EXHIBIT 10.12
EQUITY HOLDERS AGREEMENT
THIS EQUITY HOLDERS AGREEMENT (this "Agreement") is made as of April 3O
, 1997 by and between J. Xxxxxxx Xxxxxxx (the "Equity Holder") and Dental Care
Alliance, Inc., a Delaware corporation (the "Company").
RECITALS:
WHEREAS, the authorized capital stock of the Company consists of
200,000 shares of common stock, par value $0.01 per share (the "Common Stock"),
and 15,000 shares of Class A Preferred Stock, par value $0.01 per share
(collectively, the "Shares").
WHEREAS, the Equity Holder has exercised his right to acquire 520
shares of Common Stock for $10,000, pursuant to that certain Letter Agreement
dated September 29, 1995 between the Company and the Equity Holder (the "Letter
Agreement").
WHEREAS, the Equity Holder and the Company wish to establish certain
rights and obligations with respect to the Common Stock acquired by the Equity
Holder and any Shares which may be issued or issuable in the future to the
Equity Holder.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. RESTRICTION ON TRANSFER OF SHARES.
The Equity Holder may not transfer (other than to the Company) any
Shares whether presently owned or hereafter acquired by him without the prior
written consent of the Company, except as permitted in accordance with the terms
of this Agreement. Any purported transfer of any Shares in any other manner
shall be void. As used in this Agreement, the word "transfer" includes any sale,
bequest, exchange, assignment or gift, the creation of any security interest or
other encumbrance and any other disposition of any kind, whether voluntary or
involuntary, affecting title to or possession of any of the Shares.
2. PERMITTED TRANSFER. Notwithstanding anything to the contrary in this
Agreement, the Equity Holder may at any time make any of the following
transfers:
(a) a transfer of Shares to the executor or administrator of
the estate of a deceased Equity Holder upon his death for purposes of
the administration of such Equity
Holder's estate, and to the devisee, legatee or beneficiary of the
estate;
(b) a transfer by Shares by an Equity Holder to his spouse or
issue or any trust for the benefit of himself, his spouse or issue,
provided that any Shares transferred to his spouse or a trust for the
benefit of his spouse shall be immediately transferred back to such
Equity Holder should his spouse cease to be his spouse;
(c) a transfer of Shares pursuant to a public offering;
PROVIDED, HOWEVER, in the case of a transfer pursuant to paragraph (a) or (b),
any transferee shall have executed and delivered an agreement, in form and
substance reasonably satisfactory to the Company, to be bound by the terms of
this Agreement as if the transferee were the applicable Equity Holder.
3. PIGGYBACK REGISTRATION RIGHTS.
(a) RIGHT OF EQUITY HOLDER TO INCLUDE SHARES. Whenever the
Company proposes to register any of its Shares under the Securities Act
of 1933, as amended ("Securities Act") on Form X-0, X-0, X-0 or any
similar form then in effect (a "Registration Statement"), whether or
not for its own account, the Company shall, except with respect to the
initial public offering by the Company of any class of equity
securities (but this exception shall apply only if no other holders of
Shares are permitted to participate in such offering as selling
stockholders), give written notice, thereof to the Equity Holder at
least 30 days before such filing, if practicable (but in no event less
than 20 days before such filing), offering the Equity Holder the
opportunity to register on such Registration Statement such number of
Shares as such Equity Holder may request in writing, subject to the
provisions of Section 3(b), not later than 10 days before such filing
(a "Piggyback Registration"). Upon receipt by the Company of any such
request, the Company shall use reasonable efforts to, or in the case of
an offering that is underwritten (an "Underwritten Registration"), to
cause such Shares to be included in such Registration Statement (or in
a separate Registration statement concurrently filed) and to cause such
Registration Statement to become effective with respect to such Shares.
If the Company's registration is to be effected pursuant to an
Underwritten Offering, Shares registered pursuant to this Section 3
shall be distributed in accordance with such offering. Notwithstanding
the foregoing, if at any time after giving written notice of its
intention to register its Shares and before the
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effectiveness of the registration Statement filed in connection with
such registration, the Company determines for any reason either not to
effect such registration or to delay such registration, the Company
may, at its election; by delivery of written notice to the Equity
Holder (i) in the case of a determination not to effect registration,
relieve itself of its obligation to register the Shares in connection
with such registration or (ii) in the case of a determination to delay
registration, delay the registration of such Shares of the Equity
Holder for the same period as the delay in the registration of such
other Shares. If the Equity Holder requests inclusion in a registration
pursuant to this Section 3, he may, at any time before the effective
date of the Registration Statement relating to such registration,
revoke such request by delivering written notice of such revocation to
the Company (which notice shall be effective only upon receipt by the
Company, notwithstanding the provisions of Section 4(d)); provided,
however, that if the Company, in consultation with its financial and
legal advisors, determines that such revocation would materially delay
the registration or otherwise require a recalculation of the prospectus
contained in the Registration Statement, then such Equity Holder shall
have no right to so revoke his request.
