Exhibit 10.1
Execution Copy
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of this 7th day of December, 1999
among the investors listed on Schedule I hereto (the "Investors") and Xxxxxx
Acquisition Holdings, Inc., a Delaware corporation (the "Company").
R E C I T A L S:
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WHEREAS, certain of the Investors have, pursuant to the terms of an
Amended and Restated Agreement and Plan of Merger, dated as of December 7, 1999,
among the Company, Warburg, Xxxxxx Equity Partners, L.P. ("Warburg"), Xxxxxx
Acquisition Corp., Inc. and Xxxxxx Medical Technology, Inc. (the "Merger
Agreement"), agreed to purchase shares of (i) Series A Voting Convertible
Preferred Stock, par value $.01 per share, of the Company (the "Series A
Preferred Stock") and, solely in the case of Warburg, Series B Non-Voting
Convertible Preferred Stock, par value $.01 per share, of the Company ("Series B
Preferred Stock" and, with the Series A Preferred Stock, collectively referred
to as the "Preferred Stock"), (ii) common stock of the Company, par value $.01
per share (the "Common Stock") and (iii) warrants to purchase Common Stock (the
"Warrants"); and
WHEREAS, the California Public Employees' Retirement System
("CalPERs") and Princes Gate Investors, L.P. ("PGILP"), PGI Investments Limited
("PGI Ltd."), PGI Sweden AB ("PGI Sweden") and Marinbeach United S.A.
("Marinbeach" and, together with PGILP, PGI Ltd. and PGI Sweden, "Princes Gate")
have, pursuant to the Merger Agreement, been issued shares of Series A Preferred
Stock, shares of Common Stock and Warrants;
WHEREAS, the Preferred Stock is convertible into shares of Common
Stock; and
WHEREAS, the Investors and the Company desire to promote their
mutual interests by agreeing to certain matters relating to the operations of
the Company and the disposition of shares of capital stock ("Shares") in the
Company.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto hereby agree as follows:
SECTION 1. COVENANTS OF THE PARTIES
(a) LEGENDS. The certificates evidencing the shares of Common Stock
or Preferred Stock, as applicable, acquired by the Investors will bear the
following legends reflecting the restrictions on the transfer of such securities
contained in this Agreement and under applicable securities laws:
"The securities evidenced hereby are subject to the terms of that
certain Stockholders Agreement, dated as of December __, 1999, by
and among the Company and certain investors identified therein. A
copy of this Agreement has been filed with the Secretary of the
Company and is available upon request."
"These securities have not been registered under the Securities Act
of 1933. They may not be sold, offered for sale, pledged or
hypothecated in the absence of an effective registration statement
as to the securities under said Act or an opinion of counsel
satisfactory to the Company that such registration is not required."
(b) ELECTION OF DIRECTORS; BOARD OBSERVERS.
(i) As of the date hereof, the Board of Directors of the Company (the
"Board") will consist of (A) Xxxxxx X. Xxxxxx, (B) Xxxxxxx X. Xxxxxx, (C)
Xxxxxxxxx X. Xxxxxxxxxx, (D) Xxxxx X. Xxxxxx and (E) Xxxxx X. Xxxxxx; provided,
however, that the Board may be expanded from time to time after the date hereof
to include two additional members as the Board shall agree. From and after the
date hereof and at all times throughout the term of this Agreement (A) for so
long as CalPERs and Princes Gate collectively beneficially own five percent (5%)
or more of the outstanding shares of capital stock of the Company, assuming (1)
conversion in full of all Preferred Stock then collectively beneficially owned
by CalPERs and Princes Gate and (2) exercise in full of all Warrants then
collectively beneficially owned by CalPERs and Princes Gate, and (B) prior to
the date on which the Company completes an underwritten public offering for
shares of Common Stock (the "Initial Public Offering") pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the "1933
Act"), covering the offer and sale of Common Stock for the account of the
Company to the public generally at a price to the public which places upon the
Company a value (prior to receipt of proceeds of such offering) of at least $200
million and in which the net proceeds to the Company are not less than $50
million, each of CalPERs and Princes Gate
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shall be entitled to designate one person to be an observer at all meetings of
the Board (collectively, the "Board Observers"). The Board Observers shall
receive (x) notice of all Board meetings, (y) all written consents of the Board
and (z) copies of all written materials provided to the Board. The reasonable
expenses of the Board Observers shall be paid by the Company.
