Execution Copy
EXHIBIT 4.1
CO-SALE AGREEMENT
THIS CO-SALE AGREEMENT (this "Agreement") is dated as of this 6th day of
August, 2002, by and among PrimeSource Healthcare, Inc., a Massachusetts
corporation (the "Company"), and the persons listed as Stockholders on the
signature pages hereto (collectively, the "Stockholders" and individually, a
"Stockholder").
WHEREAS, pursuant to a Purchase Agreement, dated as of the date hereof (the
"Purchase Agreement"), by and among the Company and the investors listed on the
signature pages thereto, the Company will issue shares of Series G Preferred
Stock;
WHEREAS, it is a condition precedent to the closing of the transactions
contemplated by the Purchase Agreement that the parties hereto enter into this
Agreement; and
WHEREAS, the parties hereto are willing to execute this Agreement and to be
bound by the provisions hereof.
NOW, THEREFORE, in consideration of the premises, the agreements set forth
below, and the parties' desire to further their interests, the parties agree as
follows:
1. Certain Definitions.
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All terms not otherwise defined herein shall have the meanings set forth in
the Second Amended and Restated Registration Rights Agreement, dated as of the
date hereof (the "Registration Rights Agreement"), by and among the Company and
the stockholders signatories thereto.
"Preferred Stock" shall mean the Series G Preferred Stock of the Company.
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"Preferred Stockholder" shall mean the Stockholders of Preferred Stock.
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2. "Tag-Along" Rights for Sales by Xxxx Xxxxxx and Xxxxxx Xxxxxxx.
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(a) If Xxxx Xxxxxx ("XXXXXX") or Xxxxxx Xxxxxxx ("Xxxxxxx") (for
purposes of this SECTION 2, each of whom, the "PROPOSED TRANSFEROR") at any time
or from time to time, in one transaction or in a series of related transactions,
desires to sell, transfer or otherwise dispose of (collectively, "TRANSFER")
(for purposes of this SECTION 2, a "TAG-ALONG SALE") shares of Common Stock
and/or Preferred Stock to any Person (including the Company or any Subsidiary of
the Company) (for purposes of this SECTION 2, the "PROPOSED TRANSFEREE"), then
each of the Preferred Stockholders shall have the right, but not the obligation,
to elect that the Proposed Transferor be obligated to require, as a condition to
such Tag-Along Sale, that the Proposed Transferee purchase from each such
electing Preferred Stockholder:
(i) up to the number of shares of Common Stock derived by
multiplying the total number of shares of Common Stock owned by or issuable
to such electing Preferred Stockholder by a fraction, the numerator of
which is equal to the number of shares of Common Stock then owned by or
issuable to the Proposed Transferor that are to be purchased by the
Proposed Transferee (without giving effect to any reduction in such number
of shares by reason of any Preferred Stockholder's election to exercise the
"tag-along" rights provided in this SECTION 2 in connection with such
transaction) and the denominator of which is the total number of shares of
Common Stock owned by or issuable to the Proposed Transferor prior to such
sale; and
(ii) up to the number of shares of Preferred Stock having a value
equal to the amount derived by multiplying the stated purchase price upon
the first sale (the "STATED PURCHASE PRICE") of the shares of Preferred
Stock owned by or issuable to such electing Preferred Stockholder by a
fraction, the numerator of which is the aggregate Stated Purchase Prices of
the shares of Preferred Stock then owned by or issuable to the Proposed
Transferor that are to be purchased by the Proposed Transferee (without
giving effect to any reduction in such number of shares by reason of any
Preferred Stockholder's election to exercise the "tag-along" rights
provided in this Section 2 in connection with such transaction) and the
denominator of which is the aggregate Stated Purchase Prices of the shares
of Preferred Stock owned by or issuable to the Proposed Transferor prior to
such sale;
PROVIDED, HOWEVER, that if any Preferred Stockholder chooses not to sell any or
all shares which such Preferred Stockholder may be entitled to sell under this
SECTION 2(a), and one or more of the Preferred Stockholders is exercising its
right to sell the maximum number of shares permissible (for purposes of this
SECTION 2, each, a "REOFFER STOCKHOLDER"), then each Reoffer Stockholder and
each of the Proposed Transferors shall have the option to sell such shares as to
which the option to sell has not been exercised (for purposes of this SECTION 2,
the "REOFFER SHARES"), subject to allocation among them pro rata based on their
respective ownership of shares of Common Stock or Preferred Stock, as the case
may be.
