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XXXXXX HEALTH PRODUCTS GROUP INC.
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
Dated as of December 17, 1999
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TABLE OF CONTENTS
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1. Board of Directors..................................................................................2
(a) Nominating......................................................................................2
(b) Removal and Replacement of Nominees.............................................................2
(c) Chairman .......................................................................................3
2. Voting, etc.........................................................................................3
(a) Stockholder Approval............................................................................3
(b) Charter and Bylaws..............................................................................4
(c) Board Approval; Notice of Board Meetings........................................................4
(d) Confidentiality.................................................................................4
3. Restrictions on Disposition; Right of First Refusal.................................................5
(a) Restrictions on Disposition.....................................................................5
(b) Subsequent Dispositions.........................................................................6
(c) Right of First Refusal..........................................................................6
(d) Dispositions by Xxxxx Xxxxxx, Xxxxx Xxxxxx X-X and North Castle II..............................7
4. Tag-Along Rights....................................................................................7
5. Take-Along Rights...................................................................................8
(a) Take-Along Notice...............................................................................8
(b) Conditions to Take-Along........................................................................8
(c) Remedies .......................................................................................9
6. Piggyback Registration Rights......................................................................10
7. Registration Upon Request..........................................................................12
8. Registration Procedures............................................................................14
9. Indemnification....................................................................................17
10. Affiliate Transactions.............................................................................20
11. Management Stockholders............................................................................20
(a) Call Option....................................................................................20
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(b) Termination of Call Option.....................................................................21
(c) Put Options....................................................................................21
(d) Termination of Put Option......................................................................21
12. Severability.......................................................................................21
13. Information........................................................................................22
14. Certain Definitions................................................................................22
15. Notices............................................................................................25
16. Term...............................................................................................26
17. Headings...........................................................................................27
18. Entire Agreement...................................................................................27
19. Counterparts.......................................................................................27
20. Governing Law......................................................................................27
21. Binding Effect.....................................................................................27
22. Assignment.........................................................................................27
23. No Third Party Beneficiaries.......................................................................27
24. Amendment; Waivers, Etc............................................................................27
25. Consent to Jurisdiction............................................................................28
26. Waiver of Jury Trial...............................................................................28
27. AEA Authority......................................................................................28
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EXHIBIT 10.22
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, dated as of
December 17, 1999, among Xxxxxx Health Products Group Inc., a Delaware corpora
tion (the "COMPANY"), North Castle Partners I, L.L.C., a Delaware limited
liability company ("NORTH CASTLE"), North Castle Partners I-A, L.P., a Delaware
limited partnership ("NORTH CASTLE I-A"), North Castle Partners II, L.P., a
Delaware limited partnership ("NORTH CASTLE II"), AEA Investors Inc., a Delaware
corporation ("AEA"), NCP Co-Investment Fund, L.P., a Delaware limited
partnership ("NCP"), Squam Lake Investors IV, L.P., a Delaware limited
partnership ("SQUAM IV") and each other person who is or, becomes party to this
Agreement (collectively, with North Castle, North Castle I-A, North Castle II,
AEA, NCP, Squam IV and the Covered Shareholders (as defined below), the
"STOCKHOLDERS"). Capitalized terms used herein without otherwise being defined
herein are defined in Section 14.
W I T N E S S E T H:
WHEREAS, Xxxxx Xxxxxx, Xxxxx Xxxxxx X-X, Xxxxx Xxxxxx XX, XXX,
NCP, Squam IV and each other Stockholder hold shares of Common Stock of the
Company;
WHEREAS, the parties hereto wish to set forth certain rights
and obligations that shall attach to the ownership of Common Stock and other
Covered Equity (as defined below) held by certain of the Stockholders;
WHEREAS, in connection with the 1997 recapitalization of the
Company, AEA entered into Covered Shareholder Agreements with holders (the
"COVERED SHAREHOLDERS") of 516,861 shares of Class A Common Stock, 10,000 shares
of Class B Common Stock and 140,731 shares of Class C Common Stock, which stock
was converted into shares of Common Stock in the merger (the "MERGER") described
in the Agreement and Plan of Merger, dated as of May 31, 1997 between the
Company, North Castle and LHP Acquisition Corp., pursuant to which AEA has been
appointed representative of such shareholders for purposes of this Agreement;
WHEREAS, as of June 30, 0000, Xxxxx Xxxxxx, XXX and each other
stockholder of the Company on such date entered into a Stockholders Agreement
(the "ORIGINAL STOCKHOLDERS AGREEMENT");
WHEREAS, in September 1998, North Castle and AEA entered into
Amendment No. 1 to the Original Stockholders Agreement;
WHEREAS, on the date hereof North Castle I-A, North Castle II,
NCP and Squam IV have purchased new Common Stock issued by the Company; and
WHEREAS, North Castle I, North Castle I-A, North Castle II,
NCP, Squam IV and AEA have agreed to amend and restate the Original Stockholders
Agreement, as amended;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, North Castle I, North
Castle I-A, North Castle II, NCP, Squam IV and AEA do hereby agree as follows:
1. BOARD OF DIRECTORS.
(a) NOMINATING. Until such time as AEA and the Covered
Shareholders have sold or transferred (other than through sales or transfers to
AEA or Covered Shareholders) in excess of 50% of the Common Stock held by AEA
and the Covered Shareholders upon the consummation of the Merger, AEA shall be
entitled to nominate one person for election to the board of directors (the
"BOARD") of the Company. So long as Xxxxx Xxxxxx, Xxxxx Xxxxxx X-X and North
Castle II collectively own at least 40% of the Common Stock, each of North
Castle I-A and North Castle II shall be entitled to nominate one person for
election to the Board and North Castle shall be entitled to nominate all other
persons for election to the Board. The Board shall have at least four and no
more than ten members in the aggregate for so long as AEA is entitled to
nominate one individual for election to the Board pursuant to this Section 1(a).
If it owns less than 40% of the Common Stock, North Castle shall be entitled to
nominate a number of directors bearing the same relationship to the total number
of directors on the Board as the number of shares of Common Stock then held by
North Castle bears to the then outstanding shares of Common Stock. The Company
and each of the other parties hereto agrees to take all steps within their
power, including voting any voting Common Stock owned or controlled by them or
any of their Affiliates, to cause any person so nominated to be elected to the
Board by action of the Stockholders of the Company.
(b) REMOVAL AND REPLACEMENT OF NOMINEES. (i) At any time at
which any party shall have exercised its rights to nominate a director pursuant
to Section 1(a) and such party shall determine to remove one or more of its
nominated directors, with or without cause, the Company and each of the
Stockholders agrees to take all steps within their power, including voting (or
causing to be voted) any voting Common Stock owned
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or controlled by them or any of their Affiliates, to cause such director to be
so removed from the Board by action of the stockholders of the Company. At any
time at which any party shall have exercised its rights to nominate a director
pursuant to Section 1(a) and a vacancy shall be created on any of the Board as a
result of the death, disability, retirement, resignation or removal, with or
without cause, of a director nominated by such party, (X) the Board will request
such party to nominate a candidate to be appointed by the Board to fill such
vacancy or (Y) in the event that a candidate to fill such vacancy is to be
elected at the annual meeting of stockholders of the Company, such party shall
have the right to nominate the individual to fill such vacancy, and the
provisions of paragraph 1(a) above shall apply with respect to the nomination
and election of such nominee to fill such vacancy.
