1
EXHIBIT 2
SAFEGUARD HEALTH ENTERPRISES, INC.
AGREEMENT AMONG STOCKHOLDERS
This Agreement Among Investors (this "Agreement") is entered into this
31st day of January, 2001, by and among those certain parties listed in Schedule
1 attached hereto (individually an "Investor," collectively the "Investors").
WHEREAS, the Investors are stockholders of SafeGuard Health
Enterprises, Inc., a Delaware corporation (the "Company"); and
WHEREAS, the Investors hold certain shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock
of the Company (the "Preferred Stock") issued pursuant to that certain Term
Sheet Agreement, dated as of March 1, 2000, by and among the Company and the
Investors (the "Term Sheet Agreement"); and
WHEREAS, certain of the Investors also hold shares of Common Stock, per
value $.01 per share, of the Company (the "Common Stock"); and
WHEREAS, pursuant to the Term Sheet Agreement, the Investors desire to
enter into this Agreement to set forth certain understandings regarding the
transfer and voting of the shares of Common Stock and Preferred Stock now or
hereafter owned by the Investors;
NOW, THEREFORE, in consideration of the premises and the mutual terms
and conditions set forth in this Agreement, the parties hereto hereby agree as
follows:
ARTICLE I
AGREEMENT STOCK
1.1 Securities Subject Hereto. The provisions of this Agreement shall,
except as hereinafter specifically provided, apply to:
(a) All shares of Common Stock of the Company now owned or hereafter
acquired by any Investor including, without limitation, shares of Common Stock
of the Company issued upon conversion of the Preferred Stock and shares of
Common Stock of the Company issued upon the exercise of any stock options or
warrants;
(b) All shares of Preferred Stock of the Company now owned or hereafter
acquired by any Investor including, without limitation, shares of Preferred
Stock of the Company issued upon conversion of those certain Series A, B, C and
D Convertible Notes issued to the Investors pursuant to the Term Sheet
Agreement;
-1-
2
(c) All shares of capital stock of the Company hereafter acquired by an
Investor in respect of, in lieu of or in exchange for the shares of Common Stock
referred to in Section 1.1(a) above or for the shares of Preferred Stock
referred to in Section 1.1(b) above, whether by reason of any stock split, stock
dividend, reverse split, recapitalization, merger, exchange or otherwise; and
(d) All shares of capital stock of the Company hereafter acquired by
any Investor pursuant to any subscription or rights to acquire additional shares
of capital stock of the Company which subscription or other right to acquire
capital stock of the Company is measured by or attributable to the ownership of
any shares of capital stock made subject to this Agreement by the foregoing
provisions of this Section 1.1.
All the shares of capital stock of the Company described above in this Section
1.1 are hereinafter referred to as "Agreement Stock."
ARTICLE II
PROVISIONS APPLICABLE TO TRANSFERS
2.1 Transfers Subject to Agreement. No Investor shall transfer, assign,
convey, pledge or otherwise encumber any shares of Agreement Stock, whether
voluntarily, involuntarily or by operation of law, except subject to and bound
by the provisions of this Agreement. Any transfer of Agreement Stock must be
conditioned upon the transferor or assignee expressly agreeing in writing to the
terms of this Agreement and acknowledging that the Agreement Stock is subject to
and bound by the provisions of this Agreement. Any certificate evidencing shares
of Agreement Stock transferred by an Investor shall have placed thereon the
restrictive legend described in Article V of this Agreement.
ARTICLE III
VOTING AGREEMENT
3.1 Voting Agreement.
(a) Each Investor hereby agrees to vote all shares of Agreement
Stock held by such Investor to approve an amendment to the Certificate of
Incorporation of the Company increasing the authorized number of shares of
Common Stock of the Company to 40 million or more shares in order to have
sufficient authorized and unissued shares of Common Stock reserved for issuance
upon the conversion of the Preferred Stock issuable to the Investors upon
conversion of the Convertible Notes.
(b) Each Investor hereby agrees not to vote any shares of Agreement
Stock to approve any change in the size of the Board of Directors of the Company
from its current number of seven, whether to increase or decrease such size.
-2-
3
(c) Each Investor hereby agrees to take all actions necessary,
including, without limitation, voting all shares of Agreement Stock held by the
Investor to cause ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to be appointed or elected to the Board of
Directors of the Company as the director elected by the Series B, C and D
Preferred Stock, voting together as a single class, effective as of the date of
this Agreement.
