1
Exhibit 10.8
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (the "Agreement") is entered into
as of this 27th day of July, 1999 by and among XxxxxxxXxxxxx.xxx, Inc., a
Delaware corporation (the "Corporation"), Vitamin Shoppe Industries Inc., a New
York corporation ("VSI") and the holders of Series A Preferred Stock of the
Corporation set forth on Schedule 1 (the "Investors"). VSI and the Investors are
collectively referred to herein as the "Stockholders".
WHEREAS, VSI owns all of the Class B Common Stock, par value
$0.01 per share, of the Corporation (the "Class B Common Stock");
WHEREAS, the Corporation has entered into a Series A Preferred
Stock Purchase Agreement, dated July 27, 1999 (the "Purchase Agreement"), with
the Investors, pursuant to which the Investors are purchasing shares of the
Corporation's Series A Preferred Stock, par value $0.01 per share (the "Series A
Preferred Stock");
WHEREAS, the Series A Preferred Stock is convertible into
shares of Class A Common Stock, par value $0.01 per share, of the Corporation
(the "Class A Common Stock") at a conversion price (the "Conversion Price") set
forth in the Certificate of Designation for the Series A Preferred Stock;
WHEREAS, as a condition to their investment in the
Corporation, the Stockholders have required that all of the parties hereto enter
into this Agreement on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS: USAGE. (a) As used herein, each of
the following terms shall have the meaning set forth or referred to below:
"Accepting Investors" shall have the meaning set forth in
Section 3.6(b).
"Affiliate" of any Person (hereinafter "first Person") shall
mean (i) any other Person who, directly or indirectly, is in Control of, is
Controlled by or is under common Control with such first Person; (ii) any Person
who is a director or executive officer (as defined in Rule 3b-7 of the Exchange
Act) of such first Person or any Person described in clause (i) above; or (iii)
any Person who is an immediate family member of any Person described in clause
2
(ii) above. For purposes of this Agreement, each of FdG Capital Partners LLC,
FdG-Chase Capital Partners LLC and FdG Capital Associates LLC shall be deemed to
be an "Affiliate" of VSI, and notwithstanding anything contained herein to the
contrary, neither X.X. Xxxxxxx III, L.P. nor Whitney Strategic Partners III,
L.P. shall be deemed to be an "Affiliate" of the Corporation or VSI.
"Annual Plan" shall have the meaning set forth in Section
3.1(c).
"Certificate of Designation" shall mean the Certificate of
Designation for the Series A Preferred Stock.
"Class A Common Stock" shall have the meaning set forth in the
fourth paragraph of this Agreement.
"Class B Common Stock" shall have the meaning set forth in the
second paragraph of this Agreement.
"Common Stock" shall mean the Class A Common Stock and Class B
Common Stock. For purposes hereof, any calculation of a percentage of
outstanding shares of Common Stock shall be made by dividing the number of
shares of Common Stock with respect to which the calculation is being made by
the total number of outstanding shares of Class A Common Stock and Class B
Common Stock, calculated as if all shares of capital stock of the Corporation
convertible into Class A Common Stock or Class B Common Stock have been fully
converted.
"Competitor" shall mean any business that, as a principal or
material portion or purpose of its business, directly or indirectly, markets or
distributes (through wholesale, retail or direct marketing channels, including
mail order or the Internet) vitamins, minerals, nutritional supplements, any
other nutritional or non-prescription health-related product, or any other
product marketed or distributed by the Corporation after the date of this
Agreement.
"Control" of a Person shall mean the power, direct or
indirect, to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms "Controlling" and "Controlled" have meanings
correlative to the foregoing.
"Conversion Price" shall have the meaning set forth in the
fourth paragraph of this Agreement.
"Corporation" shall have the meaning set forth in the first
paragraph of this Agreement.
"Corporation's Response Notice" shall have the meaning set
forth in Section 2.2.
"Disposition" shall have the meaning set forth in Section
3.6(a).
2
3
"Drag-Along Notice" shall have the meaning set forth in
Section 2.5.
"Drag-Along Right" shall have the meaning set forth in Section
2.5.
"Drag-Along Transaction" shall have the meaning set forth in
Section 2.5.
"Equity Securities" shall have the meaning given thereto in
Rule 3a11-1 promulgated under the Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Fair Market Value" per share for a particular security as of
a particular date shall mean:
(i) if the security is of a class of securities quoted on a
national securities exchange, the average closing sales price per share on such
exchange for the twenty trading days preceding the determination date;
(ii) if the security is of a class of securities quoted on the
Nasdaq Stock Market, the average last trade price per share as reported on the
Nasdaq Stock Market for the twenty trading days preceding the determination
date;
(iii) if the security is of a class of securities then traded
on an over-the-counter market, the average of the closing bid and asked prices
per share in such over-the-counter market for the twenty trading days preceding
the determination date; or
(iv) if the security is of a class of securities not then
listed on a national securities exchange, quoted on the Nasdaq Stock Market or
traded on an over-the-counter market, such value as VSI and the participating
Investor may agree upon; provided, that if such parties are unable to agree upon
the Fair Market Value within ten (10) days after the event which requires a
determination of Fair Market Value to be made, VSI and the participating
Investor shall agree on a valuation firm of nationally recognized standing,
which firm shall determine the Fair Market Value. If the parties are unable to
agree on a valuation firm to determine the Fair Market Value within twenty (20)
days after the event which requires a determination of Fair Market Value to be
made, then within five (5) days thereafter, VSI, on the one hand, and the
participating Investor, on the other hand, shall each choose a valuation firm of
nationally recognized standing and such two firms shall select a third valuation
firm of nationally recognized standing, which third firm shall determine the
Fair Market Value. The fees and expenses of the valuation firms shall be borne
equally by VSI, on the one hand, and the participating Investor, on the other
hand.
3
4
"Initial Public Offering" shall mean the consummation of an
underwritten public offering of Class A Common Stock at a price per share equal
to at least 125% of the Conversion Price and with aggregate proceeds (net of
underwriting discounts and commissions) in excess of $30 million.
"Investor Affiliates" shall have the meaning set forth in
Section 2.2.
"Investor Associates" shall have the meaning set forth in
Section 2.2.
"Investor's Notice" shall have the meaning set forth in
Section 2.2.
"Investors" shall have the meaning set forth in the first
paragraph of this Agreement.
"Liens" shall mean all liens, claims, charges, assessments,
options, security interests and other legal and equitable encumbrances other
than such of the foregoing as may be imposed by applicable federal and state
securities laws or by the terms of this Agreement.
"Offer Notice" shall have the meaning set forth in Section
3.6(a).
