MUTUAL RELEASE OF CLAIMS AND MODIFICATION AGREEMENT
THIS MUTUAL RELEASE OF CLAIMS AND MODIFICATION AGREEMENT (the
"Agreement") is made and entered into as of this 16th day of October, 1999, by
and among NU SKIN ENTERPRISES, INC., a Delaware corporation ("Nu Skin"), Xxxx
Xxxxxxx, Xxxxxx Xxxx, Xxxxxxx X. XxXxxxxxx, Xx., Xxxxx X. Xxxxxxx and Xxxxx
Xxxxxxxxx, acting in all matters pursuant to the direction of at least four of
such persons, as representatives and Attorney-in-Fact of the Stockholders (the
"Stockholders Representatives") of GENERATION HEALTH HOLDINGS, INC., a Delaware
corporation (the "Company") pursuant to the power of attorney granted to such
Stockholders Representatives by the Stockholders of Generation Health Holdings,
Inc. (the "Stockholders"), pursuant to the Stockholder's Letter and LASALLE BANK
NATIONAL ASSOCIATION, a national banking association, as escrow agent (the
"Escrow Agent").
WITNESSETH:
WHEREAS, Nu Skin, Sage Acquisition Corporation ("Merger Sub") and the
Company entered into that Restated Agreement and Plan of Merger and
Reorganization dated as of October 16, 1998 (the "Merger Agreement", and
capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Merger Agreement);
WHEREAS, pursuant to the Merger Agreement, the Company merged with and
into Merger Sub in accordance with the General Corporation Law of the State of
Delaware and upon the terms and subject to the conditions set forth in the
Merger Agreement;
WHEREAS, the parties hereto wish to resolve certain disputes and grant
a mutual release of claims and in connection therewith modify certain rights,
obligations and liabilities of those Stockholders who timely accept the terms
and conditions of this Agreement by executing and delivering a Stockholder's
Election Form substantially in the form attached hereto as Exhibit A (the
"Accepting Holders"), which executed Election Form shall be attached hereto as
Exhibit B with a schedule of the names of the Accepting Holders, and Nu Skin as
set forth in the Merger Agreement, the Cholestin Escrow Agreement, the Escrow
Agreement, the Registration Rights Agreement and the Stockholder Escrow
Agreement dated as of October 16, 1998 by and among the Stockholders
Representatives, the Escrow Agent and the Stockholders (the "Stockholder Escrow
Agreement"); and
WHEREAS, the Accepting Holders received in excess of sixty percent
(60%) of the Merger Consideration (as defined below);
NOW, THEREFORE, in consideration of the covenants and agreements herein
set forth, the parties hereto agree as follows:
1. CHOLESTIN ESCROW.
(a) Notwithstanding that Nu Skin has or will notify the Escrow Agent
that the conditions set forth in Section 5.16(a) of the Merger Agreement
necessary for the distribution to the Stockholders of the Total Cholestin Escrow
Shares have not been satisfied and directing the Escrow Agent to distribute such
shares to Nu Skin in accordance with Section 5.16(a) of the Merger Agreement and
the Cholestin Escrow Agreement, in consideration of the release of claims by the
Accepting Holders set forth in Section 3 below and the other terms and
conditions of this Agreement, with respect to the Accepting Holders only, the
Total Cholestin Escrow Shares held in the names of the Accepting Holders (the
"Accepting Holders Total Cholestin Escrow Shares") will not be cancelled and
returned to Nu Skin pursuant to Section 5.16 of the Merger Agreement and the
Cholestin Escrow Agreement at this time, but shall be held and distributed to
the Accepting Holders and/or Nu Skin, as the case may be, as set forth in this
Agreement. All other Total Cholestin Escrow Shares, other than the Accepting
Holders Total Cholestin Escrow Shares, shall be cancelled and returned to Nu
Skin by the Escrow Agent promptly following October 25, 1999 in the manner
contemplated by the Merger Agreement and the Cholestin Escrow Agreement. The
provisions of Section 5.16 of the Merger Agreement shall continue to apply to
the Accepting Holders Total Cholestin Escrow Shares, which provisions are
incorporated herein by reference, subject to the following changes: (i) all
references to "the first anniversary of the Effective Date" shall be deleted and
replaced with "June 15, 2000", and (ii) rather than distributing the shares on
an all or nothing basis at June 15, 2000, the shares shall be distributed to the
Accepting Holders pro rata based on the percentage of the Sales objective
satisfied as set forth below.
