EXHIBIT 10.13
PUT/CALL AGREEMENT
THIS PUT/CALL AGREEMENT ("Agreement") is entered into as of August 11,
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1998, by and between Harborside Healthcare Corporation, a Delaware corporation
(the "Company"), and Stephen L. Guillard (the "Executive").
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WHEREAS, the Company and HH Acquisition Corp., a Delaware Corporation
("MergerCo"), have entered into an Agreement and Plan of Merger, dated as of
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April 15, 1998 (the "Merger Agreement") pursuant to which, upon the Effective
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Time of the Merger (each as defined below), 177,688 shares of Common Stock, par
value $.01 per share, of the Company (the "Common Stock") held by the Executive
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will be converted into the right to retain the same number of shares of Class A
Common Stock of the Company ("Management Rollover Stock");
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WHEREAS, pursuant to Section 2.4 of the Merger Agreement, the
Executive has elected to retain options to purchase up to 0 shares of Common
Stock, which upon the Effective Time of the Merger, will become exercisable into
shares of Class A Common Stock ("Management Rollover Options" and, when and if
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such Management Rollover Options are exercised, the "Management Rollover Option
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Shares"); and
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WHEREAS, the Executive and the Company are entering into an Employment
Agreement (the "Employment Agreement") of even date herewith;
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WHEREAS, the parties desire to provide for certain provisions relating
to the repurchase of the Management Rollover Stock and Management Rollover
Option Shares (collectively, the "Management Rollover Securities") following
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certain events.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
parties hereto agree as follows:
1. Certain Definitions.
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For purposes of this Agreement:
"Approved Sale" means a transaction or a series of related
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transactions which results in a bona fide, unaffiliated change of economic
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beneficial ownership of the Company or its business of greater than 50%
(disregarding for this purpose any disparate voting rights attributable to the
outstanding stock of the Company), whether pursuant to the sale of the stock of
the Company, the sale of the assets of the Company, or a merger or consolidation
(other than a sale of stock by an Initial Stockholder to (i) another Initial
Stockholder or affiliate thereof, or (ii) a non-U.S. entity with respect to
which an Initial Stockholder or affiliate thereof has an administrative
relationship).
"Cause" shall have the meaning ascribed to that term in the Employment
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Agreement.
"Cost" means $25.00.
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"Disability" has the meaning set forth in the Employment Agreement.
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"Effective Time" means the time at which the Merger becomes effective
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as specified in the Merger Agreement.
"Employment Agreement" means the Employment Agreement between the
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Company and the Executive dated as of the date hereof.
"Fair Market Value" means the value of a Management Rollover Security,
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as of the Termination Date, calculated pursuant to Section 5 hereof.
"Fiscal Year" means the fiscal year of the Company.
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"Good Reason" shall have the meaning ascribed to that term in the
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Employment Agreement.
"Initial Public Offering" means the sale of any of the common stock of
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the Company pursuant to a registration statement that has been declared
effective under the Securities Act of 1933, as amended, if as a result of such
sale (i) the Company becomes a reporting company under Section 12(b) or 12(g) of
the Securities Exchange Act of 1934, as amended, and (ii) such stock is traded
on the New York Stock Exchange or the American Stock Exchange, or is quoted on
the Nasdaq National Market System or is traded or quoted on any other national
stock exchange or national securities system.
"Initial Stockholders" means the stockholders of the Company who
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became stockholders as of the Effective Time (other than any such stockholders
who are also employees of the Company prior to the Effective Time) and any
transferees of such stockholders prior to an Initial Public Offering or an
Approved Sale.
"Investors" shall mean those entities set forth on Schedule 1 of the
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Merger Agreement.
"Merger" means the merger of MergerCo into the Company pursuant to the
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Merger Agreement.
"Retirement" shall have the meaning ascribed to that term in the
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Employment Agreement.
"Subsidiary" means any joint venture, corporation, partnership or
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other entity as to which the Company, whether directly or indirectly, has more
than 50% of the (i) voting rights or (ii) rights to capital or profits.
"Termination Date" means the date on which the Executive ceases to be
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employed by the Company for any reason.
Certain other items are defined elsewhere in this Agreement.