"Offered Stock" shall have the meaning set forth in Section
2.2.
"Offering Period" shall have the meaning set forth in Section
3.6(b).
"Participation Notice" shall have the meaning set forth in
Section 2.4.
"Permitted Transferee" shall have the meaning set forth in
Section 2.2.
"Person" shall mean any natural person, corporation, limited
partnership, limited liability company, general partnership, joint stock
company, joint venture, association, company, trust, bank, trust company, land
trust, business trust or other organization, whether or not a legal entity, and
any government or agency or political subdivision thereof.
"Proposed Transfer" shall have the meaning set forth in
Section 2.4.
"Proposed Transferee" shall have the meaning set forth in
Section 2.4.
"Public Offering" shall mean a registered offering and sale of
Equity Securities of the Corporation.
"Purchase Agreement" shall have the meaning set forth in the
third paragraph of this Agreement.
4
5
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Series A Director" shall have the meaning set forth in
Section 3.3(a).
"Shares Subject to Offer" shall have the meaning set forth in
Section 3.6(a).
"Stock" shall mean the Class A Common Stock, the Class B
Common Stock and the Series A Preferred Stock.
"Stockholders" shall have the meaning set forth in the first
paragraph of this Agreement.
"Tag-Along Right" shall have the meaning set forth in Section
2.4.
"Transfer" shall mean any sale, assignment, pledge,
hypothecation, encumbrance or other transfer or disposition of any kind.
"Transferee" shall have the meaning set forth in Section 2.2.
"VSI" shall have the meaning set forth in the first paragraph
of this Agreement.
"Whitney" shall mean X.X. Xxxxxxx III, L.P.
"Whitney Director" shall have the meaning set forth in Section
3.3(b).
"Whitney Investors" shall mean Whitney and Whitney Strategic
Partners III, L.P.
(b) Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context requires. The word "or" is not exclusive and the word "including" means
"including without limitation." Unless otherwise specified, all accounting terms
used in this Agreement shall be interpreted in accordance with generally
accepted accounting principles as in effect from time to time, applied on a
consistent basis.
ARTICLE II
TRANSFERS OF SHARES
SECTION 2.1 RESTRICTIONS ON TRANSFER. No Stockholder shall
Transfer any Stock which it owns, except as otherwise set forth in and permitted
by this Agreement. Any Transfer not permitted by, or not effected in accordance
with, the terms of this Agreement shall be null and void and neither the
Corporation as the issuer of such Stock nor any transfer agent shall give any
effect to such attempted Transfer. The Corporation shall, prior to registering
or directing the registration of any such attempted Transfer by any Stockholder
on the books of the
5
6
Corporation, require the provision of evidence satisfactory to the Corporation
that such Transfer is permitted by, and has been effected in accordance with,
the terms of this Agreement.
SECTION 2.2 RIGHTS OF FIRST REFUSAL. At least 15 business days
before any Investor may effect any Transfer of any Series A Preferred Stock or
Class A Common Stock issuable upon conversion of such Series A Preferred Stock
(the Series A Preferred Stock and/or Class A Common Stock proposed to be
Transferred being referred to as the "Offered Stock"), other than to a Permitted
Transferee (as defined below) who agrees in writing to be bound by this
Agreement, the Investor shall provide the Corporation with a written notice (the
"Investor's Notice") stating (a) the Investor's intention to Transfer such
Offered Stock and the name and address of the proposed transferee (the
"Transferee"); (b) the number of shares and type (Series A Preferred Stock or
Class A Common Stock) of Offered Stock; and (c) the consideration (which must be
cash consideration) for which the Investor proposes to Transfer such Offered
Stock. The Corporation shall then have the right (the "First Refusal Right"),
exercisable by written notice (the "Corporation's Response Notice") to such
Investor within 10 business days after receipt of the Investor's Notice, to
purchase (or designate one or more other person(s) or entity(ies) to purchase)
such Investor's Offered Stock on the same terms and conditions as are provided
for in the Investor's Notice.
If the First Refusal Right is exercised with respect to all
Offered Stock, then the Corporation (or its designee(s)) shall effect the
purchase of the Offered Stock, including payment of the purchase price, at the
Corporation's offices on a date specified by the Corporation (which shall be not
more than 10 business days after delivery of the Corporation's Response Notice)
and at such time the selling Investor shall deliver to the Corporation the
certificates representing the Offered Stock to be purchased, properly endorsed
for transfer. If purchased by the Corporation, the Offered Stock so purchased
shall thereupon be canceled and cease to be issued and outstanding shares of the
Corporation's capital stock.
In the event the Corporation does not exercise the First
Refusal Right within 10 business days after receipt of the Investor's Notice,
the selling Investor shall have a period of up to [30] business days after the
date of the Investor's Notice (or, if earlier, the date the Investor's Notice
should have been given pursuant to this Section 2.2) in which to sell or
otherwise dispose of the Offered Stock to the Transferee for the same price as,
and upon such other terms and conditions which are not materially more favorable
to the Transferee than those, specified in the Investor's Notice.
In the event that the Corporation (or its designee(s)) makes a
timely exercise of the First Refusal Right with respect to a portion, but not
all of the Offered Stock, the selling Investor shall have the option,
exercisable by written notice to the Corporation delivered within 10 days
following the date of the Corporation's Response Notice, to effect the sale of
the Offered Stock pursuant to one of the following alternatives:
6
7
(a) Transfer of the Offered Stock to the Transferee in
compliance with this Section 2.2 as if the
Corporation did not exercise the First Refusal Right;
or
(b) Sale to the Corporation (or its designee(s)) of the
portion of the Offered Stock which the Corporation
has elected to purchase in accordance with this
Section 2.2.
For purposes of this Section 2.2 "Permitted Transferee" shall
mean (i) entities established and Controlled by or under common Control with the
Investors and any investor in or Affiliate of an Investor (collectively,
"Investor Affiliates"); (ii) any managing director, director, officer or
employee of an Investor or any Investor Affiliate or the heirs, executors,
administrators, testamentary trustees, custodians, legatees, beneficiaries,
spouses or lineal descendants of any or any of the foregoing persons referred to
in this clause (ii) (collectively, "Investor Associates"); and (iii) any trust,
all of the beneficiaries of which, or a corporation, limited liability company
or partnership, all of the stockholders, members or general or limited partners
of which, include an Investor, Investor Affiliates and/or Investor Associates.