(ii) Each of the parties hereto further agrees (X) if a
candidate nominated by any party or parties to fill any vacancy on the Board in
accordance with paragraph (b)(i) above shall not have been appointed to fill
such vacancy within ten Business Days of the Board having been given the name of
such candidate by the nominating party or parties, then each of the parties
hereto (other than the Company) shall act by written consent, or call a special
meeting of stockholders of the Company for the sole purpose of filling such
vacancy, and in such written consent or at such special meeting, vote or cause
to be voted the voting Common Stock of the Company held or controlled by such
party or any Affiliate of such party in favor of the candidate nominated to fill
such vacancy, (Y) other than as provided in Section 1(b)(i), no party hereto
shall vote, or give any consent, in favor of the removal as a director of the
Company of any candidate nominated by any other party, and (Z) if, in connection
with the election of any candidate nominated by another party in accordance
herewith for election as a director of the Company any party hereto fails or
refuses to vote as required by this Section 1, or votes or gives any consent or
proxy in contravention of this Section 1, the respective nominating party shall
have an irrevocable proxy (which irrevocable proxy shall revoke any proxy
previously given by the defaulting party in contravention of this Section 1)
pursuant to Section 212(e) of the General Corporation Law of the State of
Delaware, coupled with an interest, to vote, all the voting Common Stock of the
Company held or controlled by such party in accordance with this Section 1, and
each party hereto hereby grants such proxy.
(c) CHAIRMAN. The Chairman of the Board shall be selected by
directors from one of North Castle's nominees.
2. VOTING, ETC. (a) STOCKHOLDER APPROVAL. Neither the
Certificate of Incorporation nor the By-Laws of the Company shall contain any
provision requiring a vote of a supermajority of the outstanding shares of
Common Stock for any matter, except as required by law.
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(b) CHARTER AND BYLAWS. The parties agree that the provisions
of the Company's certificate of incorporation and bylaws will not (I) conflict
with the terms of this Agreement or (II) be amended in a manner adversely
affecting one or more Stockholders but not adversely affecting all Stockholders
without consent of the adversely affected Stockholders.
(c) BOARD APPROVAL; NOTICE OF BOARD MEETINGS. All actions
requiring the approval of the Board shall be approved by a majority of the
directors present at any duly convened Board meeting or without a meeting by
written consent of a majority of the members of the Board, in each case in
accordance with the provisions of the Delaware General Corporation Law. The
Company agrees to give any director nominated by AEA no less than three Business
Days' prior notice of any meeting of the Board or, in the case of a telephonic
Board meeting, two Business Days' prior notice.
(d) CONFIDENTIALITY. Each of the Stockholders agrees to keep
confidential and not to disclose to any Person any Information provided to it by
or on behalf of the Company or any of its Subsidiaries, or obtained by the
Stockholder; PROVIDED that nothing contained herein shall prevent any
Stockholder from disclosing such Information to (I) any of the other
Stockholders, (II) any of its Representatives, PROVIDED that such Stockholder
(W) informs each of its Representatives receiving any such Information of its
confidential nature and of this provision and its terms, (X) uses its reasonable
best efforts to cause its Representatives to treat such Information
confidentially in accordance herewith, and otherwise to comply herewith as if
parties hereto, and (III) any member of the Board. If any Stockholder or any of
its Representatives is requested to disclose any such Information by any
Governmental Entity, such Stockholder will promptly notify the Company to permit
it to seek a protective order or take other action that the Company in its
discretion deems appropriate, and such Stockholder will cooperate in any such
efforts to obtain a protective order or other reasonable assurance that
confidential treatment will be accorded such Information. If, in the absence of
a protective order, such Stockholder or any of its Representatives is compelled
as a matter of law to disclose any such Information in any proceeding or
pursuant to legal process, such Stockholder may disclose to the party compelling
disclosure only the part of such Information as is required by law to be
disclosed (in which case, prior to such disclosure, such Stockholder will advise
and consult with the Company and its counsel as to such disclosure and the
nature and wording of such disclosure) and such Stockholder will use its
reasonable best efforts to obtain confidential treatment therefor.
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3. RESTRICTIONS ON DISPOSITION; RIGHT OF FIRST REFUSAL.
(a) RESTRICTIONS ON DISPOSITION. Prior to a Public Offering,
no Stockholder may sell, transfer, pledge, encumber or otherwise dispose of any
Covered Equity to any Person (other than the Company) except as follows (a
"PERMITTED TRANSFER"):
(i) to any Specified Affiliate of such Stockholder, PROVIDED
that such Specified Affiliate agrees in writing to become a party to
this Agreement and PROVIDED FURTHER that such Specified Affiliate
delivers to the Company (X) an opinion of counsel, which opinion and
counsel shall be reasonably satisfactory to the Company, to the effect
that the transfer is not a Prohibited Transfer, and (Y) a certificate
of the transferor and the transferee, to the effect that the transferee
is a Specified Affiliate of the transferor;
(ii) to any other Stockholder, PROVIDED that such transferee
Stockholder delivers an opinion of counsel to the Company, which
opinion and counsel shall be reasonably satisfactory to the Company, to
the effect that the transfer is not a Prohibited Transfer;
(iii) any transfer of Common Stock in a public offering if
such stock has been registered pursuant to Section 6 or 7;
(iv) any transfer of Common Stock pursuant to Sections 4 and
5; and
(v) any transfer of Common Stock to a person who is not a
Stockholder or a Specified Affiliate of the transferor, subject to
compliance with the right of first refusal provided in Section 3(c),
PROVIDED that the transferee (X) agrees in writing to become a party to
this Agreement and (Y) delivers an opinion of counsel to the Company,
which opinion shall be reasonably satisfactory to the Company, to the
effect that the transfer is not a Prohibited Transfer;
Each Stockholder shall give the Company at least 15 days prior notice of any
proposed disposition of any Covered Equity pursuant to a Permitted Transfer
described in this Section 3(a), and prompt notice of any such actual
disposition. Any sale, transfer, pledge, encumbrance or other disposition of any
Covered Equity other than pursuant to a Permitted Transfer shall be void and of
no effect. The Company agrees to provide such certificates with respect to
factual matters involving the Company as may be reasonably requested by a
Stockholder or its counsel in connection with a proposed Permitted Transfer.
Notwithstanding the foregoing, no Management Stockholder may effect any
Permitted Transfer (except of the type described in clauses (i), (iii) and (iv)
of this
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Section 3.1(a)) until the earlier to occur of (X) June 30, 2002, and (Y) the
termination of such Management Stockholder's employment with the Company.
(b) SUBSEQUENT DISPOSITIONS. Following any Public Offering,
any Stockholder may transfer Common Stock to any Person, PROVIDED that, except
with respect to a transfer of the type described in Sections 3(a)(iii) and (iv),
the transferee must deliver to the Company an opinion of counsel, which opinion
and counsel shall be reasonably satisfactory to the Company, to the effect that
such transfer is not required to be registered under the Securities Act.
(c) RIGHT OF FIRST REFUSAL. If a Stockholder other than Xxxxx
Xxxxxx, Xxxxx Xxxxxx X-X or North Castle II (a "SELLING HOLDER") desires to make
a Permitted Transfer pursuant to clause (v) of Section 3(a) following an offer
(which offer must be in writing, be irrevocable by its terms for at least 15
Business Days and be a bona fide offer) from any prospective purchaser to
purchase all or any part of the Common Stock owned by such Selling Holder, such
Selling Holder shall give notice (the "NOTICE OF OFFER") in writing to the Board
and to Xxxxx Xxxxxx, Xxxxx Xxxxxx X-X or North Castle II (I) designating the
number of shares of Common Stock that such Selling Holder proposes to sell (the
"OFFERED SHARES"), (II) naming the prospective purchaser thereof (the
"DESIGNATED PURCHASER") and (III) specifying the price (the "OFFER PRICE") and
terms (the "OFFER TERMS") upon which such Selling Holder desires to sell the
same. During the 15 Business Day period following receipt of such notice by the
Company, Xxxxx Xxxxxx, Xxxxx Xxxxxx X-X and North Castle II (the "REFUSAL
PERIOD") such Selling Holder shall not be permitted to accept such offer, but
may submit a new Notice of Offer in respect of any revised offer in accordance
with and subject to this Section 3(c). During the Refusal Period, North Castle,
North Castle I-A or North Castle II or any Affiliate of North Castle, including
any pooled investment vehicle organized by the managing member of North Castle
or by any of its Affiliates shall have the right to purchase from the Selling
Holder at the Offer Price and on the Offer Terms all, but not less than all, of
the Offered Shares, PROVIDED that (A) North Castle I-A shall not be entitled to
exercise such right until North Castle I has issued a written notice stating
that it will not exercise such right, (B) North Castle II shall not be entitled
to exercise such right until Xxxxx Xxxxxx xxx Xxxxx Xxxxxx X-X have each issued
written notices stating that it will not exercise such right and (C) any other
Affiliate of North Castle shall not be entitled to exercise such right until
Xxxxx Xxxxxx, Xxxxx Xxxxxx X-X and North Castle II have each exercised written
notices stating that it will not exercise such right. The right provided
hereunder shall be exercised by written notice to the Selling Holder and the
Company given at any time during the Refusal Period. If such right is exercised,
Xxxxx Xxxxxx, Xxxxx Xxxxxx X-X or North Castle II or any Affiliate of North
Castle shall deliver to the Selling Holder payment of the Offer Price in
accordance with the Offer Terms, against delivery of appropriately endorsed
certificates or other instruments representing the Offered Shares. If Xxxxx
Xxxxxx, Xxxxx Xxxxxx X-X or North
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Castle II or any Affiliate of North Castle fails to subscribe for the Offered
Shares during the Refusal Period, the Selling Holder may sell to the Designated
Purchaser the Offered Shares at the Offer Price and on the Offer Terms.
