Preview
INDEX NO. 652326/2011
(FILED: NEW YORK COUNTY CLERK 0872272011)
NYSCEF DOC. NO. 1 RECEIVED NYSCEF 08/22/2011
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
Xx
INTEGRATED MANAGEMENT, INC. and Date Purchased:
DR. BRIAN FRADET,
Plaintiffs, The basis of venue is plaintiff's
-against- principal place of business.
ALLEN SWERDLOWE, Index No.:
Defendant.
meee en nn cece neem en en nen enn nee ene nn nen en nnn nnennennenennenenneee K
SUMMONS
To the above named Defendant:
Allen Swerdlowe
112 Birch Hill Road
Weston, Connecticut 06883
You are hereby summoned to answer the Complaint in this action and to serve a copy of your
Answer, or if the Complaint is not served with this summons, to serve a notice of appearance, on
the Plaintiff's attorney within 20 days after the service of this summons, exclusive of the day of
service (or within 30 days after the service is complete if this summons is not personally
delivered to you within the State of New York); and in case of your failure to appear or answer,
judgment will be taken against you by default for the relief demanded in the complaint.
Dated: Garden City, New York
August 22, 2011
KERN AUGUSTIN
CONROY & SCHY P MANN, P.C.
Attorneys for Play
By:
Vi fort
1325 fr gue
Suit 25
Garden City, New |York 11530
(516) 294-5432
TO:
ALLEN SWERDLOWE
112 Birch Hill Road
Weston, Connecticut 06883
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
pete tenn nee nee nen een ene
INTEGRATED MANAGEMENT, INC and, Index No.:
DR. BRIAN FRADET,
Plaintiffs, VERIFIED COMPLAINT.
-against-
ALLEN SWERDLOWE,
Defendant.
nant eee erence enn ne ne neem nen nemen nn nennnneennenene,
Plaintiffs, Integrated Management, Inc., and Dr. Brian Fradet (collectively the “plaintiffs”) by
and through their attorneys, Kern Augustine Conroy & Schoppmann, P.C., for their Verified
Complaint herein, respectfully set forth and allege the following:
1 Plaintiff, Integrated Management, Inc. (hereinafter “IMI”) was, and still is, a
domestic professional corporation duly organized under the laws of the State of New York and is
in the business of rendering health care services to the general public. IMI’s principal place of
business is 275 Madison Avenue, New York 10016.
2 Plaintiff, Dr. Brian Fradet (hereinafter “Fradet”), is a resident of the State of
Connecticut and is the President of IMI.
3 Defendant, Allen Swerdlowe (hereinafter the “Defendant”) is a resident of the
State of Connecticut and is a former officer and employee of IMI.
4 On or about February 7, 2001, IMI, Fradet and the Defendant entered into a
Shareholders’ Agreement (the “Agreement”). (A copy of the Agreement is annexed hereto as
Exhibit “A”)
Section II(B) of the Agreement provides as follows:
“Voluntary Termination or Termination for Cause. In the event
that any Shareholder’s employment is terminated by reason of (i)
his or her voluntarily quitting employment; or (ii) his or her being
discharged for cause (as defined below), all shares owned by him
or her shall be subject to repurchase, at the election of the
Company, at a price equal to the greater of the purchase price paid
for the shares or the net book value per share, as reflected in the
Company’s most recent balance sheet.
1. Discharge for “cause”, as used herein, shall mean discharge by
the Company because of probation, revocation, suspension or any
other limitation of Shareholder’s license to practice his or her
profession in New York; the inability of Shareholder to obtain or
maintain professional liability insurance at reasonable rates which
are comparable to rates commonly available to practitioners of
comparable specialty to that of Shareholder in the community;
Shareholder has been convicted of any felony or has been
discharged from employment for theft, dishonesty, misconduct,
alcohol or drug addiction, for acts which cause embarrassment or
detrimental publicity to the Company, habitual neglect of his duty,
or willful breach of duty or gross negligence in carrying out the
activities for which the Shareholder is employed, or any other act
or omission on his or her part which is recognized by the courts of
the State of New York as constituting just cause for an employer to
terminate employee’s specified term contract of employment prior
to its specified expiration date.”
