EXHIBIT 4.12
AMENDED AND RESTATED SECURITYHOLDERS AGREEMENT
AMENDED AND RESTATED SECURITYHOLDERS AGREEMENT, dated as of June 16,
1997 among CASTLE DENTAL CENTERS, INC. a Delaware corporation (the "Company"),
Xxxx X. Xxxxxx, D.D.S., P.C, a Texas professional corporation ("New PC"), the
investors listed on Exhibit I.A hereto (the "Investors"), the shareholders of
the Company listed on Exhibit I.B hereto (the "Shareholders") and the
shareholders of New PC listed on Exhibit I.C hereto (the "PC Holders").
RECITALS
WHEREAS, the Company, New PC and JHCDDS, Inc., a Texas professional
corporation ("Old PC") are parties to a Securities Purchase Agreement with the
Investors, dated as of December 18, 1995, as amended by Amendment No. 1 thereto,
dated as of the date hereof (as amended, the "Securities Purchase Agreement"),
authorizing the issuance and delivery of (i) $7,500,000 of 12% Senior
Subordinated Notes (the "Original Notes"), (ii) 1,244,737 shares of the
Company's Series A Convertible Preferred Stock, par value $.001 per share (the
"Series A Convertible Preferred Stock"), (iii) $2,000,000 of 12% New Senior
Subordinated Notes (the "New Notes" and, collectively with the Original Notes,
the "Notes") and (iv) 485,382 shares of Series C Convertible Preferred Stock,
par value $.001 per share (the "Series C Convertible Preferred Stock" and,
collectively with the Series A Convertible Preferred Stock, the "Convertible
Preferred Stock").
WHEREAS, the parties hereto are parties to Securityholders
Agreement, dated as of December 18, 1995 (the "Original Agreement").
WHEREAS, it is a condition to the execution of Amendment No. 1 to
the Securities Purchase Agreement that the parties hereto enter into this
Agreement for the purpose of amending and restating the original Agreement in
its entirety.
NOW, THEREFORE, in consideration of the foregoing premises and
mutual covenants and agreements contained herein, the parties hereto agree to
amend and restate the Original Agreement in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. Capitalized terms used but not defined
herein shall have the meaning ascribed to them in the Securities Purchase
Agreement. As used herein, the following terms shall have the following
meanings:
"AFFILIATE" shall mean, with respect to any person or entity, (i)
any other person or entity which, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with such
person or entity, and (ii) in the case of any individual, the spouse, lineal
descendants or ancestors of such individual, any trust for the benefit of such
individual or over which such individual may exercise a power of appointment and
any trust entirely for the benefit of such spouse and/or lineal descendants
and/or such individual. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a person or entity, whether by virtue of the ownership of voting
stock, by contract or otherwise.
"COMPANY" shall have the meaning set forth in the preamble.
"CONVERTIBLE PREFERRED STOCK" shall have the meaning set forth in
the first recital.
"INITIATING SHAREHOLDER" shall have the meaning specified in Section
2.4(a).
"INVESTORS" shall have the meaning set forth in the preamble.
"NOTES" shall have the meaning set forth in the first recital.
"OWNED" as to any Shares or PC Shares, as applicable, shall mean all
Shares as to which any Person would be deemed to be a beneficial owner or PC
Shares, as applicable, within the meaning of Rule 13d-3 of the Exchange Act.
"PC SHARES" shall mean any shares of Capital Stock of New PC.
"PARTICIPATING OFFEREE" shall have the meaning specified in Section
2.4(a).
"PARTICIPATION NOTICE" shall have the meaning specified in Section
2.4(a).
"PARTICIPATION SECURITIES" shall have the meaning specified in
Section 2.4(a).
"PARTICIPATION TRANSFER" shall have the meaning specified in Section
2.4(a).
"SECURITIES" shall mean the Bridge Notes, Notes and the Convertible
Preferred Stock.
"SECURITIES PURCHASE AGREEMENT" shall have the meaning set forth in
the first recital.
"SERIES A CONVERTIBLE PREFERRED STOCK" shall have the meaning set
forth in the first recital.
"SERIES C CONVERTIBLE PREFERRED STOCK" shall have the meaning set
forth in the first recital.
"SHAREHOLDERS" shall have the meaning set forth in the preamble.
"SHARES" shall mean the shares of Common Stock and any other shares
of capital stock of the Company.