(d) DISPOSITIONS BY NORTH CASTLE, NORTH CASTLE X-X XXX XXXXX
XXXXXX XX. Xxxxx Xxxxxx, Xxxxx Xxxxxx X-X and North Castle II may only sell,
transfer or otherwise dispose of any Covered Equity if each of them sell,
transfer or otherwise dispose of such Covered Equity on substantially similar
terms and conditions contemporaneously in transactions involving quantities of
such Covered Equity that are substantially similar on a pro rata basis.
4. TAG-ALONG RIGHTS. If North Castle, North Castle I-A, North
Castle II and their respective Affiliates or successors (the "NORTH CASTLE
SELLERS") desires to make a Permitted Transfer pursuant to clauses (ii) and (v)
of Section 3(a), which transfer, together with all prior transfers by the North
Castle Sellers involves more than 5% of the Common Stock owned by the North
Castle Sellers on the date hereof, following an offer (which offer must be in
writing, be irrevocable by its terms for at least 35 Business Days and be a bona
fide offer) from any prospective purchaser to purchase all or any part of the
Common Stock owned by the North Castle Sellers, the North Castle Sellers shall
give a Notice of Offer in writing to the Board and the other Stockholders (I)
designating the number of Offered Shares, (II) naming the Designated Purchaser
and (III) specifying the Offer Price and Offer Terms. During the 20 Business Day
period following receipt of such notice by the Company and the other
Stockholders, the other Stockholders shall have the right (a "TAG-ALONG RIGHT")
exercised by delivery of a written notice to the North Castle Sellers and the
Company, to participate in such sale to the Designated Purchaser at the Offer
Price and on the Offer Terms on a PRO RATA basis determined as the quotient
determined by dividing (A) the percentage of Common Stock held by each
Stockholder so electing to sell (each such Person, an "ACCEPTING STOCKHOLDER")
by (B) the aggregate percentage of Common Stock represented by the Common Stock
then held by all of the Accepting Stockholders and the North Castle Sellers. The
Company shall notify each Accepting Stockholder at least ten Business Days prior
to the closing of the proposed sale by the North Castle Sellers of the number of
Offered Shares which each such Accepting Stockholder may sell and such Accepting
Stockholder shall deliver into trust, three or more Business Days prior to the
closing certificates or other instruments representing the Offered Shares duly
endorsed for transfer or duly executed stock powers for release against payment
to such Accepting Stockholder of such Accepting Stock holder's net proceeds paid
for the shares of such Stockholder at the closing of such sale.
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5. TAKE-ALONG RIGHTS.
(a) TAKE-ALONG NOTICE. If the North Castle Sellers intend to
effect a sale (a "TAKE-ALONG SALE") of all of their shares of Common Stock to a
non-Affiliate third party (a "100% BUYER") prior to a Public Offering and elect
to exercise their rights under this Section 5, the North Castle Sellers shall
deliver written notice (a "TAKE-ALONG NOTICE") to the Company and the other
Stockholders, which notice shall (I) state (W) that the North Castle Sellers
wish to exercise their rights under this Section 5 with respect to such
transfer, (X) the name and address of the 100% Buyer, (Y) the per share amount
and form of consideration the North Castle Sellers propose to receive for its
shares of Common Stock and (Z) drafts of purchase and sale documentation setting
forth the terms and conditions of payment of such consideration and all other
material terms and conditions of such transfer (the "DRAFT SALE AGREEMENT"),
(II) contain an offer (the "TAKE-ALONG OFFER") by the 100% Buyer to purchase
from the other Stockholders all of their shares of Common Stock, on and subject
to the same price, terms and conditions offered to the North Castle Sellers and
(III) state the anticipated time and place of the closing of such transfer (a
"SECTION 5 CLOSING"), which (subject to such terms and conditions) shall occur
not fewer than 15 days nor more than 90 days after the date such Take-Along
Notice is delivered, PROVIDED that if such Section 5 Closing shall not occur
prior to the expiration of such 90-day period, the North Castle Sellers shall be
entitled to deliver another Take-Along Notice with respect to such Take-Along
Offer. Upon request of the North Castle Sellers, the Company shall provide the
North Castle Sellers with a current list of the names and addresses of the other
Stockholders.
(b) CONDITIONS TO TAKE-ALONG. Upon delivery of a Take-Along
Notice, each of the other Stockholders shall have the obligation to transfer all
of its shares of Common Stock pursuant to the Take-Along Offer, as such offer
may be modified from time to time, PROVIDED that the North Castle Sellers
transfer all of their shares of Common Stock to the 100% Buyer at the Section 5
Closing and that all shares of Common Stock held by the North Castle Sellers and
the other Stockholders are sold to the 100% Buyer at the same price, and on the
same terms and conditions PROVIDED FURTHER that a Stockholder shall only be
required to make, in connection with a Take-Along Sale, representations and
warranties that survive the closing of such Sale with respect to its authority,
its title to its Common Stock, certain conflicts, approvals and litigation
relating to it, and shall not be required to make any representations or
warranties with respect to the Company or its business that survive that Closing
of such Sale or with respect to any other Stockholder. Within five Business Days
prior to the closing contemplated by the Take-Along Notice, each of the other
Stockholders shall (I) deliver to the North Castle Sellers certificates
representing such other Stockholder's shares of Common Stock, duly endorsed for
transfer or accompanied by duly executed stock powers, and (II) execute and
deliver to the North Castle Sellers a power of attorney and a letter of
transmittal and custody
8
agreement in favor of the North Castle Sellers, and in form and substance
reasonably satisfactory to the North Castle Sellers appointing North Castle as
the true and lawful attorney-in-fact and custodian for such other Stockholder,
with full power of substitution, and authorizing the North Castle Sellers to
execute and deliver a purchase and sale agreement substantially in the form of
the Draft Sale Agreement and otherwise in accordance with the terms of this
Section 5(b) and to take such actions as the North Castle Sellers may reasonably
deem necessary or appropriate to effect the sale and transfer of the shares of
Common Stock to the 100% Buyer, upon receipt of the purchase price therefor set
forth in the Take-Along Notice at the Section 5 Closing, free and clear of all
security interests, liens, claims, encumbrances, options, and voting agreements
of whatever nature, together with all other documents delivered with such
Notice and required to be executed in connection with the sale thereof pursuant
to the Take-Along Offer. The North Castle Sellers shall hold such shares and
other documents in trust for such other Stockholder for release against payment
to such Stockholder of such Stockholder's net proceeds in accordance with the
contemplated transaction. If, within 15 days after delivery to the North Castle
Sellers, the North Castle Sellers have not completed the sale of all of the
shares of Common Stock owned by the North Castle Sellers and the other
Stockholders to the 100% Buyer and another Take-Along Notice with respect to
such Take-Along Offer has not been sent to the other Stockholders, the North
Castle Sellers shall return to each other Stockholder all certificates
representing the shares and all other documents that such other Stockholder
delivered in connection with such sale. The North Castle Sellers shall be
permitted to send only two Take-Along Notices with respect to any one Take-Along
Offer. Promptly after the Section 5 Closing, the North Castle Sellers shall
furnish such other evidence of the completion and time of completion of such
sale and the terms thereof as may reasonably be requested by any of the other
Stockholders.
