
exchanged for cash or a different number or kind of shares or securities of
the Company or of another corporation through reorganization, merger,
recapitalization, reclassification, stock split-up, reverse stock split,
stock dividend, stock consolidation, stock combination, stock
reclassification or similar transaction, an appropriate adjustment shall be
made by the Committee in the number and kind of shares as to which options
may be granted. In the event of such a change or exchange, other than for
shares or securities of another corporation or by reason of reorganization,
the Committee shall also make a corresponding adjustment changing the
number or kind of shares and the exercise price per share allocated to
unexercised options or portions thereof, which shall have been granted
prior to any such change, shall likewise be made. Any such adjustment,
however, shall be made without change in the total price applicable to the
unexercised portion of the option (except for any change in the aggregate
price resulting from rounding-off of share quantities or prices).
In the event of a "spin-off" or other substantial distribution of
assets of the Company which has a material diminutive effect upon the Fair
Market Value of the Common Stock, the Committee in its discretion shall
make an appropriate and equitable adjustment to the exercise prices of
options then outstanding under the Plan.
Where an adjustment under this Section 3.5 of the type described above
is made to an Incentive Stock Option, the adjustment will be made in a
manner which will not be considered a "modification" under the provisions
of subsection 424(b)(3) of the Code.
In connection with the dissolution or liquidation of the Company or a
partial liquidation involving 50% or more of the assets of the Company, a
reorganization of the Company in which another entity is the survivor, a
merger or reorganization of the Company under which more than 50% of the
Common Stock outstanding prior to the merger or reorganization is converted
into cash or into a security of another entity, a sale of more than 50% of
the Company's assets, or a similar event that the Committee determines, in
its discretion, would materially alter the structure of the Company or its
ownership, the Committee, upon 30 days prior written notice to the option
holders, may, in its discretion, do one or more of the following: (i)
shorten the period during which options are exercisable (provided they
remain exercisable for at least 30 days after the date the notice is
given); (ii) accelerate any vesting schedule to which an option is subject;
(iii) arrange to have the surviving or successor entity grant replacement
options with appropriate adjustments in the number and kind of securities
and option prices, or (iv) cancel options upon payment to the option
holders in cash, with respect to each option to the extent then exercisable
(including any options as to which the exercise has been accelerated as
contemplated in clause (ii) above), of any amount that is the equivalent of
the Fair Market Value of the Common Stock (at the effective time of the
dissolution, liquidation, merger, reorganization, sale or other event) or
the fair market value of the option. In the case of a change in corporate
control, the Committee may, in considering the advisability or the terms
and conditions of any acceleration of the exercisability of any option
pursuant to this Section 3.5, take into account the penalties that may
result directly or indirectly from such acceleration to either the Company
or the option holder, or both, under Section 280G of the Code, and may
decide to limit such acceleration to the extent necessary to avoid or
mitigate such penalties or their effects.
No fractional shares of Common Stock shall be issued under the Plan on
account of any adjustment under this Section 3.5.
3.6 Rights of Participants and Beneficiaries.
The Company shall pay all amounts payable hereunder only to the option
holder or beneficiaries entitled thereto pursuant to the Plan. The Company
shall not be liable for the debts, contracts or engagements of any optionee
or his or her beneficiaries, and rights to cash payments under the Plan may
not be taken in execution by attachment or garnishment, or by any other
legal or equitable proceeding while in the hands of the Company.
3.7 Government Regulations.
The Plan, and the grant and exercise of options and the issuance and
delivery of shares of Common Stock under options granted hereunder, shall
be subject to compliance with all applicable federal and state laws, rules
and regulations (including but not limited to state and federal securities
law) and federal margin requirements and to such approvals by any listing,
regulatory or governmental authority as may, in the opinion of counsel for
the Company, be necessary or advisable in connection therewith. Any
securities delivered under the Plan shall be subject to such restrictions,
and the person acquiring such securities shall, if requested by the
Company, provide such assurances and representations to the Company as the
Company may deem necessary or desirable to assure compliance with all
applicable legal requirements. To the extent permitted by applicable law,
the Plan and options granted hereunder shall be deemed amended to the
extent necessary to conform to such laws, rules and regulations.
3.8 Amendment and Termination.
The Board or the Committee may at any time suspend, amend or terminate
the Plan and nay, with the consent of the option holder, make such
modifications of the terms and conditions of such option holder's option as
it shall deem advisable, provided, however, that, without approval of the
Company's stockholders given within twelve months before or after the
action by the Board or the Committee, no action of the Board or the
Committee may, (A) materially increase the benefits accruing to
participants under the Plan; (B) materially increase the number of
securities which may be issued under the Plan; or (C) materially modify the
requirements as to eligibility for participation in the Plan. No option
maybe granted during any suspension of the Plan or after such termination.
The amendment, suspension or termination of the Plan shall not, without the
consent of the option holder affected thereby, alter or impair any rights
or obligations under any option theretofore granted under the Plan. No
option way be granted during any period of suspension nor after termination
of the Plan, and in no event may any option be granted under the Plan after
the expiration of ten years from the date the Plan is adopted by the Board.
