EXHIBIT 10.2
[Execution Copy]
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT, dated as of March 31, 2004 (as the same
may be modified, amended, supplemented and/or restated from time to time, this
"Agreement" or the "Stockholders Agreement"), is by and among (1) NATURAL HEALTH
TRENDS CORP., a Florida corporation (the "Issuer"), (2) the persons and/or
entities named on Schedule 1 attached hereto and made part hereof (collectively,
the "Original Holders"), and (3) the other persons and/or entities, if any
(including direct and indirect successors and transferees of the Original
Holders), who subsequently become party to this Agreement (together with the
Original Holders, collectively, the "Holders").
BACKGROUND
Under that certain Agreement and Plan of Merger, dated as of March 31,
2004 (as the same may be modified, amended, supplement and/or restated from time
to time, the "Merger Agreement"), between the Issuer, MV MergerCo, Inc. and
MarketVision Communications Corporation, the Issuer has issued (or has agreed to
issue) to each Original Holder, as part of the Merger Consideration (as defined
therein) the number of shares of Common Stock, par value $.001 per share, of the
Issuer ("Common Stock") as is indicated below such Original Holders' respective
names on the signature page hereto.
This is the Stockholders Agreement referred to (and defined as such) in
the Merger Agreement. It is a condition precedent to the consummation of the
transactions contemplated by the Merger Agreement that the Issuer and Original
Holders execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and undertakings herein contained and of each and every act performed
or to be performed hereunder, the Holders and the Issuer hereby agree and
covenant as follows:
ARTICLE 1: CERTAIN DEFINITIONS
SECTION 1.1. Agreement Definitions. In this Agreement, the term:
"Affiliate" of any Holder or Close Relative/Successor means
and includes any entity controlling, controlled by, or under common control
with, such Holder or Close Relative/Successor.
"Blue Sky Laws" means the securities and "blue sky" laws of
any state of other jurisdiction.
"Close Relative/Successor" of any Holder means and includes:
(i) such Holder's spouse, (ii) such Holder's lineal descendants, (iii) any trust
established solely for the benefit of such Holder's spouse and/or lineal
descendants, and (iv) such Holder's executors, heirs, administrators or assigns,
upon death of such Holder.
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"Commission" means the Securities and Exchange Commission, or
any successor governmental authority.
"Market Value" of the Common Stock means, for any period, the
average of the per share of Common Stock last reported sales price for each
trading day during such period. For purposes of the foregoing, "last reported
sale price" for any trading day means (i) if the Common Stock is listed or
admitted for trading on the New York Stock Exchange or the American Stock
Exchange, the last sale price, or the closing bid price if no sale occurred, for
such trading day of the Common Stock on such securities exchange on which the
Common Stock is listed, or (ii) if not listed on the New York Stock Exchange or
the American Stock Exchange, the last reported sales price, or the closing bid
price if no sale occurred, for such trading day of the Common Stock quoted in
The Nasdaq Stock Market or (iii) if not listed on the New York Stock Exchange or
the American Stock Exchange or quoted in The Nasdaq Stock Market, the last
reported sales price, or the closing bid price if no sale occurred, for such
trading day of the Common Stock in any other system of automated dissemination
of quotations of securities prices then in common use, if the Common Stock is
then so quoted. If the Common Stock is not listed or quoted as described in any
of the foregoing clauses (i) through (iii), the Market Value of the Common Stock
for any period shall mean the market value thereof as determined by a nationally
recognized investment banking firm selected in good faith by the Board of
Directors of the Issuer.
"Merger Shares" means the 690,000 shares of Common Stock
originally issued under the Merger Agreement.
"Registrable Securities" means, at any date, shares of Common
Stock held by a Holder under this Agreement; provided that such Common Stock
shall cease to be Registrable Securities: (i) when sold or otherwise transferred
pursuant to an effective registration statement under the Securities Act or
pursuant to Rule 144 or any similar provision then in force) under the
Securities Act, and (ii) on the first anniversary of the date of this Agreement.
"Reorganization" means a stock dividend, stock split,
subdivision of shares, reverse split or combination of shares in respect of the
Common Stock and/or other Securities or any similar recapitalization or capital
reorganization of the Issuer, Common Stock and/or other Securities.
"Reorganization Securities" means all shares of Common Stock
and other securities of the Issuer issued on or with respect to any other
Securities as a result of a Reorganization.
"Securities" means and includes: (i) the Merger Shares, (ii)
all Reorganization Securities issued on or with respect to the Merger Shares or
any other Securities, and (iii) all shares of Common Stock and Reorganization
Securities issued upon any transfer of any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder.
SECTION 1.2. Merger Agreement Definitions. Capitalized terms used and
not defined herein have the respective meanings ascribed to such terms in the
Merger Agreement.
