EXHIBIT 3
EXECUTION VERSION
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT, dated as of June 21, 2002 (this
"Agreement"), among the undersigned stockholders (each, a "Stockholder" and
collectively, the "Stockholders") of Aros Corporation, a Delaware corporation
("Parent"). Capitalized terms used herein without definition shall have the
meanings assigned to them in the Merger Agreement (defined below).
WHEREAS, Parent, Aros Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Acquisition Sub"), and ReGen Biologics,
Inc., a Delaware corporation (the "Company") have entered into an Agreement and
Plan of Merger, dated as of June 7, 2002 (the "Merger Agreement"), pursuant to
which, effective as of the date hereof, Acquisition Sub has merged with and into
the Company (the "Merger"), and each outstanding share of ReGen Common Stock and
ReGen Preferred Stock has been converted into the right to receive shares of
Aros Common Stock, Aros Series A Stock and/or Aros Series B Stock on the terms
and subject to the conditions set forth in the Merger Agreement;
WHEREAS, as of the date hereof, each Stockholder is the owner of shares of
Aros Common Stock, Aros Series A Stock and/or Aros Series B Stock (with respect
to each Stockholder, such Stockholder's "Existing Parent Shares" and, together
with any shares of capital stock of the Parent acquired after the date hereof,
whether upon the exercise of warrants, options, conversion of convertible
securities or otherwise, such Stockholder's "Parent Shares");
WHEREAS, as an inducement and a condition to effecting the Merger under
the Merger Agreement, the Stockholders have agreed to enter into this Agreement;
WHEREAS, among other things, the Stockholders desire to set forth their
agreement with respect to the voting of their respective Parent Shares in
connection with the constitution of and election of members to the Board of
Directors of Parent upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. VOTING.
1.1. AGREEMENT TO VOTE PARENT SHARES. Upon consummation of the Merger,
each Stockholder hereby agrees, severally and not jointly, that such Stockholder
shall, and shall cause the holder of record on any applicable record date to,
from time to time, at any meeting (whether annual or special and whether or not
an adjourned or postponed meeting) of stockholders of the Parent, however
called, in accordance with Parent's certificate of incorporation, bylaws and
applicable law:
(a) if a meeting is held, appear at such meeting or otherwise cause the
Parent Shares to be counted as present thereat for purposes of
establishing a quorum; and
(b) vote or consent (or cause to be voted or consented), in person or by
proxy, all Parent Shares, and any other voting securities of Parent
(whether acquired heretofore or hereafter) that are beneficially
owned or held of record by such Stockholder or as to which such
Stockholder has, directly or indirectly, the right to vote or direct
the voting, or take such other necessary or desirable action within
such Stockholder's control in favor of the following:
(1) The authorized number of directors on Parent's Board of
Directors shall be maintained at seven (7) members;
(2) The following persons shall be elected to Parent's Board of
Directors:
(i) The then current Chief Executive Officer of Parent, who
shall initially be Xxxxxx X. Xxxxxx, Xx.;
(ii) Two (2) designees of Sanderling Ventures, one of whom
shall initially be Xx. Xxxxxx X. XxXxxx;
(iii) One (1) designee of Centerpulse USA Holding Co., who
shall initially be Xxxxxxx Frtischi;
(iv) One (1) designee of a majority of the members of the
Board of Directors of Parent immediately prior to the
Effective Time, who shall initially be Xxxx X. Xxxxxxx;
and
(v) Two (2) designees of a majority of the foregoing members
of the Board of Directors of Parent, one of whom shall
initially be Xx. Xxxxxxx Xxxxxxxx;
(3) Any Director designated in accordance herewith shall be removed
upon the request of the party or group who designated such
Director and, upon such removal, or upon any resignation of any
such Director, an individual selected by the party entitled to
designate such Director hereunder shall be elected to Parent's
Board of Directors; PROVIDED, HOWEVER, that this provision shall
not apply with respect to the director designated pursuant to
clause (iv) above; when such director's initial term concludes
or if a replacement is earlier required, then such director
shall be nominated and elected in accordance with Parent's
certificate of ( incorporation, bylaws and applicable law.