(c) REMEDIES. Each of the Other Stockholders acknowledges that
North Castle would be irreparably damaged in the event of a breach or a
threatened breach by such other Stockholder of any of its obligations under this
Section 5 and each of the other Stockholders agrees that, in the event of a
breach or a threatened breach by such other Stockholder of any such obligation,
the North Castle Sellers shall, in addition to any other rights and remedies
available to it in respect of such breach, be entitled to an injunction from a
court of competent jurisdiction (without any requirement to post bond) granting
it specific performance by such other Stockholder of its obligations under this
Section 5. In the event that the North Castle Sellers shall file suit to enforce
the covenants contained in this Section 5 (or obtain any other remedy in respect
of any breach thereof), the prevailing party in the suit shall be entitled to
recover, in addition to all other damages to which it may be entitled, the costs
incurred by such party in conducting the suit, including reasonable attorney's
fees and expenses.
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6. PIGGYBACK REGISTRATION RIGHTS. (a) If the Company at any
time proposes to register any shares of Common Stock under the Securities Act
of 1933, as amended (the "SECURITIES ACT"), whether or not for sale for its own
account (other than pursuant to a Special Registration) and the registration
form to be used may also be used for the registration of Registrable Securities
(as defined below) owned by the Stock holders, the Company shall notify the
Stockholders at least 45 days prior to the filing of the first registration
statement in connection therewith. Upon the receipt of a written request of any
Stockholder made within 20 days after such notice (which request shall specify
the Registrable Securities intended to be disposed of by such Stockholder and
the intended method of disposition thereof), the Company will, subject to the
other provisions of this Section 8, include in such registration all Registrable
Securities with respect to which the Company has received a written request for
inclusion (a "PIGGYBACK REGISTRATION"). Each such request shall also contain an
undertaking from the applicable Stockholder to provide all such information and
material and to take all actions as may be reasonably required by the Company in
order to permit the Company to comply with all applicable federal and state
securities laws.
"REGISTRABLE SECURITIES" shall mean any shares of Common Stock
held by a Stockholder other than those not acquired from the Company, an
Affiliate thereof or another Stockholder. As to any particular Registrable
Securities once issued, such securities shall cease to be Registrable Securities
when (I) a registration statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such registration statement, (II) they
shall have been distributed to the public pursuant to Rule 144, or (III) they
shall have ceased to be outstanding.
(b) Each selling Stockholder shall pay all sales commissions
or other similar selling charges with respect to Registrable Securities sold by
such Stockholder pursuant to a Piggyback Registration. The Company shall pay all
registration and filing fees, fees and expenses of compliance with federal and
state securities laws, printing expenses, messenger and delivery expenses, fees
and disbursements of counsel and accountants for the Company, and reasonable
fees and disbursements of one counsel for all selling stockholders who shall be
selected, if the Piggyback Registration is also a Demand Registration, as
provided in Section 7(b)(i), unless the applicable state securities laws require
that stockholders whose securities are being registered pay their pro rata share
of such fees, expenses and disbursements, in which case each Stockholder
participating in the registration shall pay its PRO RATA share of all such fees,
expenses and disbursements based on its PRO RATA share of the total number of
shares being registered.
(c) If a Piggyback Registration is an underwritten
registration, only Registrable Securities which are to be distributed by the
underwriters may be included in
10
the registration. If the managing underwriters or, if the Piggyback Registration
is not an underwritten registration, the Company's investment bankers, advise
the Company in writing that in their opinion the number of securities requested
to be included in such registration exceeds the number which can be sold in such
offering or will have a material adverse effect on the price of the Registrable
Securities to be sold, the Company will include in such registration (I) if it
is not a Demand Registration (as defined below), the securities proposed to be
sold by the Company for its own account, and then Registrable Securities
proposed to be sold by Stockholders making a Piggyback Registration Request or,
(II) if such registration is a Demand Registration, the securities proposed to
be sold by the Company for its own account, and then Registrable Securities for
which registration has been requested pursuant to Section 7(a)(i) or 7(a)(ii),
in each case which Registrable Securities shall be included in such registration
in proportion (as nearly as practicable) to the amount of Registrable Securities
of the Company owned by each such holder of Registrable Securities to the total
amount of Registrable Securities as to which a Piggyback Registration and/or a
Demand Registration request has been made. Notwithstanding the foregoing, if the
managing underwriters or, if the registration is not an underwritten
registration, the Company's investment bankers, advise the Company in writing
that in their opinion, the inclusion in a Piggyback Registration of Common Stock
held by Management Stockholders will have a material adverse effect on the
offering, the Company will not include such Common Stock in such registration.
(d) Notwithstanding the foregoing, if at any time after giving
written notice to the Stockholders of its intention to register any shares of
Common Stock pursuant to subsection (a) of this Section 6 and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register such
securities, the Company may, at its election, give written notice of such
determination to each Stockholder and thereupon shall be relieved of its
obligation to register Registrable Securities as part of such terminated
registration (but not from its obligation to pay expenses in connection
therewith as provided in subsection (b) above). If a registration pursuant to
this Section 6 involves an underwritten public offering and a Stockholder
requests to be included in such registration, such Stockholder may elect, in
writing prior to the effective date of the registration statement filed in
connection with such registration, not to participate in such registration.
(e) Each Stockholder agrees not to sell or offer for public
sale or distribution, including pursuant to Rule 144, any of such Stockholder's
Common Stock within 15 days prior to or 180 days after the effective date of any
registration (except as part of such registration other than a Special
Registration) with respect to which piggyback registration rights are available
pursuant to this Section 6.
11
7. REGISTRATION UPON REQUEST. (a) REQUEST FOR REGISTRATION.
Upon the written request of Xxxxx Xxxxxx, Xxxxx Xxxxxx X-X and North Castle II
(the "INITIATING HOLDER") at any time after the date hereof requesting that the
Company effect pursuant to this Section 7 the registration (a "DEMAND
REGISTRATION") of any of such Initiating Holders' Registrable Securities under
the Securities Act (which request shall specify the Registrable Securities so
requested to be registered, the proposed amounts thereof, and the intended
method of disposition by the Initiating Holders), the Company shall promptly
give written notice of such requested registration to all Stockholders, and
thereupon the Company will, as expeditiously as reasonably possible, use its
commercially reasonable efforts to effect the registration under the Securities
Act of
(i) the Registrable Securities which the Company has been so
requested to register, for disposition in accordance with the intended
method of disposition stated in such request, and
(ii) all other Registrable Securities owned by Stockholders,
the holders of which shall have made a written request to the Company
for registration thereof (which request shall specify such Registrable
Securities and the proposed amounts thereof) within 30 days after the
receipt of such written notice from the Company,
all to the extent requisite to permit the disposition by the holders of the
securities constituting Registrable Securities so to be registered, PROVIDED
that the Company shall not be required to effect any registration pursuant to
this Section 7 if it is a registration with respect to which the Company is not
required to pay expenses pursuant to Section 7(b)(i) unless the Company shall
have received assurances satisfactory to it that the Initiating Holders will
bear the expenses of registration and PROVIDED, FURTHER, that each other
Stockholder proposing to register securities as part of such Demand Registration
shall agree in writing to pay its PRO RATA share of such expenses.
