TAG-ALONG AGREEMENT
This TAG-ALONG AGREEMENT (this "Agreement") is entered into as of June 26,
2002, by and among Medical Technology Systems, Inc., a Delaware corporation (the
"Company"), Eureka I, L.P. (the "Purchaser") and Xxxx X. Xxxxxx (the
"Stockholder").
RECITALS
WHEREAS, on this date the Company is issuing 2,000 shares of its Series A
Convertible Participating Preferred Stock to the Purchaser and Warrants to
purchase 566,517 Shares of Common Stock of the Company pursuant to a Securities
Purchase Agreement of even date herewith (the "Purchase Agreement");
WHEREAS, one of the conditions to the investment by the Purchaser is the
execution of this Agreement providing for certain restrictions and obligations
with respect to capital stock of the Company held by the Stockholder.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises set forth in this Agreement and in the Purchase Agreement, the parties
hereto, intending to be legally bound, agree as follows:
SECTION 1. STOCK RESTRICTION PROVISIONS.
1.1 Right of Participation in Sales.
(a) Co-Sale Right. If at any time the Stockholder desires to sell or
otherwise dispose of all or any of the capital stock of the Company
beneficially owned by it to any person or entity (the "Proposed
Transferee"), the Purchaser shall have the right to participate in such
disposition, to the extent of its Pro Rata Portion at the same price and
upon the same terms and conditions as involved in such disposition by the
Stockholder, and the Stockholder shall make effective arrangements for such
participation (which shall be a condition to any sale by the Stockholder).
The Stockholder shall provide at least twenty (20) days prior written
notice of such sale (the "Co-Sale Notice") to the Company and the
Purchaser.
(b) Pro Rata Portion. For purposes of subsection (a), the Purchaser's
"Pro Rata Portion" means the result obtained by multiplying the number of
shares of Common Stock held by the Purchaser by a fraction of which the
numerator is the number of shares of Common Stock disposed of by the
Stockholder to the Proposed Transferee, and of which the denominator is the
number of shares of Common Stock held by the Stockholder immediately before
such disposition. For this purpose, (1) "Common Stock" means all capital
stock of the Company, however designated, that participates in any
liquidation or dissolution of the Company without limit as to per-share
amount; (2) any sale of securities or other rights that are convertible
into, exercisable for or exchangeable for Common Stock ("Convertible
Securities") shall be treated as a sale of the underlying Common Stock; and
(3) the Pro Rata Portion shall be calculated on the assumption that all
Convertible Securities held by the Stockholder or the Purchaser shall have
been converted, exercised or exchanged.
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(c) Notice of Intent to Participate. If the Purchaser wishes to so
participate in any sale under this Section 1.1, it shall notify the
Stockholder of such intention within fifteen (15) days after the date the
Co-Sale Notice is received.
(d) Exception. This Section shall not apply to any disposition by the
Stockholder of shares of Common Stock which, when aggregated with all
shares of Common Stock disposed of by the Stockholder and all Other
Stockholders during the calendar month in which the disposition in question
occurs and the preceding eleven calendar months, does not exceed 70,000
shares of Common Stock. "Other Stockholder" means each stockholder of the
Company who is, at the time of the disposition in question, party to an
agreement with the Purchaser similar to this Agreement.
(e) Family Transfers. This Section shall not apply to any disposition
without consideration to any member of the Xxxxxx Family (as defined in the
Purchase Agreement), but the Stockholder will not make any such disposition
unless the transferee and the Company execute and deliver an agreement with
the Purchaser identical to this Agreement. Any disposition made pursuant to
this subsection will be disregarded for purposes of subsection (d).
1.2 Put Right. In the event of any sale, transfer, assignment or
disposition of any capital stock by the Stockholder in violation of any
provision of Section 1.1 of this Agreement, the Purchaser shall have the right,
in addition to all other rights for breach of this Agreement, to elect to cause
such Stockholder to purchase, and such Stockholder shall be obligated to
purchase, from the Purchaser and at the same price per share and on the same
terms and conditions as involved in such disposition by such Stockholder, the
number of shares of Common Stock that the Purchaser was entitled to sell under
Section 1.1.