(b) Notwithstanding any other provision in the Merger Agreement, the
Cholestin Escrow Agreement or the certificate delivered or to be delivered to
the Escrow Agent pursuant to Section 7(c) of the Cholestin Escrow Agreement to
the contrary, Nu Skin shall deliver to the Escrow Agent on or before October 25,
1999 written instructions pursuant to this Agreement authorizing and instructing
the Escrow Agent promptly to deliver the Initial Release Amount (as defined
below) to the Accepting Holders pro rata. For purposes of this Section 1(b), the
"Initial Release Amount" shall equal 152,192 shares (35% of the Total Cholestin
Escrow Shares) multiplied by a fraction, the numerator of which is the number of
Accepting Holders Total Cholestin Escrow Shares and the denominator of which is
the Total Cholestin Escrow Shares.
(c) Notwithstanding any other provision in the Merger Agreement or the
Cholestin Escrow Agreement to the contrary, on each of January 15, 2000 and
April 15, 2000, and within 20 days after June 15, 2000 (each a "Release Date"),
Nu Skin shall deliver to the Escrow Agent written instructions pursuant to this
Agreement authorizing and instructing the Escrow Agent to deliver to the
Accepting Holders pro rata the Earned Amount (as defined below) of the then
remaining Accepting Holders Total Cholestin Escrow Shares. For purposes of this
Section 1(c), "Earned Amount" shall equal (i) the percentage equivalent of the
total Sales (net of returns) in the United States or worldwide, as the case may
be, by Nu Skin of products containing Cholestin as calculated as of the 31st day
of the month immediately preceding January 15, 2000 and April 15, 2000, and as
calculated as of June 15, 2000, divided by $12,000,000 for United States sales
or $75,000,000 for worldwide sales, whichever percentage is greater, multiplied
by (ii) the Accepting Holders Total Cholestin Escrow Shares, minus (iii) the
number of Accepting Holders Total Cholestin Escrow Shares theretofor released
and delivered to the Accepting Holders.
(d) Promptly upon receipt of written instructions contemplated by
Section 1 hereof, (i) the Escrow Agent shall deliver a copy of such written
instructions to the Stockholders Representatives and (ii) the Escrow Agent, the
Stockholders Representatives and Nu Skin shall take such action as may be
necessary to cause certificates representing the amount of shares specified in
the written instructions delivered pursuant to Sections 1(b) or (c) hereof to be
distributed to the Accepting Holders pro rata in accordance with the procedures
set forth in Sections 7(b) and (e) of the Cholestin Escrow Agreement.
(e) The provisions set forth in Section 7(b), (c), (d) and (e) of the
Cholestin Escrow Agreement, subject to the modifications in this Agreement,
shall continue in effect with respect to any of the Accepting Holders Total
Cholestin Escrow Shares on deposit after June 15, 2000 with respect to Sales
made through that date. If as of June 15, 2000, total Cholestin Sales have not
reached one of (i) $12,000,000 in the United States or (ii) $75,000,000
worldwide then the portion of the Accepting Holders Total Cholestin Escrow
Shares which are not distributed to the Accepting Holders based on sales through
June 15, 2000 in accordance with the formula set forth above shall be cancelled
and returned to Nu Skin. Within twenty days after June 15, 2000, Nu Skin shall
deliver a certificate to the Stockholder Representatives and the Escrow Agent
indicating the number of the remaining Accepting Holder Total Escrow Shares to
be delivered to the Accepting Holders pursuant to this Agreement and the number
that are to be returned to Nu Skin for cancellation. The provisions of Section
7(b), (c), (d) and (e) of the Cholestin Escrow Agreement, subject to the
modifications in this Agreement, shall apply with respect to the procedures to
be followed with respect to such certificate and the distribution of shares to
the Stockholders or Nu Skin as the case may be. Accepting Holders shall deliver
to the Escrow Agent stock transfer powers duly executed in blank (with
signatures duly notarized if requested by Nu Skin) to facilitate the
distribution of Accepting Holder Total Escrow Shares as contemplated by this
Section 1.