(b) UNDERWRITTEN REGISTRATION.
(i) Notwithstanding anything herein to the contrary,
the Equity Holder may not participate in any Underwritten
Registration hereunder unless he (a) agrees to sell his Shares
on the same terms and conditions provided in any underwriting
arrangements approved by the persons entitled hereunder to
approve such arrangement and (b) accurately completes and
executes in a timely manner all questionnaires, powers of
attorney, indemnities, custody agreements, underwriting
agreements and other documents required under the terms of
such underwriting arrangements. Notwithstanding (a) above, the
Equity Holder shall be required to pay his proportionate share
of any underwriting discount and related expenses of the
underwriters borne by other stockholders (as opposed to the
Company) with respect to the registration and offering of the
Shares only if the Registration Statement relating to such
registration is declared effective, and shall be reimbursed
for any such amounts paid if the Registration Statement does
not become effective or if there is a suspension of its
effectiveness. In addition, the Equity Holder shall be
responsible for any legal, accounting or other professional
fees and expenses incurred by such Equity
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(ii) If any Piggyback Registration is in the form of
an Underwritten Offering, the managing underwriter or
underwriters and any additional investment bankers and
managers to be used in connection with such registration shall
be selected by the Company (subject to any separate agreement
with the holders on behalf of which a secondary Underwritten
Offering is being made).
(c) PRIORITY IN PIGGYBACK REGISTRATION.
(i) If any of the Shares to be included in a
Piggyback Registration are to be sold in one or more
Underwritten Offerings and the managing underwriter or
underwriters advise the Company in writing that the total
amount of Shares requested to be included in such offering
would exceed the maximum amount of securities which can be
marketed at a price reasonably related to the current fair
market value of such securities without adversely affecting
such offering (the "Underwriters' Maximum Number"), then the
Company will so notify all holders of Shares requesting
inclusion in such registration and will be required to include
in such registration, to the extent of the Underwriters'
Maximum Number: first, if the Underwritten Registration is an
underwritten registration on behalf of the stockholders of the
Company, the Shares requested by such stockholders to be
included in such registration, pro rata among such
stockholders on the basis of the number of Shares held by such
stockholders; second, any Shares that the Company proposes to
sell for its own account; and third, other securities
requested to be included in such registration; provided,
however, that if the Underwritten Registration is an
underwritten registration on behalf of the Company, the
Company will include in such registration, in lieu of the
first and second priorities described above, to the extent of
the Underwriters' Maximum Number: first, the Shares the
Company proposes to sell and second, the Shares requested by
the stockholders of the Company to be included in such
registration, pro rata among such Stockholders on the basis of
the number of Shares held by such stockholders.
(ii) If any of the Shares to be included in a
Piggyback Registration are to be sold in a non-underwritten
offering, but the Company, after consultation with an
investment banking firm of nationally recognized standing
(including a regional firm of recognized standing), reasonably
determines the amount of Shares to be included in such
registration exceeds the amount of securities that can be sold
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within a price range acceptable to the Company or the
initiating holders and notifies all holders of Shares
requesting inclusion in such registration of such
determination ("Company's Maximum Number"), then the Company
will be required to include in such registration, to the
extent of the Company's Maximum Number, Shares in accordance
with the priorities set forth in paragraph (i) above.
(d) DELIVERY OF REGISTRATION STATEMENT. In connection with a
Piggyback Registration, the Company shall deliver to the selling Equity
Holder, its counsel and the underwriters, if any, without charge, at
least one signed copy of the Registration Statement, upon request, and
such number of conformed copies thereof and such number of copies of
the Prospectus (including the preliminary Prospectus) included in such
Registration Statement and any amendment or supplement thereto or any
other document as such persons may reasonably request and as promptly
as practicable after the filing with the Securities and Exchange
Commission of any document which is incorporated by reference into a
Registration Statement, a copy of such document.
(e) EQUITY HOLDER INFORMATION. If Shares owned by the Equity
Holder are included in a Piggyback Registration, such Equity Holder
shall furnish promptly to the Company such information regarding
himself and the distribution of such securities as the Company may from
time to time reasonably request in writing in order that the Company
may comply with applicable securities laws.