(ii) For as long as Warburg, Xxxxxx Equity Partners, L.P. ("Warburg") owns
beneficially and of record at least 20% of the outstanding shares of capital
stock, assuming (1) conversion in full of all Preferred Stock then collectively
beneficially owned by Warburg and (2) exercise in full of all Warrants then
collectively beneficially owned by Warburg, the Company will nominate and use
its best efforts to have two individuals designated by Warburg elected to the
Board. For as long as Warburg owns beneficially and of record at least 10% of
the outstanding shares of capital stock, assuming (1) conversion in full of all
Preferred Stock then collectively beneficially owned by Warburg and (2) exercise
in full of all Warrants then collectively beneficially owned by Warburg, the
Company will nominate and use its best efforts to have one individual designated
by Warburg elected to the Board. The directors designated by Warburg are
hereinafter referred to as the "Warburg Directors."
(c) REPLACEMENT DIRECTORS. In the event that any Warburg Director (a
"Withdrawing Director") designated in the manner set forth in Section 1(b)
hereof is unable to serve, or once having commenced to serve, is removed or
withdraws from the Board, such Withdrawing Director's replacement (the
"Substitute Director") will be designated by Warburg. A Warburg Director may be
removed, with or without cause, by Warburg and Warburg shall thereafter have the
right to nominate a replacement for such director. The Investors and the Company
agree to take all action within their respective power, including but not
limited to, the voting of capital stock of the Company owned by them to cause
the election of such Substitute Director promptly following his or her
nomination pursuant to this Section 1(c).
(d) BOARD COMMITTEES. As of the date hereof, the Executive Committee
(if any), Compensation Committee and Audit Committee of the Board will consist
of at least one director elected by the holders of a majority of the Preferred
Stock (the "Series A Committee Nominee"). The Series A Committee Nominee will
serve as Chairman of each of the Compensation and Audit Committees from and
after the date hereof.
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(e) EMPLOYEE STOCK INCENTIVES; MANAGEMENT OPTIONS.
(i) The Investors acknowledge that the Company has reserved
(A) an aggregate of 3,000,000 shares (the "Option Shares") of its Common Stock
for grant or sale to key employees of the Company, in such amounts and in such
manner -- including incentive and non-qualified stock options, restricted stock
grants, stock bonuses or other stock incentive programs -- as the Board shall,
from time to time, determine, and (B) 9 shares of Common Stock and 160,000
shares of Series A Preferred Stock (the "Series A Options"), all for issuance to
certain executive officers of the Company identified in the Merger Agreement,
pursuant to the exercise of options granted to such officers pursuant to Section
5.13 of the Merger Agreement.
(ii) It is understood and agreed that the receipt by the
management investors identified in Schedule I of (i) the Series A Options,
Subordinated Notes (as defined in the Merger Agreement) and Warrants and (ii)
cash referred to in Sections 5.13(a) and (b), respectively, of the Merger
Agreement shall be in lieu of (and in full satisfaction of) any and all payments
to which such executive officers may have been entitled pursuant to that certain
letter agreement, dated as of March 4, 1999, between the Company and Xxxxxx X.
Xxxxxx or any other agreement, written or oral, among any of such executive
officers and the Company.
(f) VOTING BY WARBURG.
(i) Pursuant to the terms of the Series B Preferred Stock, Warburg
and its affiliates holding shares of Series B Preferred Stock shall be entitled,
at any time and in their sole discretion, to exchange any or all shares of
Series B Preferred Stock then beneficially owned by Warburg and/or such
affiliates for a like amount of Series A Preferred Stock. Notwithstanding
Warburg's and/or its affiliates' election to so exchange Series B Preferred
Stock for Series A Preferred Stock, Warburg and its affiliates shall be deemed
holders of Preferred Stock hereunder and shall be entitled to all of the
benefits, and subject to all of the restrictions, relating to such ownership set
forth herein for so long as it and/or they hold any shares of Preferred Stock.