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ARTICLE 2: RESTRICTED SECURITIES
SECTION 2.1. Acquisition for Investment. Each Holder hereby
acknowledges his understanding that the Merger Shares are not, and any other
Securities may not be, registered under the Securities Act, or registered or
qualified under any Blue Sky Laws, on the grounds that the offering, sale,
issuance and delivery thereof is exempt from the registration and/or
qualification requirements thereof, and that the Issuer's reliance on such
exemption is predicated in part on the following covenants, agreements and
acknowledgments of the Holders. Each Holder hereby represents and warrants to
and covenants and agrees with the Issuer that such Holder: (1) has been
furnished with all information which such Holder deems necessary to evaluate the
merits and risks of the acquisition of his Securities; (2) has had the
opportunity to ask questions and receive answers concerning the information
received about his Securities and the Issuer; (3) has been given the opportunity
to obtain any additional information such Holder deems necessary to verify the
accuracy of any information obtained concerning his Securities and the Issuer;
(4) by reason of such Holder's business and financial experience, such Holder,
has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of an investment
in his Securities; (5) is acquiring his Securities for his own personal account
for investment purposes and not with a view to the sale or distribution of all
or any part of his Securities (or any interest therein); (6) owns the entire
beneficial interest in his Securities, and the offer to invest in his Securities
was made to such Holder on a personal contact basis and not by means of any
general solicitation or general advertising; (7) understands that: (i) his
Securities cannot be resold unless they are subsequently registered under the
Securities Act, registered or qualified under all applicable Blue Sky Laws, or
an exemption from such registration and qualification is available, and (ii)
neither the Issuer nor any other person is obligated to effect such registration
or qualification (except as otherwise provided hereunder); (8) will not offer,
sell, transfer, distribute or otherwise dispose of his Securities except in
compliance with the Securities Act and all applicable Blue Sky Laws; (9) has
adequate means of providing for his current needs and foreseeable personal
contingencies and has no need for his investment in his Securities to be liquid;
(10) is able to bear the economic risk of the investment in his Securities
indefinitely; and (11) is currently able to afford the complete loss of
such investment.
SECTION 2.2. Restrictive Legends. Certificates for all Securities now
or hereafter issued to and held by the Holders shall be marked conspicuously
with: (i) for so long as appropriate, a legend stating that the Securities have
not been registered or qualified under the Securities Act and Blue Sky Laws and
setting forth appropriate restrictions on transfer as a result thereof, and (ii)
in addition, substantially following legend:
"THE OFFER, SALE, TRANSFER, ASSIGNMENT, PLEDGE, HYPOTHECATION
OR OTHER DISPOSITION OR ENCUMBRANCE OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY AND SUBJECT
TO THE TERMS OF A STOCKHOLDERS AGREEMENT DATED AS OF MARCH 31,
2004, AS AMENDED. SUCH AGREEMENT ALSO SET FORTH CERTAIN
OBLIGATIONS OF THE HOLDER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE WITH RESPECT TO THE SALE AND VOTING OF SUCH
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SECURITIES IN CERTAIN CIRCUMSTANCES. THE HOLDER AGREES TO BE
BOUND BY THE TERMS OF SUCH AGREEMENT, A COPY OF WHICH IS ON
FILE AT THE EXECUTIVE OFFICES OF THE ISSUER AND CAN BE
INSPECTED UPON WRITTEN REQUEST OF SUCH HOLDER."
ARTICLE 3: RESTRICTIONS ON TRANSFER
SECTION 3.1. In General. (A) Except as otherwise provided in this
Agreement, a Holder shall have no right to offer, sell, transfer, assign,
pledge, hypothecate or otherwise dispose of or encumber, in any manner and
whether or not for value or consideration ("Transfer"), any or all of the
Securities owned or held by such Holder (or any part of such Holder's right,
title or interest therein), unless: (i) by operation of law or pursuant to the
laws of descent and distribution, (ii) in accordance with Sections 3.2, 3.3, 3.4
and 3.5 hereof, and (iii) in the case of a Transfer in accordance with the
foregoing clause (i) and Section 3.2(A), Section 3.2(B), Section 3.2(D) and
(with respect to Private Offered Securities but not Public Offered Securities
(as such terms are defined in Section 3.3)) Section 3.3, the person or entity
(excepting the Issuer) to whom such Securities (or interest therein) are to be
sold, transferred, assigned, pledged, hypothecated or otherwise disposed of or
encumbered ("Transferred") shall have become a party to this Agreement and by
executing and delivering to the Issuer a Supplement instrument substantially in
the form of Schedule 2 hereto (a "Supplement"). Any attempted Transfer of
Securities in violation of this Article 3, whether voluntary or involuntary,
shall be void and of no force and effect. The Issuer shall not be required to
record on its books, or to otherwise recognize, any purported Transfer of
Securities in violation of this Article 3, or to recognize the rights of any
purported transferee of Securities as a result of such a Transfer.
(B) The Issuer is hereby authorized and empowered by each
Holder to modify, amend and supplement Schedule 1 hereto to reflect any changes
in the information therein after the date of this Agreement as a result of any
Transfer of Securities (including changes in the identity of the Holders and in
their respective holdings of Securities).