SECTION 2.3 COMPLIANCE WITH LAW; LEGEND. (a) No Investor shall
transfer any Series A Preferred Stock (or Class A Common Stock issuable upon
conversion thereof) pursuant to this Article II unless such transfer is made (i)
pursuant to an effective registration statement under the Securities Act and is
qualified under applicable state securities or blue sky laws or (ii) without
registration under the Securities Act and qualification under applicable state
securities or blue sky laws, as a result of the availability of an exemption
from registration and qualification under such laws. The Corporation may, at its
option, request a legal opinion as to the availability of an exemption from
registration and qualification under the Securities Act and applicable state
securities or blue sky laws for any transfer requested pursuant to clause (ii)
above.
(b) Upon initial issuance and thereafter until transferred
pursuant to an effective registration statement under the Securities Act and
qualified under applicable state securities or blue sky laws, or until receipt
by the Corporation of a written opinion of counsel to the Investors reasonably
acceptable to the Corporation to the effect that such legend is not required in
order to ensure compliance with the Securities Act and state securities laws,
the certificate or certificates representing any shares of Series A Preferred
Stock (or Class A Common Stock issuable upon conversion thereof) shall bear a
legend reading substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION THEREUNDER.
7
8
(c) Each Investor hereby agrees that, until the expiration or
termination of this Agreement, each outstanding certificate representing any
shares of Series A Preferred Stock (or Class A Common Stock issuable upon
conversion thereof) held by such Investor shall also bear a legend reading
substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS AND OBLIGATIONS, INCLUDING RESTRICTIONS ON TRANSFER
PURSUANT TO A STOCKHOLDERS AGREEMENT DATED AS OF JULY 27, 1999. A COPY
OF SUCH STOCKHOLDERS AGREEMENT MAY BE OBTAINED WITHOUT CHARGE FROM THE
SECRETARY OF THE ISSUER. NO TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE WILL BE MADE ON THE BOOKS OF THE ISSUER UNLESS
ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF SUCH AGREEMENT.
SECTION 2.4 TAG-ALONG RIGHTS. (a) So long as VSI holds at
least 10% of the then-outstanding Common Stock, if, at any time VSI proposes to
transfer for value Common Stock (a "Proposed Transfer") to any Person (other
than an Affiliate of VSI) (the "Proposed Transferee"), then VSI must permit each
Investor, or cause each Investor to be permitted, to sell such number of shares
of Common Stock which represents the same percentage of the Common Stock held by
such Investor as the number of shares of Common Stock being sold by VSI
represents as a percentage of the Common Stock held by VSI (a "Tag-Along
Right"), for the same consideration per share and otherwise on the same terms
and conditions obtained by VSI in such transfer.
(b) In the event of a Proposed Transfer giving rise to a
Tag-Along Right, VSI shall deliver a written notice (a "Participation Notice")
to each Investor at least 30 days prior to the consummation of such Proposed
Transfer stating that the Proposed Transfer is subject to the provisions of this
Section 2.4 and including the principal terms of the Proposed Transfer,
including the number and class of shares of Common Stock proposed to be
purchased, the maximum and minimum per share purchase price and the name and
address of the Proposed Transferee. Each Investor may elect to participate in
the Proposed Transfer by delivering a written notice to VSI of such Investor's
election to participate within 20 days after delivery of the Participation
Notice. VSI shall seek to obtain the agreement of the Proposed Transferee to the
participation of such Investors in the Proposed Transfer and will not transfer
any Common Stock to the Proposed Transferee if the Proposed Transferee declines
to allow the participation of such Investors electing to participate. Each
Investor who does not elect to participate in the Proposed Transfer shall be
deemed to have waived all of his rights with respect to such Proposed Transfer,
and VSI shall thereafter be entitled to effect the Proposed Transfer on the
terms set forth in the Participation Notice for a period of 90 days following
delivery of the Participation Notice, without any obligation to such
non-participating Investors; provided, however, that VSI shall thereafter be
free to transfer to the Proposed Transferee within such 90-period, at a per
share price no greater than the per share price set forth in the Participation
Notice and on other principal terms which are not materially more favorable to
VSI than those set forth in the Participation Notice, without any further
obligation to such non-accepting Investors.
8
9
(c) The election of any Investor to participate in the
Proposed Transfer shall be irrevocable, and each such Investor shall be bound
and obligated to transfer in the Proposed Transfer on the same terms and
conditions, with respect to each such share of Common Stock sold, as VSI;
provided, however, that (a) if the principal terms of the Proposed Transfer
change with the result that the minimum per share price to be paid in the
Proposed Transfer shall be less than the minimum per share price set forth in
the Participation Notice or the other principal terms shall be materially less
favorable to VSI and participating Investors than those set forth in the
Participation Notice, each participating Investor shall be permitted to withdraw
and shall be released from his obligations thereunder and (b) if, at the end of
the 90th day following the date of the Participation Notice, VSI has not
completed the Proposed Transfer, each participating Investor shall be released
from his obligations under this Section 2.4, the Participation Notice shall be
null and void, and it shall be necessary for a new Participation Notice to be
furnished, and the terms and provisions of this Section 2.4 again complied with,
in order to consummate such Proposed Transfer pursuant to this Section 2.4,
unless the failure to complete such sale resulted from any failure by any
participating Investor to comply with the terms of this Section 2.4.
(d) If, prior to consummation, the terms of the Proposed
Transfer shall change with the result that the per share price to be paid in
such Proposed Transfer shall be greater than the maximum per share price set
forth in the Participation Notice or the other principal terms of such Proposed
Transfer shall be materially more favorable to the participating Investors than
those set forth in the Participation Notice, the Participation Notice shall be
null and void, and it shall be necessary for a new Participation Notice to be
furnished, and the terms and provisions of this Section 2.4 again complied with,
in order to consummate such Proposed Transfer pursuant to this Section 2.4;
provided, however, that in the case of such a new Participation Notice, the
applicable period to which reference is made in Section 2.4(b) shall be five
business days.
(e) No later than immediately prior to the consummation of the
Proposed Transfer, each participating Investor shall cause the conversion into
Class A Common Stock of that number of shares of its Series A Preferred Stock
that will result in the issuance by the Corporation to such Investor of at least
a number of shares of Class A Common Stock equal to the number of shares of
Class A Common Stock being transferred by the participating Investor pursuant to
this Section 2.4.
(f) Notwithstanding the foregoing, no Investor shall have any
right of participation pursuant to the provisions of this Section 2.4 with
respect to any transfer:
(i) to an Affiliate of VSI;
(ii) to any director, officer or employee of the Corporation
or its subsidiaries;
(iii) in a Public Offering or to the public under Rule 144
under the Securities Act; or
9
10
(iv) with respect to which VSI exercises its "drag along"
rights under Section 2.5.