(ii) In the event that at any time following an exchange by Warburg
of Series B Preferred Stock for Series A Preferred Stock, Warburg or any of its
affiliates owns more than 49% of the issued and outstanding voting securities of
the Company ("Voting Stock"), Warburg agrees that (i) it shall be entitled to
vote (or take action by written consent in respect of) not more than 49% of the
issued and outstanding shares of Voting Stock and (ii) it will vote (or take
action by written consent in respect
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of) any shares in excess of 49% of the Voting Stock ("Neutral Shares") in
proportion to the vote of all other holders of Voting Stock voting (or acting by
written consent) on such matter, unless Warburg elects to abstain from voting in
respect of the Neutral Shares. For purposes hereof, "affiliate" shall mean a
Person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the first mentioned
Person; "control" (including the terms "controlled by" and "under common control
with") means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of stock, as trustee or executor, by contract or credit arrangement or
otherwise; and "Person" means an individual, corporation, partnership,
association, joint venture, limited liability company, trust or any
unincorporated organization.
(g) TRANSFERS BY WARBURG. Notwithstanding anything to the contrary
contained herein, Warburg shall be entitled to Transfer up to $5,000,000 of
Shares to any Person at any time, subject to any limitations imposed by federal
or state securities laws, provided such transferee agrees to be bound by, and
shall be entitled to the benefits of, the terms of this Agreement.
SECTION 2. SUBSCRIPTION RIGHTS
(a) SUBSCRIPTION RIGHT. Subject to Section 2(b) below, if at any
time after the date hereof, the Company proposes to issue equity securities of
any kind (the term "equity securities" shall include for these purposes any
warrants, options or other rights to acquire equity securities and debt
securities convertible into equity securities) of the Company (other than the
issuance of securities (i) upon conversion of the Preferred Stock pursuant to
the Company's Certificate of Incorporation, (ii) to the public in a firm
commitment underwriting pursuant to a registration statement filed under the
1933 Act, (iii) pursuant to the acquisition of another corporation by the
Company by merger, purchase of substantially all of the assets or other form of
reorganization or (iv) pursuant to an employee stock option plan, stock bonus
plan, stock purchase plan or other management equity program approved by the
Board), then, as to each of the Investors, the Company shall:
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(A) give written notice setting forth in reasonable detail (1) the
designation and all of the terms and provisions of the securities proposed
to be issued (the "Proposed Securities"), including, where applicable, the
voting powers, preferences and relative participating, optional or other
special rights, and the qualification, limitations or restrictions thereof
and dividend rate and maturity; (2) the price and other terms of the
proposed sale of such securities; (3) the amount of such securities
proposed to be issued; and (4) such other information as the Investors may
reasonably request in order to evaluate the proposed issuance; and
(B) offer to issue to each such Investor a portion of the Proposed
Securities equal to a percentage determined by dividing (x) the number of
shares of Common Stock held by such Investor and issuable to such
Investor, assuming conversion in full of any convertible securities and
exercise in full of the Warrants then held by such Investor, by (y) the
total number of shares of Common Stock then held by all of the Investors,
including for purposes of this calculation all shares of Common Stock
issuable upon conversion in full of any then outstanding convertible
securities and upon exercise in full of any then outstanding Warrants.
Each such Investor must exercise its purchase rights hereunder within twenty
(20) days after receipt of such notice from the Company. If all of the Proposed
Securities offered to such Investors are not fully subscribed by such Investors,
the remaining Proposed Securities will be reoffered to the Investors purchasing
their full allotment upon the terms set forth in this Section 2(a), until all
such Proposed Securities are fully subscribed for or until all such Investors
have subscribed for all such Proposed Securities which they desire to purchase,
except that such Investors must exercise their purchase rights within ten (10)
days after receipt of all such reoffers. To the extent that the Company offers
two or more securities in units, Investors must purchase such units as a whole
and will not be given the opportunity to purchase only one of the securities
making up such unit.
Upon the expiration of the offering periods described above, the Company will be
free to sell such Proposed Securities that the Investors have not elected to
purchase during the ninety (90) days following such expiration on terms and
conditions no more favorable to the purchasers thereof than those offered to the
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Investors. Any Proposed Securities offered or sold by the Company after such
90-day period must be reoffered to the Investors pursuant to this Section 2(a).