3.9 Time of Grant And Exercise of Option.
An option shall be deemed to be exercised when the Secretary of the
Company receives written notice from an option holder of such exercise,
payment of the exercise price determined pursuant to Section 2.1 of the
Plan and set forth in the Stock Option Agreement, and all representations,
indemnifications and documents reasonably requested by the Committee.
3.10 Privileges of Stock Ownership; Non-Distributive Intent; Reports
to Option Holders.
A participant in the Plan shall not be entitled to the privilege of
stock ownership as to any shares of Common Stock not actually issued to the
optionee. Upon exercise of an option at a time when there is not in effect
under the Securities Act of 1933, as amended, a Registration Statement
relating to the Common Stock issuable upon exercise or payment therefor and
available for delivery a Prospectus meeting the requirements of Section
10(a)(3) of said Act, the optionee shall represent and warrant in writing
to the Company that the shares purchased are being acquired for investment
and not with a view to the distribution thereof.
The Company shall furnish to each optionee under the Plan the
Company's annual report and such other periodic reports, if any, as are
disseminated by the Company in the ordinary course to its stockholders.
3.11 Legending Share Certificates.
In order to enforce any restrictions imposed upon Common Stock issued
upon exercise of an option granted under the Plan or to which such Common
Stock may be subject, the Committee nay cause a legend or legends to be
placed on any share certificates representing such Common Stock, which
legend or legends shall make appropriate reference to such restrictions,
including, but not limited to, a restriction against sale of such Common
Stock for any period of time as may be required by applicable laws or
regulations. If any restriction with respect to which a legend was placed
on any certificate ceases to apply to Common Stock represented by such
certificate, the owner of the Common Stock represented by such certificate
may require the Company to cause the issuance of a new certificate not
bearing the legend.
Additionally, and not by way of limitation, the Committee may impose
such restrictions on any Common Stock issued pursuant to the Plan as it may
deem advisable, including, without limitation, restrictions under the
requirements of any stock exchange upon which Common Stock is then traded.
3.12 Use of Proceeds.
Proceeds realized pursuant to the exercise of options under the Plan
shall constitute general working capital funds of the Company.
3.13 Changes in Capital Structure; No Impediment to Corporate
Transactions.
The existence of outstanding options under the Plan shall not affect
the Company's right to effect adjustments, recapitalizations,
reorganizations or other changes in its or any other corporation's capital
structure or business, any merger or consolidation, any issuance of bonds,
debentures, preferred or prior preference stock ahead of or corporation's
capital structure or business, any merger or consolidation, any affecting
Common Stock, the dissolution or liquidation of the Company's or any other
corporation's assets or business, or any other corporate act, whether
similar to the events described above or otherwise.
3.14 Effective Date of the Plan.
The Plan shall be effective as of the date of its approval by the
stockholders of the Company within twelve months after the date of the
Board's initial adoption of the Plan. Options may be granted but not
exercised prior to stockholder approval of the Plan. If any options are so
granted and stockholder approval shall not have been obtained within twelve
months of the date of adoption of this Plan by the Board of Directors, such
options shall terminate retroactively as of the date they were granted.
3.15 Termination.
The Plan shall terminate automatically as of the close of business on
the day preceding the tenth anniversary date of its adoption by the Board
or earlier as provided in Section 3.8. Unless otherwise provided herein,
the termination of the Plan shall not affect the validity of any option
agreement outstanding at the date of such termination.
3.16 No Effect on Other Plans.
The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company, any Subsidiary or any Parent
Corporation. Nothing in the Plan shall be construed to limit the right of
the Company (i) to establish any other forms of incentives or compensation
for employees of the Company, any Subsidiary or any Parent Corporation or
(ii) to grant or assume options or other rights otherwise than under the
Plan in connection with any proper corporate purpose including but not by
way of limitation, the grant or assumption of options in connection with
the acquisition by purchase, lease, merger, consolidation or otherwise, of
the business, stock or assets of any corporation, partnership, firm or
association.
* * *
EXHIBIT 5
OPTION AGREEMENT
OPTION AGREEMENT, dated December 17, 1997, between Lexington
Healthcare Group, Inc., a Delaware corporation (the "Corporation") and Jack
Friedler (the "Optionee").
WHEREAS, the Corporation has adopted a 1997 Stock Option Plan
(the "Option Plan").
WHEREAS, the Corporation desires to grant to the Optionee,
pursuant to the Option Plan, the right and option to purchase shares (the
"Option Shares") of Common Stock, $.0l par value per share (the "Common
Stock"), of the Corporation, on the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the receipt of $1.00 and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
SECTION 1. Option to Purchase Common Stock.
a. Subject to Section 12 hereof, the Corporation hereby
grants to the Optionee, pursuant to the Option Plan, an option (the
"Option") to purchase from the Corporation Option Shares, at a purchase
price of $2.625 per Option Share (the "Option Price"). The Optionee's
right and option to purchase the Option Shares shall vest annually
commencing December 17, 1998 as follows: (i) 20,000 Option Shares vest on
December 17, 1998; (ii) 20,000 Option Shares vest on December 17, 1999; and
(iii) 20,000 Option Shares vest on December 17, 2000 (each an
"Installment") at the Option Price, so long as the Optionee is
employed by the Corporation. Said right shall be cumulative. In the event
that the Optionee's employment with the Corporation terminates prior to
December 17 of any year, the Optionee shall not have the right or option to
purchase any part of an Installment which would have otherwise vested on
such December 17. With respect to the Option, the "Option Period" shall
commence on the date hereof and terminate on December 16, 2003.
