EXHIBIT 7
CO-SALE AGREEMENT
THIS CO-SALE AGREEMENT is made this 2/nd/ day of March, 2001, by and among
Luxtec Corporation, a Massachusetts corporation (the "Company"), and the persons
listed as Stockholders in the signature pages hereto (collectively, the
"Stockholders" and individually, a "Stockholder").
WHEREAS, in connection with the Agreement and Plan of Merger, dated
November 27, 2000, as amended by Amendment No. 1 to the Agreement and Plan of
Merger, dated February 8, 2001 (together, the "Merger Agreement"), by and among
the Company, Laser Merger Sub Inc., a Delaware corporation and a wholly-owned
subsidiary of the Company, and PrimeSource Surgical, Inc., a Delaware
corporation ("PSS"), the Company will issue shares of Series B Preferred Stock,
shares of Series C Preferred Stock and shares of Series D Preferred Stock to
certain of PSS's stockholders;
WHEREAS, on February 3, 1998, PSS entered into an Investors' Rights
Agreement (the "Investors' Rights Agreement") and a Voting Agreement (the
"Voting Agreement") with holders of the PSS Common Stock and Series A Preferred
Stock, on June 14, 1999, PSS entered into the Amended and Restated Stockholders
Agreement (the "Amended and Restated Stockholders Agreement"), on various dates
in November, 1999, PSS entered into Amendment No. 1 to Amended and Restated
Stockholders' Agreement, on August 17, 2000, PSS entered into a Second Amended
and Restated Stockholders' Agreement (the "Second Amended and Restated
Stockholders' Agreement") and on January 23, 2001, PSS entered into Third
Amended and Restated Stockholders' Agreement (collectively with the Investors'
Rights Agreement, the Voting Agreement, the Amended and Restated Stockholders'
Agreement and the Second Amended and Restated Stockholders' Agreement, the
"Prior Agreements");
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.
All terms not otherwise defined herein shall have the meanings set forth in
the Registration Rights Agreement, dated as of the date hereof (the
"Registration Rights Agreement"), by and among the Company and the stockholders
signatories thereto.
"Rollover Stock" shall mean the Alternative Equity Financing Stock,
Qualified Equity Financing Stock or Future Preferred Stock.
"Rollover Stockholder" shall mean the Stockholders of Rollover Stock.
2. "Tag-Along" Rights for Sales by Rooney or Bayley or Series B
Stockholders.
(a) If either Rooney or Bayley or Series B Stockholders (for purposes
of this Section 2, 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
Rollover Stockholders and Series C 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 Rollover Stockholder or Series C 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 Rollover Stockholder or Series C 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 Rollover Stockholder's
or Series C 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 an
aggregate redemption value equal to the amount derived by multiplying the
aggregate redemption value of the shares of Rollover Stock or Series C
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Preferred Stock owned by or issuable to such electing Rollover Stockholder
or Series C Stockholder times a fraction, the numerator of which is the
aggregate redemption value 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 Rollover Stockholder's or Series C 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 redemption value of the shares of Preferred Stock owned by or
issuable to the Proposed Transferor prior to such sale;
provided, however, that if any Rollover Stockholder or Series C Stockholder
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chooses not to sell any or all shares which such Rollover Stockholder or Series
C Stockholder may be entitled to sell under this Section 2(a), and one or more
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of the Rollover Stockholders or Series C 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.
Any such sales by any Rollover Stockholder or Series C Stockholder shall be
on the same terms and conditions as the proposed Tag-Along Sale by the Proposed
Transferor. Each Rollover Stockholder or Series C 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.
(b) 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 Rollover Stockholder or Series C
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;
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(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 Rollover Stockholders or Series C 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;
(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 Rollover
Stockholders and Series C Stockholders as a group;
(vi) the maximum number of shares of Common Stock and Preferred
Stock each such Rollover Stockholder or Series C 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).
(c) If a Rollover Stockholder or Series C Stockholder desires to
participate in such Tag-Along Sale, such Series C Stockholder shall provide
written notice (for purposes of this Section 2, the "Tag-Along Notice") to such
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Proposed Transferor not later than ten (10) business days after the Notice Date
setting forth the number of shares of Common Stock, Rollover Stock and Series C
Preferred Stock, if any, such Rollover Stockholder or Series C Stockholder
elects to include in the Tag-Along Sale. In the event that any Rollover
Stockholder or Series C Stockholder chooses not to sell any or all which such
other Rollover Stockholder or Series C Stockholder may be entitled to sell under
Section 2(a), the Proposed Transferor participating in the Tag-Along Sale shall
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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
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available for sale pursuant to Section 2(a) (which the Company shall transmit to
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each Reoffer Stockholder within three (3) business days of its receipt
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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 Rollover Stockholder or Series C Stockholder
may elect to include shares in a Tag-Along Sale only if such Rollover
Stockholder or Series C Stockholder elects to include in such Tag-Along Sale a
ratio of shares of Common Stock to shares of Rollover Stock or Series C
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 Rollover Stockholder or Series C
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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 Rollover Stock or Series C
Preferred Stock sold by such Rollover Stockholder or Series C Stockholder in the
Tag-Along Sale shall not be limited by the provisions of this sentence and (ii)
if a Rollover Stockholder or Series C Stockholder is selling all of the shares
of Rollover Stock or Series C Preferred Stock owned by it and its Affiliates in
such Tag-Along Sale, then the number of shares of Common Stock sold by such
Rollover Stockholder or Series C 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 Rollover Stockholders or Series C Stockholders to
such Proposed Transferee shall not take place.