SECTION 2. MISCELLANEOUS.
2.1 Duration of Agreement. Except as otherwise provided herein, the rights
and obligations of the Company, the Purchaser and the Stockholder under this
Agreement shall terminate June 26, 2012.
2.2 Legend. Each certificate representing shares of capital stock
beneficially owned by the Stockholder shall bear a legend in substantially the
following form, until such time as the shares of capital stock, represented
thereby are no longer subject to the provisions hereof:
"The sale, transfer or assignment of the securities represented by
this certificate are subject to the terms and conditions of a certain
Tag-along Agreement dated as of June 26, 2002, as amended from time to
time, among the Company and certain holders of its outstanding capital
stock. Copies of such Tag-along Agreement may be obtained at no cost
by written request made by the holder of record of this certificate to
the Secretary of the Company."
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2.3 Governing Law. This Agreement shall be governed in all respects by the
laws of Delaware.
2.4 Injunctive Relief. It is acknowledged that it will be impossible to
measure the damages that would be suffered by a party if any other party fails
to comply with the provisions of this Agreement and that in the event of any
such failure, the non-defaulting parties will not have an adequate remedy at
law. The non-defaulting parties shall, therefore, be entitled to obtain specific
performance of the defaulting party's obligations hereunder and to obtain
immediate injunctive relief. The defaulting party shall not argue, as a defense
to any proceeding for such specific performance or injunctive relief, that the
non-defaulting parties have an adequate remedy at law.
2.5 Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
2.6 Entire Agreement. This Agreement, the Purchase Agreement and the other
documents delivered pursuant thereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
2.7 Severability. In case any provision of the Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
2.8 Amendment and Waiver. Except as otherwise expressly provided, this
Agreement may be amended or modified only upon the mutual written consent of all
the parties hereto.
2.9 Delays or Omissions. It is agreed that no delay or omission to exercise
any right, power or remedy accruing to any party upon any breach, default or
noncompliance of any other party under this Agreement shall impair any such
right, power or remedy, nor shall it be construed to be a waiver of or in any
such breach, default or noncompliance, or any acquiescence therein, or of or in
any similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent or approval of any kind or character on
the part of any party of any breach, default or noncompliance under this
Agreement or any waiver on the part of any party of any provisions or conditions
of this Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing.
2.10 Notices and Consents. All notices and consents required or permitted
hereunder shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party to be notified; (b) when sent by confirmed telex
or facsimile if sent during normal business hours of the recipient; if not, then
on the next business day; (c) five (5) days after having been sent by registered
or certified mail, return receipt requested, postage prepaid; or (d) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All communications shall be
sent to each party at the address set forth on the signature pages hereof or at
such other address as any party may designate by ten (10) days advance written
notice to the other parties hereto.
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2.11 Attorneys' Fees. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants actually incurred, which shall include, without
limitation, all fees, costs and expenses of appeals.
2.12 Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
2.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
2.14 Pronouns. All pronouns contained herein, and any variations thereof,
shall be deemed to refer to the masculine, feminine or neutral, singular or
plural, as to the identity of the parties hereto may require.
2.15 Further Assurances. From and after the date of this Agreement, upon
the request of the Purchaser or the Company, the Company, the Stockholder and
the Purchaser shall execute and deliver such instruments, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth in the first paragraph hereof.
Address: MEDICAL TECHNOLOGY SYSTEMS, INC.
00000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000
Name:
Title:
Address: EUREKA I, L.P.
000 Xxxxxxxx Xxxx, Xxxxx 000 By: EUREKA MANAGEMENT, L.P.,
Xxxxxxx, Xxxxxxxxxxxx 00000 its sole general partner
By: BERWIND CAPITAL PARTNERS, LLC,
its sole general partner
By: _______________________________
Xxxxxxxxx X. Xxxxx,
President
[SIGNATURES CONTINUED ON NEXT PAGE]
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Address:
00000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000
______________________________
Xxxx X. Xxxxxx