Section II(C) of the Agreement provides as follows:
“
‘Repurchase of Shares. In the event the Company elects to
repurchase the Shares, the stock certificates representing the
same shall forthwith be returned to the Company upon payment
therefor by the Company.”
7. At all times relevant to this action, Fradet and Defendant were elected officers and
directors of IMI and were jointly and severally in control of the funds and assets of IMI.
8 At all times relevant to this action, it was the duty of the Defendant to skillfully,
diligently, and carefully administer the affairs of IMI; to keep honest, accurate, and correct
accounts of all affairs, business and transactions of IMI; to safeguard the effects and property of
IMI; to prevent said assets from being wasted, stolen, and squandered; and to faithfully and
diligently perform all other duties devolving upon him as an officer of IMI.
9 Upon information and belief, and at all times relevant to this action, the
Defendant failed to perform the duties imposed on him as an officer of IMI in that he did not
give proper care or oversight to the business and affairs of IMI, and neglected the same; and that
he did not administer the affairs of IMI in a skillful, careful and diligent manner; but, on the
contrary, neglected suffered, and permitted monies, property, and effects of IMI to be taken,
wasted, and squandered; and that the Defendant personally wasted, squandered, transferred and
stole monies and other assets of IMI for his own personal account and for his own personal use.
10. Upon information and belief, and at all times relevant to this action, unbeknownst
to Fradet, withdrew and secreted funds from IMI, aggregating more than nine hundred thousand
($900,000.00) dollars, for his own personal account and for his own personal use.
il. Upon information and belief, and at all times relevant to this action, unbeknownst
to Fradet, the Defendant caused to transferred and converted for his own use and benefit, the
funds and assets of IMI, aggregating more than nine hundred thousand ($900,000.00) dollars in
fraud of and to the detriment of IMI and Fradet.
12, At all times relevant to this action, the Defendant has failed and refused to
account for said monies and assets, or to repay the same taken in the manner aforementioned.
13. Upon information and belief and at all times relevant to this action, unbeknownst
to Fradet and IMI, Defendant caused to be withdrawn funds drawn from a Business Credit
Agreement issued to IMI by Citibank and transferred the same for his account and for his own
personal use.
14. Upon information and belief and at all times relevant to this action, unbeknownst
to Fradet and IMI, Defendant improperly and fraudulently utilized IMI’s credit cards and charge
accounts for his own personal use.
15. On or about September 12, 2008, IMI: a) notified Defendant that IMI elected to
discharge and terminate Defendant as an employee and shareholder of IMI for cause; b) notified
Defendant that IMI elected to repurchase Defendant’s shares of IMI, pursuant to Sections II(B)
and II(C) of the Agreement, for zero dollars; c) demanded that Defendant return any share
certificates to IMI; and d) demanded repayment of the aggregate amount improperly or
fraudulently obtained from IMI.
16. In accordance with the Agreement, Defendant ceased having rights as a
shareholder of IMI upon his discharge and termination.
AS AND FOR A FIRST CAUSE OF ACTION
(Breach of Shareholders Agreement)
17. Plaintiffs repeat, reiterate and re-allege each and every allegation contained in the
paragraphs “1” through “16” inclusive, with the same force and effect as if fully set forth at
length herein.
18. The Defendant’s actions constitute a breach of the Agreement.
19. Based on the foregoing, IMI and Fradet have been damaged in an amount to be
determined at trial and in excess of nine hundred thousand ($900,000.00) plus interest.
AS AND FOR A SECOND CAUSE OF ACTION
(Breach of Duty of Good Faith and Fair Dealing)
20. Plaintiffs repeat, reiterate and re-allege each and every allegation contained in
the paragraphs “1” through “19” inclusive, with the same force and effect as if fully set forth at
length herein.
21. By virtue of IMI and Fradet’s contractual relationship with Defendant, Defendant
owed to IMI and Fradet duties of good faith and fair dealing.
22. In accordance with the duties of good faith and fair dealing, Defendant was
prohibited from engaging in actions which would injure or destroy any rights or privileges
inuring to the plaintiffs.