(f) Notwithstanding any other provision of this Agreement, the Merger
Agreement, the Cholestin Escrow Agreement or the certificate delivered or to be
delivered to the Escrow Agent pursuant to Section 7(c) of the Cholestin Escrow
Agreement to the contrary, in each circumstance in which Accepting Holders Total
Cholestin Escrow Shares are to be distributed to the Accepting Holders, the
number of such shares to be distributed to the Accepting Holders shall be
rounded to the nearest whole number. Under no circumstances shall any Accepting
Holder receive more shares from the Escrow Fund (as defined in the Cholestin
Escrow Agreement) than were deposited in that Escrow Fund by or on behalf of
such Accepting Holder.
2. TRADING LIMITATIONS.
(a) Each Stockholder who received a certificate or certificates
representing 21,000 or fewer shares of Class A Common Stock in connection with
the Merger, including, without limitation, the Escrow Shares and the Cholestin
Escrow Shares (the "Merger Consideration"), shall, as of October 16, 1999, be
released from the trading limitations set forth in Article III of that certain
Stockholder's Letter executed by each Stockholder prior to the Merger; provided,
however, that any Accepting Holder who received more than 10,000 shares of
Merger Consideration may, at such Accepting Holder's sole discretion, elect to
be governed by the trading limitations set forth in Section 2(b) hereof by so
indicating on such Accepting Holder's Election Form, and in consideration of
making such election, Nu Skin shall permit such Accepting Holder to participate
in the liquidity event, if any, contemplated by Section 6 hereof.
(b) Each Accepting Holder who received a certificate or certificates
representing more than 21,000 shares of Merger Consideration irrevocably agrees
that, except pursuant to the exercise of registration rights in accordance with
the Registration Rights Agreement, such Accepting Holder shall not, from the
date hereof and for a period ending on the first to occur of (a) three days
following the date that Nu Skin publicly announces its earnings for the fiscal
year ended December 31, 1999 or issues a press release or public statement
indicating that its earnings for the fiscal year ended December 31, 1999 will be
below analysts' expectations, (b) February 10, 2000 and (c) the consummation of
a transaction sponsored or arranged by Nu Skin in which each Accepting Holder's
shares of Class A Common Stock are purchased by Nu Skin or a third party (a
"liquidity event"), but only with respect to those shares sold in such liquidity
event, (i) offer to sell, sell, contract to sell, pledge or otherwise dispose of
any Merger Consideration or any securities substantially similar to the Merger
Consideration, including, but not limited to, any securities that are
convertible into or exchangeable for, or that represent the right to receive,
shares of Class A Common Stock or any substantially similar securities, but
excluding shares of Class A Common Stock, if any, owned by such Accepting Holder
that do not constitute Merger Consideration or (ii) establish a "put equivalent
position" with respect to any of the Merger Consideration within the meaning of
Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended, or (iii)
publicly announce an intention to take any of the actions set forth in (i) or
(ii) above; provided, however, that the limitations set forth above shall not
apply to (A) any bona fide transfers or gifts to the ancestors, siblings,
descendants, spouse or domestic partner of such Accepting Holder, or any trust
for the benefit of such persons or such Accepting Holder, if such Accepting
Holder has provided prior written notice to Nu Skin of such transfer and such
transferee has agreed in writing to be bound by the terms hereof or (B) any
transfer of Merger Consideration to the Stockholders Representatives pursuant to
Section 9.01 of the Merger Agreement; provided, further, that any Accepting
Holder who is subject to paragraph (b) of this Section 2 may, at such Accepting
Holder's sole discretion, take any of the actions set forth in clauses (i)
through (iii) above on or after October 16, 1999 with respect to such Accepting
Holder's pro rata percentage of 150,000 of the shares of Merger Consideration.
Nu Skin and the transfer agent with respect to the Class A Common Stock are
hereby authorized to enforce the provisions of the preceding sentence by
refusing to permit transfers which Nu Skin believes may violate such sentence.
(c) Nu Skin agrees that prior to March 26, 2000, it will not modify,
amend or waive the terms of any transfer restrictions in force as of October 10,
1999 as set forth in that certain Amended and Restated Stockholders Agreement,
as amended through October 10, 1999, among the Nu Skin founding stockholder
group in a manner that could adversely effect the Accepting Holders, except that
Nu Skin may waive such transfer restrictions solely with respect to charitable
contributions approved by Nu Skin's special committee of outside directors
charged with evaluating requests by members of the NUS founding stockholder
group for release of their shares of Class A Common Stock as charitable
contributions consistent with its fiduciary duties and past practices.