SECTION 2.5 DRAG-ALONG RIGHTS. (a) So long as VSI holds at
least 66 2/3% of the then-outstanding Common Stock, if at any time VSI proposes
to sell, in any transaction or a series of related transactions, shares of
Common Stock constituting at least 50% of the Common Stock held by VSI, VSI
shall have the right (a "Drag-Along Right") to require each Investor to sell, or
cause to be sold, such number of shares of Class A Common Stock which represents
the same percentage of the Class A Common Stock held by such Investor as the
number of shares of Common Stock being sold by VSI in such sale transaction(s)
(a "Drag-Along Transaction") represents as a percentage of the Common Stock held
by VSI, for the same price and form of consideration per share and otherwise on
the same terms and conditions as are applicable to VSI.
(b) If VSI desires to exercise a Drag-Along Right pursuant to
Section 2.5(a), it must give written notice to each Investor of the proposed
Drag-Along Transaction giving rise to the Drag-Along Right at least 30 days
prior to the consummation thereof (a "Drag-Along Notice"). The Drag-Along Notice
shall set forth the principal terms of such proposed transaction including the
per share price to be paid and the name and address of the prospective buyer. If
VSI consummates the proposed transaction to which reference is made in the
Drag-Along Notice, each Investor shall be bound and obligated to sell the number
of shares of his Class A Common Stock specified in Section 2.5(a) in the
proposed transaction for the same price and form of consideration per share and
otherwise on the same terms and conditions with respect to each share sold by
VSI. In such event, no later than immediately prior to the consummation of the
proposed transaction, each Investor shall cause the conversion into Class A
Common Stock of that number of shares of its Series A Preferred Stock that will
result in the issuance by the Corporation to such Investor of at least a number
of shares of Class A Common Stock equal to the number of shares of Class A
Common Stock being sold by such Investor pursuant to this Section 2.5. If, at
the end of the 90th day following the date of the Drag-Along Notice, VSI has not
completed the proposed transaction, each Investor shall be released from his
obligation under the Drag-Along Notice, the Drag-Along Notice shall be null and
void, and it shall be necessary for a new Drag-Along Notice to be furnished, and
the terms and provisions of this Section 2.5 again complied with, in order to
consummate such proposed transaction pursuant to this Section 2.5.
(c) Each Investor agrees to vote his Series A Preferred Stock
(or Class A Common Stock issued upon conversion thereof), and hereby grants to
the Corporation an irrevocable proxy to vote such Series A Preferred Stock and
Class A Common Stock, in the same proportion as shares are voted by VSI in
connection with any Drag-Along Transaction or any merger, consolidation,
reorganization or sale of assets which would have a similar effect to that of a
Drag-Along Transaction. The Corporation agrees not to give effect to any action
by any Investor or any other Person which is in contravention of this Section
2.5(c). The foregoing provisions shall expire on the last date permitted by law.
10
11
(d) Notwithstanding the foregoing, VSI shall have no
Drag-Along Rights pursuant to the provisions of this Section 2.5 with respect to
any transfer:
(i) to an Affiliate of VSI;
(ii) to any employee, officer or director of the
Corporation who is not an Investor at the time of
such transfer;
(iii) in a Public Offering or to the public under Rule 144
under the Securities Act; or
(iv) in which the per-share consideration for the Common
Stock being sold is less than the dollar value of the
portion of the liquidation preference of one share of
Series A Preferred Stock (as determined in accordance
with the Certificate of Designation for the Series A
Preferred Stock) represented by one share of Class A
Common Stock calculated based on the Conversion Price
and as of the date of the Drag-Along Notice.
SECTION 2.6 MISCELLANEOUS PROVISIONS. The following provisions
shall be applied to any transaction to which Section 2.4 or 2.5 applies:
(a) In the event the consideration to be paid in exchange for
Common Stock in a transaction pursuant to Section 2.4 or Section 2.5 includes
any securities, and the receipt thereof by a participating Investor would
require under applicable law (i) the registration or qualification of such
securities or of any Person as a broker or dealer or agent with respect to such
securities or (ii) the provision to any participating Investor of any
information other than such information as would be required in an offering made
pursuant to Regulation D under the Securities Act solely to "accredited
investors" as defined in Regulation D, VSI shall be obligated only to use its
reasonable efforts to cause the requirements of Regulation D to be complied with
to the extent necessary to permit such participating Investor to receive such
securities (it being understood and agreed that VSI shall not be under any
obligation to effect a registration of such securities under the Securities Act
or similar statutes). Notwithstanding any provisions of this Section 2.6, if use
of reasonable efforts does not result in the requirements under Regulation D
being complied with to the extent necessary to permit such participating
Investor to receive such securities, VSI shall cause to be paid to such
participating Investor in lieu thereof, against surrender of the shares which
would otherwise have been sold by such participating Investor, an amount in cash
equal to the Fair Market Value of the securities which such participating
Investor would otherwise receive as of the date of the issuance of such
securities in exchange for Common Stock. The obligation of VSI to use reasonable
efforts to cause such requirements to have been complied with to the extent
necessary to permit a participating Investor to receive such securities shall be
conditioned on such participating Investor executing such documents and
instruments, and taking such other actions (including, without limitation, if
required by VSI, agreeing to be represented during the course of such
transaction by a "purchaser representative" (as defined in Regulation D) in
connection with evaluating the merits and risks of the prospective
11
12
investment and acknowledging that he was so represented), as VSI shall
reasonably request in order to permit such requirements to be complied with.
Unless he shall have taken all actions reasonably requested by VSI in order to
comply with the requirements under Regulation D, no participating Investor shall
have the right to require that he receive cash in lieu of securities under this
Section 2.6.
(b) Each participating Investor, whether in his capacity as a
participating Investor, stockholder, officer or director of the Corporation, or
otherwise, shall take or cause to be taken all such actions as may be necessary
or reasonably desirable in order to expeditiously consummate each transaction
pursuant to Section 2.4 or Section 2.5 and any related transactions, including,
without limitation, executing, acknowledging and delivering consents,
assignments, waivers and other documents or instruments; furnishing information
and copies of documents; filing applications, reports, returns, filings and
other documents or instruments with governmental authorities; and otherwise
cooperating with VSI and the prospective buyer. Without limiting the generality
of the foregoing, each participating Investor agrees to execute and deliver such
agreements as may be reasonably specified by VSI to which VSI will also be
party.
(c) The closing of a transaction pursuant to Section 2.4 or
2.5 shall take place at such time and place as VSI shall specify by notice to
each participating Investor. At any such closing, each participating Investor
shall deliver certificates representing the shares being purchased, duly
endorsed in blank or accompanied by stock powers duly executed in blank with the
signatures thereon guaranteed, and free and clear of Liens, against delivery of
a bank check and/or other consideration representing the aggregate purchase
price therefor.