(f) INDEMNIFICATION.
(i) The Company agrees to indemnify, to the extent
permitted by law, each holder of Shares to be registered
pursuant to Section 3 against all losses, claims, damages,
liabilities and expenses caused by any untrue 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 of a material fact required to be stated
therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or
contained in any information furnished in writing to the
Company by such holder expressly for use therein or by such
holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements
thereto to a prospective purchaser after the Company has
furnished such holder with a sufficient number of copies of
the same.
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(ii) In connection with any registration statement in
which a holder of Shares to be registered pursuant to Section
3 is participating, each such holder shall, to the extent
permitted by law, indemnify the Company, its directors and
officers and each person who controls the Company (within the
meaning of the Securities Act of 1933, as amended) against any
losses, claims, damages, liabilities and expenses resulting
from any untrue or alleged untrue statement of material fact
contained in the registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent that
such untrue statement or omission is contained in any
information or affidavit so furnished in writing by such
holder; provided that the obligation to indemnify shall be
individual, not joint and several, for each holder and shall
be limited to the net amount of proceeds received by such
holder from the sale of Shares pursuant to such registration
statement.
4. PUT OPTION.
The Company hereby grants the Equity Holder the personal and
non-transferable right and option to sell to the Company and the Company hereby
agrees to purchase from the Equity Holder all but not less than all the Shares
(together with any and all distributions, if any, on such Shares in the form of
additional Shares or other shares of capital stock of the Company) issued to the
Equity Holder pursuant to this Agreement in the event the Company has not
entered into a firm commitment underwritten public offering of its common stock
pursuant to a Registration Statement chosen by the Company and its counsel under
the Securities Act (a "Public Offering") on or before January 1. 2001 (the
"Measurement Date"). The purchase price for the purchase and sale described in
this Section 4 shall be $10,000. In the event the Equity Holder elects to sell
its Shares under this Section 4, (i) it shall notify the Company in writing of
its desire to sell the Shares within sixty (60) days after the Measurement Date
provided no Public Offering has occurred on or prior to the Measurement Date,
and (ii) it shall deliver to the Company certificate(s) representing all but not
less than all the Shares subject to sale hereunder duly endorsed for transfer in
blank together with such assignment and transfer documentation as is reasonably
requested by the Company. Upon receipt by the Company of the items described in
subparagraphs (i) and (ii) above, the Company shall pay the purchase price to
the Equity Holder in cash or in certified bank funds. The closing of the
purchase and sale contemplated in this Section 4 shall occur on the later of (i)
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ten (10) days after the Equity Holder delivers to the Company the items required
in this Section 4; or (ii) thirty (30) days after the date of written notice to
the Company by the Equity Holder of its election to sell Shares under this
Section 4. Any failure by the Equity Holder to comply strictly with the terms
and provisions described in this Section 4 for sale shall invalid and terminate
the put option set forth herein.
5. REPRESENTATIONS AND WARRANTIES OF EQUITY HOLDER.
In connection with the subscription for Shares, the Equity Holder
hereby represents and warrants to the Company as follows (with the understanding
that the Company is relying materially on such representations and warranties in
issuing Shares to the Equity Holder):
(a) The Equity Holder is a bona fide resident in the State of
Connecticut, is legally competent to execute this Agreement.
(b) The Equity Holder confirms that no representations or
warranties have been made to the Equity Holder by the Company or by any
officer, director, agent or employee thereof (collectively, the
"Company Affiliates") other than those representations specifically set
forth in this Agreement. The Equity Holder has not relied upon any
representation or warranty of the Company Affiliates, except as set
forth in this Agreement, in making the investment decision to purchase
the Shares. The Equity Holder has conducted such investigation of the
Company he has deemed necessary or desirable and has relied on his own
legal, financial and business advisors and consultants in analyzing the
data provided to him.
(c) The Equity Holder is an "accredited investor," as that
term is defined in Rule 501 of Regulation D promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as
amended.
(d) The Shares hereby subscribed for are being acquired by the
Equity Holder in good faith solely for the Equity Holder's own account,
for investment purposes only, and not with a view to resale,
distribution, subdivision or fractionalization thereof. The Equity
Holder agrees that the Shares purchased by him will not be transferred
except in compliance with the Securities Act and applicable state
securities laws and the restrictions of this Agreement. The Equity
Holder is not participating, directly or indirectly, in a distribution
of the Shares purchased by him and will not take, or cause to be taken,
any action that would cause any of such parties to be deemed an
"underwriter" of such
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Shares as defined in section 2(11) of the Securities Act. The Equity
Holder understands that any sale, transfer, pledge, hypothecation or
other disposition of the Shares purchased by may require in some states
specific approval by the appropriate governmental agency in such
states.