3. RELEASE AND WAIVER.
(a) Each of the Accepting Holders hereby fully releases, remises,
acquits, and forever discharges Nu Skin and each of its affiliates, officers,
directors, employees, agents, successors and assigns, and each of such person's
respective heirs, executors, administrators, trustees, beneficiaries, assigns,
predecessors and successors ("Accepting Holders Released Parties") from any and
all claims, suits, obligations, liabilities, causes of action, demands, charges,
complaints, damages, losses, attorney's fees, and costs or expenses, of any kind
whatsoever, whether at law or in equity, whether known or unknown, that the
Accepting Holders, any predecessor or successor in interest of the Accepting
Holders, now has, ever had, or might conceive or accrue in the future against
any of the Accepting Holders Released Parties arising out of, occurring in
connection with, or otherwise relating to the Merger Agreement and all related
transactions, from the beginning of the world up to and including the date
hereof; provided, however, that the foregoing release shall not apply to or
affect (i) any obligations, duties or rights arising under this Agreement, (ii)
any obligations, duties or rights under Sections 5.08, 5.09, 5.12, 5.13, 5.14 or
5.22 of the Merger Agreement, the Registration Rights Agreement or the
respective Stockholder's Letters (other than Article II), (iii) any obligations,
duties or rights under any employment agreement, consulting agreement,
confidentiality agreement, or lost certificate affidavit entered into by and
between Nu Skin and any Stockholder in connection with the Merger Agreement, or
any promissory note assumed or succeeded to by Nu Skin or its affiliates as a
result of the Merger or (iv) any obligations of Nu Skin under the Merger
Agreement (as modified by this Agreement), the Escrow Agreement (as modified by
this Agreement), and/or the Cholestin Escrow Agreement (as modified by this
Agreement), which by the respective terms of such agreements are to be performed
following the date of this Agreement.
(b) Nu Skin, on behalf of itself and all its affiliates, hereby fully
releases, remises, acquits, and forever discharges each Accepting Holder and
each of such person's respective heirs, executors, administrators, trustees,
beneficiaries, assigns, predecessors and successors ("Nu Skin Released Parties")
from any and all claims, suits, obligations, liabilities, causes of action,
demands, complaints, damages, losses, attorney's fees, and costs or expenses, of
any kind whatsoever, whether at law or in equity, whether known or unknown, that
Nu Skin, any predecessor or successor in interest of Nu Skin, now has, ever had,
or might conceive or accrue in the future against any of the Nu Skin Released
Parties arising out of, occurring in connection with, or otherwise relating to
breaches of representations, warranties and covenants under the Merger Agreement
and all related documentation among Nu Skin, the Stockholders and/or the
Stockholders Representatives, from the beginning of the world up to and
including the date hereof; provided, however, that the foregoing release shall
not apply to or affect (i) any obligations, duties or rights arising under this
Agreement, (ii) any obligations, duties or rights under Sections 5.08, 5.09,
5.12, 5.13, 5.14 or 5.22 of the Merger Agreement, the Registration Rights
Agreement or the respective Stockholder's Letters (other than Article II), (iii)
any obligations, duties or rights under any employment agreement, consulting
agreement, confidentiality agreement, or lost certificate affidavit entered into
by and between Nu Skin and any Stockholder in connection with the Merger
Agreement, or any promissory note assumed or succeeded to by Nu Skin or its
affiliates as a result of the Merger or (iv) any obligations of the Accepting
Holders under the Merger Agreement (as modified by this Agreement), the Escrow
Agreement (as modified by this Agreement), and/or the Cholestin Escrow Agreement
(as modified by this Agreement), which by the respective terms of such
agreements are to be performed following the date of this Agreement.
(c) Notwithstanding the respective releases given by the parties
herein, each party hereto shall be entitled to enforce any right created, or
conferred upon such party, by this Agreement, including through instituting
legal action against an otherwise released person. If any party hereto brings an
action to enforce its rights hereunder, the prevailing party shall be entitled
to recover its costs and expenses, including court costs and attorneys' fees
incurred in connection with such suit.
(d) The mutual releases set forth in this Section 3 are entered into by
the Accepting Holders and Nu Skin without any admission of liability to any
other, but solely for the purpose of avoiding costly litigation, further
uncertainty, controversy, and legal expense. Without limiting the foregoing,
nothing contained herein shall be taken or construed to be an inference or
admission by any party or as evidencing or indicating in any degree the truth or
correctness of any claims or defense asserted by any party.