SECTION 3.2. Pre-Approved Transfers. Each Holder shall have the right
to Transfer all or part of such Holder's Securities (and interests therein):
(A) in the case of a natural person Holder, to any Close
Relative/Successor of such Holder or any Affiliate of such Holder or Close
Relative/Successor;
(B) in the case of a corporate, partnership, limited liability
Issuer or other non-natural person Holder, to any Affiliate of such Holder;
(C) to any bona fide pledgee so long as such pledgee executes
and delivers to the Issuer in advance of such pledge a Supplement and any other
documentation reasonably requested by the Issuer;
(D) to the Issuer; and
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(E) to any other person or entity (including another Holder),
provided that a majority of disinterested directors of the Issuer shall have
approved such Transfer to such person or entity.
A Transfer permitted under this Section 3.2 is hereinafter sometimes referred to
as a "Pre-Approved Transfer".
Section 3.3. Rights of First Refusal. (A) In the event that any Holder
desires to Transfer all or part of such Holder's Securities, or any of the
Holder's right, title or interest in such Securities (other than in a
Pre-Approved Transfer), such Holder (the "Selling Holder") shall first deliver
to the Issuer (i) in the case of a proposed offer and sale of such Securities
("Public Offered Securities") in a brokered transaction through the facilities
of the securities exchange or the over-the-counter market on which they are
being traded or quoted (a "Public Transfer"), a notice thereof (a "Public
Transfer Notice") specifying number of Public Offered Securities that such
Holder wishes to so Transfer and that the method of Transfer is to be a Public
Transfer; and (ii) in the case of any other Transfer (a "Private Transfer"), a
copy of a written bona fide offer (a "Private Offer") to purchase such
Securities ("Private Offered Securities") executed by the proposed purchaser
thereof (the "Proposed Purchaser"). The Private Offer shall also disclose the
identity of the Proposed Purchaser, the proposed purchase price for the Offered
Securities, and any other material terms of the proposed transaction.
(B) The Issuer shall have the right, exercisable at any time
within two business days after the date of the Issuer's receipt of the written
copy of a Public Transfer Notice or Private Offer (as the case may be) as
aforesaid, to purchase such (i) Public Offered Securities for cash at a price
per share equal to the price offered by Holder to the Issuer (and its Designee)
(the "Offer Price"), or (ii) Private Offered Securities at the price proposed in
the Private Offer and otherwise (to the extent practicable) on the identical
terms thereof. Such right of the Issuer may be assigned by the Issuer to any
other person or entity approved by a majority of the disinterested directors of
the Issuer (any such assignee, the Issuer's "Designee"). In the event that the
Issuer (and its Designee) fails to exercise its right to purchase as aforesaid,
or fails to consummate its purchase after exercise in accordance with the
following Section 3.3(C), any such (x) Public Offered Securities to be included
in a Public Transfer specified in a Public Transfer Notice, then the Selling
Holder may consummate the Public Transfer of such Securities at any time within
90 days after the failure to exercise or consummate (as the case may be) at a
price equal to or greater than the Offer Price, or (y) Private Offered
Securities to be included in a Transfer specified in a Private Offer, then the
Selling Holder may consummate the Private Transfer specified in such Private
Offer with the Proposed Purchaser at any time within 90 days after the failure
to exercise or consummate (as the case may be) at the price proposed in the
Private Offer and otherwise on the identical terms thereof (or no better price
and other terms, from the standpoint of the Proposed Purchaser). If any such
Transfer is not consummated within such time period, all of the Public Offered
Securities or Private Offered Securities (as the case may be) shall continue to
be subject to all of the provisions of this Agreement. A Transfer described in a
Private Offer may be consummated only if the Proposed Purchaser identified
therein executes and delivers to the Issuer a Supplement and thereby agrees to
be bound by and to hold the Private Offered Securities subject to the applicable
provisions of this Agreement.
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(C) Any purchase of Securities by the Issuer (or its Designee)
pursuant to this Section 3.3 shall be consummated not more than five (5)
business days after the date that the Issuer (or its Designee) exercises its
right to purchase the Securities pursuant to this Section 3.3. Each such closing
shall be held at the principal offices of the Issuer, or at such other place as
may be agreed upon by the parties. At any such closing: (i) the Selling Holder
shall deliver properly endorsed stock certificates, executed in blank, and all
other documents that the purchaser may reasonably require for the purpose of
establishing their absolute, unencumbered title to the Securities purchased and
obtaining their transfer on the books of the Issuer, and (ii) the purchaser
shall deliver the purchase consideration therefor. In the event that the Issuer
notifies a Holder in writing that it is exercising its right of first refusal
under this Section 3.3, and then fails to timely deliver the appropriate
purchase consideration, and such Holder has otherwise complied with the terms
and conditions of this Section 3.3, then the Issuer shall indemnify the Holder
for any loss in value resulting from Holder's subsequent sale of such offered
securities in an amount equal to the excess of the purchase consideration per
share as promised by the Issuer over the actual per share price received by the
Holder in an arms length bona fide transaction, multiplied by the actual number
of shares sold by the Holder.