ARTICLE III
OTHER AGREEMENTS
SECTION 3.1 FINANCIAL STATEMENTS; ANNUAL PLAN. If and so long
as any Investor owns such number of shares of Series A Preferred Stock equal to
$2 million worth of such stock (based upon the initial purchase price of such
stock on the date of issuance) and is not a Competitor (or an Affiliate of a
Competitor or a direct or indirect partner, officer, director, consultant,
employee or stockholder of, or other type of investor in, a Competitor), the
Corporation shall deliver to such Investor:
(a) As soon as available, and in any event within 45 days
after the close of each fiscal quarter (other than the last fiscal quarter in
the fiscal year), financial statements consisting of a balance sheet of the
Corporation as of the end of such quarter, together with statements of
operations and cash flows, stockholders' equity and changes in financial
condition for such quarter, setting forth in comparative form the figures from
such quarter, the figures for the corresponding quarter of the preceding fiscal
year and the budgeted figures from the Annual Plan (as hereinafter defined) for
such current quarter, all in reasonable detail, prepared and certified by an
authorized financial officer of the Corporation as fairly presenting the
financial
12
13
condition as of the balance sheet date and results of operations for the period
then ended in accordance with generally accepted accounting principles
consistently applied;
(b) As soon as possible, and in any event within 90 days after
the close of each fiscal year of the Corporation, financial statements
consisting of a balance sheet of the Corporation as of the end of such fiscal
year, together with statements of operations and cash flows, stockholders'
equity and changes in financial condition for such fiscal year, setting forth in
comparative form the figures for such fiscal year and for the previous fiscal
year, all in reasonable detail, and duly certified by an opinion unqualified as
to scope of a firm of independent certified public accountants satisfactory to
the Board of Directors of the Corporation; and
(c) At least 30 days prior to the beginning of each fiscal
year commencing after the date of this Agreement, a copy of an annual plan (the
"Annual Plan") for such year which shall include a budget submitted to and
approved by the Board of Directors of the Corporation, and within 30 days after
the preparation of any amendment or modification to such Annual Plan, a copy of
such amendment or modification.
In addition, the Corporation shall permit any person or
persons designated by such Investor in writing to visit and inspect any of the
properties of the Corporation, to examine the books and financial records of the
Corporation, and to discuss its affairs, finances and accounts with its
officers, all at such reasonable times and intervals as such Investor may
reasonably request.
SECTION 3.2 CONFIDENTIALITY. (a) Each Investor hereby agrees
that Confidential Information (as defined below) furnished and to be furnished
to it has been and will be made available in connection with such Investor's
investment in the Corporation. Each Investor agrees that it will not (and will
cause its respective officers, directors, employees, representatives,
consultants and advisors to not) use the Confidential Information in any way
unrelated to its investment in the Corporation. Each Stockholder further
acknowledges and agrees that it will not (and will cause its respective
officers, directors, employees, representatives, consultants and advisors to
not) disclose any Confidential Information to any Person; provided, however,
that Confidential Information may be disclosed (i) to the extent compelled by
judicial or administrative process or, in the opinion of such Investor's
counsel, required by applicable statute, law, rule or regulation or legal
process, (ii) to any Person to whom such Investor is contemplating a transfer of
its Series A Preferred Stock (or Class A Common Stock issuable upon conversion
thereof) (provided that such transfer would not be in violation of the
provisions of this Agreement and as long as such potential transferee is advised
of the confidential nature of such information and executes and delivers to the
Corporation a confidentiality agreement no less restrictive to the potential
transferee than the provisions hereof), or (iii) if approval of the
Corporation's Board of Directors shall have been obtained, or (iv) to the
extent required by any regulatory authority having jurisdiction over an
Investor.
(b) "Confidential Information" means any information
concerning the Corporation, its financial condition, business, operations or
prospects in the possession of or to
13
14
be furnished to any Investor in its capacity as a stockholder of the
Corporation; provided, however, that the term "Confidential Information" does
not include information which (i) becomes generally available to the public
other than as a result of a disclosure by an Investor or its agents, counsel,
accountants, investment advisers, representatives or Affiliates in violation of
this Section 3.2 or (ii) was or becomes available to such Investor on a
non-confidential basis from a source other than the Corporation, provided that
such source is or was (at the time of receipt of the relevant information) not,
to the best of such Investor's knowledge, bound by a confidentiality agreement
with (or other confidentiality obligation to) the Corporation or another Person.
SECTION 3.3 BOARD OF DIRECTORS. (a) (i) Each Investor shall
take such action as may be necessary to cause to be nominated and elected as the
Series A Preferred Director as provided in the Certificate of Designation (the
"Series A Director"), at any annual or special meeting of the Corporation's
stockholders or holders of Series A Preferred Stock (as the case may be) called
for the purpose of voting on the election of the Series A Director or by
consensual action of holders of Series A Preferred Stock with respect to the
election of the Series A Director, one individual designated by Whitney;
provided, however, that, in the event that the Whitney Investors own less than
50% of the shares of Series A Preferred Stock purchased by them pursuant to the
Purchase Agreement (including, for purposes of this provision, shares of Class A
Common Stock issued upon conversion of any such shares of Series A Preferred
Stock), the Series A Preferred Director instead shall be designated by the
Investors holding a majority of the shares of Series A Preferred Stock held by
all Investors (including, for purposes of this provision, shares of Class A
Common Stock issued upon conversion of any such shares of Series A Preferred
Stock). Each Investor agrees to appear in person or by proxy at any annual or
special meeting of the Corporation's stockholders or holders of Series A
Preferred Stock (as the case may be) for the purpose of obtaining a quorum and
to vote the shares of Series A Preferred Stock owned by such Investor, either in
person or by proxy, at any such meeting called for the purpose of voting on the
election of the Series A Director or by any such consensual action with respect
to the election of Series A Director, in favor of the election of the Series A
Director nominated in accordance with this Section 3.3(a).
(ii) Whitney or the Investors holding a majority of the
shares of Series A Preferred Stock held by all Investors (as the case may be in
accordance with Section 3.3(a)) shall be entitled at any time and for any reason
(or for no reason) to designate the Series A Director for removal as a director
of the Corporation, and to designate for election an individual to fill any
vacancy in the Series A Director seat. Each Investor agrees to take such action,
within 5 days after such designation for removal, as is necessary to remove any
director so designated for removal or to elect any director so designated to
fill any vacancy in accordance with the foregoing.