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(4) An amendment to Parent's certificate of incorporation to
increase the number of shares of Parent's authorized common
stock by an amount sufficient for issuance upon conversion or
exercise of the Aros Series A Stock, the Aros Series B Stock and
the ReGen Options and Warrants assumed by Parent;
(5) The amendment of Parent's bylaws as described in EXHIBIT A
hereto and as may otherwise be required to provide for the
governance of Parent as contemplated by this Agreement and the
Merger Agreement;
(6) A reverse stock split;
(7) An increase in the number, as of the date hereof, of Parent
Shares available for issuance pursuant to options issued under
the Parent's Employee Stock Option Plan by 3.0 million Parent
Shares; and
(8) A change in the name of Parent and an accompanying ticker symbol
change, both as determined by the Board of Directors of Parent
subsequent to the Effective Time.
(c) vote or consent (or cause to be voted or consented), in person or by
proxy, all Parent Shares, and any other voting securities of Parent
(whether acquired heretofore or hereafter) that are beneficially
owned or held of record by such Stockholder or as to which such
Stockholder has, directly or indirectly, the right to vote or direct
the voting, (i) against any amendment or change to the certificate
of incorporation or bylaws of Parent providing for the election of
less than seven (7) directors, or any other amendment or change to
the certificate of incorporation or bylaws inconsistent with the
terms of this Agreement or (ii) in favor of any amendment or change
to the certificate of incorporation or bylaws necessary to be made
to render such certificate of incorporation or bylaws consistent
with the terms ( of this Agreement.
1.2. FAILURE TO DESIGNATE. If any party fails to designate a
representative to fill a directorship pursuant to the terms of Section 1.1, the
election of a person to such directorship shall be accomplished in accordance
with Parent's certificate of incorporation, bylaws and applicable law.
1.3. NO OWNERSHIP INTEREST. Nothing contained in this Agreement shall be
deemed to vest in Parent any direct or indirect ownership or incidence of
ownership of or with respect to any Parent Shares now owned or hereafter issued
to the Stockholders pursuant to the Merger or otherwise. All rights, ownership
and economic benefits of and relating to the Parent Shares shall remain vested
in and belong to the Stockholders, and Parent shall have no authority to direct
the Stockholders in the voting of any of the Parent Shares, except as otherwise
provided herein, or in the performance of the Stockholders' duties or
responsibilities as stockholders of the Parent.
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1.4. NO INCONSISTENT AGREEMENTS. Each Stockholder hereby covenants and
agrees that, except as contemplated by this Agreement and the Merger Agreement,
the Stockholder (a) has not entered, and shall not enter at any time while this
Agreement remains in effect, into any voting agreement or voting trust with
respect to the Parent Shares and (b) has not granted, and shall not grant at any
time while this Agreement remains in effect, a proxy or power of attorney with
respect to the Parent Shares, in case of either (a) or (b), which is
inconsistent with such Stockholder's obligations pursuant to this Agreement.
1.5. LEGEND.
(a) Concurrently with the execution of this Agreement, there shall
be imprinted or otherwise placed, on certificates representing
the Parent Shares, the following restrictive legend (the
"Legend"):
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS
AND CONDITIONS OF A STOCKHOLDERS' AGREEMENT WHICH PLACES CERTAIN
RESTRICTIONS ON THE VOTING OF THE SHARES REPRESENTED HEREBY. ANY
PERSON ACCEPTING ANY INTEREST IN SUCH SHARES SHALL BE DEEMED TO
AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SUCH
STOCKHOLDERS' AGREEMENT. A COPY OF SUCH STOCKHOLDERS' AGREEMENT WILL
BE FURNISHED TO THE RECORD HOLDER OF THIS CERTIFICATE WITHOUT CHARGE
UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF
BUSINESS."
(b) Parent agrees that, during the term of this Agreement, it will
not remove, and will not permit to be removed (upon registration
of transfer, reissuance of otherwise), the Legend from any such
certificate and will place or cause to be placed the Legend on
any new certificate issued to represent Parent Shares
theretofore represented by a certificate carrying the Legend.
2. REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER. Each Stockholder hereby,
severally and not jointly, represents and warrants to other Stockholders as
follows:
2.1. AUTHORIZATION; VALIDITY OF AGREEMENT; NECESSARY ACTION. Such
Stockholder has full power and authority, or legal capacity in the case of an
individual stockholder, to execute and deliver this Agreement, to perform such
Stockholder's obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance by such Stockholder
of this Agreement and the consummation by such Stockholder of the transactions
contemplated hereby have been duly and validly authorized by such Stockholder
and no other actions or proceedings on the part of such Stockholder are
necessary to authorize the execution and delivery by such Stockholder of this
Agreement and the consummation of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by
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such Stockholder, and, assuming this Agreement constitutes a valid and binding
obligation of Parent, constitutes a valid and binding obligation of such
Stockholder, enforceable in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency or other similar
laws, now or hereafter in effect, affecting creditors' rights generally.
2.2. CONSENTS AND APPROVALS; NO VIOLATIONS. None of the execution,
delivery or performance of this Agreement by such Stockholder nor the
consummation of the transactions contemplated hereby nor compliance with any of
the provisions hereof by such Stockholder will (i) require any filing with, or
approval of, any Governmental Entity, (ii) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration) under, or result in the creation or imposition of any lien upon
any of the assets or properties of such Stockholder under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, guarantee,
other evidence of indebtedness, lease, license, contract, agreement, judgment,
order, notice, decree, statute, law or other instrument or obligation to which
such Stockholder is a party or by which such Stockholder or any of such
Stockholder's properties or assets may be bound or (iii) violate any order or
law applicable to such Stockholder or any of such Stockholder's properties or
assets, except in each case as would not have a material adverse effect on such
Stockholder's ability to consummate the transactions contemplated hereby.
2.3. NO GROUP. Each Stockholder is acting individually and not as part of
a "group" as defined in the Exchange Act.
2.4. SHARES. Each Stockholder owns all of his, her or its respective
Existing Parent Shares, free and clear of all liens, encumbrances, charges,
pledges and other security interests.
3. MISCELLANEOUS.
3.1. FURTHER AGREEMENTS.
(a) Each Stockholder, severally and not jointly, hereby agrees,
while this Agreement is in effect, and except as contemplated
hereby, that upon any sale, transfer, pledge, or other
disposition of any Parent Shares to any Person, such Person or
entity shall agree to be bound by all of the terms and
conditions of this Agreement, and the Stockholder shall deliver
a duly executed copy of the Agreement to Parent to evidence such
Agreement prior to any such sale, transfer, pledge or other
disposition.
(b) Each Stockholder shall not request that the Parent or its
transfer agent register the transfer (book-entry or otherwise)
of any certificate or uncertificated interest representing any
of such Stockholder's Parent Shares, and hereby consents to the
entry of stop transfer instructions by the Parent of any
transfer of such Stockholder's Parent Shares, unless such
transfer is made in compliance with this Agreement.
(c) In the event of a stock dividend or distribution, or any change
in the Parent's capital stock by reason of any stock dividend or
distribution, split-up, recapitalization, combination, exchange
of shares or the like, the
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term "Parent Shares," as applicable, shall be deemed to refer to
and include the Parent Shares as well as all such stock
dividends and distributions and any shares into which or for
which any or all of the Parent Shares may be changed or
exchanged.
3.2. TERMINATION.
(a) This Agreement shall terminate and no party shall have any
rights or duties hereunder upon the earliest to occur of (i) the
fifth (5th) anniversary of the Effective Time, (ii) a Change of
Control of Parent (as defined below) or (iii) the re-listing of
the Parent Shares on a national securities exchange or the
NASDAQ National Market System. Upon any termination of this
Agreement, this Agreement shall thereupon become void and of no
further force and effect, PROVIDED, HOWEVER, that nothing in
this Section 3.2 shall relieve or otherwise limit any party of
liability for breach of this Agreement.