SECTION 3.4. Sale of the Issuer. If (x) the Board of Directors of the
Issuer approve the sale of the Issuer to a third party (whether through a sale
of outstanding Common Stock, assets of the Issuer, merger or otherwise), and (y)
at the time of the vote or other action of such Board Xxxxx XxXxxx is a member
thereof, then each Holder shall sell all of his Securities in such sale (or, if
appropriate, vote his Securities in favor of such sale) upon the terms and
conditions approved by such Board.
SECTION 3.5. Certain Put Rights. (A) During the 180-day period
commencing on the earlier of (i) the first anniversary of the date of this
Agreement, or (ii) the date on which the Securities are registered with the
Securities and Exchange Commission for resale to the public (the "Put Right
Period"), Original Holders Xxxx Xxxxxxxxx and Xxxxx Xxxxxx and any of their
transferees pursuant to a Permitted Transfer described in Section 3.2(A) or (B)
hereof (collectively, "Put Right Holders") shall have the right, exercisable at
only one time during the Put Right Period, to require the Issuer to purchase
all, and not less than all, of their Securities hereunder at an aggregate price
equal to: (i) $4.00 multiplied by the number of Merger Shares issued to such
Original Holders and held by the Put Right Holders on the date of such exercise
less (ii) the total consideration (the "Prior Consideration") received by such
Put Right Holders (or their predecessors in title) from any prior sales of such
Merger Shares (or any other Securities issued in respect thereof) (the "Put
Right Price"). The Put Right (i) may be exercised by (x) Xxxx Xxxxxxxxx and his
direct and indirect transferees who are Put Right Holders (the "Xxxxxxxxx
Group") and not the Xxxxxx Group (as hereinafter defined), and/or (ii) Xxxxx
Xxxxxx and his direct and indirect transferees who are Put Right Holders (the
"Xxxxxx Group") and not the Xxxxxxxxx Group, but (ii) may not be effectively
exercised hereunder if such attempted exercise by any member of the (x)
Xxxxxxxxx Group is by less than all of the members of the Xxxxxxxxx Group, or
with respect to less than all of the Merger Shares held by them, or (y) Xxxxxx
Group is all of the members of the Xxxxxx Group, or with respect to less than
all of the Merger Shares held by them.
(B) In the event that the Put Right Holders desire to exercise
their rights under this Section 3.5, all such Holders shall deliver to the
Issuer during the Put Right Period a written notice of such exercise, specifying
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the identity of each Put Right Holder, the Securities held by each, evidence of
all of the Prior Consideration received by the Put Right Holder and the Put
Right Price therefor. Any sale of Securities to the Issuer pursuant to this
Section 3.4 shall be consummated not more than 30 days after the date that the
Put Right Holders deliver such notice. Such closing shall be held at the
principal offices of the Issuer, or at such other place as may be agreed upon by
the parties. At any such closing: (i) the Put Right Holders shall deliver
properly endorsed stock certificates, executed in blank, and all other documents
that the Issuer may reasonably require for the purpose of establishing their
absolute, unencumbered title to the Securities purchased and obtaining their
transfer on the books of the Issuer, and (ii) the Issuer shall deliver the Put
Right Price therefor.
SECTION 3.6. Void Transfers. Except for Transfers by operation of law
or pursuant to the laws of descent and distribution (it being understood,
however, that the other applicable provisions of this Article 3 shall apply to
such Transfers), any attempted Transfer of Securities in violation of this
Article 3, whether voluntary or involuntary, shall be void and of no force and
effect. The Issuer shall not be required to record on its books, or to otherwise
recognize, any purported Transfer of Securities in violation of this Article 3,
or to recognize the rights of any purported transferee of Securities as a result
of such a Transfer.
ARTICLE 4: REGISTRATION RIGHTS
SECTION 4.1. Piggyback Registrations. (A) If the Issuer proposes to
file with the Commission a registration statement under the Securities Act
(other than a registration statement (x) on Form S-4 or S-8, or any form
substituting therefor, (y) filed in connection with a tender or exchange offer
or an asset or business acquisition, or (z) relating to any compensatory plan,
agreement or arrangement), it will at each such time give written notice to the
Holders of Registrable Securities of its intention so to do. Upon the written
request of any Holder of Registrable Securities made within 15 days after
receipt of notice from the Issuer, the Issuer will in good faith endeavor to
cause all Registrable Securities which the Issuer has been requested to register
by the Holders of Registrable Securities to be included in such registration
statement under the Securities Act, to the extent required to permit the sale or
other disposition by such Holders of their Registrable Securities; provided that
(i) as a condition to any Holder's inclusion of any of his Registrable
Securities in any such registration, such Holder must: (x) sell his Registrable
Securities to any underwriter(s) selected by the Issuer on the same terms and
conditions as apply to the Issuer and/or other holders of Common Stock included
in such registration, (y) provide to such underwriter(s) and/or the Issuer true
and accurate information regarding himself and his Registrable Securities and
his intended method of distribution or other disposition thereof, and (z)
complete, execute and deliver all questionnaires, powers-of-attorney, custody
agreements, indemnities, underwriting agreements, "hold-back," "black-out" and
other "no-sell" agreements and such other documents and agreements reasonably
required by such underwriter(s) and/or the Issuer in connection with such
registration or the distribution and sale of Registrable Securities thereunder;
and (ii) if, at any time after giving notice of its intention to register any
Common Stock and prior to the effective date of the registration statement filed
in connection with such registration the Issuer shall determine, for any reason,
not to register such Common Stock, then the Issuer shall give written notice to
all Holders of Registrable Securities and, thereupon, shall be relieved of
its obligation to register Registrable Securities in connection with
such registration.