(e) No person has made any direct or indirect representation
or warranty of any kind to the Equity Holder with respect to the
economic return which may accrue to such Persons, and each of such
Persons has consulted with his or its own tax counsel and other
advisors with respect to an investment in the Company.
(f) The Equity Holder confirms that all documents, records,
books, and other information deemed material by the Equity Holder for
the purposes of purchasing the Shares have been made available to the
Equity Holder, and the Equity Holder also confirms that the Equity
Holder has been given an opportunity to make any further inquiries of
and receive satisfactory answers from the Company and its
representatives with respect to the Shares purchased hereunder, and to
obtain any additional information that the Company either possesses or
can acquire without unreasonable effort or expense that is necessary to
verify the accuracy of the information furnished.
(g) The Equity Holder is aware of and understands that the
Shares have not been registered under the Securities Act or any of the
applicable state securities laws, in reliance on an exemption therefrom
for private offerings.
(h) There are no actions, suits, proceedings, orders,
investigations or claims pending or, to the best of the Equity Holder's
knowledge threatened against or affecting the Equity Holder at law or
equity, or before or by any governmental department, commission, board,
bureau, agency or instrumentality which will have any material effect
on the Equity Holder's ability to consummate the transactions
contemplated by this Agreement.
(i) There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the purchase of the
Shares based on any arrangement or agreement binding upon the Equity
Holder.
6. MISCELLANEOUS.
(a) LEGENDS. Each certificate representing Shares from time to
time owned by the Equity Holder shall bear legends substantially as
follows:
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"The shares; represented by this certificate have not been registered
under the Securities Act of 1933 and may not be sold or transferred in
violation of such Act."
"Transfer of the shares represented by this certificate is restricted
by an Equity Holders Agreement, dated April 30, 1997, a copy of which
is on file at the office of Dental Care Alliance, Inc."
(b) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware
applicable to agreements made and to be performed in Delaware.
(c) ASSIGNMENT. Merger or Consolidation. This Agreement shall
not be assignable, but shall be binding upon and inure to the benefit
of the successors of the Company and the respective heirs and legal
representatives of the Equity Holder. If the Company is merged into or
consolidated with another corporation, or all or substantially all of
the assets of the Company are transferred to another entity, then the
term "Company" for all purposes of this Agreement shall include such
successor corporation and the term "Shares" shall include any stock and
warrants of the successor corporation.
(d) NOTICES. Any notice or other communication under this
Agreement shall be considered given and received when (i) delivered
personally in writing, (ii) received by registered mail, return receipt
requested or (iii) sent by telecopier, with a copy confirmed by
registered mail, return receipt requested, by the parties at the
following addresses and telecopier numbers (or at such other addresses
and telecopier numbers as a party may specify by notice to the others):
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If to the Company:
Dental Care Alliance, Inc.
0000 Xxxx Xxxxxx
0xx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: President
Telecopier No: (000) 000-0000
If to the Equity Holder:
J. Xxxxxxx Xxxxxxx
Xxxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Telecopier No: (000) 000-0000
(e) APPOINTMENT OF PERSONAL REPRESENTATIVE. The executor or
administrator of the estate of any deceased party ("Personal
Representative") shall give the company and the other parties prompt
notice of his appointment, stating the address at which notices under
this Agreement shall be given to him.
(f) WAIVER. The Company shall have the right to waive any of
its rights or any obligations owing to it hereunder without the consent
of the other parties to this Agreement.
(g) COUNTERPARTS; FACSIMILE. This Agreement may be executed in
one or more counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall
constitute one and the same instrument.
(h) COMPLETE AGREEMENT; MODIFICATION AND TERMINATION. This
Agreement contains a complete statement of all the arrangements among
the parties with respect to its subject matter and cannot be changed or
terminated except in writing signed by all o(pound) the parties. This
Agreement gives effect to the issuance by the Company to the Equity
Holder of capital stock under letter dated September 29, 1995 between
the Equity Holder and the Company, and fully satisfies all of the
Company's obligations therein.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
DENTAL CARE ALLIANCE, INC.
By:
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Name: Xxxxxx X. Xxxxxxx
Title: President
EQUITY HOLDER
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J. Xxxxxxx Xxxxxxx
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