(b) LIMITATIONS ON REGISTRATIONS. The registration rights
granted to Initiating Holders pursuant to this Section 7 are subject to the
following limitations:
(i) Each selling Stockholder shall pay all sales commissions
or other similar selling charges with respect to the Registrable
Securities sold by such Stockholder pursuant to a Demand Registration.
In connection with four Demand Registrations pursuant to this Section
7, the Company shall pay all registration and filing fees, fees and
expenses of compliance with federal and state securities laws, printing
expenses, messenger and delivery expenses, fees and disbursements of
counsel and accountants for the Company and fees and expenses of one
counsel, selected by the Initiating Holders, for all selling
Stockholders in connection with a Demand Registration, unless the
applicable state securities laws
12
require that stockholders whose securities are being registered pay
their pro rata share of such fees, expenses and disbursements, in which
case each Stockholder participating in the registration shall pay its
pro rata share of all such fees, expenses and disbursements based on
its pro rata share of the total number of shares being registered,
PROVIDED that if a Demand Registration involves, pursuant to Section
6(c) hereof, a cutback of the number of Registrable Securities which
may be sold such that the Initiating Holders are not permitted to
register at least 50% of the Registrable Securities which they request
to register, then such Demand Registration shall not be deemed one of
the Initiating Holders' Demand Registrations with respect to which
expenses will be paid by the Company. In all other instances, the
selling Stockholders shall pay all expenses of a Demand Registration;
(ii) the Initiating Holders shall determine the method of
distribution of the securities to be registered in a Demand
Registration and if an underwritten offering, shall select the managing
underwriter of such offering;
(iii) the Company shall not be obligated to file a
registration statement under this Section 7 unless the total number of
shares of Registrable Securities requested to be included in such
offering by the Initiating Holders equals or exceeds 5% of the number
of shares of Common Stock outstanding on a fully diluted basis;
(iv) the Company shall be entitled to postpone for a
reasonable time not exceeding 90 days the filing of any registration
statement under this Section 7 if, at the time it receives a request
for a Demand Registration pursuant thereto, the Board shall determine
in good faith that such offering will interfere with a pending
financing, merger, sale of assets, recapitalization or other similar
corporation action which the Company is actively pursuing and is
material to the business of the Company; and
(v) a registration statement that does not become effective or
does not remain effective for the period specified in Section 8(b)
shall be deemed not to constitute a registration statement filed
pursuant to this Section 7, PROVIDED that, if such registration
statement does not become effective or does not remain effective for
such period solely by reason of the Initiating Holders' refusal to
proceed, it shall be deemed to constitute a registration statement
filed pursuant to Section 7 unless the Initiating Holders shall have
elected to pay all expenses in connection with such registration as
aforesaid.
13
(c) Each Stockholder agrees not to sell or offer for public
sale or distribution including, pursuant to Rule 144, any of such Stockholder's
Common Stock-within 15 days prior to or 180 days after the effective date of any
Demand Registration (except as part of such registration).
(d) The Company agrees not to effect any sale or distribution
of any of its equity securities or of any security convertible into or
exchangeable or exercisable for any equity security of the Company (other than
such sale or distribution of such securities in connection with any merger or
consolidation by the Company or any subsidiary of the Company or the acquisition
by the Company or a subsidiary of the Company of the capital stock or
substantially all the assets of any other Person or in connection with an
employee stock ownership or other benefit plan) during the 15 days prior to, and
during the 180 day period which begins on, the effective date of a registration
statement filed in connection with a Demand Registration (except as part of such
registration).
8. REGISTRATION PROCEDURES. If and whenever the Company is
required to use its commercially reasonable efforts to effect the registration
of any Registrable Securities under the Securities Act as provided in this
Agreement, the Company will promptly:
(a) prepare and file with the Securities and Exchange
Commission (the "COMMISSION") a registration statement with respect to such
securities and use its commercially reasonable efforts to cause such
registration statement to become effective;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement until such
time as all of such securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set forth in
such registration statement, but in no event for a period of more than six
months after such registration statement becomes effective;
(c) at least five business days before filing with the
Commission, furnish to counsel (if any) to the selling Stockholders such
registration copies of all documents proposed to be filed with the Commission in
connection with such registration, which documents will be subject to the review
of such counsel;
(d) furnish to each seller of securities such number of
conformed copies of such registration statement and of each amendment and
supplement thereto (in each case including all exhibits, except that the Company
shall not be obligated to furnish any
14
seller of securities with more than two copies of such exhibits), such number of
copies of the prospectus comprised in such registration statement (including
each preliminary prospectus and any summary prospectus), in conformity with the
requirements of the Securities Act, and such other documents, as such seller may
reasonably request in order to facilitate the disposition of the securities
owned by such seller;
(e) use its commercially reasonable efforts to register or
qualify all securities covered by such registration statement under the
securities or blue sky laws of such jurisdictions as each seller shall
request, and do any and all other acts and things which may be necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the securities owned by such seller, except that the Company
shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it is not so
qualified, or to consent to general service of process in any such
jurisdiction;
(f) in connection with an underwritten offering only, use its
commercially reasonable efforts to furnish to each seller copies of
(i) an opinion of counsel for the Company, dated the effective
date of the registration statement, and
(ii) a "comfort" letter signed by the independent public
accountants who have certified the Company's financial statements
included in the registration statement,
each covering substantially the same matters with respect to the registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountant's letters delivered to the underwriters in underwritten
public offerings of securities;
(g) notify each seller of any securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and at the request of any such seller prepare and furnish to such
seller a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material
15
fact required to be stated therein or necessary to make the statements therein
not mislead ing in the light of the circumstances then existing;
(h) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least 12 months, but not more than 18 months,
beginning with the first month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act;
(i) use its commercially reasonable efforts to list the
Registrable Securities covered by such registration statement on any securities
exchange (including NASDAQ), if such securities are not already so listed and if
such listing is then permitted under the rules of such exchange, and to provide
a transfer agent and registrar for such Registrable Securities not later than
the effective date of such registration statement;
(j) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(k) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the holders of a majority of the Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including, without limitation,
effecting a stock split or a combination of shares);
(l) in the event of the issuance of any stop order suspending
the effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any securities included in such registration statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order.
The Company may require each seller of any securities as to
which any registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing in order to permit the Company
to comply with all applicable federal and state securities laws.
The Company shall make available for inspection by any seller
of securities as to which any registration is being effected, any underwriter
participating in any disposition pursuant to the related registration statement,
and any attorney, accountant or other agent retained by any such seller or any
such underwriter (collectively, the "IN-
16
SPECTORS"), all financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries, if any, as shall be reasonably
necessary to enable them to exercise their due diligence responsibility, and
shall cause the Company's and its subsidiaries' officers, directors and
employees to supply all information and respond to all inquiries reasonably
requested by any such Inspector in connection with such registration statement.
Each Stockholder hereby agrees that upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
8(g), such holder will promptly discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 8(g), and, if so
directed by the Company, will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies, then in such holder's possession
of the prospectus covering such Registrable Securities current at the time of
receipt of such notice. In the event the Company shall give such notice, the
period mentioned in Section 8(b) shall be extended by the number of days during
the period from and including the date when each seller of any Registrable
Securities covered by such registration statement shall have received such
notice to but not including the date when each such seller receives copies of
the supplemented or amended prospectus contemplated by Section 8(g).
9. INDEMNIFICATION. (a) The Company agrees to indemnify, to
the extent permitted by law, each Stockholder participating in a registration
pursuant to this Agreement, the officers and directors of such Stockholder and
each Person that controls such Stockholder (within the meaning of the Securities
Act) against any and all losses, claims, damages, liabilities and expenses,
including all reasonable legal fees incurred therewith, arising out of, based
upon or resulting from any untrue statement or alleged untrue statement of a
material fact contained in any registration statement, prospectus or preliminary
prospectus, or any amendment thereof or supplement thereto, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statement therein not misleading in light of the
circumstances then existing or any violation or alleged violation by the Company
of any federal, state, foreign or common law rule or regulation applicable to
the Company and relating to action required of or inaction by the Company in
connection with any such registration, except insofar as the same result from or
are contained in any information furnished in writing to the Company by such
Stockholder and stated to be specifically for use therein or, in the case of an
underwritten offering only, from such Stockholder's failure to deliver a copy of
the registration statement, prospectus or preliminary prospectus or any
amendments thereof or supplements thereto.