23. Defendant violated the duties of good faith and fair dealing in connection with the
parties' contractual relationship.
24, Based on the foregoing, IMI and Fradet have been damaged in an amount to be
determined at trial and in excess of nine hundred thousand ($900,000.00) dollars plus interest.
AS AND FOR A THIRD CAUSE OF ACTION
(Unjust Enrichment)
25. Plaintiffs repeat, reiterate and re-allege each and every allegation contained in the
paragraphs “1” through “24” inclusive, with the same force and effect as if fully set forth at
length herein.
26. Based on the foregoing, Defendant has been unjustly enriched in an amount to be
determined at trial and in excess of nine hundred thousand ($900,000.00) dollars plus interest.
AS AND FOR A FOURTH CAUSE OF ACTION
(Violation of General Business Law § 349)
27. Plaintiff repeats, reiterates and re-alleges each and every allegation contained in
the paragraphs “1” through “26” inclusive, with the same force and effect as if fully set forth at
length herein.
28. Pursuant to General Business Law Section 349 of the State of New York,
Defendant is prohibited from engaging in deceptive acts and practices in the conduct of its
business or in the furnishing of any service in the State of New York.
29. Defendant’s acts described above constitute violations of the state law because
defendant has engaged in deceptive acts and practice in violation of General Business Law §349.
30. Defendant’s actions have not only caused injury to IMI and Fradet, but have the
potential of causing harm to the public at large by effectively denying the public access to the
quality of services that the plaintiffs have previously offered to the general public.
31. Due to the willful and wanton nature of Defendant’s acts, the need to both deter
such conduct in the future and prevent public harm, IMI and Fradet demand compensatory
damages, in an amount to be determined at trial and in excess of nine hundred thousand
($900,000.00) dollars plus interest, punitive damages in the amount of one million
($1,000,000.00) dollars, and an award of attorneys’ fees as authorized by General Business Law
§349.
AS AND FOR A FIFTH CAUSE OF ACTION
(Fraud)
32. Plaintiffs repeats, reiterates and re-alleges each and every allegation contained in
the paragraphs “1” through “31” inclusive, with the same force and effect as if fully set forth at
length herein.
33. Upon entering into the Agreement, and thereafter, Defendant knowingly made
frequent false representations to IMI and Fradet that he was willing and able to perform his
obligations under the Agreement and the property, assets and financial affairs of IMI for the
benefit and in the interests of IMI.
34, Upon entering into the Agreement, and thereafter, Defendant knowingly made
frequent false representations to IMI and Fradet that he possessed the business and financial
acumen to perform handle the financial affairs of IMI for the benefit and in the interests of IMI.
35. In reliance of Defendant’s representations, IMI and Fradet permitted Defendant
access and control of IMI’s property, assets and financial affairs, including IMI’s credit lines,
credits cards and charge accounts, to perform his obligations under the Agreement for the benefit
and in the interests of IMI.
36. Unbeknownst to IMI and Fradet, Defendant knowingly, and for his own benefit
and enrichment, withdrew, transferred, stole and secreted monies from IMI’s lines of credit
causing damages to IMI and Fradet in excess of three hundred thousand ($300,000.00) dollars.
37. Unbeknownst to IMI and Fradet, Defendant knowingly, and for his own benefit
and enrichment, utilized IMI’s credit cards and charge accounts of IMI for personal expenses and
items, including: a) payment of personal credit cards; b) extensive renovations to his home; c)
high-end Mercedes; d) first-class airfare and vacations for Defendant and his family; e) country
club membership fees for Defendant and his family; f) reimbursement of medical bills for
Defendant and his family; and g) expensive designer clothing, causing damages to IMI and
Fradet in excess of six hundred thousand ($600,000.00) dollars.
38. Based on the foregoing, the IMI and Fradet have been damaged in an amount to
be determined at trial and in excess of nine hundred thousand ($900,000.00) dollars plus interest.
AS AND FOR A SIXTH CAUSE OF ACTION
39. Plaintiffs repeats, reiterates and re-alleges each and every allegation contained in
the paragraphs “1” through “38” inclusive, with the same force and effect as if fully set forth at
length herein.