"THIRD PARTY" or "THIRD PARTIES" shall mean any person, firm,
corporation or other entity, but, as to any Shareholder, shall not include the
estate of such Shareholder.
"TRANSFER" shall have the meaning set forth in Section 2.1 hereof.
"TRANSFEREE" shall mean any Person acquiring Shares from a
Shareholder and any subsequent transferee of any such Person herein referred to
as a "Transferee" of such Person.
ARTICLE II
RESTRICTIONS ON TRANSFER
Section 2.1 TRANSFER OF SHARES AND PC SHARES. During the term of
this Agreement, no Shareholder or PC Holder shall, directly or indirectly,
offer, sell, assign, transfer, grant a participation interest in, pledge,
encumber or otherwise dispose of, or place in trust (voting or otherwise) (each
such transaction being herein called a "Transfer") to any Third Party any Shares
or PC Shares, as applicable, Owned by such Shareholder or PC Holder unless such
transfer is in accordance with the provisions of this Agreement.
Section 2.2 AGREEMENT TO BE BOUND. No Transfer of Shares or PC
Shares, as applicable, by a Shareholder or PC Holder shall be effective unless
(i) the certificates representing such Shares or PC Shares, as applicable,
issued to the Transferee shall bear the legend provided in Section 2.3 and (ii)
the Transferee (if not already a party hereto) shall have executed and delivered
to each Investor and Shareholder (or PC Holder, as applicable), as a condition
precedent to such Transfer, an instrument or instruments reasonably satisfactory
to such parties confirming that the Transferee agrees to be bound by the terms
of this Agreement in the same manner as such Transferee's transferor, except as
otherwise provided in this Agreement.
Section 2.3 RESTRICTIVE LEGEND. Each certificate evidencing Shares
Owned by each Shareholder or PC Shares Owned by each PC Holder shall be
conspicuously stamped or otherwise imprinted with a legend in substantially the
following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO RESTRICTIONS ON TRANSFER AND CAN BE TRANSFERRED ONLY PURSUANT TO
THE TERMS OF AN AMENDED AND RESTATED SECURITYHOLDERS AGREEMENT DATED
AS OF JUNE 16, 1997 AMONG THE COMPANY AND CERTAIN HOLDERS OF ITS
SECURITIES. A COPY OF SUCH AGREEMENT WILL BE FURNISHED WITHOUT
CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
Section 2.4 PARTICIPATION RIGHTS. Except as set forth in Section
2.5, no Shareholder may Transfer any Shares Owned by such Shareholder as long as
any Notes remain outstanding. Thereafter, any Shareholder hereto may Transfer
any shares of Common Stock Owned by such Shareholder if the following terms and
conditions have been satisfied:
(a) Any Shareholder hereto (the "Initiating Shareholder") shall give
notice of any intended Transfer (each, a "Participation Transfer") to each
Investor (each, a "Participating Offeree"). Such notice (the "Participation
Notice") shall set forth the terms and conditions of such proposed Participation
Transfer, including the name of the prospective transferee, the number of Shares
proposed to be Transferred (the "Participation Securities"), the purchase price
per share proposed to be paid therefor, the payment terms and type of
Participation Transfer to be effectuated, and any other material terms and
conditions of such proposed Participation Transfer. Within 20 days following the
delivery of the Participation Notice by the Initiating Shareholder, each
Participating Offeree shall have the right, but not the obligation, to
participate in such Participation Transfer by Transferring (up to the number of
shares of Common Stock Owned by such Participating Offeree), that number of
shares equal to the product obtained by multiplying (i) the total number of
shares of Common Stock proposed to be Transferred in the Participation Transfer
times (ii) a fraction, the numerator of which shall be equal to the aggregate
number of shares of Common Stock Owned by such Participating Offeree (or
issuable upon conversion in full of any Convertible Preferred Stock held
thereby) immediately prior to the Participation Transfer and the denominator of
which is equal to the sum of (x) the aggregate number of shares of Common Stock
Owned by the Initiating Shareholder immediately prior to the Participation
Transfer plus (y) the aggregate number of shares of Common Stock Owned by all
other Participating Offerees (or issuable upon conversion in full of any
Convertible Preferred Stock held thereby) immediately prior to the Participation
Transfer and (z) the aggregate number of shares of Common Stock comprising the
numerator. In the event that a Participating Offeree elects not to participate
in the Participation Transfer, then the other Participating Offerees may sell
additional shares PRO RATA to the extent of such Participating Offeree's
non-participation. Any such Participation Transfers shall be on the same terms
and conditions as the proposed Participation Transfer by the Initiating
Shareholder.