b. The Option may be exercised by the Optionee by delivery
to the Corporation, at any time commencing December 17, 1998, of a written
notice (the "Option Notice"), which Option Notice shall state the
Optionee's intention to exercise the Option, the date on which the Optionee
proposes to purchase the Option Shares (the "Closing Date") and the number
of Option Shares to be purchased on the Closing Date, which Closing Date
shall be no later than 30 days nor earlier than 10 days following the date
of the Option Notice. Upon receipt by the Corporation of an Option Notice
from the Optionee, the Optionee shall be obligated to purchase that number
of Option Shares to be purchased on the Closing Date set forth in the
Option Notice.
c. The purchase and sale of Option Shares acquired
pursuant to the terms of this Option Agreement shall be made on the Closing
Date at the offices of the Corporation. Delivery of the stock certificate
or other instrument registered in the name of the Optionee, evidencing the
Option Shares being purchased on the Closing Date, shall be made by the
Corporation to the Optionee on the Closing Date against the delivery to the
Corporation of a certified or bank check in the full amount of the
aggregate purchase price therefor.
SECTION 2. Representations and Warranties of The Holder. The
Optionee hereby represents and warrants to the Corporation that in the event the
Optionee acquires any Option Shares, such Option Shares will be acquired for his
own account, for investment and not with a view to the distribution thereof. The
Optionee understands that except as set forth in Section 6 hereof, the Option
Shares will not be registered under the Securities Act of 1933, as amended (the
"Securities Act"), and that they must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act or the transaction is
exempt from registration. The certificate or certificates representing any
Option Shares shall bear the following restrictive legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933; OR (ii) TO THE EXTENT APPLICABLE,
RULE 144 UNDER SUCH ACT (OR SIMILAR RULE UNDER THE SECURITIES
ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY
SATISFACTORY TO COUNSEL FOR THE ISSUER, THAN AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT IS AVAILABLE."
SECTION 3. Reorganization; Mergers; Sales; Etc.
a. If, at any time during the Option Period, there shall
be any capital reorganization, reclassification of Common Stock (other than
a change in par value or from par value to no par value or from no par
value to par value or as a result of a stock dividend or subdivision,
split-up or combination of shares), or the consolidation or merger of the
Corporation with or into another corporation that does not result in a
"Change of Control" (as such term is hereinafter defined), then the
unexercised and fully vested portion of this Option shall, after such
reorganization, reclassification, consolidation or merger, be exercisable
for the kind and number of shares of stock or other securities or property
of the Corporation or of the corporation resulting from such consolidation
or surviving such merger to which the Optionee would have been entitled if
the Optionee had held shares of Common Stock issuable upon the exercise
hereof immediately prior to such reorganization, reclassification,
consolidation, merger or sale.
b. If at any time during the Option Period, there shall be
any Change in Control, then (i) all options under this Option shall become
vested, accelerate and become immediately exercisable as of the date
immediately preceding the effective date of the Change of Control, and (ii)
the unexercised and fully vested Option shall, after such Change in
Control, be exercisable for the kind and number of shares of stock of the
Corporation or the Corporation resulting from such consolidation of
surviving such merger or to which such properties and assets shall have
been sold to which the Optionee would have been entitled if the Optionee
had held all of the Option Shares immediately prior to such Change of
Control. A change of control shall be deemed to have occurred when:
(i) A person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, becomes, or obtains the
right to become, the beneficial owner of the Corporation's securities
having 30% or more of the combined voting power of then outstanding
securities of the Corporation that may be cast for the election of
directors of the Corporation;
(ii) At any time, a majority of the Board-nominated
slate of candidates for the Board is not elected;
(iii) The Corporation consummates a merger in which it
is not the surviving entity;
(iv) Substantially all of the Corporation's assets
are sold; or
(v) The Corporation's Stockholders approve the
dissolution or liquidation of Employer.
c. The provisions of this Section 3 shall similarly apply
to successive reorganizations, reclassifications, consolidations, mergers
and sales.
SECTION 4. Adjustment of Option Shares and Option Price.
a. The number of Option Shares subject to this Option
during the Option Period shall be cumulative as to all prior dates of
calculation and shall be adjusted for any stock dividend, subdivision,
split-up or combination of Common Stock.
b. The Option Price shall be subject to adjustment from
time to time as follows:
If, at any time during the Option Period, the number of shares of
Common Stock outstanding is altered by a stock dividend payable in shares
of Common Stock or by a subdivision or split-up or combination of shares of
Common Stock, then, immediately following the record date fixed for the
determination of holders of shares of Common Stock, entitled to receive
such subdivision or split-up or combination, the Option Price shall be
appropriately increased or decreased and the number of shares of Common
Stock issuable upon the exercise hereof shall be increased or decreased,
pursuant to the formula set forth in Section 4.c.
c. Upon each adjustment of the Option Price pursuant to
the provisions of this Section 4, the number of shares of Common Stock
issuable upon the exercise hereof shall be adjusted to the nearest full
share of Common Stock by multiplying a number equal to the Option Price in
effect immediately prior to such adjustment by the number of shares of
Common Stock issuable immediately prior to such adjustment and dividing the
product so obtained by the adjusted Option Price.