40. Pursuant to the Agreement, IMI and Fradet are entitled to fees and costs,
including, reasonable attorneys’ fees.
WHEREFORE, IMI and Fradet demand that a judgment be entered against the
Defendant based upon the complaint: 1) in an amount to be determined at trial and in excess of
nine hundred thousand ($900,000.00) dollars plus interest on the first cause of action; 2) in an
amount to be determined at trial and in excess of nine hundred thousand ($900,000.00) dollars
plus interest on the second cause of action; 3) in an amount to be determined at trial and in
excess of nine hundred thousand ($900,000.00) dollars plus interest on the third cause of action;
4) for compensatory damages in an amount to be determined at trial and excess of nine hundred
thousand ($900,000.00) dollars plus interest on the fourth cause of action; 5) for compensatory
damages, punitive damages and attorneys fees in the amount of one million ($1,000,000.00)
dollars on the fourth cause of action; 6) in an amount to be determined at trial and in excess of
nine hundred thousand ($900,000.00) dollars plus interest on the fifth cause of action; 7) for
reasonable attorneys’ fees and the costs and disbursements of this action on the sixth cause of
action; and 8) for such other further relief as the Court determines to be just, fair and proper.
Dated: Garden City, New York
August 22, 2011
KERN AUt CQ DY
& SCHOPPM4 P.g
By
pavid . Vokzd
Attot ntiffs
325 ranklin vent
Suite 255
Garden City, NY 11§30
(516) 294-5432
Fax: (516) 294-5414
EXHIBIT A
107/27/2011 15:58 12122135129 4@TH STREET MEDICAL PAGE 62/16
SHAREHOLDERS' AGREEMENT
TE iS AGREEMENT AMONG SHAREHOLDERS ("Agreement") is made tered.
intoasof 3¢__"]_ day of FED , 202% _, by and between Integrated Management, inc., a
New York corporation (the "Company"), and Brian Fradet, DC ("Fradet") and Allen Swerdlowe
("Swerdic ve") (collectively the "Shareholders" and individually a "Sherebolder").
RECITALS
W iereas the Shareholders have formed the Company for the purpose of providihg
managem mnt services to businesses which render health care services to the general pulflic; and
W iereas the Company was incorporated as a general business corporation on vember
20,2000 nd the Company has authorized capital consisting of one class of two bundr#d (200)
shares of ommon stock ("Common Stock"); and
W sereas the Shareholders are desirous of entering into this Agreement for the pose of
setting fo th their respective rights and duties in connection with the formation of the mpany ,
the finan ing, management and operation of its business, and
W hereas, the Shareholders consider it to be in their best interests and in the bes] interests
of the Co apany to impose certain restrictions and obligations on the shares of the C any and
that their nutual interests will be further promoted if the shares held by the Sharehol 8
continue o be held by those active in the operation. of the business and that they deem jt
beneficia to make special provision with relation to the transfer or other disposition ofthe shares
owned b: them;
bs 3W, THEREFORE, it is agreed:
IL OFIE [CERS AND DIRECTORS
A. E aard
Directors.
of The Board of Directors of the Company shall consist of Frfdet and
§ verdlowe so long as each is a Shareholder,
B. C fficers. The officers shall be:
President - Fradet
Secretary/Treasurer - Swerdlowe
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C. Y ting: Shareholders agree that:
1. As long as each of them remains a shareholder of the Company, be will vot his
shares for the election of the other as a director of the Company and will vot
meetings of the shareholders of the Company so as to carry out and make effective
# at all
the terms and provisions of this Agreement).
as directors of the Company, Shareholders shall elect the following officers And no
others unless they shall mutually otherwise agree from time to time:
President: Fradet
Secretary/Treasurer; Swerdlowe
Cours
D. O dinary e
of Business: All transactions which are not in the ordinary course of
‘bi siness shall require unanimous consent.
Ul, REI URCHASE OF SHARES BY THE COMPANY
pur pon rmin Ono mployment b bh, Di ty. or Termihation,
¥ ithout Cause.