(b) For purposes of this Agreement, "Change of Control" of Parent
shall mean the earliest to occur of (i) a merger or
consolidation to which Parent is a party and which results in,
or is effected in connection with, a change in ownership of a
majority of the outstanding shares of voting stock of Parent,
(ii) any sale or transfer of all or substantially all of the
assets of Parent to any Person not an affiliate of Parent, (iii)
the sale by the stockholders of Parent of a majority of the
voting stock of Parent to any Person not an affiliate of Parent
or (iv) a liquidation or dissolution of Parent. A Change of
Control shall not include any change in ownership of Parent
Shares contemplated by or resulting from the Merger.
3.3. SEVERAL OBLIGATIONS; CAPACITY; RELIANCE.
(a) The representations, warranties, covenants, obligations,
agreements and conditions of this Agreement applicable to the
Stockholders are several and not joint.
(b) The obligations of the Stockholders hereunder are several and
not joint and the covenants and agreements of the Stockholders
herein are made only in their capacity as stockholders of the
Company and not as directors.
(c) Each Stockholder understands and acknowledges that Parent is
entering into the Merger Agreement in reliance upon such
Stockholder's execution and delivery of this Agreement.
3.4. FURTHER ASSURANCES. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further action as may be necessary
or desirable to consummate the transactions contemplated by this Agreement.
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3.5. NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by nationally recognized overnight courier or by registered or certified
mail (postage prepaid, return receipt requested), or by electronic mail, with a
copy thereof to be delivered or sent as provided above or by facsimile or
telecopier, as follows:
(a) IF TO PARENT:
Aros Corporation
000 Xxxxxxxx Xxxxxx
Xxxx Wing Xxxxxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Xx., Ph.D.
With copies to:
Xxxxxx Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Price, Esq.
Facsimile: (000) 000-0000
and:
Xxxx Xxxxxxx LLP
0000 Xxxxxx Xxxx.
XxXxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxxxxxx
Facsimile: (000) 000-0000
(b) If to any of the Stockholders, to the address set forth
under its name on such Stockholders' signature page hereto;
or to such other address as the party to whom notice is to be given may have
furnished to the other parties in writing in accordance herewith. All such
notices or communications shall be deemed to be received (i) in the case of
personal delivery, nationally recognized overnight courier or registered or
certified mail, on the date of such delivery and (ii) in the case of facsimile
or telecopier or electronic mail, upon confirmed receipt.
3.6. INTERPRETATION. When a reference is made in this Agreement to
Sections, subsections, Schedules or Exhibits, such reference shall be to a
Section, subsection, Schedule or Exhibit to this Agreement unless otherwise
indicated. The words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without limitation."
The word "herein" and similar references mean, except where a specific Section
or Article reference is expressly indicated, the entire Agreement rather than
any specific Section or Article. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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3.7. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
3.8. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement, the
Merger Agreement and the documents referred to herein and therein constitute the
entire agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and thereof, and are not intended to confer upon any Person other than the
parties hereto and thereto any rights or remedies hereunder and thereunder.
3.9. AMENDMENTS; ASSIGNMENT. This Agreement may be amended (or provisions
of this Agreement waived) only by an instrument in writing signed by (a) Parent
and (b) the holders of at least a majority of the outstanding Parent Shares at
the time of such amendment or approval. Any amendment or waiver so effected
shall be binding upon Parent, each of the parties hereto and any assignee of any
such party. No waivers of any breach of this Agreement extended by any party
hereto to any other party shall be construed as a waiver of any rights or
remedies of any other party hereto or with respect to any subsequent breach.
This Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. Unless a Stockholder has
complied with Sections 3.1(b) and 3.1(c) hereof, neither this Agreement nor any
of the rights, interests or obligations under this Agreement shall be assigned,
in whole or in part, by any such Stockholder without the prior written consent
of the other parties, and any purported assignment without such consent shall be
void.
3.10. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or
delay on the part of any party hereto in the exercise of any right hereunder
will impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor will any
single or partial exercise of any such right preclude other or further exercise
thereof or of any other right. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive to, and not exclusive of, any
rights or remedies otherwise available.