ARTICLE IV
REQUIRED SALE
4.1 Required Sale. In the event that certain of the Investors
consisting of CAI Partners and Company II, L.P., CAI Capital Partners and
Company II, L.P. and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the "Selling Investors") shall determine
to sell or exchange (whether in a business combination or some other form of
transaction) all, but not less than all, of the shares of Agreement Stock held
by such Selling Investors in a bona fide arms-length transaction to a third
party and such transaction satisfies the following conditions:
(a) The proposed transferee has offered to acquire all the outstanding
shares of capital stock of the Company in the transaction;
(b) The transaction has been approved by the Board of Directors of the
Company; and
(c) If the total consideration payable by the proposed transferee for
the acquisition of all the outstanding shares of capital stock of the Company is
less than $30 million, the Company has received a fairness opinion from an
investment banker that the transaction is fair to the stockholders of the
Company from a financial standpoint;
then, upon the written request of the Selling Investors, all the other Investors
(the "Required Sellers") shall (a) sell, transfer and deliver, or cause to be
sold, transferred and delivered, to the proposed transferee, on the same
financial terms and conditions as applicable to the Selling Investors, all
shares of Agreement Stock held by the Required Sellers and (b) if stockholder
approval of the transaction is required, vote all shares of Agreement Stock held
by the Required Sellers to approve the transaction. In the event of a sale
pursuant to this Section 4.1, the transferee shall not be required to acquire
the shares of Agreement Stock subject to the terms of this Agreement and this
Agreement shall terminate upon the consummation of the transaction. The
provisions of this Section 4.1 shall terminate and have no further force or
effect whatsoever from and after six (6) years after the date of this Agreement.
-3-
4
ARTICLE V
RESTRICTIVE LEGEND
5.1 Restrictive Legend. Each certificate representing Agreement Stock
shall have placed thereon a legend in substantially the following form:
THE VOTING AND TRANSFER OF THE SHARES OF STOCK REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO AN AGREEMENT AMONG STOCKHOLDERS DATED
____________, 2000, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE
OF THE COMPANY, AND SUCH SHARES MAY NOT BE VOTED OR SOLD OR OTHERWISE
DISPOSED OF EXCEPT IN STRICT ACCORDANCE WITH THE TERMS OF THAT
AGREEMENT. A COPY OF SUCH AGREEMENT WILL BE FURNISHED WITHOUT CHARGE TO
THE HOLDER OF THIS CERTIFICATE UPON RECEIPT BY THE COMPANY AT ITS
PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE OF A WRITTEN REQUEST
FROM THE HOLDER REQUESTING SUCH COPY.
ARTICLE VI
SPECIFIC PERFORMANCE AND OTHER REMEDIES
6.1 Remedies. The parties hereby declare that it is impossible to
measure in money the damages which will accrue to a party hereto by reason of a
failure of any party hereto to perform any of its obligations under this
Agreement. Therefore, if any party hereto shall institute any action or
proceeding to enforce the provisions hereof, each party hereto against whom such
action or proceeding is brought hereby waives the claim or defense therein that
such party has an adequate remedy of law, and no party shall urge in any such
action or proceeding the claim or defense that such remedy at law exists. Each
party hereby acknowledges that the shares of Agreement Stock are unique chattels
and each party to this Agreement shall be entitled to exercise any and all
available remedies for a violation of any of the terms of this Agreement,
including, but not limited to, the equitable remedy of specific performance as
specified above and injunctive relief.
ARTICLE VII
TERMINATION
7.1 Termination as to an Investor. Notwithstanding anything herein to
the contrary, this Agreement shall terminate as to any Investor effective as of
the date and the time such Investor ceases to own any shares of Agreement Stock.
Upon any such termination, such Investor shall have no further rights or
obligations hereunder except that rights or remedies of such Investor arising
out of the breach of this Agreement by any other party hereto prior to the date
and time of such termination shall not be affected by such termination.
-4-
5
ARTICLE VIII
MISCELLANEOUS
8.1 Notices. All notices, claims, demands and other communications
hereunder shall be in writing and shall be deemed given upon (a) confirmation of
receipt of a facsimile transmission, (b) confirmed delivery by a standard
overnight carrier (c) when delivered by hand or (d) the expiration of five
business days after the day when mailed by registered or certified mail
(postpaid prepaid, return receipt requested), addressed to the Investors at
their respective addresses as shown on the books of the Company.
8.2 Entire Agreement; Amendments. This Agreement sets forth the entire
understanding of the parties and supersedes all prior agreements or
understandings, whether written or oral, with respect to the subject matter
hereof. No terms, conditions, or warranties, other than those contained herein,
and no amendments or modifications hereto, shall be valid unless made in writing
and signed by all parties hereto.
8.3 Binding Effect/Assignability. This Agreement shall extend to and be
binding upon and inure to the benefit of the parties hereto, their respective
heirs, legal representatives, successors and assigns.