(b) The closing of any proposed Participating Transfer in respect of
which a Participation Notice has been delivered shall occur not earlier than 30
days nor more than 90 days after the date the last Participation Notice has been
given. The closing shall be held at 10:00 a.m., local time, on the date of
closing at the principal office of the Company, or at such other time or place
as the parties to such transaction mutually agree. At the closing, the
Initiating Shareholder, together with all Participating Offerees electing to
transfer shares of Common Stock, shall deliver to the proposed Transferee (i)
certificates evidencing the shares of Common Stock to be transferred pursuant
thereto, free and clear of any lien, claim or encumbrance and (ii) such other
documents, including, without limitation, executed stock powers and evidence of
ownership and authority, as the Transferees shall reasonably request, and shall
receive in exchange therefor the consideration to be paid or delivered by the
proposed Transferee in respect of such shares as described in the Participation
Notice.
(c) Notwithstanding anything contained in this Section 2.4, the
Transfers permitted by this Section 2.4 shall not include pledges or
encumbrances of Shares.
Section 2.5 PERMITTED TRANSFERS. Notwithstanding any provision in
this Article II to the contrary, any individual Shareholder or PC Holder may
Transfer, without compliance with the requirements of Section 2.4, Shares or PC
Shares to (a) the PC Stock Option Agreement or any successor agreement and (b)to
the immediate family members (including grandchildren) or the estate of any such
Shareholder or PC Holder (including, without limitation, any Transfer by such
Shareholder or PC Holder to or among any trust, custodial or other similar
accounts or funds in which such Shareholder or PC Holder or other member of his
immediate family serves as trustee, custodian or a similar fiduciary capacity)
pursuant to a bona fide gift, in each instance, subject always to the terms and
provisions of this Agreement. Any such Transferee shall receive and hold the
Shares so transferred subject to the terms and provisions of this Agreement
(including the restrictions on Transfer in this Article II) and shall be deemed
a Shareholder or PC Holder, as applicable, for purposes hereof.
Section 2.6 IMPROPER TRANSFER. Any attempt to Transfer any Shares or
PC Shares not in compliance with this Agreement shall be null and void and
neither the Company nor New PC, as the case may be, nor any transfer agent shall
give any effect in the Company's or New PC's stock records to such attempted
Transfer.
Section 2.7 ADJUSTMENT OF TIME PERIODS. The closings referred to in
Sections 2.4(b) shall be extended for such amount of time as is necessary for
expiration of all regulatory holding periods and to obtain any governmental and
regulatory consents and approvals necessary in respect of the purchase or sale
of Shares to take place at such closing.
ARTICLE III
MISCELLANEOUS
Section 3.1 BOARD OF DIRECTORS, POLICY BOARD. (a) Subject to the
rights of the holders of the Series C Convertible Preferred Stock to elect a
majority of the Board of Directors of the Company under the circumstances set
forth in the Certificate of Designation, as long as (i) any of the Notes are
outstanding or (ii) the Investors beneficially own at least 4.4 percent of the
Fully Diluted Outstanding Shares, (x) the Company and the Shareholders shall
take all action within their respective power, including, but not limited to,
the voting of capital stock of the Company, required to cause the Board of
Directors of the Company to at all times consist of at least 4 and no more than
7 members, one of whom shall be designated by the Investors (the "Designee") and
(y) New PC and the PC Holders shall take all action within their respective
power, including, but not limited to, the voting of capital stock of New PC,
required to cause the Policy Board (as defined in the Management Agreement) of
New PC to at all times consist of at least 4 and no more than 7 members, one of
whom shall be designated by the Investors (the "PC Designee"). Each of the
Shareholders and the Company agree to vote any of their Shares which are
outstanding at all meetings of stockholders of the Company (or any written
consents in lieu thereof) in which directors are elected in favor of the
Designee. Each of the PC Holders and New PC agree to vote any of their PC Shares
which are outstanding at all meetings of stockholders of New PC (or any written
consents in lieu thereof) in which members of the Policy Board are elected in
favor of the PC Designee.