(d) The provisions of this Section 2 shall not apply to any
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transaction in which shares of Common Stock or Series B Preferred Stock are
proposed to be sold publicly pursuant to a registration statement filed under
the Act.
(e) Notwithstanding anything herein to the contrary, the rights and
obligations provided for in this Section 2 shall terminate, with respect to all
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shares (other than Series C Preferred Stock) held by each Rollover Stockholder
or Series C 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 post-
equity valuation of the Company of at least $75,000,000.
3. Restrictions on Rooney's and Bayley's Transfer.
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Each of Rooney and Bayley 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
a holders of a majority of the shares of the Series C Preferred Stock, which
consent shall not be unreasonably withheld.
4. Effectiveness of Agreement. This Agreement shall not become effective
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until the Effective Time (as defined in the Merger Agreement) of the Merger. If
the Merger (as defined in the Merger Agreement) is not consummated then this
Agreement shall be of no force and effect and the Prior Agreements shall remain
in full force and effect pursuant to its terms.
5. 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, at its address set forth on the signature pages hereto,
with a copy to Xxxxxx, Xxxx & Xxxxxxxx LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx,
XX 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 Rooney or Bayley, 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.
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6. Entire Agreement and Amendments.
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(a) This Agreement, together with the Registration Rights Agreement
dated as of even date herewith, constitutes the entire agreement of the parties
with respect to the subject matter hereof and thereof, and upon the
effectiveness of this Agreement as set forth in Section 4 hereof, supersedes the
Prior Agreements in their entirety with respect to each party to such prior
agreements. The parties hereto acknowledge and agree that the 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 Rooney,
Bayley and the Stockholders owning at least eighty percent (80%) of the shares
owned by the Stockholders; provided, however, that any amendment hereto shall
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require the consent of the holders of 50% of the then outstanding shares of
Series C Preferred Stock provided 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.
7. Governing Law; Successors and Assigns.
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This Agreement shall be governed by the laws of the State of Delaware 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 Registrable Securities).
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.
8. 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,
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costs and necessary disbursements in addition to any other relief to which such
party may be entitled.
9. 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.
10. Aggregation of Stock.
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All shares of Registrable Securities 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.
11. 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.
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 Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof.
Other than as disclosed on Schedule A attached hereto, the Company has not
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previously entered into any agreement with respect to its securities granting
any "piggy back" registration rights to any Person. The Company represents and
warrants to each of the Holders of Registrable Securities that, except as set
forth in this Agreement or on Schedule B attached hereto, as of the date hereof,
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there are no outstanding "demand" registration rights with respect to the
Company's securities. The rights granted to the Holders of Registrable
Securities hereunder do not in any way conflict with and are not inconsistent
with the rights granted to the holders of the Company's securities under any
such agreements.
15. Forms.
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All references in this Agreement to particular forms of Registration
Statements are intended to include all successor forms which are intended to
replace, or to apply to similar transactions as, the forms herein referenced.
* * * * *
(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.
LUXTEC CORPORATION
By:________________________________
Name:
Title:
Xxxx X. Xxxxxx
0000 X. Xxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Xxxxxxx X. Xxxxxx
0000 X. Xxxxxxxxxx
Xxxxxx, Xxxxxxx 00000
GE Capital Equity Investments, Inc.
By:________________________________
Name:
Title:
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 000000
Xxxxxxx Xxxxxxx Xxxxxxx Booth IV L.P.
By: Its General Partner
CSHB Ventures IV L.P.
By: _______________________________
Name:
Title: General Partner
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxx 00000-0000
BAM Enterprises, LLC
By: _______________________________
Name: Xxxx X. Xxxxxx
Title: President
0000 X. Xxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Xxxxxxx X. Xxxxxxx
0000 Xxxxx Xxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
Webbmont Holdings, L.P.
By: _______________________________
Name: Xxxxxx Xxxxxx
Title: President of General Partner
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Investors Equity, Inc.
By: _______________________________
Name: Xxxxxx X. Xxxxxx
Title: President
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Xxxxxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Xxxxxx Xxxxx Xxxxxx
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Xxxxxx X. Xxxxx
Xxxx X. Xxxxx
0000 Xxxxx Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Geneva Middle Market Investors, L.P.
By: _______________________________
Name:
Title
00 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