The election by an Investor not to exercise its subscription rights under this
Section 2(a) in any one instance shall not affect its right (other than in
respect of a reduction in its percentage holdings) as to any subsequent proposed
issuance. Any sale of such securities by the Company without first giving the
Investors the rights described in this Section 2(a) shall be void and of no
force and effect.
(b) RIGHT OF FIRST REFUSAL. Notwithstanding the provisions of
Section 2(a), and prior to the exercise by any Investor of any purchase rights
pursuant to Section 2(a), if at any time during the 12 month period after the
date hereof the Company proposes to issue equity securities (as defined above)
of any kind of the Company having a purchase price of up to $40,000,000 (other
than the issuance of securities (i) to the public in a firm commitment
underwriting pursuant to a registration statement filed under the 1933 Act, (ii)
pursuant to the acquisition of another corporation by the Company by merger,
purchase of substantially all of the assets or other form of reorganization,
(iii) pursuant to an employee stock option plan, stock bonus plan, stock
purchase plan or other management equity program approved by the Board) or (iv)
upon exercise of any Warrants (a "Proposed Issuance"), then, as to each of the
holders of Preferred Stock, the Company shall:
(A) give written notice setting forth in reasonable detail (1) the
size and other terms of the Proposed Issuance; and (2) such other
information as the Investors may reasonably request in order to evaluate
the proposed issuance; and
(B) offer to issue to each such holder of Preferred Stock a portion
of the first $40,000,000 in value of the Proposed Issuance in the form of
additional securities having terms and provisions (including, but not
limited to, voting powers, preferences and relative participating,
optional and other special rights) no less favorable to the holders of
Preferred Stock than the terms of the Preferred Stock (the "Proposed
Securities") at a price per share equal to the then current Series A
Conversion Price (as defined in the Certificate of Incorporation of the
Company), in an amount equal to a percentage determined by dividing (x)
the number of shares of Common Stock held by such holder of Preferred
Stock and issuable to such holder of
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Preferred Stock, assuming conversion in full of any convertible securities
and exercise in full of any Warrants then held by such holder of Preferred
Stock, by (y) the total number of shares of Common Stock then held by all
of the holders of Preferred Stock, including for purposes of this
calculation all shares of Common Stock issuable upon conversion in full of
any then outstanding convertible securities and exercise in full of any
Warrants then outstanding.
Each such holder of Preferred Stock must exercise its purchase rights hereunder
within twenty (20) days after receipt of such notice from the Company. If all of
the Proposed Securities offered to such holders of Preferred Stock in accordance
with this Section 2(b) are not fully subscribed by such holders, the remaining
Proposed Securities will be reoffered to the holders of Preferred Stock
purchasing their full allotment upon the terms set forth in this Section 2(b),
until all such Proposed Securities are fully subscribed for or until all such
holders of Preferred Stock have subscribed for all such Proposed Securities
which they desire to purchase, except that such holders must exercise their
purchase rights within ten (10) days after receipt of all such reoffers.
Upon the expiration of the offering periods described above, the Company will be
free to sell such Proposed Securities that the holders of Preferred Stock have
not elected to purchase during the ninety (90) days following such expiration on
terms and conditions no more favorable to the purchasers thereof than those
offered to such holders of Series A Preferred Stock. Any Proposed Securities
offered or sold by the Company after such 90-day period must be reoffered to the
holders of Preferred Stock pursuant to this Section 2(b).
The election by a holder of Preferred Stock not to exercise its right of first
refusal under this Section 2(b) in any one instance shall not affect its right
(other than in respect of a reduction in its percentage holdings) as to any
subsequent proposed issuance. Any sale of such securities by the Company during
the 12 month period from the date hereof without first giving the holders of
Preferred Stock the rights described in this Section 2(b) shall be void and of
no force and effect.
(c) INJUNCTIVE RELIEF. The Company acknowledges that it is
impossible to measure in money the damages which will accrue to the parties
hereto by reason of the failure of the Company to perform any of its obligations
set forth in this
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Section 2. Therefore, the Investors shall have the right to specific performance
of such obligations, and if any party hereto shall institute any action or
proceeding to enforce the provisions hereof, the Company hereby waives the claim
or defense that the party instituting such action or proceeding has an adequate
remedy at law.