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(B) Notwithstanding Section 4.1(A), if the managing
underwriter(s), if any, of the offering to be effected pursuant to a
registration statement advises the Issuer or Holders of Registrable Securities
that the total number of shares of Common Stock which they and any other persons
or entities intend to include in such offering would adversely affect the
success of such offering, then the number of Registrable Securities to be
offered for the account of the Holders of Registrable Securities shall be
reduced pro rata among such Holders of Registrable Securities who have
requested, in accordance with the foregoing, inclusion in such offering, on the
basis of the number of Registrable Securities held by such Holders of
Registrable Securities, to the extent necessary to reduce the total number of
shares of Common Stock to be included in such offering to the number recommended
by such managing underwriter(s), or excluded in their entirety, as the case may
be. In the event that the contemplated distribution does not involve an
underwritten public offering, such determination that the inclusion of such
Holders of Registrable Securities shall adversely affect the success of the
offering shall be made in good faith by the Board of Directors of the Issuer.
SECTION 4.2. Issuer's Obligations in Registration. If and whenever the
Issuer is obligated by the provisions of Section 4.1 to include Registrable
Securities in a registration under the Securities Act, the Issuer will, as
expeditiously as possible (but subject to any delay resulting from the failure
of any Holder of Registrable Securities participating in such registration to
comply with the proviso in Section 4.1(A) above):
(A) prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use its reasonable
best efforts to cause such registration statement to become and remain effective
during the period required for the distribution of the Registrable Securities
covered by the registration statement; provided, however, that the foregoing
obligations under this Section 4.2(A) shall terminate after the expiration of
180 days following the date on which such registration statement becomes
effective under the Securities Act;
(B) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such registration
statement, whenever the Holders of Registrable Securities for whom such
Registrable Securities are registered or are to be registered shall desire to
dispose of the same; provided, however, that the foregoing obligations under
this Section 4.2(B) shall terminate after the expiration of 180 days following
the date on which such registration statement becomes effective under the
Securities Act;
(C) furnish to the Holders of Registrable Securities for whom
such Registrable Securities are registered or are to be registered such number
of copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such Holders of Registrable
Securities may reasonably request in order to facilitate the disposition of such
Registrable Securities;
(D) use its reasonable best efforts to register or qualify the
Registrable Securities covered by such registration statement under such Blue
Sky Laws of such jurisdictions as the Holders for whom such Registrable
Securities are registered or are to be registered shall reasonably request, and
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do any and all other acts and things to so register or qualify such Registrable
Securities, which may be necessary or advisable to enable such Holders of
Registrable Securities to consummate the disposition in such jurisdictions of
such Registrable Securities; provided, however, that the Issuer shall not be
required to qualify generally to do business or subject itself to taxation in
any jurisdiction where it is not then so qualified or subject to taxation or to
take any action that would subject it to general service of process in any
jurisdiction where in is not then so subject;
(E) if at any time a prospectus relating to the Registrable
Securities covered by such registration statement is required to be delivered
under the Securities Act and any event occurs as a result of which the
prospectus included in such registration statement as then amended or
supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the prospectus to comply with the Securities Act,
the Issuer promptly will prepare and file with the Commission an amendment or
supplement which will correct such statement or omission or an amendment which
will effect such compliance and shall use its reasonable best efforts to cause
any amendment of such registration statement containing an amended prospectus to
be made effective as soon as possible; and
(F) as promptly as practicable notify each Holder of
Registrable Securities (i) of any request by the Commission or any other federal
or state governmental authority for amendments or supplements to a registration
statement or related prospectus with respect to Registrable Securities being
registered hereunder or for additional information to be included in such
registration statement or prospectus or otherwise, (ii) of the issuance by the
Commission of any stop order suspending the effectiveness of any such
registration statement or the initiation or threatening of any proceedings for
that purpose, and (iii) of the issuance by any state securities commission or
other regulatory authority of any order suspending the qualification or
exemption from qualification of any of Registrable Securities under any
Blue Sky Laws.
Each Holder of Registrable Securities being registered hereunder, upon receipt
of any notice from the Issuer of the happening of any event of the kind
described in subsection (E) or (F) of this Section 4.2, shall forthwith
discontinue disposition of Registrable Securities until such Holder's receipt of
the copies of the supplemented or amended prospectus contemplated by subsection
(E) of this Section 4.2 or until it is advised in writing (the "Advice") by the
Issuer that the use of such prospectus may be resumed. In the event that the
Issuer shall give any such notice, the time periods for which a registration
statement is required to be kept effective pursuant to Section 4.2(A) hereof
shall be extended by the number of days during the period from and including the
date of the giving of such notice to and including the date when each Holder of
Registrable Securities being registered hereunder shall have received (i) the
copies of the supplemented or amended Prospectus contemplated by Section 4.2(E)
or (ii) the Advice.
