NEW YORK HEALTH CARE INC. AGREEMENT
AGREEMENT made as of the 31st day of March, 1988 by and among JERRY BRAUN
("Braun"), residing at 929 East 28th Street, Brooklyn, New York 11210, SAMSON
SOROKA ("Soroka"), residing at 1228 East 22nd Street, Brooklyn, New York 11210,
JACOB ROSENBERG ("Rosenberg"), residing at 932 East 29th Street, Brooklyn, New
York 11210, (hereinafter referred to collectively as the "Group A Shareholders")
and HERSH CHITRIK ("Chitrik") residing at 1401 President Street, Brooklyn, New
York 11213 and SID BORENSTEIN ("Borenstein") residing at 1246 East 10th Street,
Brooklyn, New York 11230, each natural person, firm or entity which subsequently
becomes a shareholder of the Company and a signatory to this Agreement
(hereinafter, together with the Group A Shareholders, collectively called the
"Equityholders"), and NEW YORK HEALTH CARE, INC., a New York corporation having
an address at 4211 13th Avenue, Brooklyn, New York 11219 (the "Company").
W I T N E S S E T H :
WHEREAS, the Company has been duly organized and is presently existing
under the laws of the State of New York and is presently authorized to issue 200
shares of voting common stock, without par value ("Common Stock");
WHEREAS, the Group A Shareholders have formed and operated the Company;
WHEREAS, Chitrik and Borenstein are desirous of becoming shareholders of
WHEREAS, it is deemed in the best interests of the Company and the Group A
Shareholders that provision be made for continuity and stability of the business
and policies of the Company, and, to that end, to provide for certain rights and
obligations upon the occurrence of certain events, all to the extent and upon
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereto agree as follows:
1. Equity Interest.
(a) Each Group A Shareholder presently owns the number of shares of
Common Stock set forth opposite his name below, which Common Stock in the
aggregate constitutes all the Company's outstanding Common Stock as of the
date of this Agreement:
Number of shares of
Name of Group A Shareholder Common Stock
(b) Subject to the terms and provisions of this Agreement and upon
fulfillment by Chitrik and Borenstein of their obligations as set forth in
this Agreement, the Group A Shareholders jointly agree to sell and transfer
to Chitrik and Borenstein, and Chitrik and Borenstein jointly agree to
purchase the number of shares of common stock set forth below at opposite
their respective names provided, however, that the Company first applies
for and receives permission for the proposed transfer of shares from the
New York State Department of Health;
Name of Shareholder Number of Shares to be Issued
(c) From and after the date of this Agreement, and provided that
Chitrik and Borenstein have fully complied with their obligations as set
forth in this Agreement, they will each be entitled to receive their
respective distribution, as set forth in the table immediately below, of
distributable earnings from the Company ("Equity Interest"), but shall have
no right to vote in any matter in which shareholders of the Company may
vote until such time as an appropriate application to the New York State
Department of Health for the sale and transfer of shares of common stock of
the Company has been approved:
Name Equity Interest
2. Directors and Officers.
(a) The Directors of the Company shall be Braun, Soroka and Rosenberg
until their successors are elected by the Company's shareholders.
(b) The officers of the Corporation shall be as follows: President
Braun Vice President and Secretary Rosenberg Treasurer Soroka
3. Chitrik's Obligation to Obtain Credit Line. The provision of an Equity
Interest in the Company to Chitrik and Borenstein as provided in this Agreement
is contingent upon Chitrik obtaining for the Corporation a revolving credit line
with a reputable lending institution in an amount not less than Eight Hundred
Thousand ($800,000.00) Dollars. The Credit Line (the "Credit Line") shall be
available at the date of closing of this Agreement. The Credit Line shall bear
interest in an amount not greater than two points above the Citibank prime rate.
agreed to and understood by the shareholders that Braun,, Chitrik, Borenstein,
Rosenberg and Soroka will personally guarantee the Credit Line.
4. Priority Rights of Group A Shareholders to Withdraw.
(a) The parties acknowledge and agree that as of the date hereof the
Corporation has retained and not yet distributed profits of approximately
$365,000 (referred to herein as "Net Accounts Receivable").
(b) It is understood that the Net Accounts Receivable are subject to
verification by the review thereof by a Certified Public Accountant and are
subject to collection by the Company.
(c) The Group A Shareholders are to exclusively receive and have the
right to exclusively withdraw one hundred (100%) percent of any
distributions of the Company until such time as they recover the Net
Account Receivable referred to in subparagraph (a) of this Paragraph 4.