(d) TERMINATION. The provisions of Section 2 shall expire upon
the closing of the Initial Public Offering.
SECTION 3. COVENANTS OF THE COMPANY
(a) FINANCIAL AND BUSINESS INFORMATION. From and after the date
hereof, and at all times throughout the term of this Agreement (A) for so long
as an Investor holds beneficially (within the meaning of Rule 13d-3 under the
Exchange Act) at least five percent (5%) of the outstanding Common Stock (on a
fully diluted basis), or, in the case of CalPERs and Princes Gate, such
Investors collectively beneficially own at least five percent (5%) of the
outstanding capital stock of the Company (on a fully diluted basis), and (B)
prior to the date on which the Company completes the Initial Public Offering,
the Company shall deliver to each such Investor:
(i) MONTHLY AND QUARTERLY STATEMENTS - as soon as practicable,
and in any event within 30 days after the close of each month of each
fiscal year of the Company in the case of monthly statements and 45 days
(or as soon as practicable, but in no event later than 60 days for each
fiscal quarter ended prior to April 1, 2001) after the close of each of
the first three fiscal quarters of each fiscal year of the Company in the
case of quarterly statements, a consolidated balance sheet, statement of
income and statement of cash flows of the Company and any subsidiaries as
at the close of such month or quarter and covering operations for such
month or quarter, as the case may be, and the portion of the Company's
fiscal year ending on the last day of such month or quarter, all in
reasonable detail and prepared in accordance with GAAP, subject to audit
and year-end adjustments, setting forth in each case in comparative form
the figures for the comparable period of the previous fiscal year.
(ii) ANNUAL STATEMENTS - as soon as practicable after the end
of each fiscal year of the Company, and in any event within 90 days (or as
soon as practicable, but in no event later than 120 days, for fiscal year
1999) thereafter, duplicate copies of:
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(A) consolidated balance sheets of the Company and any
subsidiaries at the end of such year; and
(B) consolidated statements of income, stockholders' equity
and cash flows of the Company and any subsidiaries for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and accompanied by an
opinion thereon of independent certified public accountants of
recognized national standing selected by the Company, which opinion
shall state that such financial statements fairly present in all
material respects the financial position of the Company and any
subsidiaries on a consolidated basis and have been prepared in
accordance with GAAP (except for changes in application in which
such accountants concur) and that the examination of such
accountants in connection with such financial statements has been
made in accordance with generally accepted auditing standards, and
accordingly included such tests of the accounting records and such
other auditing procedures as were considered necessary in the
circumstances.
(iii) AUDIT REPORTS - promptly upon receipt thereof, one copy
of each other financial report and internal control letter submitted to
the Company by independent accountants in connection with any annual,
interim or special audit made by them of the books of the Company.
(iv) OTHER REPORTS - promptly upon their becoming available,
one copy of each financial statement, report, notice or proxy statement
sent by the Company to stockholders generally, of each financial
statement, report, notice or proxy statement sent by the Company or any of
its subsidiaries to the SEC or any successor agency, if applicable, of
each regular or periodic report and any registration statement, prospectus
or written communication (other than transmittal letters) in respect
thereof filed by the Company or any subsidiary with, or received by such
Person in connection therewith from, any domestic or foreign securities
exchange, the SEC or any successor agency or any foreign regulatory
authority performing functions similar to the SEC, of any press release
issued by the Company or any subsidiary, and of any material of any nature
whatsoever prepared by the SEC or any successor agency thereto or any
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state blue sky or securities law commission which relates to or affects in
any way the Company or any subsidiary.
(v) PROGRESS REPORT - prior to each regularly scheduled
meeting of the Board of Directors of the Company, a narrative report shall
be delivered to each of the Investors describing the Company's activities
since the date of the last such report, including a description of
business development, operating results and marketing efforts.
(vi) REQUESTED INFORMATION - with reasonable promptness, the
Company shall furnish each of the Investors with such other data and
information as from time to time may be reasonably requested.