17
(b) Each Stockholder participating in a registration pursuant
to this Agreement agrees to indemnify, to the extent permitted by law, the
Company, its directors and officers and each Person that controls the Company
(within the meaning of the Securities Act) against any and all losses, claims,
damages, liabilities and expenses, including all reasonable legal fees incurred
in connection therewith, arising out of, based upon or resulting from any untrue
statement or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus, or any amendment
thereof or supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
but only to the extent that such untrue statement or (as to the matters set
forth in such information or affidavit) omission is contained in any information
or affidavit furnished to the Company in writing by such Stockholder and stated
to be expressly for use therein and except insofar as the same result from the
Company's failure to deliver a copy of the registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto, PROVIDED
that such Stockholder's obligations hereunder shall be limited to an amount
equal to the proceeds to such Stockholder of the Registrable Securities sold
pursuant to such registration statement.
(c) In connection with an underwritten offering, the Company
and each Stockholder participating in the related registration will indemnify
the underwriter(s), their officers and directors and each Person who controls
such underwriter(s) (within the meaning of the Securities Act) to the same
extent as provided in subsections (a) and (b), respectively, above.
(d) Promptly after receipt by an indemnified party of notice
of the commencement of any action or proceeding involving a claim referred to in
the preceding subsections of this Section 9, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action, PROVIDED that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subsections of this Section 9, except to the extent that the indemnifying party
is actually and materially prejudiced by such failure to give notice. In any
case in which any such action is brought against an indemnified party, the
indemnifying party will be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified, to the
extent that it may wish, with counsel reasonably satisfactory (taking into
account, among other factors, any potential exposure of the indemnified party to
criminal liability) to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party for any legal or other expenses subsequently incurred by the latter in
connection with the defense
18
thereof unless, in the reasonable judgment of any such indemnified party, a
conflict of interest may exist between such indemnified party and any
indemnifying party or any other of such indemnified parties, in which case the
indemnifying party shall be liable to such indemnified party for any reasonable
legal or other expenses incurred in defending such action. No indemnifying party
will consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
of such claim or litigation. Notwithstanding the foregoing, and without limiting
any of the rights set forth above, in any event any party will have the right to
retain, at its own expense, counsel with respect to the defense of a claim.
(e) If for any reason the foregoing indemnity is unavailable,
then the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of such losses, claims, damages, liabilities
or expenses (I) in such proportion as is appropriate to reflect the relative
benefits (which relative benefits with respect to such offering shall be deemed
to be in the same proportion as the respective net proceeds received from such
offering by the Company and the Stockholders determined as set forth on the
table on the cover page of the prospectus) received by the indemnifying party on
the one hand and the indemnified party on the other or (II) if the allocation
provided by subdivision (i) above is not permitted by applicable law or provides
a lesser sum to the indemnified party than the amount hereinafter calculated, in
such proportion as is appropriate to reflect not only the relative benefits
received by the indemnifying party on the one hand and the indemnified party on
the other but also the relative fault of the indemnifying party and the
indemnified party (which relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Company or the Stockholders, the intent of the
parties and their relative knowledge, access to information and opportunity to
prevent or correct such statement or omission) as well as any other relevant
equitable consideration. Notwithstanding the foregoing, (A) no holder of
Registrable Securities shall be required to contribute any amount in excess of
the amount such holder would have been required to pay to an indemnified party
if the indemnity under subsection (b) of this Section 9 was available and (B) no
underwriter, if any, shall be required to contribute any amount in excess of the
amount by which the total price at which the Registrable Securities underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages which such underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. The
obligation of any underwriters to contribute pursuant to this Xxx-
00
xxxx 0 xxxxx xx several in proportion to their respective underwriting
commitments and not joint.
(f) An indemnifying party shall make payments of all amounts
required to be made pursuant to the foregoing provisions of this Section 9 to or
for the account of the indemnified party from time to time promptly upon receipt
of bills or invoices relating thereto or when otherwise due and payable.
10. AFFILIATE TRANSACTIONS. The Company will not engage in any
transaction or series of related transactions (other than Exempted Transactions)
with North Castle, North Castle I-A or North Castle II or any of their
respective Affiliates and any successor to any such person unless (i) the
transaction (or series of related transactions) is on terms and conditions no
less favorable than would be obtainable by the Company in an arm's-length
transaction and the Chief Financial Officer of the Company delivers to the Board
and to AEA a certificate to such effect and (ii) if the transaction (or series
of related transactions) involves an amount more than $1 million, a majority of
the members of the Board who are not officers, employees or managing members of
the Company, or of Xxxxx Xxxxxx, Xxxxx Xxxxxx X-X or North Castle II or any of
their respective Affiliates shall have approved such transactions in writing or
at a duly convened meeting of the Board.
11. MANAGEMENT STOCKHOLDERS.
(a) CALL OPTION. In the event of a Management Stockholder's
termination of employment at the Company for any reason other than for death or
permanent disability, the Company shall have an option (a "CALL OPTION") to
purchase from the Management Stockholder all (but not less than all) of the
Management Stockholder's Covered Equity at a price equal to the fair market
value of the Covered Equity determined as of the date of repurchase by the Board
of Directors of the Company in its sole discretion. If the Company desires to
exercise the Call Option, it shall give written notice thereof to the Management
Stockholder within 60 days of the occurrence of the event giving rise to such
Call Option. Such Call Option shall expire if such notice is not given within
such 60-day period. The Management Stockholder shall deliver to the Company
certificates representing the Covered Equity, free and clear of all claims,
liens, or encumbrances, together with blank stock powers, duly executed with all
signature guarantees at a closing at the principal office of the Company on the
third business day after notice has been given to the Management Stockholder, or
at such other place and time and in such manner as may be mutually agreed to by
the Management Stockholder and the Company. The net proceeds from the purchase
of the Covered Equity pursuant to the Call Option (the "CALL OPTION PROCEEDS")
shall be paid by a check, which shall be delivered to the Management Stockholder
at the closing of such purchase.
20
(b) TERMINATION OF CALL OPTION. All rights and obligations
created pursuant to Section 11(a) shall be extinguished upon the earlier of (I)
June 30, 2002 or (II) a Public Offering.
(c) PUT OPTIONS. In the event of (I) the permanent disability
of the Management Stockholder so that he is unable substantially to perform his
services as an employee of the Company for an aggregate of 180 days during any
twelve-month period or (II) the death of the Management Stockholder, the
Management Stockholder or, in the event of death, the deceased Management
Stockholder's administrator or executor, shall have the option (the "PUT
OPTION"), exercisable by the giving of notice thereof to the Company within 120
days of the occurrence of the event giving rise to such Put Option, which, in
the case of permanent disability, shall mean the 180th day of inability to
perform services as an employee of the Company, to sell to the Company, and the
Company upon exercise of such Put Option shall buy from the Management
Stockholder or the deceased Management Stockholder's administrator or executor,
as the case may be, all (but not less than all) of the Management Stockholder's
Covered Equity, at a price per share equal to the fair market value of the
Covered Equity determined as of the date of repurchase by the Board of Directors
of the Corporation in its sole discretion. Such Put Option shall expire if such
notice is not given within such 120-day period. The Management Stockholder, or
the deceased Management Stockholder's administrator or executor, shall deliver
to the Company certificates representing the Covered Equity, free and clear of
all claims, liens, or encumbrances, together with blank stock powers, duly
executed with all signature guarantees at a closing at the principal office of
the Company on the third business day after notice has been given to the Company
or at such other place and time and in such manner as may be mutually agreed to
by the Management Stockholder, or the deceased Management Stockholder's
administrator or executor, and the Company. The net proceeds from the purchase
of the Covered Equity pursuant to the Management Stockholder Option (the "PUT
OPTION PROCEEDS") shall be paid by a check, which shall be delivered to the
Management Stockholder at the closing of such purchase. The obligations of the
Company to purchase the Management Stockholder's Covered Equity pursuant to this
Section 11(c) shall be deferred during any period in which such purchase would
not be permitted by applicable law or could cause the Company to be in default
under any agreement to which it or its Subsidiaries are a party.