(iii) The provisions of this Section 3.3(a) shall apply
only during such time as the holders of Series A Preferred Stock, voting as a
separate class, have the right to elect one director of the Corporation.
14
15
(b) (i) In the event that no Series A Director is to be
designated pursuant to the Certificate of Designation relating to the Series A
Preferred Stock, for so long as the Whitney Investors together continue to own
at least 50% of the shares of Class A Common Stock issuable to them upon
conversion of all shares of Series A Preferred Stock purchased by them pursuant
to the Purchase Agreement, the directorship previously designated in the
Certificate of Designation relating to the Series A Preferred Stock as the
"Series A Preferred Director" shall, pursuant to paragraph (g) of Section FIFTH
of the Company's Certificate of Incorporation, continue to exist, and each
Stockholder shall take such action as may be necessary to cause to be nominated
and elected as a member of the Board of Directors of the Corporation, at any
annual or special meeting of the Corporation's stockholders called for the
purpose of voting on the election of directors, or by consensual action of the
Corporation's stockholders with respect to the election of directors, one
individual designated by Whitney (the "Whitney Director"). Each Stockholder
agrees to appear in person or by proxy at any annual or special meeting of the
Corporation's stockholders for the purpose of obtaining a quorum and to vote its
shares of capital stock, either in person or by proxy, at any such meeting
called for the purpose of voting on the election of directors or by any such
consensual action with respect to the election of directors, in favor of the
election of the Whitney Director nominated in accordance with this Section
3.3(b).
(ii) Whitney shall be entitled at any time and for any
reason (or for no reason) to designate the Whitney Director for removal as a
director of the Corporation, and to designate for election an individual to fill
any vacancy in the Whitney Director seat. Each Investor agrees to take such
action, within 5 days after such designation for removal, as is necessary to
remove any director designated for removal or to elect any director so
designated to fill any vacancy in accordance with the foregoing.
(c) The Corporation shall provide to the Series A Director or
the Whitney Director (as the case may be) the same information concerning the
Corporation and its subsidiaries, and access thereto, provided to other members
of the Corporation's Board of Directors.
(d) The Series A Director or the Whitney Director (as the case
may be) shall receive the same compensation for services as a director as other
members of the Board who are directly or indirectly affiliated with, or employed
by, stockholders of the Corporation which are Affiliates of the Corporation. The
reasonable travel expenses incurred by the Series A Director or the Whitney
Director (as the case may be) in attending meetings shall be reimbursed by the
Corporation.
(e) As promptly as practicable following the date hereof, the
Corporation shall purchase directors' and officers' insurance upon terms and
pricing customary for a company of its size and operating in its industry.
(f) The parties hereto will cause the Corporation's Board of
Directors to meet at least six times annually.
15
16
SECTION 3.4 ACTION BY STOCKHOLDERS. (a) Covenant to Vote. Each
Stock holder shall appear in person or by proxy at any annual or special meeting
of the Corporation's stockholders for the purpose of obtaining a quorum and
shall vote the shares of Stock owned by such Stockholder upon any matter
submitted to a vote of the Corporation's stockholders in a manner so as to
implement and be consistent with, and not to conflict with, the terms of this
Agreement.
(b) Action by Written Consent. Each Stockholder agrees to
execute promptly any consent in writing presented to it which sets forth any
action implementing the terms of this Agreement, including any action with
respect to the election of directors.
SECTION 3.5 NO VOTING OR CONFLICTING AGREEMENTS. No Investor
shall enter into or agree to be bound by any voting trust with respect to any
shares of Series A Preferred Stock (or Class A Common Stock issuable upon
conversion thereof) nor shall any Investor grant any proxies or enter into any
stockholder agreements or arrangements of any kind with any Person with respect
to any shares of Series A Preferred Stock (or Class A Common Stock issuable upon
conversion thereof) that are inconsistent with the provisions of this Agreement
(whether or not such agreements and arrangements are with other stockholders).
The foregoing prohibition includes, but is not limited to, agreements or
arrangements with respect to the acquisition, disposition or voting of any
shares of Series A Preferred Stock (or Class A Common Stock issuable upon
conversion thereof) that are inconsistent with the provisions of this Agreement.
No Investor shall act, for any reason, as a member of a group or in concert with
any other Person in connection with the acquisition, disposition or voting of
any shares of Series A Preferred Stock (or Class A Common Stock issuable upon
conversion thereof) in any manner which is inconsistent with the provisions of
this Agreement.
SECTION 3.6 RIGHT OF FIRST OFFER. (a) Except in the situations
described in Section 3.6(e), if at any time prior to the consummation of an
Initial Public Offering the Corporation desires to sell capital stock (or
rights, options or warrants to purchase capital stock or securities convertible
into capital stock) of the Corporation (each such above act, a "Disposition"),
the Corporation shall deliver to each Investor a written notice (an "Offer
Notice") which shall state the number of and consideration for the shares or
securities which the Corporation proposes to sell (the "Shares Subject to
Offer") and such other terms as are reasonably necessary for the holders of the
Series A Preferred Stock to evaluate such proposal.
(b) (i) Each Investor shall have the option for 20 days (the
"Offering Period") following receipt of an Offer Notice to accept the offer as
to a percentage of the Shares Subject to Offer equal to the percentage which (A)
the sum of (x) the number of shares of Common Stock owned by such Investor plus
(y) the number of shares of Common Stock into which such holder's Series A
Preferred Stock is convertible bears to (B) the total number of shares of Common
Stock of the Corporation outstanding on a fully diluted basis (i.e., assuming
conversion of all outstanding securities and exercise of all outstanding options
and warrants, whether or not then convertible or exercisable) (such Investor's
"Pro Rata Share"). To exercise these rights, an Investor must deliver to the
Corporation within the Offering Period a written election (the "Initial
16
17
Acceptance Notice") to purchase so many of the Shares Subject to Offer as such
Investor may desire to purchase, but not in excess of its Pro Rata Share.
Promptly upon expiration of the Offering Period, the Corporation shall deliver
to each Investor a written notice stating the number of shares subject to Offer
to be purchased by such Investor and by each other Investor as well as the
number of Shares Subject to Offer offered to, but not accepted by, Investors
pursuant to this Section 3.6(b) (the "Non-Accepted Shares").