3.11. GOVERNING LAW; ENFORCEMENT. This Agreement and the rights and duties
of the parties hereunder shall be governed by, and construed in accordance with,
the law of the State of Delaware. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity.
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3.12. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
[SIGNATURES NEXT PAGE]
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IN WITNESS WHEREOF, each of the Stockholders has signed this Agreement or caused
this Agreement to be signed by their respective officers or other authorized
person thereunto duly authorized as of the date first written above.
STOCKHOLDERS
SANDERLING VENTURE PARTNERS IV CO-
INVESTMENT FUND, L.P.
By: /s/ XXXX X. XXXXXXXXX
-------------------------------
Xxxx X. Xxxxxxxxx
General Partner
SANDERLING IV BIOMEDICAL CO-
INVESTMENT FUND, L.P.
By: /s/ XXXX X. XXXXXXXXX
-------------------------------
Xxxx X. Xxxxxxxxx
General Partner
SANDERLING IV VENTURE MANAGEMENT
By: /s/ XXXX X. XXXXXXXXX
-------------------------------
Xxxx X. Xxxxxxxxx
Owner
SANDERLING VENTURE PARTNERS V CO-
INVESTMENT FUND, L.P.
By: Middleton, XxXxxx & Xxxxx
Associates V, LLC
By: /s/ XXXXXX X. XxXXXX
-------------------------------
Xxxxxx X. XxXxxx
Managing Director
SANDERLING V BIOMEDICAL CO-
INVESTMENT FUND, L.P.
By: Middleton, XxXxxx & Xxxxx
Associates V, LLC
By: /s/ XXXXXX X. XxXXXX
-------------------------------
Xxxxxx X. XxXxxx
Managing Director
SANDERLING V LIMITED PARTNERSHIP
By: Middleton, XxXxxx & Xxxxx
Associates V, LLC
By: /s/ XXXXXX X. XxXXXX
-------------------------------
Xxxxxx X. XxXxxx
Managing Director
SANDERLING V BETEILIGUNGS GMBH &
CO. KG
By: Middleton, XxXxxx & Xxxxx
Associates V, LLC
By: /s/ XXXXXX X. XxXXXX
-------------------------------
Xxxxxx X. XxXxxx
Managing Director
SANDERLING V VENTURES MANAGEMENT
By: /s/ XXXXXX X. XxXXXX
-------------------------------
Xxxxxx X. XxXxxx
Owner
IN WITNESS WHEREOF, each of the Stockholders has signed this Agreement or caused
this Agreement to be signed by their respective officers or other authorized
person thereunto duly authorized as of the date first written above.
STOCKHOLDERS
If an individual:
--------------------------------------
Name:
Notices Address:
If a corporation, partnership or other
legal entity:
CENTERPULSE USA HOLDING CO.
--------------------------------------
By: /s/ XXXXX X. XXXX
-----------------------------------
Name: Xxxxx X. Xxxx
Title: Secretary
Notices Address: 0 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
STOCKHOLDERS
If an individual:
/s/ J. XXXXXXX XXXXXXXX
--------------------------------------
Name: J. Xxxxxxx Xxxxxxxx
Notices Address: 0000 Xxxxxxxx Xxxxx Xxxx
Xxxx, XX 00000
13 June 2002
If a corporation, partnership or other
legal entity:
--------------------------------------
By:
-----------------------------------
Name:
Title:
Notices Address:
STOCKHOLDERS
If an individual:
--------------------------------------
Name:
Notices Address:
If a corporation, partnership or other
legal entity:
XXXXX & COMPANY INCORPORATED
--------------------------------------
By: /s/ XXX XXXXXXX
-----------------------------------
Name: Xxx Xxxxxxx
Title: Managing Director & CFO
Notices Address: c/o Xxxxx Xxxxxx
Vice President
Xxxxx & Company Incorporated
000 Xxxxx Xxxxxx, 0xx Xx.
Xxx Xxxx, XX, 00000