SECTION 5. Termination of the Options.
a. Termination of Options in General. Subject to
subsections (b)-(d) of this Section, the Option granted hereby shall
terminate and the Option shall no longer be exercisable after the earlier
of December 16, 2003 or three months after the date of termination of
employment, except in the case of retirement, death or disability.
b. Option Rights Upon Retirement. If the Optionee retires
from the employment of the Corporation or any affiliate or subsidiary in
accordance with the Corporation's retirement policy of the Corporation or
any affiliate or subsidiary and prior to his complete exercise of the
Option, the Board of Directors or the Stock Option Committee of the
Corporation, in its discretion, may allow the Option to be fully exercised,
at any time within one year after the date of such termination, to the
extent that the Optionee was entitled to exercise the Option at the date of
his retirement.
c. Option Rights Upon Disability. If an Optionee becomes
disabled while employed by the Corporation or any affiliate or subsidiary
and prior to his complete exercise of the Option, the Board of Directors
or the Stock Option Committee of the Corporation, in its discretion,
may allow the Option to be fully exercised, at any time within one year
after the date of such termination, to the extent that the Optionee was
entitled to exercise the Option at the date of his disability.
d. Death of the Optionee. In the event that an Optionee
shall die while he is an employee of the Corporation (or within three (3)
months after the termination of such employment) and prior to his complete
exercise of the Option, the Option may be exercised in whole or in part
only: (i) by the Optionee's estate or on behalf of such person or persons
to whom the Optionee's rights pass under his Will or by the laws of descent
and distribution, (ii) to the extent that the Optionee was entitled to
exercise the Option at the date of his death, and (iii) prior to the
expiration of the term of the Option, or within one year after the date of
death, whichever is earlier.
SECTION 6. Transfer of Option; Successors And Assigns.
This Agreement (including the Option) and all rights hereunder
shall not be transferable at any time without the prior written consent of
the Corporation. This Agreement and all the rights hereunder shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors, approved assigns and approved transferees.
SECTION 7. Employment of Optionee. Neither the adoption of
the 1997 Plan nor the granting of any Option shall confer upon the Optionee
any right to continued employment, nor shall it interfere in any way with
the right of the Company to terminate the employment of Optionee at any
time, with or without cause.
SECTION 8. Notices. All notices or other communications
which are required or permitted hereunder shall be in writing and
sufficient if delivered personally or sent by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
If the Corporation, to:
Lexington Healthcare Group, Inc.
35 Park Place
New Britain, Connecticut 06052
Attention: Harry N. Dermer, President
With a copy to:
Arthur Marcus, Esq.
Gersten, Savage, Kaplowitz & Fredericks, LLP
101 East 52nd Street, 9th Floor
New York, NY 10022
If to the Optionee:
to the address written below the Optionee's signature below;
or to such other address as the party to whom notice is to be given may
have furnished to the other party in writing in accordance herewith. If
mailed as aforesaid, any such communication shall be deemed to have been
given on the third business day following the day on which the piece of
mail containing such communication is posted.
SECTION 9. Governing Law. This Agreement shall be governed
by, and construed in accordance with the laws of the State of Connecticut.
SECTION 10. Entire Agreement. This Agreement contains the
entire agreement between the parties hereto with respect to the
transactions contemplated herein and supersedes all previously written or
oral negotiations, commitments, representations and agreement.
SECTION 11. Amendments and Modifications. This Agreement, or
any provision hereof, may not be amended, changed or modified without the
prior written consent of each of the parties hereto.
SECTION 12. Termination. In addition to the termination
provisions set forth in Section 1 hereof, the Option shall terminate and
the Option shall no longer be exercisable after December 16, 2003.
[Signatures on following page]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Option
Agreement to be executed and delivered as of the date first above written.
LEXINGTON HEALTHCARE GROUP, INC.
By: /s/ Harry Dermer
Harry Dermer
President
AGREED TO AND ACCEPTED BY:
Jack Friedler ###-##-####
Optionee Name and Social Security Number
1041 Church Hill Rd.
Optionee Address
Fairfield, CT 06430
EXHIBIT 6
OPTION AGREEMENT
OPTION AGREEMENT, dated December 17, 1997, between Lexington
Healthcare Group, Inc., a Delaware corporation (the "Corporation") and
Harry Dermer (the "Optionee").
WHEREAS, the Corporation has adopted a 1997 Stock Option Plan
(the "Option Plan").