In the event of a termination of employment of any Shareholder by reason
being discharged without cause (as defined below); or (b) by reason of his
total physical or mental disability for a period of 180 consecutive days, all
owned by such Shareholder shall be subject to repurchase, at the election of the
Company, at a price equal to the fair market value of such shares, treating the
Company as a going concern.
The fair market value shall be determined by the independent public ace tants of
the Company. Should the Shareholder not agree to the determination of su
accountants, he or she may appoint at his or her cost, another independent ublic
accountant and the two shall jointly determine the fair market value. If the oO such
accountants cannot agree, they shall appoint a third independent public accbuntant
and the determination of the third such accountant shall be final. As part of his or her
determination, the third public accountant shal] allocate the fees of all thre!
accountants among the parties.
Terminat
- ‘oluntary ion
or Termination for Cause. In the event that any Shareliplder's
« mployment is terminated by reason of (i) his or her voluntarily quitting emplfyment, or
ii) his or her being discharged for cause (as defined below), all shares owned py him or
er shall be subject to repurchase, at the election of the Company, at a price I to the
seater of the purchase price paid for the shares or the net book value per sh: , a8
eflected in the Company's most recent balance sheet.
" Page
2 of 15
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Discharge for "cause," as used herein, shall mean discharge by the Comp: ecalse
of probation, revocation, suspension or any other limitation of Shareholder'glicense
-o practice his or her profession in New “York; the inability of Shareholder tofobtain
or maintain professional liability insurance at reasonable rates which ate confparable
‘9 rates commonly available to practitioners of comparable specialty to that ¢f
3hareholder in the community; Shareholder has been convicted of any felony or has
aeen discharged from employment for theft, dishonesty, misconduct, alcoho] or drug
addiction, for acts which cause embarrassment or detrimental publicity to th
Company, habitual neglect of his duty, or willful breach of duty or gross negligence
in carrying out the activities for which the Shareholder is employed, or any act
or omission on his or her part which is recognized by the courts of the State bf New
York as constituting just cause for an employer to terminate employee's spe ied.
term contract of employment prior to its specified expiration date.
C. Re wurchase of Shares. In the event the Company elects to repurchase the 8 the
stc 2k certificates representing the same shall forthwith be retumed to the C y upon
pa ment therefor by the Company.
S. [ARES
Re stcti . Shareholders agree not to sell, assign,
hy 1othecate, transfer, pledge, encumber, give away, or otherwise dispose of any of the
sh res of the Company that he now or hereafter may hold or own, nor shall anyjsuch
sh wes be transferable except pursuant to and in compliance with the terms an
cc iditions of this Agreement, and the Company agrees that it will not transfer
re ognize any transfer of said shares except in compliance herewith.
R zbt of First Refusal. Neither any Shareholder nor his or her heirs, personal
re sresentatives, successors, or assigns, shall have the right at any time of ownesship of
th ; shares to sell or transfer any portion of his shares unless:
1 Offer to Company. The selling Shareholder shall deliver a written notice toghe
Company, stating the price, terms, and conditions of the proposed sale or or, the
shares to be sold or transferred, and the identity of the proposed transferee
“Notice"). Within thirty (30) days after receipt of such Notice, the Comp: shall
have the right to purchase all or any portion of the shates so offered at the ce and
on the terms and conditions stated in such Notice.
Offer to Other Shareholders, If the Company fails to purchase all or a portipn of the
shares specified in the Notice described in subparagraph 8(a), and if the Cpany has
not then made an initial public offering of its Common Stock, the following
procedure shall be followed with regard to any sale or transfer of shares:
a. the Company shall, at the expiration of thirty (30) days after receipt of fheNotice,
transmit a copy of the Notice to each of the Sharcholders who are partifs hereto.
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b, Bach of the Shareholders shall have thirty (30) days after the mailing of De
Notice to him to notify the selling Shareholder in writing of his or her fention to
purchase the specified portion of the shares described in the Notice on th terms
and conditions set forth in the Notice. Each Shareholder shall deliver to fhe
selling Shareholder by mail or otherwise a written offer or offers to p cn the
specified portion of the selling Shareholder's shares on the terms described in the
Notice.