4. BOOK VALUE ADJUSTMENTS. Pursuant to Section 2.08 of the Merger
Agreement, Nu Skin shall deliver to the Escrow Agent for deposit into the Escrow
Account (as defined in the Escrow Agreement) as of October 16, 1999, a
certificate representing 24,434 shares of Class A Common Stock. The Stockholders
and Nu Skin hereby agree that upon such deposit, all required adjustments to the
Merger Consideration shall have been made and no further adjustments to the
Merger Consideration shall be made pursuant to Section 2.08 of the Merger
Agreement.
5. General escrow.
(a) As of October 16, 1999, the Escrow Agent shall distribute to Nu
Skin a total of 103,533 Total Escrow Shares1 from the Escrow Account (as defined
in the Escrow Agreement). The Escrow Agent, the Stockholders Representatives and
Nu Skin shall cause a certificate representing such shares to be delivered to Nu
Skin as payment in full of claims made by Nu Skin pursuant to Sections
7.02(a)(v) and (vii) of the Merger Agreement. Nu Skin, for itself and all
Indemnified Parties, hereby agrees that the Reserved Amount (as defined in the
Escrow Agreement) is $0.00 following the distribution of Total Escrow Shares
described above. All other Total Escrow Shares, other than those distributed to
Nu Skin pursuant to this Section 5(a) or subject to Sections 5(c), 5(d) and 5(f)
below, shall be distributed to the Stockholders promptly following the one year
anniversary of the Effective Date as contemplated by the Escrow Agreement.
Following the distribution to Nu Skin of the Total Escrow Shares pursuant to
this Section 5(a), Nu Skin shall have no further interest in the Escrow Fund (as
defined in the Escrow Agreement) and Nu Skin shall have no further rights,
duties or obligations under the Escrow Agreement.
(b) Upon the Escrow Agent's receipt of certificates representing the
shares referenced in Section 4 hereof, the Escrow Agent shall increase the
number of shares of Class A Common Stock beneficially owned by each Stockholder
or Accepting Holder, as applicable, in the Escrow Fund (as defined in the Escrow
Agreement), pro rata based on such Stockholder's proportionate interest in such
deposited shares. In lieu of issuing and depositing the 24,434 shares required
by Section 4 hereof, Nu Skin may authorize the Escrow Agent to reduce by 24,434
the number of shares to be delivered to Nu Skin pursuant to Section 5(a).
(c) Notwithstanding any other provision in the Merger Agreement or in
Escrow Agreement to the contrary, the Accepting Holders' pro rata portion of the
set aside in the Escrow Fund (as defined in the Escrow Agreement) originally
consisting of $250,000 in cash and Class A Common Stock and 33,207 Escrow Shares
established pursuant to Section 10(b)(ii) of the Escrow Agreement (the "SR
Expense Set Aside") remaining after payment of all Stockholders Representatives,
accrued and unpaid expenses through the date this Agreement is actually executed
and delivered, shall be held by the Escrow Agent in the Escrow Account (as
defined in the Escrow Agreement) to pay the accrued and unpaid fees and expenses
of the Stockholders Representatives without regard to the termination of the
Escrow Fund (as defined in the Escrow Agreement). Any claims made by the
Stockholders Representatives against the SR Expense Set Aside shall comply with
the provisions of Section 10(b)(ii) of the Escrow Agreement. As soon as the
Stockholders Representatives are satisfied that their responsibilities to the
Stockholders have been discharged, the Stockholders Representatives shall
deliver a certificate to the Escrow Agent to that effect. Upon the Escrow
Agent's receipt of such certificate, the Escrow Agreement shall be deemed
terminated in accordance with Section 14 of the Escrow Agreement and the balance
of the SR Expense Set Aside shall be distributed in accordance with Section 8(h)
of the Escrow Agreement.
(d) As of October 25, 1999, the Escrow Agent and the Stockholders
Representatives shall take such action as may be necessary to (i) reduce the
Accepting Holders' pro rata portion of 173,913 shares of Class A Common Stock on
deposit in the Escrow Fund (as defined in the Escrow Agreement), (ii) cause a
certificate representing such shares to be transferred to the Escrow Agent for
deposit into the Escrow Fund (as defined in the Stockholder Escrow Agreement).