WHEREAS, the Corporation desires to grant to the Optionee,
pursuant to the Option Plan, the right and option to purchase shares (the
"Option Shares") of Common Stock, $.0l par value per share (the "Common
Stock"), of the Corporation, on the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the receipt of $1.00 and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
SECTION 1. Option to Purchase Common Stock.
a. Subject to Section 12 hereof, the Corporation hereby
grants to the Optionee, pursuant to the Option Plan, an option (the
"Option") to purchase from the Corporation Option Shares, at a purchase
price of $2.625 per Option Share (the "Option Price"). The Optionee's
right and option to purchase the Option Shares shall vest annually
commencing December 17, 1998 as follows: (i) 20,000 Option Shares vest on
December 17, 1998; (ii) 20,000 Option Shares vest on December 17, 1999; and
(iii) 20,000 Option Shares vest on December 17, 2000 (each an
"Installment") at the Option Price, so long as the Optionee is
employed by the Corporation. Said right shall be cumulative. In the event
that the Optionee's employment with the Corporation terminates prior to
December 17 of any year, the Optionee shall not have the right or option to
purchase any part of an Installment which would have otherwise vested on
such December 17. With respect to the Option, the "Option Period" shall
commence on the date hereof and terminate on December 16, 2003.
b. The Option may be exercised by the Optionee by delivery
to the Corporation, at any time commencing December 17, 1998, of a written
notice (the "Option Notice"), which Option Notice shall state the
Optionee's intention to exercise the Option, the date on which the Optionee
proposes to purchase the Option Shares (the "Closing Date") and the number
of Option Shares to be purchased on the Closing Date, which Closing Date
shall be no later than 30 days nor earlier than 10 days following the date
of the Option Notice. Upon receipt by the Corporation of an Option Notice
from the Optionee, the Optionee shall be obligated to purchase that number
of Option Shares to be purchased on the Closing Date set forth in the
Option Notice.
c. The purchase and sale of Option Shares acquired
pursuant to the terms of this Option Agreement shall be made on the Closing
Date at the offices of the Corporation. Delivery of the stock certificate
or other instrument registered in the name of the Optionee, evidencing the
Option Shares being purchased on the Closing Date, shall be made by the
Corporation to the Optionee on the Closing Date against the delivery to the
Corporation of a certified or bank check in the full amount of the
aggregate purchase price therefor.
SECTION 2. Representations and Warranties of The Holder. The
Optionee hereby represents and warrants to the Corporation that in the event the
Optionee acquires any Option Shares, such Option Shares will be acquired for his
own account, for investment and not with a view to the distribution thereof. The
Optionee understands that except as set forth in Section 6 hereof, the Option
Shares will not be registered under the Securities Act of 1933, as amended (the
"Securities Act"), and that they must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act or the transaction is
exempt from registration. The certificate or certificates representing any
Option Shares shall bear the following restrictive legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933; OR (ii) TO THE EXTENT APPLICABLE,
RULE 144 UNDER SUCH ACT (OR SIMILAR RULE UNDER THE SECURITIES
ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY
SATISFACTORY TO COUNSEL FOR THE ISSUER, THAN AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT IS AVAILABLE."
SECTION 3. Reorganization; Mergers; Sales; Etc.
a. If, at any time during the Option Period, there shall
be any capital reorganization, reclassification of Common Stock (other than
a change in par value or from par value to no par value or from no par
value to par value or as a result of a stock dividend or subdivision,
split-up or combination of shares), or the consolidation or merger of the
Corporation with or into another corporation that does not result in a
"Change of Control" (as such term is hereinafter defined), then the
unexercised and fully vested portion of this Option shall, after such
reorganization, reclassification, consolidation or merger, be exercisable
for the kind and number of shares of stock or other securities or property
of the Corporation or of the corporation resulting from such consolidation
or surviving such merger to which the Optionee would have been entitled if
the Optionee had held shares of Common Stock issuable upon the exercise
hereof immediately prior to such reorganization, reclassification,
consolidation, merger or sale.
b. If at any time during the Option Period, there shall be
any Change in Control, then (i) all options under this Option shall become
vested, accelerate and become immediately exercisable as of the date
immediately preceding the effective date of the Change of Control, and (ii)
the unexercised and fully vested Option shall, after such Change in
Control, be exercisable for the kind and number of shares of stock of the
Corporation or the Corporation resulting from such consolidation of
surviving such merger or to which such properties and assets shall have
been sold to which the Optionee would have been entitled if the Optionee
had held all of the Option Shares immediately prior to such Change of
Control. A change of control shall be deemed to have occurred when:
(i) A person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, becomes, or obtains the
right to become, the beneficial owner of the Corporation's securities
having 30% or more of the combined voting power of then outstanding
securities of the Corporation that may be cast for the election of
directors of the Corporation;
(ii) At any time, a majority of the Board-nominated
slate of candidates for the Board is not elected;
(iii) The Corporation consummates a merger in which it
is not the surviving entity;
(iv) Substantially all of the Corporation's assets
are sold; or
(v) The Corporation's Stockholders approve the
dissolution or liquidation of Employer.
c. The provisions of this Section 3 shall similarly apply
to successive reorganizations, reclassifications, consolidations, mergers
and sales.