(d) TERMINATION OF PUT OPTION. All rights and obligations
created pursuant to Section 11(c) shall be extinguished upon the earlier of (I)
the fifth anniversary of this Agreement or (II) a Public Offering.
12. SEVERABILITY. If any provision of this Agreement is
invalid, inoperative or unenforceable for any reason, such circumstance shall
not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or
21
circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative or unenforceable to any extent whatsoever. The invalidity
of any one or more phrases, sentences, clauses, Sections or subsections of this
Agreement shall not affect the remaining portions of this Agreement.
13. INFORMATION. (a) Each of the Stockholders agrees that,
from the date of this Agreement and for so long as it shall own any Covered
Equity, it will furnish the Company such necessary information and reasonable
assistance as the Company may reasonably request (X) in connection with the
consummation of the transactions contemplated by this Agreement, (Y) in
connection with the preparation and filing of any reports, filings,
applications, consents or authorizations with any Governmental Entity under any
Applicable Laws and (Z) in order for the Company to determine, from time to
time, whether it is a "personal holding company" within the meaning of Section
542 of the Code. Each Stockholder proposing to make a transfer pursuant to
Section 3(a) shall provide the Company with any information reasonably requested
in order for the Company to determine whether the proposed transfer would be a
Prohibited Transaction.
(b) Within 90 days of the end of each fiscal year, the Company
shall mail to each Stockholder a report setting forth an audited balance sheet
as at the end of such fiscal year and audited statements of income, common
shareholders' equity and cash flows for such fiscal year of the Company and its
Subsidiaries on a consolidated basis, and any other information the Company
deems necessary or desirable. The Company will furnish quarterly financial
statements to Stockholders as requested.
(c) The Company also will furnish to AEA such other
information as AEA may from time to time reasonably request on behalf of itself
or the other Covered Shareholders.
14. CERTAIN DEFINITIONS.
"AFFILIATE" means with respect to any Person, any other Person
directly or indirectly Controlling, Controlled by or under common Control with
such first Person.
"APPLICABLE LAWS" means all applicable provisions of (I)
constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, codes or orders of any Governmental Entity, (II) any
consents or approvals of any Governmental Entity and (III) any orders,
decisions, injunctions, judgments, awards, decrees of or agreements with any
Governmental Entity.
"BUSINESS DAY" means a day other than a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
to close.
22
"CHANGE OF CONTROL" means any transaction or series
transaction, the result of which is that Xxxxx Xxxxxx, Xxxxx Xxxxxx X-X and
North Castle II no longer have the right, in the aggregate, to nominate a
majority of the members of the Board.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON STOCK" means all shares of any class common stock of
the Company, whether voting or non-voting, outstanding from time to time.
"CONTROL" means the power to direct the affairs of a Person by
reason of ownership of voting securities, by contract or otherwise.
"COVERED EQUITY" means all of the shares of Common Stock,
preferred stock or other equity interest in the Company, and any other security,
warrant or other right that is or may allow the holder thereof to receive Common
Stock or preferred stock or other equity interest, owned from time to time by
any of the Stockholders.
"COVER SHAREHOLDERS" is defined in the recitals to this
Agreement.
"COVERED SHAREHOLDERS AGREEMENTS" means the agreements between
AEA and the Covered Shareholders pursuant to which the Covered Shareholders have
appointed AEA as their representative and have granted AEA a proxy to vote their
Common Stock in accordance with the provisions of this Agreement.
"EXEMPTED TRANSACTIONS" means (I) the investment banking
services provided by North Castle Partners, L.L.C. (the "Sponsor") in connection
with the recapitalization of the Company consummated as of June 30, 1997, in
consideration of which the Company has agreed to pay the Sponsor a fee of $3.5
million and (II) the ongoing monitoring and management services to be provided
to the Company, in consideration of which the Company has agreed to pay the
Sponsor an annual fee of $1.5 million.
"GOVERNMENTAL ENTITY" means any federal, state, local or
foreign court, legislative, executive or regulatory authority or agency.
"INFORMATION" means all information about the Company or any
of its subsidiaries (whether written or oral or in electronic or other form and
whether prepared by the Company, its advisers or otherwise), that is or has been
furnished to any Stockholder or any of its Representatives by or on behalf of
the Company or any of its subsidiaries, or any of their respective
Representatives, together with all written or electronically stored
documentation prepared by such Stockholder or its Representatives
23
based on or reflecting, in whole or in part, such information, PROVIDED that the
term "Information" does not include any information that (X) is or becomes
generally available to the public through no action or omission by any
Stockholder or its Representatives or (Y) is or becomes available to such
Stockholder on a nonconfidential basis from a source, other than the Company or
any of its subsidiaries, or any of their respective Representatives, that to
the best of such Stockholder's knowledge, after reasonable inquiry, is not
prohibited from disclosing such portions to such investor by a contractual,
legal or fiduciary obligation.
"MANAGEMENT STOCKHOLDER" means any stockholder who is as of
the date hereof or later becomes, a consultant to or an officer or employee of
the Company other than Xxxxxxx Xxxxxx and Xxxxx Xxxxxxxx.
"NORTH CASTLE SELLERS" is defined in Section 4.
"PERSON" means any natural person, firm, individual,
partnership, joint venture, business trust, trust, association, corporation,
company or unincorporated entity.
"PROHIBITED TRANSFER" means any transfer of Covered Equity to
a Person which (U) may not be effected without registering the securities
involved under the Securities Act, (V) would result in the assets of the Company
constituting Plan Assets as such term is defined in the Department of Labor
regulations promulgated under the Employer Retirement Income Security Act of
1974, as amended, (X) would cause the Company to be, be Controlled by or under
common Control with an "investment company" for purposes of the Investment
Company Act of 1940, as amended, or (Y) would require any securities of the
Company to be registered under the Securities and Exchange Act of 1934, as
amended.
"PUBLIC OFFERING" means any sale of Common Stock to the public
pursuant to an effective registration statement under the Securities Act
underwritten by an underwriter of national standing other than a Special
Registration.
"REPRESENTATIVES" means with respect to any Person, any of
such Person's directors, officers, employees, general partners, affiliates,
attorneys, accountants, financial and other advisers, and other agents and
representatives, including in the case of any Stockholder any person nominated
to the Board by such Stockholder.
"RULE 144" means Rule 144 (or any successor provision) under
the Securities Act.
24
"SPECIAL REGISTRATION" means (A) The registration of shares of
equity securities and/or options or other rights in respect thereof to be
offered to Management Stockholders or (B) the registration of equity securities
and/or options or other rights in respect thereof solely on Form S-4 or S-8 or
any successor form.