(b) INSPECTION. From and after the date hereof, and at all times
throughout the term of this Agreement (A) for so long as an Investor holds
beneficially (within the meaning of Rule 13d-3 under the Exchange Act) at least
five percent (5%) of the outstanding Common Stock (on a fully diluted basis),
or, in the case of CalPERs and Princes Gate, such Investors collectively
beneficially own at least five percent (5%) of the outstanding capital stock of
the Company (on fully diluted basis) and (B) prior to the date on which the
Company completes the Initial Public Offering, the Company shall permit such
Investor, its nominee, assignee, and its representative to visit and inspect any
of the properties of the Company, to examine all its books of account, records,
reports and other papers not contractually required of the Company to be
confidential or secret, to make copies and extracts therefrom, and to discuss
its affairs, finances and accounts with its officers, directors, key employees
and independent public accountants or any of them (and by this provision the
Company authorizes said accountants to discuss with such Investor, its nominees,
assignees and representatives the finances and affairs of the Company and any
subsidiaries), all at such reasonable times and as often as may be reasonably
requested. The rights set forth in this Section 3(b) shall be in addition to any
rights available to each Investor under the Delaware General Corporation Law.
(c) CONFIDENTIALITY. As to so much of the information and other
material furnished under or in connection with this Agreement (whether furnished
before, on or after the date hereof, including without limitation information
furnished pursuant to Sections 3(a) and 3(b) hereof) as constitutes or contains
confidential business, financial or other information of the Company or any
subsidiary, each of the Investors covenants for
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itself and its directors, officers and partners that it will use due care to
prevent its officers, directors, partners, employees, counsel, accountants and
other representatives from disclosing such information to Persons other than
their respective authorized employees, counsel, accountants, shareholders,
partners, limited partners and other authorized representatives; PROVIDED,
HOWEVER, that each Investor may disclose or deliver any information or other
material disclosed to or received by it should such Investor be advised by its
counsel that such disclosure or delivery is required by law, regulation or
judicial or administrative order. For purposes of this Section 3(c), "due care"
means at least the same level of care that such Investor would use to protect
the confidentiality of its own sensitive or proprietary information, and this
obligation shall survive termination of this Agreement.
(d) CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. The Company
will continue to engage in business of the same general type as now conducted by
it, and preserve, renew and keep in full force and effect its corporate
existence and take all reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business;
provided, however, that nothing herein shall prohibit or limit in any way the
Company's ability to consummate the proposed transaction with Cremascoli Ortho
Group. The Company shall require all of its employees or consultants to enter
into appropriate confidentiality agreements to protect confidential information
relating to the Company and its business, including trade secrets.
(e) COMPLIANCE WITH LAWS. The Company will comply in all material
respects with all applicable laws, rules, regulations and orders except where
the failure to comply would not have a material adverse effect on the business,
properties, operations, prospects or financial condition of the Company.
(f) INSURANCE. The Company will maintain insurance with responsible
and reputable insurance companies or associations in such amounts and covering
such risks as is usually carried by companies of similar size and credit
standing engaged in similar business and owning similar properties, provided
that such insurance is and remains available to the Company at commercially
reasonable rates.
(g) KEEPING OF BOOKS. The Company will keep proper books of record
and account, in which full and correct entries
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shall be made of all financial transactions and the assets and business of the
Company in accordance with GAAP.
(h) LOST, ETC. CERTIFICATES EVIDENCING SHARES (OR SHARES OF COMMON
STOCK); EXCHANGE. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any
certificate evidencing any Shares (or shares of Common Stock) owned by one of
the Investors, and (in the case of loss, theft or destruction) of an unsecured
indemnity satisfactory to it, and upon reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
such certificate, if mutilated, the Company will make and deliver in lieu of
such certificate a new certificate of like tenor and for the number of shares
evidenced by such certificate which remain outstanding. Such Investor's
agreement of indemnity shall constitute indemnity satisfactory to the Company
for purposes of this Section 3(h). Upon surrender of any certificate
representing any Shares (or shares of Common Stock) for exchange at the office
of the Company, the Company at its expense will cause to be issued in exchange
therefor new certificates in such denomination or denominations as may be
requested for the same aggregate number of Shares or shares of Common Stock, as
the case may be, represented by the certificate so surrendered and registered as
such holder may request. The Company will also pay the cost of all deliveries of
certificates for such shares to the office of such Investor (including the cost
of insurance against loss or theft in an amount satisfactory to the holders)
upon any exchange provided for in this Section 3(h).