SECTION 4.3. Payment of Registration Expenses. The costs and expenses
of all registrations under the Securities Act pursuant to Section 4.1, and of
all other actions which the Issuer is required to take or effect pursuant to
this Article 4, shall be paid by the Issuer (including without limitation all
registration and filing fees, printing expenses, fees and disbursements of
counsel to the Issuer and expenses of any special audit incident to or required
in connection with any such registration) (collectively, "Registration
Expenses"); provided, however, that the Issuer shall only be obligated to pay
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(i) the fees and disbursements of any counsel to the Holders of Registrable
Securities, or (ii) the underwriters' discounts or commissions or any transfer
taxes in respect of Registrable Securities. In the event that the Issuer effects
more than two registrations under the Securities Act of Registrable Securities
pursuant to this Article 4, the Holders of Registrable Securities included in
any subsequent registration under the Securities Act shall be obligated to
reimburse the Issuer, promptly upon invoice, for the Registration Expenses
incurred by it in connection with such subsequent registrations, in proportion
to their respective holdings of Registrable Securities included in
such registration.
ARTICLE 5: VOTING AGREEMENT
If (x) the Board of Directors of the Issuer approve and recommend to
the stockholders of the Issuer any action, matter or transaction requiring the
approval of the Issuer's stockholders, and (y) at the time of the vote or other
action of such Board Xxxxx XxXxxx is a member thereof, then each Holder shall
vote all of his Securities entitled to vote thereon in accordance with
such recommendation.
ARTICLE 6: INDEMNIFICATION
SECTION 6.1. Indemnification by Original Holders. (A) Each Original
Holder, jointly and severally, shall indemnify the Issuer, the Surviving
Corporation and their respective directors, officers, agents and representatives
(the "Indemnified Persons") against, and hold the Indemnified Persons harmless
from, any and all Losses (as hereinafter defined) directly or indirectly
incurred, suffered, sustained or required to be paid by, or sought to be imposed
upon, any of the Indemnified Persons resulting from, relating to or arising out
of any breach of any of the representations or warranties of the Company set
forth in Article III of the Merger Agreement.
(B) In this Agreement, the term "Losses" means and includes
all losses, claims, liabilities, damages (including, without limitation,
punitive, consequential and special damages awarded to any third-party
claimant), judgments, liabilities, payments, obligations, costs and expenses
(including, without limitation, any costs of investigation, remediation or
cleanup, and any reasonable legal fees and costs and expenses incurred after the
Closing Date in defense of or in connection with any alleged or asserted
liability, payment or obligation as to which indemnification may apply
hereunder), regardless of whether or not any liability, payment, obligation or
judgment is ultimately imposed against the Indemnified Persons and whether
or not the Indemnified Persons are made or become parties to an claim,
action, suit, proceeding or investigation in respect thereof, voluntarily
or involuntarily.
SECTION 6.2. Temporal Limitations. (A) The indemnification rights under
Section 6.1 shall expire at the respective times set forth in Section 6.2(B),
and the Original Holders shall have no liability under Section 6.1 unless an
Indemnified Person gives written notice to the Original Holders asserting a
claim for Losses, including reasonably detailed specific facts and circumstances
pertaining thereto, before the expiration of the periods of time that the
underlying representations, warranties, covenants and agreements survive
under Section 6.2(B).
11
(B) All representations and warranties contained in Article
III of the Merger Agreement shall survive the Closing for a period of two years.
SECTION 6.3. Basket and Cap. (A) Indemnification for claims under
Section 6.1 shall be payable only if and to the extent that the aggregate amount
of all Losses of the Indemnified Persons shall exceed $100,000, and shall not be
payable in any event with respect to the first $100,000 of such Losses. The
Original Holders' liability for all claims under this Section 6.1 shall not
exceed the sum of $2,500,000 (the "Indemnity Cap").