6. Tf the total shares specified in the offers received within such period by he
selling Shareholder exceed the shares referred to in the Notice ("Shares or Sale")
the Shares for Sale shall be apportioned to each Shareholder in accord é with,
the ratio that his shares bears to the total owned by the Shareholders andfeach
Shareholder desiring to purchase a percentage of the Shares for Sale in dxcess of
his or her proportionate share shall be entitled to purchase the proportiog of the
Shares for Sale that remains thus uncdisposed of, at the ratio that his or hfr shares
bears to the total shares held by all of the Shareholders desiring to pure!
shares in excess of those to which they are entitled under such prior
apportionment. Such apportionment shall be made successively until alli f the
Shares for Sale shall have been allocated to purchasing Shareholders.
C. T ansfer to Third Parties. If none or only a part of the Shares for Sale is bid foyp
by (i) the Company; or (ii) if the Company has not yet made an initial public offering, by
ot er Shareholders within the specified time periods, then the selling Sharehold may
di pose of the Shares for Sale to any person. or persons but only within a periodjof ninety
(S )) days from the date of his or her first Notice to the Company. However, the ling
S] areholder shall not sell or transfer any of the Shares for Sale at a lower price pron.
te ms more favorable to the purchaser or transferee than those specified in the otice to
th : Company. After the ninety (90) day period, the procedure for first offering pp the
C mpany and other Shareholders shall again apply.
T ansfer by Gift or at Death. The requirement of this paragraph that no trans: of the
S: areholder's shares shall be valid until it is first offered to the Company and ofher
S areholders shall not apply to transfers by inter vivos gift or by intestate succ SS10N OF
te tamentary disposition on the Shareholder's death. However, any subsequent jransfer by
tt > donce, estate, representative or beneficiary must be made in accordance with the
P 2visions of this paragraph.
P wehase
Involuntary
Option Upon Transfer, If, other than by reason ofa Shi holder's
d ath, a Company interest is transferred by operation of law to any petson (inclading, but
n + limited to, a Shareholder's trustee in bankruptcy, a purchaser at any credito 's Or court
si le or the guardian or conservator of an incompetent Shareholder), the other
§ sareholder(s) (or at such other Shareholders’ option, the Company), within ety (90)
d ys of receipt of actual notice of the transfer, may exercise an option, whichiq hereby
g anted, to purchase all but not less than all, of such Shareholder's interest in
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Coy apany at fair market value and such Shazeholder's transferee shall have no fafther
ints ‘est in the Company.
Fai Market Value, The "fair market" value shall be determined by the indepe! t
pul lic accountants of the Company. Should. the Shareholder not agree to the
det rmination of such accountants, he may appoint at his cost, another indepen it
pul lic accountant and the two shall jointly determine the fair market value. If th# two
suc 1 accountants cannot agree, they shall appoint a third independent public accbuntant
+
anc the determination of the third such accountant shall be final. As part of his er
dei :tmination, the third public accountant shall allocate the fees of all three ace: tants
arr. ong the parties.
s. Simultaneously with the payment of the first
ing ailment of the purchase price, as hereinafter set forth, the selling shareholder ‘or the
pe sonal representative or representatives of a deceased shareholder, shall endo! e all of
the shares to be sold and purchased hereunder, and shall deliver the same in esc! yw to the
att mney for the Company with the appropriate amount of federal and state do entary
ste nps affixed thereto, together with, in the case of death, the appropriate tax ver
fic m the Estate Tax Division of the State Tax Commission of the state where di edent
re: ided, and a certificate of discharge of property from lien of Federal Estate T: In
re; pect of the estate tax on decedent's estate: regarding the shares purchased by
Cc mpany. The attorney for the Company shall then present the duly endorsed
he d by him in escrow to the Company, which shall retain such shares in es after
is: aing a receipt therefor to the Company, umtil such time as such shares shall ve been
fu ly paid for. Upon payment in full of the purchase price, the shares, together ith all
er jorsements thereof, if in a separate instrument, held in escrow, shall be deliv d to the
C mpany, Title to the shares shall be deemed to have passed to the Company
pz yment of the first installment of the purchase price.