(i) TERMINATION. The provisions of this Section 3 shall remain in
effect until the closing of the Initial Public Offering.
SECTION 4. ESCROW AGREEMENT.
In connection with Xxxxxx Medical Technology, Inc.'s pending dispute
with Xxxx X. Xxxxxxxxx (XXXXXXXXX X. XXXXXX MEDICAL TECHNOLOGY, Inc.), including
with respect to contingent sales payments under the Sales and Option Agreements
between Xx. Xxxxxxxxx and Xxxxxx Medical Technology, Inc. ("WMT"), dated January
3, 1996 and January 3, 1997, and related agreements and contractual arrangements
between WMT and Xx. Xxxxxxxxx and existing or hereinafter commenced litigation
between such parties with respect to such dispute (the "Xxxxxxxxx Dispute"), the
Company and WMT agree to proceed diligently towards the ultimate resolution,
whether by settlement, judicial determination,
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arbitration or otherwise (a "Resolution") of the Xxxxxxxxx Dispute. Pending a
Resolution, the Investors, other than Warburg and Purchaser (as defined in the
Merger Agreement), agree to execute, deliver and be bound by the terms and
conditions of the Escrow Agreement, dated of even date herewith, among WMT, the
Company, the Investors and State Street Bank and Trust Company, as Escrow Agent
(the "Escrow Agent"), including without limitation by depositing the Escrow
Amount (as defined in the Escrow Agreement) with the Escrow Agent pursuant to
the terms thereof.
SECTION 5. INTERPRETATION OF THIS AGREEMENT
(a) TERMS DEFINED. As used in this Agreement, the following terms
have the respective meaning set forth below:
EXCHANGE ACT: the Securities Exchange Act of 1934, as amended.
GAAP: means generally accepted accounting principles.
PERSON: an individual, partnership, joint-stock company, limited
liability company, corporation, trust or unincorporated organization, and a
government or agency or political subdivision thereof.
TRANSFER: means any sale, assignment, pledge, hypothecation, or
other disposition or encumbrance.
(b) ACCOUNTING PRINCIPLES. Where the character or amount of any
asset or amount of any asset or liability or item of income or expense is
required to be determined or any consolidation or other accounting computation
is required to be made for the purposes of this Agreement, this shall be done in
accordance with U.S. GAAP at the time in effect, to the extent applicable,
except where such principles are inconsistent with the requirements of this
Agreement.
(c) DIRECTLY OR INDIRECTLY. Where any provision in this Agreement
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.
(d) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed entirely within such State.
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(e) SECTION HEADINGS. The headings of the sections and
subsections of this Agreement are inserted for convenience only and shall not
be deemed to constitute a part thereof.
SECTION 6. MISCELLANEOUS
(a) NOTICES.
(i) All communications under this Agreement shall be in
writing and shall be delivered by hand or facsimile or mailed by overnight
courier or by registered or certified mail, postage prepaid:
(1) if to Warburg, at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
(facsimile: (000) 000-0000), marked for the attention of Xxxxxxxxx
Xxxxxxxxxx, or at such other address as Warburg may have furnished the
Company in writing,
(2) if to CalPERs, at Lincoln Plaza, 000 "X" Xxxxxx, Xxxxxxxxxx,
Xxxxxxxxxx 00000-0000 (facsimile: 916-558-4058), marked for the attention
of Senior Investment Officer or at such other address as CalPERs may have
furnished the Company in writing, with a copy to Xxxxxx X. Brand, Esq.,
Xxxxx, Day, Xxxxxx & Xxxxx, 000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000 (facsimile:
213-243-2539),
(3) if to Princes Gate, at 0000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, XX
00000 (facsimile: 212-761-9869), marked for the attention of Xxxxxxx
Xxxxxx, or at such other address as Princes Gate may have furnished the
Company in writing,
(4) if to the Company, at 0000 Xxxxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxx 00000 (facsimile: 901-867-4320), marked for the attention of
Xxxxxx X. Xxxxxx, or at such other address as it may have furnished in
writing to the Investors; and
(ii) Any notice so addressed shall be deemed to be given: if
delivered by hand or facsimile, on the date of such delivery; if mailed by
courier, on the first business day following the date of such mailing; and if
mailed by registered or certified mail, on the third business day after the date
of such mailing.