2. Call Provisions -- Management Rollover Securities.
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In the event that the Executive ceases to be employed by the Company
for any reason prior to an Initial Public Offering or an Approved Sale, the
Company, at any time during the sixty (60) day period following the Termination
Date (the "Repurchase Period"), shall have a one-time right (the "Repurchase
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Right") to purchase all, but not less than all, of the Management Rollover
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Securities. The purchase price for each Management Rollover Security shall
equal Fair Market Value, or, if the Executive is terminated for Cause, the lower
of Fair Market Value or Cost. If the Company elects to purchase the Management
Rollover Securities, it shall notify the Executive at or before the end of the
Repurchase Period of such election and the purchase price shall be paid in cash
at a time set by the Company (the "Repurchase Date") within thirty (30) days
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after the end of the Repurchase Period, provided that the Executive has
presented to the Company a stock certificate or certificates evidencing the
Management Rollover Securities duly endorsed for transfer (the "Endorsed
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Certificates"). If the Executive fails to deliver the Endorsed Certificates,
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the Management Rollover Securities represented thereby shall be deemed to have
been purchased upon (i) the payment by the Company of the purchase price to the
Executive or his permitted transferee or (ii) notice to the Executive or such
permitted transferee that the Company is holding the purchase price for the
account of the Executive or such permitted transferee, and upon such payment or
notice the Executive and such permitted transferee will have no further rights
in or to such Management Rollover Securities.
3. Put Provisions -- Management Rollover Securities.
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If the Executive's employment by the Company is terminated prior to an
Initial Public Offering or an Approved Sale (i) by the Company without Cause or
by the Executive for any reason (provided that the Executive shall not become
employed by a competitor of the Company as determined in good faith by the Board
of Directors of the Company); (ii) due to the Executive's Retirement, death or
Disability; or (iii) by the Company with Cause after August 11, 2001, and the
Company has not exercised its Repurchase Right, the Executive or his or her
representative, during the sixty (60) day period immediately following the
Repurchase Period, shall have a one-time right to require HBRS Limited, a Cayman
Islands corporation ("HBRS") to purchase all, but not less than all, of the
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Management Rollover Securities, unless, by the thirtieth (30th) day after HBRS
and the Company have received notice of the Executive's election to exercise his
put right to HBRS, the Company has notified the Executive and HBRS of its
election, exercisable at the discretion of the Company, to purchase the
Management Rollover Securities on the same terms as such Management Rollover
Securities were offered to HBRS, in which case such Management Rollover
Securities will be acquired by the Company. The purchase price shall be at Fair
Market Value, unless the employment of the Executive is terminated by the
Company without Cause prior to August 11, 2000, or for any other reason other
than Good Reason, Retirement, death, or Disability prior to August 11, 2001, in
which case the purchase price will be the lower of Fair Market Value or Cost.
The purchase price shall be paid in cash on the thirtieth (30th) day after HBRS
and the Company have received notice of the Executive's election to exercise his
put right (the "Put Date"), provided that HBRS or the
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Company, as the case may be, need not pay the purchase price until such later
time that the Executive presents to the Company the Endorsed Certificates.
4. Put/Call Provisions -- Management Rollover Options.
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In the event that the Executive exercises a Management Rollover Option
following the Executive's Termination Date in accordance with the provisions
governing such Management Rollover Option, the Company may elect to purchase any
Management Rollover Option Shares so acquired at any time by notice to such
effect during the 60 days following the date of exercise (the "Exercise Date"),
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and the Executive may elect to put said shares to HBRS (subject to the right of
the Company to purchase the Management Rollover Option Shares pursuant to the
provisions hereof) by notice to such effect during the following 60-day period.
Payment shall be made to the Executive in the amounts and subject to the terms
set forth in Sections 2 and 3 hereof (substituting the Exercise Date for the
Termination Date).
5. Determination Of Fair Market Value.
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The Fair Market Value of the Management Rollover Securities to be
purchased by the Company or HBRS, as the case may be, hereunder shall be
determined in good faith by the Company's Board of Directors. The Board of
Directors shall make its determination of Fair Market Value annually (the
"Annual Valuation") promptly after the completion of the Company's audited
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financial statements for the year then completed and such determination shall
remain in effect until the Board of Directors makes the next Annual Valuation.