(b) In the event that the Designee or PC Designee, as applicable,
(the "Withdrawing Member"), designated in the manner set forth in Section 3.1(a)
above is unable to serve, or once having commenced to serve, is removed or
withdraws from the Board of Directors of the Company or the Policy Board of New
PC, as applicable, such Withdrawing Member's replacement (the "Substitute
Member") on the Board of Directors of the Company or the Policy Board of New PC,
as applicable, will be designated by the Investors. The Company and the
Shareholders agree to take all action within their respective power, including,
but not limited to, the voting of outstanding capital stock of the Company or
New PC, as applicable, to cause the election of such Substitute Member as soon
as practicable following his designation.
(c) In the event the Investors entitled to designate a Director or
member of the Policy Board pursuant to this Agreement cease to be so entitled,
the vacancy resulting therefrom shall be filled by the remaining directors or
members of the Policy Board or by the stockholders in the manner provided by
applicable law or the number of directors constituting the Board or members of
the Policy Board shall be reduced. In the event the Investors entitled to
designate a Director or member of the Policy Board pursuant to this Agreement
choose not to designate a Director or member of the Policy Board, such
directorship or membership shall remain vacant.
Section 3.2 TERMINATION OF AGREEMENT. This Agreement shall terminate
as follows:
(i) upon the agreement of the Company, New PC, the
Shareholders, the PC Holders and the Investors; or
(ii) on such date as there are no longer any Notes or
Convertible Preferred Stock (or any securities issued upon
conversion of the Convertible Preferred Stock) outstanding and all
shares of Common Stock which may be issued upon conversion of the
Convertible Preferred Stock shall be free of any restrictions on
transfer, including, but not limited to, any restrictions pursuant
to Rule 144 of the Securities Act, as such rule may be amended from
time to time.
Section 3.3 REPRESENTATIONS. Each party hereto represents that (i)
the execution and delivery of this Agreement and the performance of such party's
obligations hereunder will not violate or conflict with any material agreement
to which such party is a party or any law, rule, license, regulation, judgment,
order, ruling or decree governing or affecting such party; (ii) no consents or
filings with any governmental authority or any other person are required to be
obtained or made in connection with such party's execution, delivery and
performance of this Agreement; and (iii) this Agreement constitutes the valid
and binding obligation of such party, enforceable against such party in
accordance with its terms.
Section 3.4 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SHAREHOLDERS AND PC HOLDERS. Each Shareholder and PC Holder represents and
warrants to the Investors that all the shareholders of the Company and/or New
PC, as the case may be, who are Affiliates of such Shareholder or PC Holder, as
the case may be, are parties to this Agreement. Each Shareholder and PC Holder
represents and warrants that this Agreement does not violate any material
agreement, instrument, order, writ, judgment or decree to which it is a party,
or by which any of its properties or assets are bound. Each Shareholder and PC
Holder covenants that if after the date hereof any person or entity who is or
becomes a shareholder of the Company or New PC is or becomes an Affiliate of any
Shareholder or PC Holder, then such Shareholder or PC Holder shall cause such
person or entity to become a party to this Agreement.
Section 3.5 SUCCESSORS AND ASSIGNS. All agreements contained herein
by or on behalf of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not, including, without limitation, any Person who acquires any Securities (or
any securities issued in exchange for any of the Notes or upon conversion of any
Convertible Preferred Stock) from any party.
Section 3.6 NOTICES. All communications provided for hereunder shall
be sent by first class mail or overnight courier and, if to any Investor,
addressed to the Investor in the manner in which its address appears on Exhibit
I.A hereto, with a copy to Xxxxxxx X. Xxxxx, Xx., Esq., at Xxxxxxx Xxxx &
Xxxxxxxxx, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; if to any
Shareholder, addressed to the Shareholder at the address set forth below such
Shareholder's name on Exhibit I.B hereto; if to any PC Holder, addressed to the
PC Holder at the address set forth below such PC Holder's name on Exhibit I.C
hereto; and if to the Company, addressed to it at 0000 Xxxx Xxx Xxxx., Xxxxx
0000, Xxxxxxx, Xxxxx 00000, Attention: Office of the President, or to such other
address with respect to any party as such party shall notify the other in
writing.
Section 3.7 DESCRIPTIVE HEADINGS. The descriptive headings of the
several paragraphs of this Agreement are inserted for convenience only and do
not constitute a part of this Agreement.
Section 3.8 GOVERNING LAW. The corporate law of the State of
Delaware will govern all issues concerning the relative rights of the Company,
on the one hand, and the Shareholders and the Investors, on the other hand. The
corporate law of the State of Texas will govern all issues concerning the
relative rights of New PC, on the one hand, and the PC Holders and Investors, on
the other hand. All other questions concerning the construction, validity and
interpretation of this Agreement will be governed by, and construed and enforced
in accordance with, the law of the State of New York without regard to the
conflicts of laws principles thereof.