(b) REPRODUCTION OF DOCUMENTS. This Agreement and all documents
relating thereto, including, without limitation, (i) consents, waivers and
modifications which may hereafter be
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executed, (ii) documents received by each Investor pursuant hereto and (iii)
financial statements, certificates and other information previously or hereafter
furnished to each Investor, may be reproduced by each Investor by an
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and each Investor may destroy any original document so
reproduced. All parties hereto agree and stipulate that any such reproduction
shall be admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made by each Investor in the regular course
of business) and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
(c) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties.
(d) ENTIRE AGREEMENT; AMENDMENT AND WAIVER. This Agreement
constitutes the entire understanding of the parties hereto relating to the
subject matter hereof and supersede all prior agreements or understandings with
respect to the subject matter hereof among such parties. This Agreement may be
amended, and the observance of any term of this Agreement may be waived, with
(and only with) the written consent of each of the Investors.
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders Agreement as of the date first above written.
XXXXXX ACQUISITION HOLDINGS, INC.
By: /s/ Xxxxxxxxx X. Xxxxxxxxxx
-----------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxxx
Title: President
WARBURG, XXXXXX EQUITY PARTNERS, L.P.
By: Warburg, Xxxxxx & Co.,
General Partner
By: /s/ Xxxxxxxxx X. Xxxxxxxxxx
-----------------------------------------
WARBURG, XXXXXX NETHERLANDS EQUITY PARTNERS
I, C.V.
By: Warburg, Xxxxxx & Co.,
General Partner
By: /s/ Xxxxxxxxx X. Xxxxxxxxxx
-----------------------------------------
WARBURG, XXXXXX NETHERLANDS EQUITY PARTNERS
II, C.V.
By: Warburg, Xxxxxx & Co.,
General Partner
By: /s/ Xxxxxxxxx X. Xxxxxxxxxx
-----------------------------------------
WARBURG, XXXXXX NETHERLANDS EQUITY PARTNERS
III, C.V.
By: Warburg, Xxxxxx & Co.,
General Partner
By: /s/ Xxxxxxxxx X. Xxxxxxxxxx
-----------------------------------------
VERTICAL FUND ASSOCIATES, L.P.
By: Vertical Group, L.P.,General Partner
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxx
Title: General Partner
CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Investment Officer II
PRINCES GATE INVESTORS, L.P.
PGI INVESTMENTS LIMITED
PGI SWEDEN AB
MARINBEACH UNITED S.A.
By: PG Investors, Inc., as General
Partner or Attorney-in-Fact
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
/s/ Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
---------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxx X. Xxxx, Ph.D.
-----------------------
Xxxx X. Xxxx, Ph.D.
/s/ Xxxx X. Stamp
-------------------
Xxxx X. Stamp
/s/ Xxxxx X. Xxxx
-------------------
Xxxxx X. Xxxx
/s/ Xxxxxx X. Xxxxxxxxx
--------------------
Xxxxxx X. Xxxxxxxxx
/s/ Xxxxx X. Xxxxxx
--------------------
Xxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxx
--------------------
Xxxxx X. Xxxx
/s/ Xxxxx X. Xxxxx
--------------------
Xxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxxx, Ph.D.
----------------------------
Xxxxxx X. Xxxxxxx, Ph.D.
/s/ Xxxxxxx X. Xxxxxxx
----------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxx X. Xxxxxx
--------------------
Xxxx X. Xxxxxx
/s/ Xxxxxxxx X. Xxxxxx
----------------------
Xxxxxxxx X. Xxxxxx
/s/ Skip Xxxxxxxx
--------------------
Skip Xxxxxxxx
/s/ Xxxx Xxxxxx
--------------------
Xxxx Xxxxxx
/s/ Xxxx Xxxxxx
--------------------
Xxxx Xxxxxx