Following such deposit, the Escrow Fund (as defined in the Stockholder Escrow
Agreement) shall be held or distributed, as the case may be, in accordance with
the terms of the Stockholder Escrow Agreement. Notwithstanding any other
provision to the contrary in the Stockholder Escrow Agreement, including,
without limitation, Section 13(b) thereof, the Stockholders Escrow Agreement
shall not terminate until the Stockholders Representatives are satisfied that
their obligations as described in Section 3 of the Stockholders Escrow
Agreement, and all reasonable expenses incurred in connection therewith, have
been discharged, at which time the Stockholders Representatives shall deliver a
certificate to the Escrow Agent to that effect and the Escrow Agent shall
promptly, but no later than ten days following receipt of such certificate from
the Stockholders Representatives, distribute to the Stockholders pro rata any
cash or shares of Class A Common Stock remaining in the Escrow Fund (as defined
in the Stockholders Escrow Agreement).
(e) For the purposes of Sections 5(c) and 5(d) hereof, the Accepting
Holders' (as a group) pro rata portion of (i) the remaining SR Expense Set Aside
as described in Section 5(c) and (ii) the 173,913 shares that were to be
deposited pursuant to Stockholders Escrow Agreement as described in Section 5(d)
will be equal to a fraction (expressed as a percentage), the numerator of which
is the total number of shares of Merger Consideration received by the Accepting
Holders and the denominator of which is the total number of shares of Merger
Consideration received by all Stockholders.
(f) The Rejecting Holders' portion of (i) the remaining SR Expense Set
Aside (after payment of all Stockholders Representatives' accrued and unpaid
expenses through the date that this Agreement is actually executed and
delivered) and (ii) the 173,193 Shares of Merger Consideration that were to have
been deposited in escrow pursuant to the Stockholders Escrow Agreement, will be
distributed to each Rejecting Holder pro rata in accordance with Section 8(h) of
the Escrow Agreement. For the purposes of this Section 5(f), each Rejecting
Holder's pro rata interest in distributions pursuant to this Section 5(f) shall
equal the total amount to be distributed multiplied by a fraction, the numerator
of which is the number of shares of Merger Consideration received by such
Rejecting Holder and the denominator of which is the total number of shares of
Merger Consideration received by all Rejecting Holders.
6. LIQUIDITY.
Nu Skin agrees to use its reasonable best efforts, acting in good
faith, to provide Accepting Holders who are subject to the trading limitations
set forth in Section 2(b) hereof an opportunity to participate in a commercially
reasonable liquidity event on or before April 15, 2000. For purposes of this
Section 6, each Accepting Holder acknowledges that a commercially reasonable
liquidity event may include a private or public transaction at a price per share
below the closing price of Class A Common Stock on the day immediately preceding
the date of the closing of such liquidity event; provided, however, that the per
share consideration received by Accepting Holders in connection with such
liquidity event shall in no event be less than the per share amount of
consideration offered to the Nu Skin founding stockholder group or to Nu Skin in
connection with a related financing transaction; provided, further, that any
Accepting Holder who participates in such liquidity event and thereby has the
opportunity to sell at least 50% of all of such Stockholder's Merger
Consideration, excluding for purposes of such calculation any shares of such
Stockholder's Merger Consideration held in escrow as of the date of the
liquidity event (the "Eligible Shares"), agrees that the trading limitations set
forth in Section 2(b) hereof shall remain in effect until the later of (a) the
end of the restricted period set forth in Section 2(b) hereof or (b) 90 days
following the closing of such liquidity event; and, provided further, that (i)
if less than fifty percent (50%) of the Eligible Shares are tendered in such
liquidity event, Accepting Holders who elect not to participate in such
liquidity event (the "Non-participating Holders") agree that the trading
limitations set forth in Section 2(b) hereof shall remain in effect with respect
to such Accepting Holders shares of Merger Consideration until 60 days following
the closing of such liquidity event and (ii) if fifty percent (50%) or more of
the Eligible Shares are tendered in such liquidity event, Non-participating
Holders agree that the trading limitations set forth in Section 2(b) hereof
shall remain in effect with respect to such Accepting Holders shares of Merger
Consideration until 45 days following the closing of such liquidity event;
provided, however, that (x) notwithstanding (i) or (ii) above, in no event shall
the restricted period end prior to the period set forth in Section 2(b) and (y)
under no circumstances shall any Accepting Holder be required to agree to any
transfer restriction relating to a liquidity event that is more restrictive as
to time, scope or otherwise, than those agreed to by any member of the Nu Skin
founding stockholder group participating in such (or a related) liquidity event.