SECTION 6.4. Third Party Claims. With respect to any matter as to which
any Indemnified Person is entitled to indemnification under this Article 6, the
Indemnified Person shall have the right, but not the obligation, to contest,
defend or litigate, and to retain counsel of its choice in connection with, any
claim, action, suit, proceeding or investigation alleged, brought or asserted by
any third party (governmental, judicial or private party) against the
Indemnified Person in respect of, resulting from, relating to or arising out of
such matter, and the costs and expenses thereof shall be subject to the
indemnification obligations of the Original Holders hereunder; provided,
however, that if the Original Holders (x) acknowledge in writing their
obligation to indemnify the Indemnified Person in respect of such matter to the
fullest extent provided by this Article 6 and (y) demonstrate to the reasonable
satisfaction of the Indemnified Person their ability to fund the defense of such
claim, action, suit or proceeding, the Original Holders shall be entitled, at
their option, to assume and control the defense of such claim, action, suit or
proceeding at their expense through counsel of their choice if they gives prompt
notice of their intention to do so to the Indemnified Person; and provided
further, however, that such right to assume and control the defense of such
claim, action, suit or proceeding shall continue only for so long as the
Original Holders shall not be in default of their obligation acknowledged under
the foregoing clause (x) and of their obligation to fund such defense. The
Original Holders shall not be entitled to settle or compromise any third party
claim, action, suit or proceeding alleged or asserted against any Indemnified
Person without the prior written consent of such Indemnified Person (which
consent shall not be unreasonably withheld, delayed or conditioned), unless such
settlement or compromise includes the unconditional general release of such
Indemnified Person without any liability or other further obligation on its
part. No Indemnified Person shall be entitled to settle or compromise any third
party claim, action, suit or proceeding alleged or asserted against such
Indemnified Person as to which the Original Holders shall have complied with the
foregoing clauses (x) and (y) without the prior written consent of the Original
Holders Person (which consent shall not be unreasonably withheld, delayed
or conditioned).
SECTION 6.5 Set-Off. Any amounts owing by any Original Holder under
this Article 6 may be satisfied by the Issuer and Surviving Corporation (but the
Issuer and Surviving Corporation shall not be obligated to seek such
satisfaction) by setting-off such amounts against amounts owing by the Issuer or
Surviving Corporation under the First 6-Month Notes, 21-Month Notes or Second
6-Month Notes (whether or not then held by any Original Holder).
12
ARTICLE 7: MISCELLANEOUS
SECTION 7.1. Further Actions. From time to time after the date hereof,
as and when requested by the Issuer, the other parties hereto shall execute and
deliver, or cause to be executed and delivered, such further and other
agreements, documents and instruments and shall take, or cause to be taken, such
further and other actions as the Issuer may reasonably request to further effect
or evidence the transactions contemplated hereby and to otherwise carry out the
intent and purposes of this Agreement.
SECTION 7.2. Expenses. Each party hereto shall bear their own legal,
accounting and other costs and expenses with respect to the negotiation,
execution and the delivery of this Agreement and the consummation of the
transactions contemplated hereby; provided that the costs and expenses incurred
by the Original Holders may be paid in accordance with Section 5.03(e) of the
Merger Agreement.
SECTION 7.3. Entire Agreement. This Agreement (which includes the
Schedules hereto) contains the entire agreement between the parties hereto
with respect to the subject matter hereof and supersedes all prior written
or oral agreements and understandings among the parties with respect to such
subject matter.
SECTION 7.4. Assignment; Successors. This Agreement shall be binding
upon the heirs, executors, administrators, successors and permitted assigns of
the parties hereto; provided, however that inasmuch as the Holders may not
Transfer any of their Securities except as provided hereinabove, no Holder may
assign its rights under this Agreement separate and apart from its Securities
and (in such event) only to a transferee permitted to receive such Securities
under this Agreement. Neither this Agreement nor any of the rights hereunder may
be otherwise assigned by any party hereto. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
SECTION 7.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Incorporation (without
regard to the choice of law principles thereof).
SECTION 7.6. Notices. All notices, consents, requests, demands and
other communications provided for herein or permitted hereunder shall be in
writing and shall be deemed validly given, made, served and received when
delivered (if delivered personally), when telecopied (if telecopied on a
business day and such notice, consent, request, demand or other communication
(as the case may be) shall have been received by the intended recipient's fax
machine), on the next succeeding business day (if telecopied on a non-business
day and such notice, consent, request, demand or other communication (as the
case may be) shall have been received by the intended recipient's fax machine)),
one business day after being sent (if sent by overnight delivery service) or
three business days after being deposited in the mails (if sent by registered or
certified mail, return receipt requested, postage prepaid) to the following
address or fax number:
13
If to the Issuer: Natural Health Trends Corp.
00000 Xxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
If to any Holder: As indicated in under such Holder's
name on Schedule 1 hereto
No other method of delivering notices, consents, requests, demands and other
communications shall be precluded. Any party may, by notice to the Issuer,
change the address or fax number to which notices or other communications to it
are to be delivered, telecopied or sent.
SECTION 7.7. Invalid Provision. In the event that any provision of this
Agreement shall be determined to be invalid or unenforceable, this Agreement
shall be construed in all respects as if such invalid or unenforceable provision
were omitted.
SECTION 7.8. Headings and References. The Article, Section and Schedule
headings in this Agreement are for convenience of reference purposes only and
shall not control or affect the meaning or construction of any provision of this
Agreement. All Article, Section and Schedule references in this Agreement shall,
unless the context otherwise requires, be construed to be references to
corresponding Article, Section or Schedule in or to this Agreement.
SECTION 7.9. Gender; Singular and Plural. Words of gender or neuter may
be read as masculine, feminine or neuter, as required or permitted by the
context. Singular and plural forms of defined and other terms herein may be read
as singular or plural, as required or permitted by the context.
SECTION 7.10. Waivers and Amendments. This Agreement may not be
modified or amended, nor may compliance with any of its terms and conditions be
waived, except in a writing executed by (i) the Issuer, and (ii) and each Holder
holding not less than two percent (2%) of the then-outstanding Securities.