Said distributions are subject to the provisions of subparagraph (b) of
Paragraph 10 herein.
(d) After the Group A Shareholders have been fully paid pursuant to
subparagraph (c) of this Paragraph 4, all
distributions of the Company are to be made on a pro-rata basis based on the
Equity Interest set forth in paragraph 1(b) above.
(e) In the event the Company is dissolved and the Group A Shareholders
have not received the full Net Account Receivable, then, after the Credit
Line is paid back in full, the Group A Shareholders shall be entitled to
the remaining dissolution proceeds to the extent of the balance of the Net
Account Receivable. Any excess remaining thereafter shall be divided on a
pro-rata basis in accordance with the Equity Interests.
5. Business of Company. The Company shall, directly or through its
subsidiaries or affiliates, continue to engage in the businesses of operating
nursing and/or home care agencies and related activities for its own account or
the account of others and such other activities as may be necessary or
appropriate to promote the businesses of the Company.
6. Legend on Certificates. The following statements shall be inscribed on
all certificates representing Shares (or any certificate received with respect
thereto) so long as this Agreement is in effect:
"The shares represented by this certificate are subject to a certain
Equityholders Agreement dated as of March 31, 1988, and any amendments
thereto, a copy of which is on file at the principal office of the
Corporation, and any sale,
pledge, gift, bequest, transfer, assignment, encumbrance or other
disposition of this certificate in violation of said Agreement shall be
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended. The shares have been acquired f or
investment and may not be offered for sale, sold, or otherwise distributed
within the meaning of said Act in the absence of any effective registration
statement f or such shares under said Act or an opinion of counsel that
Registration is not required thereunder."
7. Term of Agreement. This Agreement shall continue in full force and
effect until the earlier of (i) termination by the mutual consent of the
Equityholders, (ii) with respect to a Group A Shareholder who transfers his
shares in accordance with the provisions of Paragraph 7 of this Agreement, upon
the transfer of all such shares, (iii) the dissolution of the corporation, (iv)
an uncured event of default on the part of Chitrik or Borenstein or (v) pursuant
to other provisions of this Agreement.
8. Voluntary Disposition.
(a) Each Group A Shareholder hereby agrees that he shall not sell, or
directly or indirectly transfer, assign, distribute, encumber, pledge or
otherwise dispose of (herein referred to as a "Disposition") any Common
Stock, whether now owned or hereafter acquired, except in compliance with
the provisions of
this Agreement and after the Company has first applied for and then
received permission for the proposed transfer of shares from the New York
State Department of Health. In addition, the Company agrees that it shall
not issue or transfer any Common Stock, unless such Common Stock is
acquired subject to the provisions of this Agreement and after the Company
has first applied for and then received permission for the proposed
transfer of shares from the New York State Department of Health.
(b) In the event a Group A Shareholder proposes to make a Disposition
of any or all of his Common Stock, such Group A Shareholder (hereinafter
called a "Selling Shareholder") shall deliver to the Company and each
Equityholder written notice of his intention to make such Disposition sent
by registered mail, return receipt requested. Such notice shall constitute
an irrevocable offer to sell said Common Stock to the Company for a period
of 30 calendar days and shall set forth the proposed terms of such
Disposition, including the offering price per share of the Common Stock and
the terms of payment. Each non selling Equityholder of the Company shall
have the right for said 30 day period to accept, in proportion to such
Equityholders' Equity Interest, the offer made by the Selling Shareholder
and not purchased by the Company.
(c) In the event that none of the Equityholders accept said offer,
then the Company shall have the right, for a period of 30 calendar days
after the expiration of the 30 day period referred to in subparagraph (b)
of this Paragraph 8, to accept the offer made by the Selling Shareholder
and not purchased by the Shareholders.
(d) If the Company and the non-selling Equityholders do not accept the
Selling Shareholder's offer, the Selling Shareholder may, after the
expiration of the two consecutive 30-day periods referred to in
subparagraphs (b) and (c) of this Paragraph 8, effect a Disposition to any
third party of Common Stock offered to the Company and the other
Equityholders and not purchased hereunder; provided that the Selling
Shareholder may not effect such Disposition on terms which are more
favorable to such a third party than those contained in the original offer
delivered pursuant to subparagraph (c) of this Paragraph 8 without once
again offering said stock for sale pursuant to this Paragraph 6, and
provided, further, that the proposed purchaser of the Common Stock agrees
to become a signatory to this Agreement and be bound by its terms and that
the Company has applied for and received permission for the proposed
transfer of said stock from the New York State Department of Health.