(ii) In the event that all or part of a Disposition is to
be made to VSI, an Affiliate of VSI or any Investor (other than in accordance
with Section 3.6(b)(i), the Corporation may not sell such shares to VSI, such
Affiliate of VSI or such Investor unless the Corporation first offers to each
Investor the opportunity to purchase a percentage of such shares equal to the
percentage which (A) the sum of (x) the number of shares of Common Stock owned
by such Investor plus (y) the number of shares of Common Stock into which such
Investor's Series A Preferred Stock is convertible bears to (B) the sum of (x)
the total number shares of Common Stock owned, in the aggregate, by such
proposed purchaser and all Investors who indicate a desire to purchase a portion
of such shares plus (y) the number of shares of Common Stock into which such
proposed purchaser and all such participating Investors' Series A Preferred
Stock is convertible. In the event that a participating Investor declines to
purchase the full amount of shares which such Investor is entitled to purchase
pursuant to the foregoing sentence, the balance of such shares may be sold to
the proposed purchaser and all Investors who indicate a desire to purchase a
portion of such shares in accordance with the formula set forth above in this
Section 3.6(b)(ii), until all such shares are purchased.
(c) The closing of the sale of any or all of the Shares
Subject to Offer shall be consummated on a date specified by the Corporation
which shall be within 45 days after the notice specifying shares Investors will
purchase or, if Investors will not purchase any shares, within 45 days after the
end of the Offering Period. The closing shall take place at the offices of the
Corporation (unless otherwise mutually agreed) at which time each Investor shall
deliver to the Corporation the purchase price for the Shares Subject to Offer it
elected to purchase (in the form of a certified or bank check or wire transfer
or other mutually agreeable means of payment) and the Corporation shall deliver
to such Investor a certificate or certificates representing the portion of the
Shares Subject to Offer it elected to purchase in accordance with Section
3.6(b). No Disposition shall be made at a lower price or on more favorable terms
than those specified in the Offer Notice.
(d) In the event that any proposed issuance subject to an
Offer Notice is for a consideration other than cash, each Stockholder electing
to purchase Shares Subject to Offer will be entitled to pay cash for each share
or other unit, in lieu of such other consideration, in the amount determined in
good faith by the Board of Directors of the Corporation to constitute the fair
value of such consideration other than cash to be paid per share or other unit.
(e) The provisions of Section 3.6 shall not apply to (i)
securities offered to the public pursuant to a registration statement filed
under the Securities Act, (ii) the issuance of shares of Common Stock upon the
conversion of Series A Preferred Stock, (ii) the issuance of
17
18
shares or options to purchase shares (and shares issuable upon exercise)
pursuant to any existing employee stock option plan of the Corporation or
employment agreement for any officer of the Corporation, (iii) the issuance of a
warrant to purchase 21,250 shares of Series A Preferred Stock to Xxxxxx Xxxxxx
Partners LLC (or its registered assigns), or the issuance of the shares of
capital stock of the Corporation issuable upon exercise of said warrant, (iv)
capital stock issued in connection with the acquisition of another corporation
whether by merger, purchase of all or substantially all of the assets or
otherwise and (v) in connection with debt financings, or strategic
relationships.
(f) The rights granted pursuant to this Section 3.6 may only
be transferred or assigned by an Investor to a transferee who will hold at least
10% of the shares of Series A Preferred Stock (including, for purposes of this
provision, shares of Class A Common Stock issued upon conversion of such shares
of Series A Preferred Stock) subsequent to the proposed transfer.
SECTION 3.7 INSURANCE. The Corporation agrees to maintain,
directly or indirectly through VSI, one or more policies of insurance issued by
insurers of recognized responsibility, insuring the Corporation and its
properties and business against such losses and risks, and in such amounts, as
are customarily maintained by other companies operating business that sell
vitamins, nutritional supplements and minerals to retail customers.
ARTICLE IV
GENERAL PROVISIONS
SECTION 4.1 TERM. This Agreement shall take effect on the date
on which the transactions contemplated under the Purchase Agreement are
consummated and shall terminate on the earlier of (a) the consummation of an
Initial Public Offering and (b) (i) as to any Stockholder, at such time as such
Stockholder no longer holds any shares of Series A Preferred Stock or Common
Stock and (ii) as to the Corporation, at such time as all of the Stockholders no
longer hold any Stock; provided, however, that the provisions of Sections
3.3(b), (c) and (d) shall terminate only at such time as Whitney can no longer
designate the Whitney Director pursuant to Section 3.3(b). Notwithstanding the
foregoing, the provisions of Sections 2.3(a) and (b) and 3.2 shall survive any
termination of this Agreement.
SECTION 4.2 REMEDIES. (a) It is acknowledged that a breach of
the provisions of this Agreement could not be compensated adequately by money
damages. Accordingly, any party hereto shall be entitled, in addition to any
other right or remedy available to it, to an injunction restraining such breach
or threatened breach and to specific performance of any provisions of this
Agreement, and in either case no bond or other security shall be required in
connection therewith. If any action shall be brought in equity to enforce any of
the provisions of this Agreement, none of the Corporation, VSI or any Investor
shall raise the defense that there is an adequate remedy at law.
(b) Any and all remedies herein expressly conferred upon a
party will be deemed cumulative with and not exclusive of any other remedy
conferred hereby or by law or
18
19
equity on such party, and the exercise of any one remedy will not preclude the
exercise of any other.
SECTION 4.3 SEVERABILITY. The parties agree that (a) the
provisions of this Agreement shall be severable in the event that any of the
provisions hereof is held by a court of competent jurisdiction to be invalid,
void or otherwise unenforceable, (b) such invalid, void or otherwise
unenforceable provisions shall be automatically replaced by other provisions
which are as similar as possible in terms to such invalid, void or otherwise
unenforceable provisions but are valid and enforceable and (c) the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
SECTION 4.4 GOVERNING LAW; JURISDICTION. (a) This Agreement
shall be governed by and construed in accordance with the internal laws of the
State of New York, without regard to principles of conflicts of law.
(b) Each party hereby irrevocably submits to the exclusive
jurisdiction of the courts of the city of New York, State of New York in any
action, suit or proceeding arising in connection with this Agreement, and agrees
that any such action, suit or proceeding shall be brought only in such court
(and waives any objection based on forum non conveniens or any other objection
to venue therein).
SECTION 4.5 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the Corporation, VSI and each Investor
and their successors and permitted assigns; this Agreement does not create, and
shall not be construed as creating, any rights enforceable by any other Person.
If any involuntary transferee acquires any shares of Stock held by any
Stockholder in any manner, whether by operation of law or otherwise, such shares
shall be held subject to all of the terms of this Agreement, and by taking and
holding such shares, such Person shall be conclusively deemed to have agreed to
be bound by and to perform all of the terms and provisions of this Agreement.