le During Shareholder’s Lifetime. In the event of a sale during a shareholder lifetime,
si ch shareholder, if an officer and director of the Company, shall simultaneous: deliver,
w th the payment of the first installment of the purchase price, his resignation such
o: Ficer and director, effective immediately.
osing and Payment of Purchase Price. The closing for the sale of shares purc! ed by
tt3 Company shall take place at the principal office of the Company at the tim and on
th2 applicable date specified in a further notice sent by the Company to the selling
s. areholder or to the personal represeritative or representatives of the deceas
s areholder, as the case may be, after the Company shall have been notified o: price
p x share, as calculated by the accountant for the Company, which specified re shall be
1) Sooner than five (5) days not later than ten (10) days, exclusive of Saturday}, Sundays,
a td holidays, from the date of sending of such further notice; provided, howevgr, that
s ich date shall be after the qualification of the personal representative or repre! lentatives
¢ *the deceased shareholder. In the event the Company shall receive the price fer share
f om the accountant before such qualification of the personal representative or!
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te cesentatives of a deceased shareholder, the date of closing and the further notkce to be
sei t by the Company, (which notice shall be sent within five (5) days after receij pt ofa
co -y of letters testamentary or letters of adrninistration) shall be aa in this Sectid
pr vided.
C: culation of Price. The calculation of the price shall be made by the accoun
re; ularly employed by the Company, and certified to by him to the Company a: having
be n computed as provided for in Section [I hereof;
ment
for Shares. Payment in full for the shares purchased pursuant
to the prd sions
of chis Section III shall be made at the principal office of the Company in cash, fertified
or 9ank check.
D fault in Payment of Purchase Prise by Company. Should the Company defauft in
m king any payment of the purchase price hereunder, and default continues for f (10)
di ys after notice thereof, the Company shall forthwithbe dissolved and liqui ted, and
di tribution of the assets promptly made. In the event of such liquidation and dgsalution,
at y moneys theretofore paid to the personal representative or representatives offihe
de seased shareholder on account of the purchase price shall be credited against fn
ar \ounts to be received by such personal representative or representatives as a results of
si +h liquidation and dissolution.
M. T ansferees of Shares Subject to Agreement. Anything in this Agreement
co ined to
tk 2 contrary notwithstanding, it is distinctly understood and agreed that upon th death of
ei her Shareholder, as the case may be, the person or persons who shall acquire fitle to
st ch shares of the Company owned by such deceased stockholder upon his deaf either
b , or pursuant to the last will and testamenit of such deceased shareholder or b
© eration of law, shall be entitled to so acquire such shares without the necessit of
c: mplying with the provisions of Section [II hereof in connection with such acd sition,
avided, however, that such acquisition shall at all times be subject to the prowsions of
§ section III hereof, and provided also that upon the acquisition of such shares tl persons
© persons so acquiring same shall be deemed to be a party and subject to this
# greement, and all of the terms, conditions, and provisions thereof.
I sufficient Surplus. If, at any time, the surplus of the Company be legally in cient,
wider the laws of the State of New York to enable the Company to make any p#yments
t xreunder with respect to the-shares which it elects or is obligated to purchase, then the
r irties hereto agree that they or their personal representative or representatives hall
r duce the capital of the Company in order to create a sufficient surplus to en le said
f iyments to be made. Anything to the contrary notwithstanding, in lieu of effetting a
r duction in capital of the Company any of the individual parties hereto may elEct to
¢ ontribute to the Company a sufficient amount of cash to enable the Company fo make
¢ ich payments.
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O. Ing slveney. If, at any time when the Company would be obligated to purchase shares
of selling shareholder under this Agreement, the Company is insolvent or wo
the ‘eby be made insolvent, the Company shall, in lieu of the letter of acceptaned set forth
in iection III C hereof, notify the selling shareholder, in writing, that the Compgny is
ins »lvent or would be made insolvent by the purchase of the shares of the selli
sh: cebolder, and that it is legally precluded from making such purchase. The s ting
sh; reholder shall be entitled to require the Company to be dissolved and the
sh; reholder(s) shall be obligated to perform all acts and do all things necessary
ef] xctuate such dissolution.