(e) Any transferee of Common Stock hereunder shall, as a condition to
transfer, agree to be bound by the provisions of this Agreement.
(f) The shares of stock issued to the remaining Group A Stockholders
or a third party pursuant to the provisions of this paragraph shall bear a
restrictive endorsement similar to that contained in Paragraph 6
(g) In the event the Selling Shareholder sells all of his shares in
the Company, such Selling Shareholder shall resign as an officer and
director of the Company, whether such sale be to a remaining Equityholder,
the Company, or a third party. If such sale be of all the shares of such
Group A Shareholder and to a third party, the third party shall have the
right to become a director, and an officer of the Company, and a signatory
on the Company bank account. If the sale be of less than all of the shares
of the Selling Shareholder, then a determination as to whether such Selling
Shareholder shall remain either or both of an officer or directors shall be
part of the terms and conditions of the offer to sell, and decided in
(h) Notwithstanding anything to the contrary contained hereinabove,
neither Chitrik and Borenstein may not sell
their respective Equity Interests in the Company without the unanimous consent
of all the Group A Shareholders of the Company.
11. Arbitration. All disputes, differences and controversies arising under
or in connection with this Agreement and not resolved within 120 days of notice
that said dispute, difference or controversy exists, shall be settled and
finally determined by binding arbitration under the then existing rules of the
American Arbitration Association (or such other mechanism as agreed to in
writing by all parties hereto).
13. Professional Review. The Shareholders shall have a right to retain at
their own cost and expense any professional they desire to review any
professional work done for the Company.
14. Bankruptcy In the event that any Equityholder becomes the subject of
any bankruptcy or reorganization, or other proceeding analogous in purpose or
effect, including the employment of a receiver, trustee or liquidator for any
such purpose, the remaining Group A Shareholders shall have the right to
purchase the shares of the Company held by the bankrupt party upon the tender of
the purchase price thereof. Said purchase price shall be the fair market value
of said stock. Said fair market value shall be determined by an expert appraiser
chosen by the Board of Directors, excluding said bankrupt party. A second expert
appraiser shall be
chosen by the bankrupt party and a third expert appraiser shall be chosen by the
two expert appraisers.
15. Broker. The Shareholders jointly and severally represent that they have
not employed any broker, or finder or incurred any liability for any brokerage
fees, commissions,, or finder's fees in connection with the transaction
contemplated by this Agreement.
16. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand or mailed, certified, registered or express
mail, with postage prepaid to the parties at their respective addresses set
forth on the first page of this Agreement or such other place as indicated by
any of the Equityholders, in writing.
17. Severability, Governing Law. If any provision of this Agreement is
determined to be illegal or unenforceable by a court of law having jurisdiction
over the parties, the remaining provisions shall be severed and constitute the
entire agreement of the parties. The Agreement shall be governed by the laws of
the State of New York for agreements made and performed in New York by parties
which are resident in New York.
19. Modification. This Agreement may not be modified or amended except by a
subsequent writing signed b each of the parties. This Agreement, together with
riders, if any, attached hereto and initialled by the Equityholder and the
Company, is the entire agreement of the parties and supersedes all prior
agreements and understandings among the parties concerning the subject matter
20. Benefits of Agreement.
Except as otherwise expressly provided herein, this Agreement shall be
binding upon and inure to the benefit of the Company, each of the Equityholders
and their respective heirs, personal representatives, successors and assigns;
provided,, however, that nothing contained herein shall be construed as granting
any Equityholder the right to transfer his Equity Interest, except as expressly
provided in this Agreement.
21. Headings. The section headings contained herein are for the purposes of
conveniences only and are not intended to define or limit the contents of said
22. Additional Documents. Each party hereto shall cooperate and shall take
such further action and shall execute and deliver such further documents as may
be reasonably requested by
any other party in order to carry out the provisions and purposes of this
23. Counterparts. This Agreement may be executed in one or more
counterparts all of which taken together shall be deemed one original.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
NEW YORK HEALTH CARE, INC.
By: /s/ Jerry Braun /s/ Jerry Braun
Jerry Braun, Pres. JERRY BRAUN
/s/ Jacob Rosenberg /s/ Samson Soroka
- -------------------------------- ------------------------------------
JACOB ROSENBERG SAMSON SOROKA
/s/ Hirsch Chitrik /s/ Sid Borenstein
- -------------------------------- ------------------------------------
HIRSCH CHITRIK SID BORENSTEIN