(b) Any such sales by any Preferred Stockholder shall be on the same
terms and conditions as the proposed Tag-Along Sale by the Proposed Transferor.
Each Preferred Stockholder whose shares are sold in a Tag-Along Sale shall be
required to bear a proportionate share of the expenses of the transaction,
including, without limitation, legal, accounting and investment banking fees and
expenses.
(c) The Proposed Transferor participating in a Tag-Along Sale shall
promptly (and in no event less than thirty (30) business days prior to the
consummation thereof) provide the Company with notice (for purposes of this
SECTION 2, the "PROPOSED TRANSFEROR NOTICE") of the proposed Tag-Along Sale
(which the Company shall transmit to each Preferred Stockholder within three (3)
business days of its receipt thereof) containing the following:
(i) the name and address of the Proposed Transferee of the shares
in the Tag-Along Sale;
(ii) the number of shares of Common Stock and Preferred Stock
proposed to be Transferred by the Proposed Transferor in the event that
none of the Preferred Stockholders elects to participate;
(iii) the proposed amount and form of consideration to be paid
for such shares and the terms and conditions of payment offered by the
Proposed Transferee;
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(iv) the aggregate number of shares of Common Stock and Preferred
Stock held of record by such Proposed Transferor as of the date of the
notice (for purposes of this SECTION 2, the "NOTICE DATE") from the
Proposed Transferor to the Company;
(v) the aggregate number of shares of Common Stock and Preferred
Stock held of record as of the Notice Date by all Preferred Stockholders as
a group;
(vi) the maximum number of shares of Common Stock and Preferred
Stock each such Preferred Stockholder is entitled to include in the
Tag-Along Sale (as computed in accordance with the equations set forth in
SECTION 2(a)); and
(vii) that the Proposed Transferee has been informed of the
"tag-along" rights provided for in Section 2(a).
(d) If a Preferred Stockholder desires to participate in such
Tag-Along Sale, such Preferred Stockholder shall provide written notice (for
purposes of this SECTION 2, the "TAG-ALONG NOTICE") to such Proposed Transferor
not later than ten (10) business days after the Notice Date setting forth the
number of shares of Common Stock and Preferred Stock, if any, such Preferred
Stockholder elects to include in the Tag-Along Sale. In the event that any
Preferred Stockholder chooses not to sell any or all which such other Preferred
Stockholder may be entitled to sell under SECTION 2(a), the Proposed Transferor
participating in the Tag-Along Sale shall promptly (and in no event less than
fifteen (15) business days prior to the consummation of such Tag-Along Sale)
provide the Company with notice (for purposes of this SECTION 2, the "REOFFER
NOTICE") of such Reoffer Shares available for sale pursuant to SECTION 2(a)
(which the Company shall transmit to each Reoffer Stockholder within three (3)
business days of its receipt thereof). If a Reoffer Stockholder desires to
participate in the sale of any of the Reoffer Shares, such Reoffer Stockholder
shall provide written notice thereof to such Proposed Transferor not later than
five (5) business days after receipt of the Reoffer Notice setting forth the
number of additional shares of Common Stock and Preferred Stock, if any, such
Reoffer Stockholder elects to include in the Tag-Along Sale. A Preferred
Stockholder may elect to include shares in a Tag-Along Sale only if such
Preferred Stockholder elects to include in such Tag-Along Sale a ratio of shares
of Common Stock to shares of Preferred Stock equal to the ratio of shares of
Common Stock to shares of Preferred Stock proposed to be sold by the Proposed
Transferor in the Tag-Along Sale; PROVIDED, HOWEVER, that (i) if a Preferred
Stockholder is selling all shares of Common Stock owned by it and its Affiliates
in such Tag-Along Sale, then the number of shares of Preferred Stock sold by
such Preferred Stockholder in the Tag-Along Sale shall not be limited by the
provisions of this sentence and (ii) if a Preferred Stockholder is selling all
of the shares of Preferred Stock owned by it and its Affiliates in such
Tag-Along Sale, then the number of shares of Common Stock sold by such Preferred
Stockholder in the Tag-Along Sale shall not be limited by the provisions of this
sentence. In the event that the Proposed Transferee does not purchase the shares
of the Proposed Transferor, then the proposed Tag-Along Sale by the Preferred
Stockholders to such Proposed Transferee shall not take place.