Diy Sale during Life or Upon Death. Should qither of
thi individual parties hereto offer to sell, or should the Company elect to purchase shares
ov aed by the respective individual parties hereto, the parties agree:
1 That the loans due from the Company to the retiring or deceased sharehold
whether or not due by their terms at such time, shall be paid by the Comp: on the
date the first installment of the purchase price is due to the selling shareholder;
that any loans due from the retiring or deceased shareholder of the Compang, whether
or not due by their terms at such time, shall be paid by the retiring shareholder or the
estate of the deceased shareholder on the date the first installment of the p hase
price is due to the selling shareholder, and such payment may be made by tl
Company setting off the amount due to it against the first installment due.
SI ares
Restrictions.
Free of Any share purchase by the Company, pursuant to the terms
o: this Agreement, shall be free of the restrictions contained herein.
D -finition of Shares and Legend to Appear Thereon. The term "shares" as Gherein
s] all be deemed to refer to all the shares of the Company owned by the individgal parties
b- reto at the time of execution of this Agreement, any shares hereafter issued it
e: change therefor by way of reclassification of shares, merger, consolidation,
re arganization, recapitalization, or otherwise, and any additional shares issued fo the
wt spective individual parties hereto by reason of dividends paid by share distri wunons or
it crease in the outstanding shares or otherwise.
1 Each of the respective individual parties hereto agrees to submit the certifidates for
shares now owned by them to the Company for imprinting of the follo pflegend
thereon:
This certificate and the share or shares it represents is held sub] ct to the
provisions of an Agreement dated the—— day of ‘uy&
copy of which Agreement is on file and may be examined at thepice of
the Company.
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- IV. Ré SIFICATION OF AGREEMENT BY COMPANY
A. Ra ification, At the first meeting of shareholders, to be held on or after the date fereof,
thi Agreement shall be submitted to the meeting and a resolution shall be adopfed
wt sreby the Company shall accept, ratify, and confirm the Agreement and to be
bo nd thereby. Any and all bylaws of the Company shall conform to the pro ns of
thi. Agreement and shall not be in conflict therewith; if any conflict exists or eS
he eafter, the provisions of this Agreement shall control.
Vv. TER {OF AGREEMENT
A. Tem. This Agreement shall be terminated upon a determination by the holders bf all of
th: shares of outstanding shares entitled to vote thereon, at a duly constituted meting of
th shareholders, that they desirc to terminate this Agreement; or until the Company is
m rged into, or sells its assets to, or exchanges stock with, another Company which has,
af 2r such merget, sale of assets or exchange of stock, consolidated total assets pf at least
$2 000,000.00 and is qualified to be listed on NASDAQ, whichever occurs
of
Termination
E ents . Notwithstanding anything herein contained to the con , this
A reement shall terminate and all rights and obligations hereunder shall cease on, the
bi spening of any of the following events:
I The adjudication of the Company as baakrupt, voluntarily or involuntarily;
execution by the Company of any assignment for the benefit of creditors the
appointment of a receiver for the Company;
2 The voluntary or involuntary dissolution of the Company; ot
3 The death of all Shareholders in a common accident.
Vi. " RADE SECRETS AND UNFAIR COMPETITION
L nique Business, It is understood that the business of the Company and its st jidiaries is
u tique and its development is dependent upon the services of the Shareholdergjas
e oployees of the Company. It is further understood that, in the course of rend
$ rvices to the Company as employees or directors, the Shareholders will hav cess to
t e Company's confidential and proprietary information and trade secrets, incldding
f ttentable and nonpatentable technology, customer or client lists and other i of
i formation. The use of such items or the solicitation of the Company's clientsfby a
£ aareholder after termination.of his or her employment would materially and ddversely
¢ fect the Company and all of the Shareholders, economically and otherwise. erefore,
<3an inducement to the Shareholders to acquire stock of the Company and fo the
( ompany and the Shareholders to enter into this Agreement with respect to th sale and
y urchase of all shares of stock owned by the Shareholders, each Shareholder:
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