SECTION 4. Adjustment of Option Shares and Option Price.
a. The number of Option Shares subject to this Option
during the Option Period shall be cumulative as to all prior dates of
calculation and shall be adjusted for any stock dividend, subdivision,
split-up or combination of Common Stock.
b. The Option Price shall be subject to adjustment from
time to time as follows:
If, at any time during the Option Period, the number of shares of
Common Stock outstanding is altered by a stock dividend payable in shares
of Common Stock or by a subdivision or split-up or combination of shares of
Common Stock, then, immediately following the record date fixed for the
determination of holders of shares of Common Stock, entitled to receive
such subdivision or split-up or combination, the Option Price shall be
appropriately increased or decreased and the number of shares of Common
Stock issuable upon the exercise hereof shall be increased or decreased,
pursuant to the formula set forth in Section 4.c.
c. Upon each adjustment of the Option Price pursuant to
the provisions of this Section 4, the number of shares of Common Stock
issuable upon the exercise hereof shall be adjusted to the nearest full
share of Common Stock by multiplying a number equal to the Option Price in
effect immediately prior to such adjustment by the number of shares of
Common Stock issuable immediately prior to such adjustment and dividing the
product so obtained by the adjusted Option Price.
SECTION 5. Termination of the Options.
a. Termination of Options in General. Subject to
subsections (b)-(d) of this Section, the Option granted hereby shall
terminate and the Option shall no longer be exercisable after the earlier
of December 16, 2003 or three months after the date of termination of
employment, except in the case of retirement, death or disability.
b. Option Rights Upon Retirement. If the Optionee retires
from the employment of the Corporation or any affiliate or subsidiary in
accordance with the Corporation's retirement policy of the Corporation or
any affiliate or subsidiary and prior to his complete exercise of the
Option, the Board of Directors or the Stock Option Committee of the
Corporation, in its discretion, may allow the Option to be fully exercised,
at any time within one year after the date of such termination, to the
extent that the Optionee was entitled to exercise the Option at the date of
his retirement.
c. Option Rights Upon Disability. If an Optionee becomes
disabled while employed by the Corporation or any affiliate or subsidiary
and prior to his complete exercise of the Option, the Board of Directors
or the Stock Option Committee of the Corporation, in its discretion,
may allow the Option to be fully exercised, at any time within one year
after the date of such termination, to the extent that the Optionee was
entitled to exercise the Option at the date of his disability.
d. Death of the Optionee. In the event that an Optionee
shall die while he is an employee of the Corporation (or within three (3)
months after the termination of such employment) and prior to his complete
exercise of the Option, the Option may be exercised in whole or in part
only: (i) by the Optionee's estate or on behalf of such person or persons
to whom the Optionee's rights pass under his Will or by the laws of descent
and distribution, (ii) to the extent that the Optionee was entitled to
exercise the Option at the date of his death, and (iii) prior to the
expiration of the term of the Option, or within one year after the date of
death, whichever is earlier.
SECTION 6. Transfer of Option; Successors And Assigns.
This Agreement (including the Option) and all rights hereunder
shall not be transferable at any time without the prior written consent of
the Corporation. This Agreement and all the rights hereunder shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors, approved assigns and approved transferees.
SECTION 7. Employment of Optionee. Neither the adoption of the
1997 Plan nor the granting of any Option shall confer upon the Optionee any
right to continued employment, nor shall it interfere in any way with the right
of the Company to terminate the employment of Optionee at any time, with or
without cause.
SECTION 8. Notices. All notices or other communications which
are required or permitted hereunder shall be in writing and sufficient if
delivered personally or sent by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If the Corporation, to:
Lexington Healthcare Group, Inc.
35 Park Place
New Britain, Connecticut 06052
Attention: Harry N. Dermer, President
With a copy to:
Arthur Marcus, Esq.
Gersten, Savage, Kaplowitz & Fredericks, LLP
101 East 52nd Street, 9th Floor
New York, NY 10022
If to the Optionee:
to the address written below the Optionee's signature below;
or to such other address as the party to whom notice is to be given may
have furnished to the other party in writing in accordance herewith. If
mailed as aforesaid, any such communication shall be deemed to have been
given on the third business day following the day on which the piece of
mail containing such communication is posted.
SECTION 9. Governing Law. This Agreement shall be governed
by, and construed in accordance with the laws of the State of Connecticut.
SECTION 10. Entire Agreement. This Agreement contains the
entire agreement between the parties hereto with respect to the
transactions contemplated herein and supersedes all previously written or
oral negotiations, commitments, representations and agreement.
SECTION 11. Amendments and Modifications. This Agreement, or
any provision hereof, may not be amended, changed or modified without the
prior written consent of each of the parties hereto.
SECTION 12. Termination. In addition to the termination
provisions set forth in Section 1 hereof, the Option shall terminate and
the Option shall no longer be exercisable after December 16, 2003.
[Signatures on following page]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Option
Agreement to be executed and delivered as of the date first above written.
LEXINGTON HEALTHCARE GROUP, INC.
By: /s/ Jack Friedler C.E.O.
Jack Friedler
Chief Executive Officer
AGREED TO AND ACCEPTED BY:
Harry Dermer ###-##-####
Optionee Name and Social Security Number
725 Town Hill Rd.
Optionee Address
New Hartford, CT 06057
EXHIBIT 7
OPTION AGREEMENT
OPTION AGREEMENT, dated December 17, 1997, between Lexington
Healthcare Group, Inc., a Delaware corporation (the "Corporation") and Mary
Archambault (the "Optionee").
WHEREAS, the Corporation has adopted a 1997 Stock Option Plan
(the "Option Plan").