8.4 Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provisions shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof with the remaining
provisions remaining in full force and effect and not affected by the illegal,
invalid or unenforceable provision or by severance here from. Furthermore, in
lieu of such illegal, invalid or unenforceable provision there shall be added
automatically as part of this Agreement a provision as similar in terms to such
illegal, invalid, or unenforceable provision as may be possible and still be
legal, valid and enforceable.
8.5 Headings/Captions. The captions to sections and subsections of this
Agreement have been inserted solely for convenience and reference, and shall not
control or effect the meaning or construction of any of the provisions of this
Agreement.
8.6 Waiver; Remedies. Waiver by any party hereto of any breach of or
exercise of any rights under this Agreement shall not be deemed to be a waiver
of similar or other breaches or rights or a future breach of the same duty. The
failure of a party to take any action by reason of any such breach or to
exercise any such right shall not deprive any party of the right to take any
action at any time while such breach or condition giving rise to such right
continues. Except as expressly limited by this Agreement, the parties shall have
all remedies permitted to them by this Agreement or law, and all such remedies
shall be cumulative.
8.7 Attorneys' Fees. If any legal action or other proceeding is brought
for the enforcement of this Agreement, or because of its alleged dispute,
breach, default, or
-5-
6
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that action or proceeding, in
addition to any other relief to which it may be entitled.
8.8 Further Assurances. The parties hereto agree to execute,
acknowledge and deliver to the other any further instruments that may be
reasonably required to give full force and effect to the provisions of this
Agreement; provided, however, that neither party shall be required to deliver
any other instrument which expands its duties, obligations or representations
and warranties, or which diminishes its rights under this Agreement.
8.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
8.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same agreement.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
-6-
7
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
Among Stockholders as of the day and year first written above.
SAFEGUARD HEALTH ENTERPRISES, INC. CAI CAPITAL PARTNERS AND COMPANY
II-C, L.P.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------- By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President ----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Assistant Secretary
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇ ▇▇▇▇▇▇▇ LIFE INSURANCE
COMPANY f/k/a ▇▇▇▇ ▇▇▇▇▇▇▇ MUTUAL
LIFE INSURANCE COMPANY
THE BAILEYS FAMILY TRUST
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.D.S. ----------------------------------------
----------------------------------- Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D.D.S., Trustee --------------------------------------
Title: Managing Director
-------------------------------------
THE ▇▇▇▇▇▇ PARTNERSHIP, LIMITED
PARTNERSHIP ▇▇▇▇ ▇▇▇▇▇▇▇ VARIABLE LIFE
INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------- By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, General Partner ----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
CAI PARTNERS AND COMPANY II, L.P. Title: Authorized Signatory
-------------------------------------
By: CAI PARTNERS GP & CO., L.P.,
GENERAL PARTNER INVESTORS PARTNER LIFE INSURANCE
COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------- By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President of ----------------------------------------
▇▇▇▇ ▇▇ Co., a General Partner Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Title: Authorized Signatory
CAI CAPITAL PARTNERS AND -------------------------------------
COMPANY II, ▇.▇.
▇▇▇▇▇▇ BANK, N.A., solely in its capacity as
By: CAI Capital Partners GP & Co., L.P., Trustee for ▇▇▇▇ Atlantic Master Trust (as
General Partner directed by ▇▇▇▇ ▇▇▇▇▇▇▇ Financial Services,
Inc.), and not in its individual capacity
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------- By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President of ----------------------------------------
▇▇▇▇ ▇▇ Co., a General Partner Name: ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Its: Authorized Signatory
---------------------------------------
THE ▇▇▇▇▇▇ PARTNERSHIP (QP),
LIMITED PARTNERSHIP
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, General Partner
-7-
8
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------- -----------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Individually ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Individually
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Individually
-8-
9
SCHEDULE 1
Investors
The Baileys Family Trust
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇▇▇
The ▇▇▇▇▇▇ Partnership, Limited Partnership
The ▇▇▇▇▇▇ Partnership (QP), Limited Partnership
CAI Partners and Company II, ▇.▇.
▇▇▇ Capital Partners and Company II, ▇.▇.
▇▇▇ Capital Partners and Company II-C, L.P.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ Life Insurance Company
(f/k/a ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company)
▇▇▇▇ ▇▇▇▇▇▇▇ Variable Life Insurance Company
Investors Partner Life Insurance Company
(f/k/a ▇▇▇▇ ▇▇▇▇▇▇▇ Life Insurance Company of America)
Mellon Bank, N.A., solely in its capacity as Trustee
for ▇▇▇▇ Atlantic Master Trust, (as directed by
▇▇▇▇ ▇▇▇▇▇▇▇ Financial Services, Inc.)
and not in its individual capacity