"SPECIFIED AFFILIATE" means (a) with respect to any Person,
any other Person directly or indirectly Controlling, Controlled by or under
common Control with such first person solely by virtue of having the power to
direct the affairs of the Person by reason of ownership, directly or indirectly,
of at least 75% of the outstanding voting securities of such Person, (b) with
respect to any Management Stockholder, Xxxxxxx Xxxxxx, Xxxxx Xxxxxxxx or Xxxxxxx
X. Xxxxx, Xx., a Specified Affiliate shall include (I) a spouse or any lineal
ancestor or descendant, and (II) the trustee or trustees of a trust or trusts at
any time established for the primary benefit of the Stockholder or the spouse or
any lineal ancestor or descendant of the Stockholder to whom such Management
Stockholder or Xxxxxxx X. Xxxxx, Xx. proposes to transfer its Common Stock and
who has agreed to be bound by this Agreement, and (c) with respect to AEA and
the Covered Shareholders, any current or future employee, shareholder, director
or officer of AEA, any spouse, issue, parents or other relatives of any of the
foregoing or of any Covered Shareholder or (i) trusts for the benefit of any of
such Persons, (ii) entities controlling or controlled by any of such Persons and
(iii) in the event of the death of any such individual Person, heirs or
testamentary legatees of such Person, in each case to whom AEA or a Covered
Shareholder has proposed to transfer its Common Stock and who has entered into a
Covered Shareholders Agreement and thereby or otherwise agrees to be bound by
this Agreement.
15. NOTICES. All notices and other communications made in
connection with this Agreement shall be in writing. Any notice or other
communication in connection herewith shall be deemed duly given to any party (A)
two Business Days after it is sent by express, registered or certified mail,
return receipt requested, postage prepaid or (B) one Business Day after it is
sent by overnight courier guaranteeing next day delivery, in each case,
addressed as follows or, to such other address as may be specified in writing to
the other parties hereto:
(i) if to the Company:
Xxxxxx Health Products Group Inc.
000 X. 000xx Xxxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
25
(ii) if to North Castle, North Castle I-A, North Castle II
or NCP:
c/o North Castle Partners, L.L.C.
00 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Xx.
with a copy to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
(iii) if to Squam IV:
Squam Lake Investors IV, L.P.
c/o Bain and Company, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxx
(iv) if to the other Stockholders, at the addresses set
forth on the signature pages to the Original
Stockholders Agreement
Any party may give any notice or other communication in connection herewith
using any other means (including, but not limited to, personal delivery,
messenger service, facsimile, telex or ordinary mail), but no such notice or
other communication shall be deemed to have been duly given unless and until it
is actually received by the individual for whom it is intended.
16. TERM. This Agreement shall be effective as of the date
hereof and shall terminate and be of no further force and effect upon the
earliest to occur of (I) June 30, 2007, (II) the termination of this Agreement
by the unanimous written consent of the Stockholders, (III) the establishment of
a Public Market for the Common Stock or (IV) a Change of Control except that the
registration rights provided in Section 6 and Section 7 will survive until AEA
and the Covered Shareholders (as a group) and Xxxxx Xxxxxx, Xxxxx Xxxxxx X-X and
North Castle II (as a group) each owns Common Stock representing
26
less than 5% of the Company's outstanding Common Stock. A "PUBLIC MARKET" for
the Common Stock shall be deemed to have been established at such time as 20% of
the Common Stock (on a fully diluted basis) shall have been sold to the public
pursuant to an effective registration statement under the Securities Act other
than a Special Registration.
17. HEADINGS. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
18. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof. Without
limiting the foregoing, the Company and each Stockholder who is party to a
Participants' Subscription Agreement or a Management Subscription Agreement
hereby agree that such agreement is hereby terminated and superseded by this
Agreement.
19. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
20. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
applicable to agreements made and performed within such State.
21. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns.
22. ASSIGNMENT. This Agreement shall not be assignable by any
party without the prior written consent of the other parties.
23. NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement
shall confer any rights upon any Person other than the parties hereto and each
such party's respective heirs, successors and permitted assigns.
24. AMENDMENT; WAIVERS, ETC. If AEA and Covered Shareholders
own 5% or more of the outstanding Common Stock, then AEA must consent in writing
to any amendment hereto. This Agreement may be amended, and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, if the Company shall have obtained the written consent to such
amendment, action or omission to act, of the holder or holders of at least
662/3% of the shares of Common Stock outstanding as of the date hereof, PROVIDED
that this Agreement may not be amended in a
27
manner adversely affecting any Stockholder which does not adversely affect all
Stockholders without the consent of such Stockholder PROVIDED, FURTHER, that in
no event may the provisions of this agreement with respect to the Piggy Back
Registration Rights (including the Company's obligations thereunder) or the
Tag-Along Rights be amended without the consent in writing of AEA. No amendment,
modification or discharge of this Agreement, and no waiver hereunder, shall be
valid or binding unless set forth in writing and duly executed by the party
against whom enforcement of the amendment, modification, discharge or waiver is
sought. Any such waiver shall constitute a waiver only with respect to the
specific matter described in such writing and shall in no way impair the rights
of the party granting such waiver in any other respect or at any other time.
25. CONSENT TO JURISDICTION. Each party irrevocably submits to
the exclusive jurisdiction of (A) the Supreme Court of the State of New York,
New York County, and (B) the United States District Court for the Southern
District of New York, for the purposes of any suit, action or other proceeding
arising out of this Agreement or any transaction contemplated hereby (and agrees
not to commence any such suit, action or other proceeding except in such
courts). Each party further agrees that service of any process, summons, notice
or document by U.S. registered mail to such party's respective address set forth
or referred to in Section 15 shall be effective service of process for any such
suit, action or other proceeding. Each party irrevocably and unconditionally
waives any objection to the laying of venue of any such suit, action or other
proceeding in (I) the Supreme Court of the State of New York, New York County,
and (II) the United States District Court for the Southern District of New York,
that any such suit, action or other proceeding brought in any such court has
been brought in an inconvenient forum.
26. WAIVER OF JURY TRIAL. Each party hereby waives, to the
fullest extent permitted by applicable law, any right it may have to a trial by
jury in respect of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby. Each party (A) certifies that
no representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (B) acknowledges that it
and the other parties have been induced to enter into the Agreement by, among
other things, the mutual waivers and certifications in this Section 26.
27. AEA AUTHORITY. AEA hereby represents and warrants to each
other party hereto that, pursuant to the Covered Shareholders Agreements, it has
been duly authorized to execute this Agreement, and to exercise all rights and
perform all obligations hereunder, on behalf of each Covered Shareholder.
28
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement by their authorized representatives as of the date first above
written.
XXXXXX HEALTH PRODUCTS GROUP INC.
By: /s/ XXXX X. XXXXXXXXX
--------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: President
NORTH CASTLE PARTNERS I, L.L.C.
By: Xxxxx Investment Group, L.L.C.,
its managing member
By: /s/ XXXXX XXXXXXXXX
--------------------------------
Name: Xxxxx Xxxxxxxxx
Title:
NORTH CASTLE PARTNERS I-A, L.P.
By: NCP G.P. I-A, L.L.C.,
its general partner
By: /s/ XXXXX XXXXXXXXX
--------------------------------
Xxxxx Xxxxxxxxx
Managing Director
29
NORTH CASTLE PARTNERS II, L.P.
By: NCP X.X. XX, L.P.,
its general partner
By: North Castle XX XX, L.L.C.,
its general partner
By: /s/ XXXXX XXXXXXXXX
--------------------------------
Name: Xxxxx Xxxxxxxxx
Title:
NCP CO-INVESTMENT FUND, L.P.
By: NCP Co-Investment GP, L.L.C.,
its general partner
By: /s/ XXXXX XXXXXXXXX
--------------------------------
Name: Xxxxx Xxxxxxxxx
Title:
30
SQUAM LAKE INVESTORS IV, L.P.
By: GPI, Inc.,
its managing general partner
By: /s/ XXXXX X. XXXXXXXX
--------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President of GPI, Inc.,
its Managing General Partner
AEA INVESTORS INC.
For itself and on behalf of the
Covered Shareholders
By: /s/ XXXXXXXXX X. XXXXX
--------------------------------
Xxxxxxxxx X. Xxxxx
General Counsel and Vice
President
31
IN WITNESS WHEREOF, the undersigned has duly executed this
Agreement by its authorized representative as of June __, 2000.
NCP I SUB, L.P.
By: North Castle Partners I, L.L.C.,
its general partner
By:
--------------------------------
Name:
Title:
32