Section 3.9 REMEDIES. In case any one or more of the provisions set
forth in this Agreement shall have been breached by the Company or any
Shareholder or Investor, the Company or the Shareholders or Investors (or any of
them), as applicable, may proceed to protect and enforce its or their rights
either by suit in equity and/or by action at law, including, but not limited to,
an action for damages as a result of any such breach and/or an action for
specific performance of any such provision contained in this Agreement. The
Company, or any Investor acting pursuant to this Section 3.9 shall be
indemnified against all liability, loss or damage, together with all reasonable
costs and expenses related thereto (including reasonable legal and accounting
fees and expenses) in accordance with paragraph 12B of the Securities Purchase
Agreement.
Section 3.10 ENTIRE AGREEMENT. This Agreement, the Securities
Purchase Agreement and the Registration Rights Agreement and the other writings
referred to herein or delivered pursuant hereto contain the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior and contemporaneous arrangements or understandings with respect thereto.
Section 3.11 SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 3.12 AMENDMENTS. This Agreement may not be changed orally,
but only by an agreement in writing signed by the party against whom enforcement
of any waiver, change, modification or discharge is sought.
Section 3.13 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument, and it shall
not be necessary in making proof of this Agreement to produce or account for
more than one such counterpart.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
CASTLE DENTAL CENTERS, INC.
By:____________________________
Name:
Title:
SHAREHOLDERS:
---------------------------------
XXXX X. XXXXXX, XX., AS TRUSTEE
OF THE CASTLE 1995 GIFT TRUST
f/b/o XXXX X. XXXXXX, XX.
CASTLE INTERESTS, LTD.
By:
Xxxx X. Xxxxxx, Xx.
General Partner
By:
Xxxx X. Xxxxxx, D.D.S.
General Partner
By:
Xxxxxxx X. Xxxxxx
General Partner
-----------------------------------
XXXX X. XXXXXX DONNELL, AS TRUSTEE
OF THE CASTLE 1995 GIFT TRUST
f/b/o XXXX X. XXXXXX DONNELL
-----------------------------------
XXXX X. XXXXXX, D.D.S.
-----------------------------------
XXXXXXX X. XXXXXX
GULFSTAR INVESTMENTS, LTD.
By:
Name:
Title:
INVESTORS:
DELAWARE STATE EMPLOYEES'
RETIREMENT FUND
By: Pecks Management Partners Ltd.
Its Investment Advisor
By:
Xxxxxx X. Xxxxxx
Managing Director
DECLARATION OF TRUST FOR DEFINED BENEFIT
PLAN OF ICI AMERICAN HOLDING INC.
By: Pecks Management Partners Ltd.
Its Investment Advisor
By:
Xxxxxx X. Xxxxxx
Managing Director
DECLARATION OF TRUST FOR DEFINED BENEFIT
PLAN OF ZENECA HOLDING INC.
By: Pecks Management Partners Ltd.
Its Investment Advisor
By:
Xxxxxx X. Xxxxxx
Managing Director
EXHIBIT I.A (INVESTORS)
DELAWARE STATE EMPLOYEES'
RETIREMENT FUND
c/o Pecks Management Partners Ltd.
Xxx Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
DECLARATION OF TRUST FOR
DEFINED BENEFIT PLAN OF ICI
AMERICAN HOLDINGS INC.
c/o Pecks Management Partners Ltd.
Xxx Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
DECLARATION OF TRUST FOR
DEFINED BENEFIT PLAN OF
ZENECA HOLDINGS INC.
c/o Pecks Management Partners Ltd.
Xxx Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
EXHIBIT I.B (SHAREHOLDERS)
NAME AND ADDRESSES SHARES OWNED OF RECORD
Xxxx X. Xxxxxx, Xx., Trustee 1,428,000
Castle Interests, Ltd. 1,028,000
Xxxx X. Xxxxxx Donnell, Trustee 116,000
Xxxx X. Xxxxxx 714,000
Xxxxxxx Xxxxxx 714,000
EXHIBIT I.C (PC HOLDERS)
NAME AND ADDRESSES SHARES OWNED OF RECORD
Xxxx X. Xxxxxx, D.D.S. 1,000 shares