(e) The provisions of this SECTION 2 shall not apply to any
transaction in which shares of Common Stock are proposed to be sold publicly
pursuant to a registration statement filed under the Act.
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(f) Notwithstanding anything herein to the contrary, the rights and
obligations provided for in this Section 2 shall terminate, with respect to all
shares held by each Preferred Stockholder, upon the occurrence of the effective
date of the Company's registration statement in connection with its closing of a
firm commitment underwritten public offering of shares of Common Stock by the
Company and any selling stockholders in which (i) the aggregate price paid for
such shares by the public shall be at least $25,000,000 and (ii) implies a
pre-equity valuation of the Company of at least $110,000,000.
3. Restrictions on Xxxxxx'x and Potenza's Transfer.
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Each of Xxxxxx and Xxxxxxx hereby agrees that he will not sell, transfer or
pledge any of his respective shares of the Company capital stock (or any direct
or indirect interest therein) or any stock certificate representing the same,
now or hereafter at any time owned by him, except as consented to in writing by
the Stockholders of a majority of the shares of the Preferred Stock, which
consent shall not be unreasonably withheld.
4. Notices.
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All notices, requests, consents and other communications provided for or
permitted hereunder shall be made in writing and shall be delivered by
hand-delivery, registered or certified first-class mail, return receipt
requested, or sent by telecopier or telex, addressed as follows:
(a) if to GE Capital Equity Investments, Inc. ("GE"), at its address
set forth on the signature pages hereto, with a copy to Xxxxxx, Xxxx & Xxxxxxxx
LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000, Facsimile:
(000) 000-0000, Attention: Xxxxx X. Xxxxxx;
(b) if to a Stockholder who is not GE, at the most current address
given by the Stockholder to the Company in accordance with the provisions
hereof, which address initially is the address of the Stockholder set forth on
the signature pates hereto; and
(c) if to Xxxxxx or Xxxxxxx, initially at his address set forth on the
signature pages hereto and thereafter at such other address, notice of which is
given in accordance with the provisions hereof, with a copy to Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, Facsimile: (000) 000-0000, Attn: Xxxxx Xxxx. All such notices
and communications shall be deemed to have been duly given: at the time
delivered by hand, if personally delivered; five (5) business days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and on the next business day,
if timely delivered to an air courier guaranteeing overnight delivery.
5. Entire Agreement and Amendments.
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(a) This Agreement, together with the Registration Rights Agreement
dated as of even date herewith, as the same may be amended and/or amended and
restated from time to time, constitutes the entire agreement of the parties with
respect to the subject matter hereof and thereof, and supersedes all prior
agreements relating to the subject matter hereof in their entirety with respect
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to each party to such prior agreements. The parties hereto acknowledge and agree
that all such prior agreements shall be of no force and effect with respect to
the parties hereto following the effectiveness of this Agreement.
(b) Neither this Agreement nor any provision hereof may be waived,
modified, amended or terminated except by a written agreement signed by Xxxxxx,
Xxxxxxx and the holders of 60% of the then outstanding shares of Preferred
Stock; and provided further, that any amendment or modification of this
Agreement that would adversely affect any of the expressed rights contained
herein of any party hereto may be effected only with the consent of such party.