7. REGISTRATION RIGHTS.
Each Accepting Holder irrevocably agrees to vote such Accepting
Holder's shares of Merger Consideration in favor of not more than one demand
registration right under the Registration Rights Agreement.
8. Effectiveness.
Each of the Merger Agreement, the Cholestin Escrow Agreement, the
Escrow Agreement and the Stockholder Escrow Agreement is specifically amended to
the extent provided herein and as necessary to give effect to such amendments.
Except as provided in the immediately preceding sentence, such agreements shall
continue in full force and effect.
9. ESCROW AGENT.
The Escrow Agent shall receive fees in the amount of (a) $3,000 for the
administration of the Escrow Fund (as defined in the Cholestin Escrow Agreement,
as modified by this Agreement) and (b) $2,750 for the administration of the
Escrow Fund (as defined in the Escrow Agreement, as modified by this Agreement)
for services rendered by the Escrow Agent under this Agreement for the period
from October 17, 1999 through October 16, 2000. All such fees owed to the Escrow
Agent hereunder shall be paid and satisfied out of those respective Escrow Funds
or such other sources as the parties hereto shall mutually agree. All
computations required to be made under the terms of this Agreement in
calculating the number of shares to be distributed from any escrow by the Escrow
Agent hereunder shall be made by Nu Skin and/or the Stockholders
Representatives, and such party shall provide any such computation in writing to
the other parties hereto.
10. GOVERNING LAW.
This Agreement, and all matters relating hereto, shall be governed by,
and construed in accordance with the laws of the State of Delaware applicable to
contracts executed and to be performed within that State.
11. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the parties and
supersede all prior agreements and understandings, both written and oral,
between the parties, or any of them, with respect to the subject matter hereof.
12. COOPERATION.
Each party agrees to cooperate with the other and to take all action
reasonably necessary to give full effect to the provisions and intent of this
Agreement.
13. AMENDMENTS.
This Agreement may not be amended or modified except by an instrument
in writing signed by, or on behalf of, the Stockholders Representatives, Nu Skin
and the Escrow Agent.
14. AUTHORIZATION.
The Stockholders Representatives, Nu Skin and the Escrow Agent each
represent and warrant (i) this Agreement has been duly and validly authorized,
executed and delivered, subject to the application of equitable remedies, and
(ii) each person executing this Agreement on behalf of the parties hereto is
duly authorized and fully competent to execute this Agreement on behalf of such
parties.
15. NOTICES.
All notices or other communications hereunder shall be in writing and
shall be given or made (and shall be deemed to have been duly given or made upon
receipt) by delivery in person, or by overnight courier service, telecopy, or
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties hereto at their address set forth below:
if to the Stockholders Representatives:
Xxxx Xxxxxxx
c/o Bay City Capital, LLC
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Pucker
Telecopier: (000) 000-0000
if to Nu Skin:
Nu Skin Enterprises, Inc.
Xxx Xx Xxxx Xxxxx
00 Xxxx Xxxxxx Xxxxxx
Xxxxx, Xxxx 00000
Attention: M. Xxxxxx Xxxx
Telecopier: (000) 000-0000
if to the Escrow Agent:
LaSalle Bank National Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Telecopy: (000) 000-0000
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
16. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which when taken together shall
constitute one and the same agreement.
17. NO third party beneficiaries.
This Agreement is for the sole benefit of the parties hereto, the
Stockholders and their permitted assigns, and nothing herein, express or
implied, is intended to or shall confer upon any other person or entity any
legal or equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
18. SEVERABILITY.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic and legal substance of the transactions
contemplated by this Agreement is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provisions is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement be consummated as
originally contemplated to the fullest extent possible.
19. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the parties hereto as of the date first written above.
NU SKIN ENTERPRISES, INC.
By: /s/ M. Xxxxxx Xxxx
Name: M. Xxxxxx Xxxx
Title: Vice President and
General Counsel
/s/ Xxxx Xxxxxxx
Xxxx Xxxxxxx
/s/Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
/s/Xxxxxxx XxXxxxxxx, Xx.
Xxxxxxx XxXxxxxxx, Xx.
/s/Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
/s/Xxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxx
Not individually, but each in his capacity as a Stockholders
Representative and as attorneys in fact of the Accepting Holders
LASALLE BANK NATIONAL ASSOCIATION,
as Escrow Agent
By: Xxxxxxx X. Xxxxxxx
Name:Xxxxxxx X. Xxxxxxx
Title:Vice President