SECTION 4.6 NOTICES. All notices and communications to be
given or otherwise made to any party to this Agreement shall be in writing and
addressed as follows:
(a) If to the Corporation:
XxxxxxxXxxxxx.xxx, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chairman of the Board
Facsimile: (000) 000-0000
Attention: President and Chief Executive Officer
Facsimile: (000) 000-0000
19
20
(b) If to VSI:
Vitamin Shoppe Industries Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
(c) If to any Investor, to such Investor's address as it
appears on the stock books of the Corporation;
(d) or to such other address as may be designated in a notice
given pursuant to the terms of this Section 4.6 to the addressor. All such
notices and communications shall be deemed to have been received: (i) in the
case of personal delivery, when delivered; (ii) if delivered by registered or
certified mail, postage prepaid and return receipt requested, on the fifth
business day following such mailing; (iii) if delivered by a nationally
recognized private courier service providing documented overnight delivery, with
overnight delivery specified, on the next business day after delivery to such
courier service; (iv) if delivered by telecopier, on the day of delivery,
provided there is written confirmation of receipt; and (v) in all other cases,
upon actual receipt.
SECTION 4.7 TENDERED SHARES DEEMED CANCELED. The parties
hereto acknowledge and agree that shares of Stock shall for all purposes be
deemed to be retired, canceled and no longer outstanding as of the date when the
certificate (or certificates) evidencing such shares are delivered to the
Corporation at its principal place of business, duly endorsed for transfer to
the Corporation (including without limitation an endorsement in blank) by the
registered holder (or holders) thereof, or accompanied by stock transfer powers
duly executed in the favor of the Corporation or in blank by the holder (or
holders) thereof. Shares of Stock shall be deemed to have been delivered for the
purposes of this Section 4.7 in the same manner as notices and communications
are deemed delivered pursuant to Section 4.6.
SECTION 4.8 ENTIRE AGREEMENT; AMENDMENT. This Agreement
contains the entire agreement among the parties hereto with respect to the
matters contemplated herein, supersedes all prior written agreements and
negotiations and oral understandings, if any, and, except as otherwise provided
herein, may not be amended, supplemented or discharged except by an instrument
in writing signed (a) in any such case by the Corporation, VSI and the holders
of at least 65% of the shares of Class A Common Stock (assuming all shares of
Series A Preferred Stock were converted into shares of Class A Common Stock)
held in the aggregate by the Investors and (b) if such amendment, supplement or
discharge treats any holder of Stock differently from all other holders of Stock
party to this Agreement as a group, by such holder; provided, however, that no
modification or amendment shall be effective to reduce the percentage of shares,
the consent of the holders of which is required under this Section 4.8. In the
event that any Stockholder or the Corporation shall be required, as a result of
the enactment, amendment or modification, subsequent to the date hereof, of any
applicable law or regulation,
20
21
or by the order of any governmental authority, to take any action that is
inconsistent with or would constitute a violation or breach of any terms of this
Agreement, then the Stockholders and the Corporation shall use their best
efforts to negotiate an appropriate amendment or modification of, or waiver of
compliance with, such terms.
SECTION 4.9 WAIVER. Any waiver by any party of a breach of any
provisions of this Agreement shall not operate as or be construed to be a waiver
of any other breach of that provision or of any breach of any other provision of
this Agreement. The failure of a party to insist upon strict adherence to any
term of this Agreement on one or more occasions shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be evidenced by a
writing signed by the party against whom the waiver is sought to be enforced.
SECTION 4.10 INTERPRETATION. Section headings and captions
herein are inserted for convenience only and shall not define, limit, extend or
describe the scope of this Agreement or affect the construction hereof.
References to Sections are, unless otherwise specified, references to Sections
of this Agreement. The language of this Agreement shall be deemed to be the
language jointly chosen by the parties hereto to express their mutual intent,
and no rule of strict construction shall be applied or enforced against any
party hereto.
SECTION 4.11 INSPECTION. So long as this Agreement is in
effect, this Agreement shall be made available for inspection by any holder of
Stock at the Corporation's principal offices. The Corporation shall send a copy
of this Agreement to any legitimately interested party without charge upon
receipt of a written request therefor.
SECTION 4.12 COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement, and shall become
binding when one or more counterparts have been signed by each of the parties
and delivered to each of the other parties hereto.
[The remainder of this page intentionally has been left blank.]
21
22
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and year first above written.
XXXXXXXXXXXXX.XXX, INC.
By:
------------------------------------
Name:
Title:
VITAMIN SHOPPE INDUSTRIES INC.
By:
------------------------------------
Name:
Title:
22
23
THE INVESTORS:
FdG-CHASE CAPITAL PARTNERS LLC
By: FdG CAPITAL ASSOCIATES LLC, its
Managing Member
By:
-----------------------------
Name:
Title:
FdG CAPITAL PARTNERS LLC
By: FdG CAPITAL ASSOCIATES LLC, its
Managing Member
By:
----------------------------
Name:
Title:
CB CAPITAL INVESTORS, INC.
By:
----------------------------------
Name:
Title:
24
XXXXXXX XXXXXXXX AND XXXXX
XXXXXXXX AS JOINT TENANTS WITH
RIGHT OF SURVIVORSHIP
-----------------------------------
Xxxxxxx Xxxxxxxx, Joint Tenant
-----------------------------------
Xxxxx Xxxxxxxx, Joint Tenant
BANKAMERICA INVESTMENT CORPORATION
By:
-------------------------------
Name:
Title:
MIG PARTNERS IV
By:
-------------------------------
Name:
Title:
25
X.X. XXXXXXX III, L.P.
By:X.X. Xxxxxxx Equity Partners III, LLC,
Its General Partner
By:
--------------------------------
Xxxxxx X. X'Xxxxx
A Managing Member
WHITNEY STRATEGIC
PARTNERS III, L.P.
By:X.X. Xxxxxxx Equity Partners III, LLC,
Its General Partner
By:
--------------------------------
Xxxxxx X. X'Xxxxx
A Managing Member
26
THE FLATIRON FUND 1998/1999, LLC
By:
--------------------------------
Name:
Title:
FLATIRON ASSOCIATES, LLC
By:
--------------------------------
Name:
Title:
27
Schedule 1
Name Investors Number of Shares
---- --------- ----------------
FdG-Chase Capital Partners LLC
FdG Capital Partners LLC 27,211
CB Capital Investors, Inc. 39,840
Xxxxxxx Xxxxxxxx and Xxxxx Xxxxxxxx, as joint tenants 212,500
with right of survivorship
The Flatiron Fund 1998/1999, LLC
Flatiron Associates, LLC
BankAmerica Investment Corporation 11,951
MIG Partners IV 1,332
X.X. Xxxxxxx III, L.P. 693,516
Whitney Strategic Partners III, L.P. 16,711