WHEREAS, the Corporation desires to grant to the Optionee,
pursuant to the Option Plan, the right and option to purchase shares (the
"Option Shares") of Common Stock, $.0l par value per share (the "Common
Stock"), of the Corporation, on the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the receipt of $1.00 and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
SECTION 1. Option to Purchase Common Stock.
a. Subject to Section 12 hereof, the Corporation hereby
grants to the Optionee, pursuant to the Option Plan, an option (the
"Option") to purchase from the Corporation Option Shares, at a purchase
price of $2.625 per Option Share (the "Option Price"). The Optionee's
right and option to purchase the Option Shares shall vest annually
commencing December 17, 1998 as follows: (i) 13,334 Option Shares vest on
December 17, 1998; (ii) 13,333 Option Shares vest on December 17, 1999; and
(iii) 13,333 Option Shares vest on December 17, 2000 (each an
"Installment") at the Option Price, so long as the Optionee is
employed by the Corporation. Said right shall be cumulative. In the event
that the Optionee's employment with the Corporation terminates prior to
December 17 of any year, the Optionee shall not have the right or option to
purchase any part of an Installment which would have otherwise vested on
such December 17. With respect to the Option, the "Option Period" shall
commence on the date hereof and terminate on December 16, 2003.
b. The Option may be exercised by the Optionee by delivery
to the Corporation, at any time commencing December 17, 1998, of a written
notice (the "Option Notice"), which Option Notice shall state the
Optionee's intention to exercise the Option, the date on which the Optionee
proposes to purchase the Option Shares (the "Closing Date") and the number
of Option Shares to be purchased on the Closing Date, which Closing Date
shall be no later than 30 days nor earlier than 10 days following the date
of the Option Notice. Upon receipt by the Corporation of an Option Notice
from the Optionee, the Optionee shall be obligated to purchase that number
of Option Shares to be purchased on the Closing Date set forth in the
Option Notice.
c. The purchase and sale of Option Shares acquired
pursuant to the terms of this Option Agreement shall be made on the Closing
Date at the offices of the Corporation. Delivery of the stock certificate
or other instrument registered in the name of the Optionee, evidencing the
Option Shares being purchased on the Closing Date, shall be made by the
Corporation to the Optionee on the Closing Date against the delivery to the
Corporation of a certified or bank check in the full amount of the
aggregate purchase price therefor.
SECTION 2. Representations and Warranties of The Holder. The
Optionee hereby represents and warrants to the Corporation that in the event the
Optionee acquires any Option Shares, such Option Shares will be acquired for his
own account, for investment and not with a view to the distribution thereof. The
Optionee understands that except as set forth in Section 6 hereof, the Option
Shares will not be registered under the Securities Act of 1933, as amended (the
"Securities Act"), and that they must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act or the transaction is
exempt from registration. The certificate or certificates representing any
Option Shares shall bear the following restrictive legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933; OR (ii) TO THE EXTENT APPLICABLE,
RULE 144 UNDER SUCH ACT (OR SIMILAR RULE UNDER THE SECURITIES
ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY
SATISFACTORY TO COUNSEL FOR THE ISSUER, THAN AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT IS AVAILABLE."
SECTION 3. Reorganization; Mergers; Sales; Etc.
a. If, at any time during the Option Period, there shall
be any capital reorganization, reclassification of Common Stock (other than
a change in par value or from par value to no par value or from no par
value to par value or as a result of a stock dividend or subdivision,
split-up or combination of shares), or the consolidation or merger of the
Corporation with or into another corporation that does not result in a
"Change of Control" (as such term is hereinafter defined), then the
unexercised and fully vested portion of this Option shall, after such
reorganization, reclassification, consolidation or merger, be exercisable
for the kind and number of shares of stock or other securities or property
of the Corporation or of the corporation resulting from such consolidation
or surviving such merger to which the Optionee would have been entitled if
the Optionee had held shares of Common Stock issuable upon the exercise
hereof immediately prior to such reorganization, reclassification,
consolidation, merger or sale.
b. If at any time during the Option Period, there shall be
any Change in Control, then (i) all options under this Option shall become
vested, accelerate and become immediately exercisable as of the date
immediately preceding the effective date of the Change of Control, and (ii)
the unexercised and fully vested Option shall, after such Change in
Control, be exercisable for the kind and number of shares of stock of the
Corporation or the Corporation resulting from such consolidation of
surviving such merger or to which such properties and assets shall have
been sold to which the Optionee would have been entitled if the Optionee
had held all of the Option Shares immediately prior to such Change of
Control. A change of control shall be deemed to have occurred when:
(i) A person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, becomes, or obtains the
right to become, the beneficial owner of the Corporation's securities
having 30% or more of the combined voting power of then outstanding
securities of the Corporation that may be cast for the election of
directors of the Corporation;
(ii) At any time, a majority of the Board-nominated
slate of candidates for the Board is not elected;
(iii) The Corporation consummates a merger in which it
is not the surviving entity;
(iv) Substantially all of the Corporation's assets
are sold; or
(v) The Corporation's Stockholders approve the
dissolution or liquidation of Employer.
c. The provisions of this Section 3 shall similarly apply
to successive reorganizations, reclassifications, consolidations, mergers
and sales.