6. Governing Law; Successors and Assigns.
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This Agreement shall be governed by the laws of the State of New York and
shall bind and inure to the benefit of and be binding upon the respective heirs,
personal representatives, executors, administrators, successors and assigns of
the parties (including transferees of any shares of Preferred Stock). Without
limiting the generality of the foregoing, all covenants and agreements of the
Stockholders shall bind any and all subsequent holders of their shares, and the
Company agrees that it shall not transfer on its records any such shares unless
(i) the transferor Stockholder shall have first delivered to the Company and the
other Stockholders the written agreement of the transferee to be bound by this
Agreement to the same extent as if such transferee had originally been a
Stockholder hereunder and (ii) the certificate or certificates evidencing the
shares so transferred bear the legend required by Section 14 of the Registration
Rights Agreement.
7. Expenses.
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If any action at law or in equity is necessary to enforce or interpret the
terms of this Agreement, the prevailing party shall be entitled to reasonable
attorneys' fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled.
8. Severability.
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If any provision of this Agreement, or the application thereof, will for
any reason and to any extent be invalid or unenforceable, the remainder of this
Agreement and application of such provision to other persons or circumstances
will be interpreted so as reasonably to effect the intent of the parties hereto.
The parties further agree to replace such void or unenforceable provision of
this Agreement with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of the void or
unenforceable provision.
9. Aggregation of Stock.
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All shares of Preferred Stock held or acquired by affiliated entities or
any Stockholder shall be aggregated together for the purpose of determining the
availability of any rights under this Agreement.
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10. Further Assurances.
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Each party agrees to cooperate fully with the other parties and to execute
such further instruments, documents and agreements and to give such further
written assurances as may be reasonably requested by any other party to evidence
and reflect the transactions described herein and contemplated hereby and to
carry into effect the intents and purposes of this Agreement.
11. Equitable Remedies.
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Each of Xxxxxx and Potenza hereto acknowledges and agrees that any breach
by either of them of this Agreement shall cause the Stockholders irreparable
harm which may not be adequately compensable by money damages. Accordingly, in
the event of a breach or threatened breach by either Xxxxxx or Xxxxxxx of any
provision of this Agreement, the Stockholders shall each be entitled, without
posting any bond or other security, to the remedies of specific performance,
temporary, preliminary and permanent injunctive relief and other equitable
remedies, including the right to compel either or both of Xxxxxx or Potenza, as
the case may be, to comply with the provisions of this Agreement, in addition to
such other rights and remedies as may be available to the Stockholders for any
such breach or threatened breach, including but not limited to the recovery of
money damages
12. Captions.
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Captions are for convenience only and are not deemed to be part of this
Agreement.
13. Counterparts.
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This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
14. No Inconsistent Agreements.
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The Company shall not, on or after the date of this Agreement, enter into
any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders of Preferred Stock in this Agreement or otherwise
conflicts with the provisions hereof.
* * * * *
(Signatures on following pages)
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IN WITNESS WHEREOF, the parties hereto have executed this Co-Sale Agreement
as of the day and year first above written.
PRIMESOURCE HEALTHCARE, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
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Name: Xxxxxxxx X. Xxxxxx
Title:
/s/ Xxxxxxxx X. Xxxxxx
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Xxxxxxxx X. Xxxxxx
0000 XX 00xx Xxxxxx
Xxxxxx Xxxxxx, Xxxxxxxxxx 00000
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
SERIES G HOLDERS:
GE Capital Equity Investments, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Xxxxxxx Xxxxxxx Xxxxxxx Xxxxx IV L.P.
By: Its General Partner
CSHB Ventures IV L.P.
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: General Partner
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxx 00000-0000
/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
0000 Xxxxx Xxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
Webbmont Holdings, L.P.
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: President of General Partner
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Investors Equity, Inc.
/s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: President
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