Notwithstanding the foregoing, if the Board of Directors or an investment banker
or appraiser appointed by the Company makes a determination of Fair Market Value
subsequent to an Annual Valuation, such subsequent determination shall supersede
the Annual Valuation then in effect and shall establish the Fair Market Value
until the next Annual Valuation. The Fair Market Value shall be based on an
assumed sale of 100% of the outstanding capital stock of the Company (without
reduction for minority interest or lack of liquidity of the Management Rollover
Securities or similar discount) and determined in a manner consistent with the
manner in which the purchase price to be paid by the Investors pursuant to the
Recapitalization Agreement was determined. If such determination of the Fair
Market Value is challenged by the Executive, a mutually acceptable investment
banker or appraiser shall establish the Fair Market Value as of the date of
valuation referenced in the Annual Valuation or a subsequent determination. The
investment banker's or appraiser's determination shall be conclusive and binding
on the Company and the Executive. Upon request by the Executive the Company
shall make available to the Executive a description of the methodology employed
by the investment banker or appraiser in making the determination of Fair Market
Value. The Company shall bear all costs incurred in connection with the
services of such investment banker or appraiser unless (i) the Fair Market Value
established by such investment banker or appraiser is less than or equal to 120%
but more than 110% of the determination challenged by the Executive, in which
case the Executive shall promptly pay or reimburse the Company fifty percent
(50%) for such costs, or (ii) the Fair Market Value established by such
investment banker or appraiser is equal to or less than 110% of the
determination challenged by the Executive, in which case the Executive shall
promptly pay or reimburse the Company for one hundred percent (100%) of such
costs. If the Executive and the
Company cannot agree upon an investment banker or appraiser, they shall each
choose an investment banker or appraiser and the two investment bankers or
appraisers shall then choose a third investment banker or appraiser who shall
establish the Fair Market Value.
6. Additional Provisions.
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a. Employment with Subsidiary. The Executive shall not be considered
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to have ceased to be employed by the Company for purposes of this Agreement if
he or she continues to be employed by the Company or a Subsidiary, or by a
company of which the Company is a Subsidiary.
b. Non-Transferability of Interest. The Executive agrees not to
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transfer any Management Rollover Securities unless the prospective transferee
has entered into a letter agreement substantially similar to this Agreement and
in form and substance acceptable to the Company.
c. Legend. Any transferee of the Management Rollover Securities
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shall be bound by the provisions of this Agreement, and each certificate
representing one or more Management Rollover Securities shall bear a legend
clearly stating such restriction.
d. Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of the State of New York, without regard to
principles of conflicts of law.
e. Counterparts. This Agreement may be executed in two counterparts,
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each of which shall be deemed an original, but both of which taken together
shall constitute one and the same Agreement.
f. Captions. The captions used herein are for ease of reference only
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and shall not define or limit the provisions hereof.
g. Notice. Any notice required or permitted to be given hereunder
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shall be deemed sufficiently given if sent by registered or certified mail,
postage prepaid, addressed to the addressee at his or its address last provided
the sender in writing by the addressee for purposes of receiving notices
hereunder or, unless or until such address shall be so furnished, to the address
indicated opposite his or its signature to this Agreement. Each party may also
provide notice by sending the other party a facsimile at a number provided by
such other party.
h. Modification and No Waiver of Breach. No waiver or modification
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of this Agreement shall be binding unless it is in writing, approved by the
Board of Directors of the Company and signed by the parties hereto. No waiver
by a party of a breach hereof by the other party shall be deemed to constitute a
waiver of a future breach, whether of a similar or dissimilar nature, except to
the extent specifically provided in any written waiver under this Section 6(h).
IN WITNESS WHEREOF, this Agreement is entered into as of the date
first above written.
HARBORSIDE HEALTHCARE CORPORATION
By: /s/ William H. Stephan
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Name:
Title:
EXECUTIVE
/s/ Stephen L. Guillard
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Stephen L. Guillard
Accepted and agreed:
HBRS LIMITED
By: /s/ Sydney J. Coleman
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Name: The Director Ltd.
Title: Director