SECTION 4. Adjustment of Option Shares and Option Price.
a. The number of Option Shares subject to this Option
during the Option Period shall be cumulative as to all prior dates of
calculation and shall be adjusted for any stock dividend, subdivision,
split-up or combination of Common Stock.
b. The Option Price shall be subject to adjustment from
time to time as follows:
If, at any time during the Option Period, the number of shares of
Common Stock outstanding is altered by a stock dividend payable in shares
of Common Stock or by a subdivision or split-up or combination of shares of
Common Stock, then, immediately following the record date fixed for the
determination of holders of shares of Common Stock, entitled to receive
such subdivision or split-up or combination, the Option Price shall be
appropriately increased or decreased and the number of shares of Common
Stock issuable upon the exercise hereof shall be increased or decreased,
pursuant to the formula set forth in Section 4.c.
c. Upon each adjustment of the Option Price pursuant to
the provisions of this Section 4, the number of shares of Common Stock
issuable upon the exercise hereof shall be adjusted to the nearest full
share of Common Stock by multiplying a number equal to the Option Price in
effect immediately prior to such adjustment by the number of shares of
Common Stock issuable immediately prior to such adjustment and dividing the
product so obtained by the adjusted Option Price.
SECTION 5. Termination of the Options.
a. Termination of Options in General. Subject to
subsections (b)-(d) of this Section, the Option granted hereby shall
terminate and the Option shall no longer be exercisable after the earlier
of December 16, 2003 or three months after the date of termination of
employment, except in the case of retirement, death or disability.
b. Option Rights Upon Retirement. If the Optionee retires
from the employment of the Corporation or any affiliate or subsidiary in
accordance with the Corporation's retirement policy of the Corporation or
any affiliate or subsidiary and prior to his complete exercise of the
Option, the Board of Directors or the Stock Option Committee of the
Corporation, in its discretion, may allow the Option to be fully exercised,
at any time within one year after the date of such termination, to the
extent that the Optionee was entitled to exercise the Option at the date of
his retirement.
c. Option Rights Upon Disability. If an Optionee becomes
disabled while employed by the Corporation or any affiliate or subsidiary
and prior to his complete exercise of the Option, the Board of Directors
or the Stock Option Committee of the Corporation, in its discretion,
may allow the Option to be fully exercised, at any time within one year
after the date of such termination, to the extent that the Optionee was
entitled to exercise the Option at the date of his disability.
d. Death of the Optionee. In the event that an Optionee
shall die while he is an employee of the Corporation (or within three (3)
months after the termination of such employment) and prior to his complete
exercise of the Option, the Option may be exercised in whole or in part
only: (i) by the Optionee's estate or on behalf of such person or persons
to whom the Optionee's rights pass under his Will or by the laws of descent
and distribution, (ii) to the extent that the Optionee was entitled to
exercise the Option at the date of his death, and (iii) prior to the
expiration of the term of the Option, or within one year after the date of
death, whichever is earlier.
SECTION 6. Transfer of Option; Successors And Assigns.
This Agreement (including the Option) and all rights hereunder
shall not be transferable at any time without the prior written consent of
the Corporation. This Agreement and all the rights hereunder shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors, approved assigns and approved transferees.
SECTION 7. Employment of Optionee. Neither the adoption of the
1997 Plan nor the granting of any Option shall confer upon the Optionee any
right to continued employment, nor shall it interfere in any way with the right
of the Company to terminate the employment of Optionee at any time, with or
without cause.
SECTION 8. Notices. All notices or other communications which
are required or permitted hereunder shall be in writing and sufficient if
delivered personally or sent by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If the Corporation, to:
Lexington Healthcare Group, Inc.
35 Park Place
New Britain, Connecticut 06052
Attention: Harry N. Dermer, President
With a copy to:
Arthur Marcus, Esq.
Gersten, Savage, Kaplowitz & Fredericks, LLP
101 East 52nd Street, 9th Floor
New York, NY 10022
If to the Optionee:
to the address written below the Optionee's signature below;
or to such other address as the party to whom notice is to be given may
have furnished to the other party in writing in accordance herewith. If
mailed as aforesaid, any such communication shall be deemed to have been
given on the third business day following the day on which the piece of
mail containing such communication is posted.
SECTION 9. Governing Law. This Agreement shall be governed
by, and construed in accordance with the laws of the State of Connecticut.
SECTION 10. Entire Agreement. This Agreement contains the
entire agreement between the parties hereto with respect to the
transactions contemplated herein and supersedes all previously written or
oral negotiations, commitments, representations and agreement.
SECTION 11. Amendments and Modifications. This Agreement,
or any provision hereof, may not be amended, changed or modified without
the prior written consent of each of the parties hereto.
SECTION 12. Termination. In addition to the termination
provisions set forth in Section 1 hereof, the Option shall terminate and
the Option shall no longer be exercisable after December 16, 2003.
[Signatures on following page]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Option
Agreement to be executed and delivered as of the date first above written.
LEXINGTON HEALTHCARE GROUP, INC.
By: /s/ Harry Dermer
Harry Dermer
President
AGREED TO AND ACCEPTED BY:
/s/ Mary Archambault ###-##-####
Optionee Name and Social Security Number
230 Geraldine Drive
Optionee Address
Coventry, CT 06238