SECTION 7.11. Remedies. The parties hereto acknowledge and agree that
the remedy at law for any breach of their respective obligations hereunder is
and will be insufficient and inadequate and that the other parties hereto will
be entitled to equitable relief (including specific performance), in addition to
remedies at law. Each party hereto hereby waives the defense that there in an
adequate remedy at law in the event of any action to enforce the provisions of
this Agreement, and consents to the remedy of specific performance.
SECTION 7.12. Counterparts. This Agreement may be executed in one
or more counterparts, which, taken together, shall constitute one and the
same agreement.
[The remainder of this page is intentionally blank.]
14
Signature Page
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
The Issuer: The Original Holders:
NATURAL HEALTH TRENDS CORP.
By: /s/ XXXX X. XXXXXXXX /s/ XXXX XXXXXXXXX
------------------------ -----------------------------------------------------
Title: President and Chief Financial Officer Name: XXXX XXXXXXXXX
Merger Shares: 196,420 shares
of Common Stock
/s/ XXXXX XXXXXX
-----------------------------------------------------
Name: XXXXX XXXXXX
Merger Shares: 450,000 shares
of Common Stock
/s/ XXXXX XXXXXX
-----------------------------------------------------
Name: XXXXX XXXXXX
Merger Shares: 43,580 shares
of Common Stock
SCHEDULE 1
----------
(to Stockholders Agreement)
Holders: Names, Addresses & Securities Held
-------------------------------------------
NAME: Xxxx Xxxxxxxxx
ADDRESS: 0000 Xxxxxx Xxxxx Xxxx
Xxxx Xxxxxxx, XX 00000
Tel. (000) 000-0000
Fax: (000) 000-0000
SECURITIES: 196,420 shares of Common Stock
------------------------------
NAME: Xxxxx XxXxxx
ADDRESS: c/o Natural Health Trends Corp.
00000 Xxxxxx Xxxxx
Xxxxxx, XX
Tel. (000) 000-0000
Fax: (000) 000-0000
SECURITIES: 450,000 shares of Common Stock
------------------------------
NAME: Xxxxx Xxxxxx
ADDRESS: 0000 Xxxxxx Xxxx 00
Xxxxxxxxxxx, XX 00000
Tel. (000) 000-0000
Fax: (000) 000-0000
SECURITIES: 43,580 shares of Common Stock
-----------------------------
Schedule 2
----------
(to Stockholders Agreement)
Supplement to Stockholders Agreement
THIS SUPPLEMENT, dated as of _____________________, ______, to the
Stockholders Agreement, dated as of March 31, 2004, by and between NATURAL
HEALTH TRENDS CORP., a Florida corporation (the "Issuer"), and the persons and
entities named in Schedule 1 attached thereto (collectively, the "Holders") (as
the same may have been, or from time to time may be, modified, amended,
supplemented and/or restated (the "Agreement").
The Holders have executed the Agreement (or by Supplement agreed to be
bound thereby). The Agreement requires, as a condition to the effectuation of
any offer, sale, transfer, assignment, pledge, hypothecation or other
disposition of or encumbrance, in any manner and whether or not for value or
consideration ("Transfer"), of any shares of Common Stock, par value $.001 per
share, of the Issuer ("Common Stock") or any other Securities (as defined in the
Agreement) that the transferee party to such Transfer execute a Supplement
instrument in the form hereof, and thereby agree to be bound by the provisions
of the Agreement. Accordingly, in consideration of the benefits to be derived
and the conditions and promises contained in the Agreement, the undersigned
hereby adopts and approves the Agreement and acknowledges and agrees as follows:
1. The undersigned has read the Agreement and understands its provisions;
2. The undersigned agrees that the undersigned is a "Holder" party to, and
as such shall hereafter be bound by, the Agreement as though the
undersigned were an original party thereto, and agrees to observe and
comply with all of the provisions thereof;
3. Without limiting the generality of the foregoing, the undersigned and
the undersigned's successors and assigns will comply with the
provisions of the Agreement and this Supplement with respect to
Transfers and voting of Securities now owned or hereafter acquired by
the undersigned;
4. The undersigned consents to the placing on any certificates
representing Securities now owned or hereafter acquired by it of a
legend or legends disclosing that such securities are subject to the
terms of the Agreement and, if applicable, that the such securities
have not been registered or qualified under and federal or state
securities laws; and
Schedule 2 (cont'd)
-------------------
(to Stockholders Agreement)
5. Notices under Section 7.6 of the Agreement shall be addressed to the
undersigned as follows:
--------------------------------------------
--------------------------------------------
--------------------------------------------
Telecopier No.
-----------------------------
Telephone No.
-----------------------------
IN WITNESS WHEREOF, this Supplement to the Agreement has been executed
by the undersigned as of the date first above written.
-------------------------------------
[By:]
--------------------------------
Name/Title:
Accepted and agreed to:
NATURAL HEALTH TRENDS CORP.
By:
------------------------------
Title:
