SHAREHOLDER AGREEMENT
BETWEEN
PARK-HOSPITAL GMBH
AND
XXXXXXXXXX HEALTHCARE CORPORATION
DATED AS OF MARCH 22, 1999
TABLE OF CONTENTS
SECTION PAGE
SECTION 1. Certain
Definitions................................................................1
SECTION 2. Representations and Warranties of the Shareholder..............6
SECTION 3. Representations and Warranties of Xxxxxxxxxx...................6
SECTION 4. Voting Security Transfers......................................6
SECTION 5. Right of First Offer...........................................8
SECTION 6. Agreement to Sell Voting Securities...........................10
SECTION 7. Board Representation..........................................10
SECTION 8. Demand Registrations..........................................13
SECTION 9. Piggyback Registrations.......................................15
SECTION 10. Holdback Agreements..........................................16
SECTION 11. Registration Procedures......................................16
SECTION 12. Shareholder's Cooperation....................................19
SECTION 13. Underwriting Agreement.......................................19
SECTION 14. Expenses......................................................19
SECTION 15. Indemnification...............................................19
SECTION 16. Changes in Xxxxxxxxxx Common Stock...........................22
SECTION 17. Shareholder Protection Rights Plan...........................22
SECTION 18. Additional Agreements........................................22
SECTION 19. Legends.......................................................23
SECTION 20. Specific Performance.........................................23
SECTION 21. Successors and Assigns.......................................23
SECTION 22. Entire Agreement; Amendment; Waiver..........................24
SECTION 23. Miscellaneous.................................................24
-i-
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT (this "AGREEMENT") is entered into as of
March 19, 1999, between Park-Hospital GmbH, a German corporation (the
"SHAREHOLDER"), and Xxxxxxxxxx Healthcare Corporation, a California corporation
("XXXXXXXXXX" or the "COMPANY").
WHEREAS, the Shareholder and Xxxxxxxxxx entered into a Shareholder
Agreement, dated as of August 16, 1996 (the "ORIGINAL AGREEMENT");
WHEREAS, the Shareholder, Xxxxxxxxxx and the Champion Shareholders
(defined below) have entered into a Settlement Agreement, dated the date hereof
(the "SETTLEMENT AGREEMENT"), as a result of which, among other things, the
Shareholder and its Affiliates will be the Beneficial Owners, as of the
Effective Date (as defined below), of 20,906,742 shares of Xxxxxxxxxx Common
Stock, and
WHEREAS, the Shareholder and Xxxxxxxxxx desire to terminate the
Original Agreement and to enter into this Agreement in lieu thereof;
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. CERTAIN DEFINITIONS. (a) For the purposes of this
Agreement,
the following terms shall have the following meanings:
"AFFILIATE" and "ASSOCIATE" when used with reference to any Person
shall have the meanings assigned to such terms in Rule 12b-2 of the Exchange
Act
as amended from time to time; provided, that Xxxxxxxxxx and its Subsidiaries
and
existing directors and executive officers of Xxxxxxxxxx who become and remain
directors and executive officers of Xxxxxxxxxx shall not, solely as a result of
holding such office, be deemed Affiliates or Associates of the Shareholder for
purposes of this Agreement.
"ACQUISITION PROPOSAL" shall mean any bona fide offer or proposal for
(i) a merger or other business combination (other than a Surviving Company
Merger) involving Xxxxxxxxxx, (ii) the acquisition of any Voting Securities
representing more than 50% of the Total Voting Power of Xxxxxxxxxx after giving
effect to such Acquisition Proposal or (iii) the acquisition of all or
substantially all of the assets of Xxxxxxxxxx.
"APPROVED ACQUISITION PROPOSAL" shall mean an Acquisition Proposal
that
is approved and recommended (and, immediately prior to consummation of such
Acquisition Proposal, that continues to be recommended) by a vote of a majority
of the entire Board, with at least one (1) of such majority being an
Independent
Director.
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A Person shall be deemed the "BENEFICIAL OWNER" and to have
"BENEFICIAL
OWNERSHIP" of, and to "BENEFICIALLY OWN," any Voting Securities as to which
such
Person or any of such Person's Affiliates or Associates (including, without
limitation, the beneficiary of any trust) is or may be deemed to be the
beneficial owner pursuant to Rule 13d-3 or 13d-5 under the Exchange Act, as
such
rules are amended from time to time a Person shall not be deemed the
"Beneficial
Owner", or to have "Beneficial Ownership" of, or to "Beneficially Own", any
Voting Security (i) solely because such Voting Security has been tendered
pursuant to a tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered Voting Security is
accepted for payment or exchange or (ii) solely because such Person or any of
such Person's Affiliates or Associates has or shares the power to vote or
direct
the voting of such Voting Security pursuant to a revocable proxy or consent
given in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations under the Exchange
Act, except if such power (or the arrangements relating thereto) is then
reportable under Item 6 of Schedule 13D under the Exchange Act (or any similar
provision of a comparable or successor report). For purposes of this Agreement,
in determining the percentage of the outstanding Voting Securities with respect
to which a Person is the Beneficial Owner, all shares as to which such person
is
deemed the Beneficial Owner shall be deemed outstanding.
"BOARD" shall mean the Board of Directors of Xxxxxxxxxx.
"CHAMPION DIRECTORS" shall mean the directors of the Board who took
office at the initiation of the Champion Shareholders (two of whom will
initially be Class II directors with original terms expiring in 2001 and one of
whom will initially be a Class I director with an original term expiring in
2000).
"CHAMPION SHAREHOLDERS" shall mean certain shareholders of Xxxxxxxxxx
that are former shareholders of Champion Healthcare Corporation, a Delaware
corporation, who are (directly or indirectly) parties to the Settlement
Agreement.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"COMMISSION" shall mean the Securities and Exchange Commission.
"CURRENT MARKET PRICE" shall mean, on the date any determination
thereof, the average of the last sale prices per share of the Xxxxxxxxxx Common
Stock reported on the New York Stock Exchange (or the principal trading market
or stock exchange for the Xxxxxxxxxx Common Stock if other than the New York
Stock Exchange) for the 15 business days preceding the date of such
determination.
"DEMAND REGISTRATION" shall have the meaning specified in Section 8(a)
hereof.
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"DEMAND REGISTRATION REQUEST" shall have the meaning specified in
Section 8(a) hereof.
"DISTRIBUTION PERIOD" shall mean, with respect to a distribution of
Registration Shares in a firm commitment underwritten public offering, the
period extending until, but not beyond, such time as each underwriter has
completed the distribution of all securities purchased by it, and with respect
to any other distribution of Registration Shares in any other registration, the
period extending until, but not beyond, the earlier of the sale of all
Registration Shares covered thereby or 90 days following the effective date of
the registration statement utilized in connection with such registration under
the Securities Act.
"EFFECTIVE DATE" shall mean the later of (i) the Effective Date as
such
term is defined in Section XIII of the Settlement Agreement and (ii) the date
on
which the Shareholder has transferred shares of Xxxxxxxxxx Common Stock to the
Champion Shareholders in accordance with Section I. A. of the Settlement
Agreement .
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"GROUP" shall have the meaning assigned to such term in Rule 13d-3 of
the Exchange Act as amended from time to time.
"INDEPENDENT DIRECTORS" shall mean those directors of the Board who
are
not Shareholder Directors, Champion Directors or officers of Xxxxxxxxxx or any
of its Subsidiaries and who do not have, and have not had during the two (2)
years preceding election as a director, any business, employment, financial,
familial or other relationship with Xxxxxxxxxx (other than being a director),
an
affiliate of Xxxxxxxxxx, the Shareholder, a Champion Shareholder, a person
owning three percent (3%) or more of the voting securities of Xxxxxxxxxx, a
director or officer of Xxxxxxxxxx, or a significant supplier or payor of
Xxxxxxxxxx.
"ORIGINAL AGREEMENT" shall have the meaning specified in the Recitals
hereof.
"XXXXXXXXXX COMMON STOCK" shall mean the common stock, no par value
per
share, of Xxxxxxxxxx.
"PARK NOTE" shall mean the $7.2 million subordinated note, dated
August
30, 1996, issued by Xxxxxxxxxx to the Shareholder.
"PERSON" shall mean an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization,
including
a governmental or political subdivision or an agency or instrumentality
thereof.
"PIGGYBACK REGISTRATION "shall have the meaning specified in Section
9(a) hereof.
4
"PIGGYBACK REGISTRATION REQUEST "shall have the meaning set forth in
Section 9(a) hereof.
"QUALIFIED PARTIES" shall mean any (i) trust described in Section 664
of the Code (or any substantially similar entity under non-U.S. tax laws) of
which the Shareholder or any of its Affiliates or Associates, or Family Members
of the Shareholder or any of its Affiliates or Associates, are income
beneficiaries and (ii) any charitable organization described in Section 501 (c)
(3) of the Code (or any substantially similar entity under non-U.S. tax laws),
in both cases that is or simultaneously agrees to be bound on the same basis as
the Shareholder under this Agreement.
"REGISTRATION SHARES" shall mean (i) any of the 20,906,742 shares of
Xxxxxxxxxx Common Stock Beneficially Owned by the Shareholder upon the closing
of the transactions contemplated by the Settlement Agreement, (ii) any shares
of
Xxxxxxxxxx Common Stock or other securities of Xxxxxxxxxx issued (or issuable
on
the conversion or exercise of any warrant, right or other security which is
issued) as a dividend or other distribution with respect to, or in exchange for
or in replacement of, any shares of Xxxxxxxxxx Common Stock referred to in
clause (i) as contemplated by Section 16 hereof and (iii) any shares of
Xxxxxxxxxx Common Stock issued to the Shareholder upon conversion of the Park
Note.
"REGISTRATION EXPENSES "shall have the meaning set forth in Section 14
hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall have the meaning set forth in Section 14
hereof.
"SETTLEMENT AGREEMENT" shall have the meaning specified in the
Recitals
hereof.
"SHAREHOLDER" shall, in addition to the meaning ascribed thereto in
the
first paragraph hereof, mean and include (i) Park-Hospital GmbH, (ii)
Xxxxxxxxxx-Kliniken-Deutschland GmbH, (iii) the trustees and beneficiaries of
the Estates of Xx. Xxxxxxx Xxxxxxxxxx, (iv) Xx. Xxxxxxx X. Xxxxxxxxxx, (v) any
member of the immediate family of Xx. Xxxxxxx X. Xxxxxxxxxx (including, without
limitation, his stepmother, brother, sister, children and wife) and any
Affiliate of any of the Persons identified in (i) through (v).
"SUBSIDIARY" shall mean, with respect to any Person, any entity at
least fifty percent (50%) of the Voting Securities of which are owned directly
or indirectly by such Person.
"SURVIVING COMPANY MERGER" shall mean any merger or other business
combination or reorganization (i) where the transaction has been approved by a
unanimous vote of the entire
5
Board or (ii) where the holders of Voting Securities of Xxxxxxxxxx prior to
such
transaction will beneficially own (solely for the purpose of this definition,
as
determined pursuant to Rule 13d-3 or rule 13d-5 of the Exchange Act) in the
aggregate at least sixty percent (60%) of the surviving corporation's Total
Voting Power immediately giving effect to such transaction.
"TRANSFER" shall mean any direct or indirect sale, transfer,
assignment, pledge, hypothecation, mortgage, or other disposition, including
those by operation or succession of law, merger or otherwise, or any
encumbrance
(other than encumbrances arising by operation of law).
"TOTAL VOTING POWER" shall mean the non-diluted aggregate number of
votes that may be cast by the holders of outstanding Voting Securities.
"VOTING SECURITIES" shall mean all securities entitled to vote in the
ordinary course in the election of directors or of Persons serving in a similar
governing capacity, including the voting rights attached to such securities and
rights or options to acquire such securities.
"WHOLLY-OWNED SUBSIDIARY" shall mean, with respect to any Person, a
Subsidiary all of the Voting Securities of which are owned, directly or
indirectly, by such Person.
(b) For the purposes of this Agreement, the following terms
shall have the meanings assigned to them in the corresponding Sections
of this Agreement:
"Acceptance Notice" Section 5 (b)
"Amended Proposal Notice" Section 5 (a)
"Eligible Person" Section 7 (a)
"Family Members" Section 4 (h)
"Heirs" Section 4 (h)
"Offer Price" Section 5 (a)
"Proposal Notice" Section 5 (a)
"Shareholder Directors" Section 7 (a)
"Shareholder Proposal" Section 5 (a)
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SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The
Shareholder represents and warrants to Xxxxxxxxxx that:
(a) the execution, delivery and performance of this Agreement by the
Shareholder have been duly and validly authorized by all necessary corporate
action and, assuming due execution by Xxxxxxxxxx, this Agreement is a legal,
valid and binding obligation, enforceable against the Shareholder in accordance
with its terms;
(b) this Agreement has been duly executed and delivered by the
Shareholder and, assuming due execution by Xxxxxxxxxx, this Agreement is a
legal, valid and binding obligation, enforceable against the Shareholder in
accordance with its terms; and
(c) the execution, delivery and performance by the Shareholder of this
Agreement do not and will not contravene or conflict with any provision of any
law, regulation, judgment, injunction, order or decree binding upon the
Shareholder or any agreement, contract or other instrument to which the
Shareholder is a party, other than any such contraventions or conflicts that
would not prevent or materially delay the performance of the Shareholder's
obligations hereunder.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF XXXXXXXXXX. Xxxxxxxxxx
represents and warrants to the Shareholder that:
(a) the execution, delivery and performance of this Agreement by
Xxxxxxxxxx have been duly and validly authorized by all necessary corporate
action and, assuming due execution by the Shareholder, this Agreement is a
legal, valid and binding obligation, enforceable against Xxxxxxxxxx in
accordance with its terms;
(b) the execution, delivery and performance by Xxxxxxxxxx of this
Agreement do not and will not contravene or conflict with the certificate of
incorporation or bylaws of Xxxxxxxxxx, any provision of any law, regulation,
judgment, injunction, order or decree binding upon Xxxxxxxxxx or any agreement,
contract or other instrument to which Xxxxxxxxxx is a party, other than any
such
contraventions or conflicts that would not prevent or materially delay the
performance of Xxxxxxxxxx' obligations hereunder; and
(c) the Settlement Agreement is in full force and effect against
Xxxxxxxxxx, there has been no notice (or, to its knowledge, threat) of
termination of such agreement and it has no reason to believe that the
Settlement Agreement is not in full force and effect against the Champion
Shareholders.
SECTION 4. VOTING SECURITY TRANSFERS. For a period of two (2) years
after the date of this Agreement, the Shareholder shall not, and shall not
suffer or permit any of its Affiliates or
7
Associates to, Transfer, in any single transaction or group of related
transactions, any Voting Securities of Xxxxxxxxxx, except for a Transfer that
complies with any of the following subsections:
(a) to any other Person which is included within the definition of
Shareholder in Section 1 hereof; provided, that such transferee Shareholder
becomes a party to this Agreement on substantially the same terms as the
transferring Shareholder;
(b) to any Person such that, after such Transfer, such Person,
together
with the Affiliates and Associates of such Person, will not Beneficially Own,
after giving effect to such Transfer, Voting Securities of Xxxxxxxxxx
constituting 25% or more of the Total Voting Power of Xxxxxxxxxx; provided
that,
so long as this Section 4 is in effect, the Shareholder, or any Affiliates or
Associates of the Shareholder, shall not in any case, form, join or participate
in or encourage the formation of a Group with such Person, or any Affiliates or
Associates of such Person, of which the members, together with all of such
members' respective Affiliates and Associates, will, together with the
Shareholder and all Affiliates and Associates of the Shareholder, Beneficially
Own 25% or more of the Total Voting Power of Xxxxxxxxxx;
(c) in a bona fide pledge of such Voting Securities to a financial
institution to secure borrowings as permitted by applicable laws, rules and
regulations; provided, that, if such pledge results in a pledge of more than
25%
of the Total Voting Power of Xxxxxxxxxx to such financial institution, such
financial institution agrees to be bound by the obligations of the Shareholder
under this Agreement (but shall not have any of the rights of the Shareholder
under this Agreement until such pledgee acquires such Voting Securities upon
foreclosure pursuant to the terms of the pledge agreement, in which case such
pledgee may transfer such Voting Securities in accordance with this Section 4
as
if such pledgee were the Shareholder hereunder and cause a transferee to have
all rights and obligations of the Shareholder hereunder);
(d) to underwriters in connection with an underwritten public offering
of such Voting Securities on a firm commitment basis registered under the
Securities Act pursuant to which the sale of such Voting Securities will be in
a
manner to effect a broad distribution;
(e) to Xxxxxxxxxx or a Wholly-Owned Subsidiary of Xxxxxxxxxx;
(f) to a Person so long as either immediately after or simultaneously
with the acquisition of such Voting Securities, such Person or an Affiliate of
such Person makes an Acquisition Proposal to acquire all outstanding Shares at
the same price and on equivalent terms offered to the Shareholder's Affiliates
and Associates that is made in compliance with the Exchange Act and the rules
and regulations thereunder; provided, that (i) other than with respect to the
Shares to be Transferred by the Shareholder or the Shareholder's Affiliates or
Associates, such Person may not purchase any Shares in the Acquisition Proposal
and the Acquisition Proposal may not otherwise be consummated unless it is
approved and recommended (and,
8
immediately prior to consummation of the Acquisition Proposal, continues to be
recommended) by a majority of the Independent Directors, (ii) if the
Acquisition
Proposal is a tender or exchange offer that is approved and recommended (and,
immediately prior to consummation of the Acquisition Proposal, continues to be
recommended) by a majority of the Independent Directors, the terms of such
tender shall provide that such Person shall, and such Person shall be required
to, accept for payment and purchase all Shares validly tendered and not
withdrawn upon expiration of the offer if a majority of the Shares are validly
tendered and not withdrawn upon expiration of the offer and (iii) such Person
shall agree to be bound on the same terms as the Shareholder by all obligations
of the Shareholder under this Agreement.
(g) to any Qualified Parties; provided, that (i) at the time of such
Transfer, the Shareholder or any of its Affiliates or Associates constitute a
sufficient number of the directors or trustees, as the ease may be, of such
Qualified Parties to permit approval of matters by such Qualified Parties
without the approval of any other director or trustee of such Qualified
Parties;
(h) in the case of a Transfer by a Person who is a natural Person, a
Transfer (A) in the case of the death of such a Person, to such Person's
executors, administrators, testamentary trustees, heirs, devisees, intestates
and legatees ("HEIRS") and (B) to such Person's current or future spouse,
parents, siblings or descendants of such parents', siblings' or spouses (the
"FAMILY MEMBERS"), provided that such Heirs and Family Members, as the case may
be, simultaneously agree to be bound on the same terms as the Shareholder to
all
of the obligations of the Shareholder under this Agreement; or
(i) to any Person in connection with an Approved Acquisition Proposal
or Surviving Company Merger.
SECTION 5. RIGHT OF FIRST OFFER.
(a) NOTIFICATION. After the Effective Date, Xxxxxxxxxx will
not enter into or recommend any Approved Acquisition Proposal without
first notifying the Shareholder in writing (a "PROPOSAL NOTICE") of
such Approved Acquisition Proposal and providing the Shareholder
(including for purposes of this Section 5, Affiliates of such
Shareholder) the opportunity (as hereinafter provided) to consummate
an
Acquisition Proposal on terms substantially equivalent to and, if the
Approved Acquisition Proposal is a cash offer, at a cash price or, if
the Approved Acquisition Proposal includes non-cash consideration, at
a
price (in either case, the OFFER PRICE) equal to the sum of the amount
of any cash plus the fair market value of any other consideration
offered in such prospective Approved Acquisition Proposal, as the same
may be amended or modified from time to time (a "SHAREHOLDER
PROPOSAL"). The Proposal Notice shall set forth the identity of the
proposed purchaser and the material terms of the proposed Approved
Acquisition Proposal. In the event that the proposed Approved
Acquisition Proposal is amended or modified,
9
Xxxxxxxxxx shall promptly notify the Shareholder in writing (an
"AMENDED PROPOSAL NOTICE"); provided, however, that, if the
Shareholder
does not provide an Acceptance Notice (as defined below) after receipt
of a Proposal Notice or any required Amended Proposal Notice, no
Amended Proposal Notice will be required unless the terms of such
amendments or modifications are less favorable in any material
respects
to Xxxxxxxxxx than those contained in the Proposal Notice or any prior
Amended Proposal Notices. Any required Amended Proposal Notice shall
set forth the identity of the proposed purchaser and the material
terms
of the amended or modified proposed Approved Acquisition Proposal.
(b) RESPONSE. Within six (6) business days after receipt of
the Proposal Notice or any required Amended Proposal Notice, the
Shareholder shall notify (an "ACCEPTANCE NOTICE") the Board in writing
of his good faith intention to enter into negotiations regarding a
Shareholder Proposal pursuant to subsection (c) below. The failure to
notify the Board in such period shall constitute notice of the
Shareholder's intention not to pursue a Shareholder Proposal. If the
Shareholder fails to deliver an Acceptance Notice after the Proposal
Notice or, if applicable, the Amended Proposal Notice, (i) the Board
shall have the right to approve and recommend the Approved Acquisition
Proposal to the shareholders of Xxxxxxxxxx and (ii) Xxxxxxxxxx shall
have the right to enter into such agreements and take such actions in
furtherance of consummating, and to consummate, the Approved
Acquisition Proposal at the Offer Price at any time within one year
from the date the Approved Acquisition Proposal was first made to
Xxxxxxxxxx.
(c) NEGOTIATION. For a period of fifteen (15) days from the
date of the last Acceptance Notice, the Shareholder shall have the
non-exclusive right to negotiate the Shareholder Proposal in good
faith
with the Directors of the Board other than the Shareholder Directors
(the "NON-SHAREHOLDER DIRECTORS") and their representatives. If at the
end of that fifteen (15) day period, a majority of the Non-Shareholder
Directors shall in the good faith exercise of their fiduciary duties
determine that the competing Approved Acquisition Proposal is superior
to the Shareholder Proposal or if the Shareholder Proposal is accepted
and is then terminated in accordance with its terms, (i) the Board
shall have the right to approve and recommend such competing Approved
Acquisition Proposal to the shareholders of Xxxxxxxxxx and (ii)
Xxxxxxxxxx shall have the right to enter into such agreements and take
such actions in furtherance of consummating, and to consummate, such
competing Approved Acquisition Proposal at the Offer Price at any time
within one year from the date the Acquisition Proposal was first made
to Xxxxxxxxxx.
(d) NON-CASH VALUATION. If the consideration offered by the
prospective purchaser or transferee or, if permitted, offered by the
Shareholder, includes non-cash consideration, Xxxxxxxxxx and the
Shareholder shall in good faith seek to agree upon the value of such
non-cash consideration. If Xxxxxxxxxx and the Shareholder fail to
agree
on
10
such value within fifteen (15) days following receipt by the
Shareholder of the Proposal Notice, then a majority of the
Non-Shareholder Directors and the Shareholder shall appoint a
nationally recognized investment banking firm mutually acceptable to a
majority of the Non-Shareholder Directors and the Shareholder which
shall resolve the issues in dispute; provided, that if a majority of
the Non-Shareholder Directors and the Shareholder cannot agree on an
investment banking firm then each shall appoint a nationally
recognized
investment banking firm which together shall within five business days
mutually agree on another nationally recognized investment banking
firm
to which the items in dispute shall be referred and which shall make a
final and binding determination within ten days. The value of any
securities shall be the fair market value of such securities and the
value of any property other than securities shall be the fair market
value of such property. If a determination under this paragraph (d) is
required, any deadline for acceptance provided for in this Section
shall be postponed until the third business day after the date of such
determination. The Shareholder and Xxxxxxxxxx shall share equally in
payment of all expenses of such investment banking firms. All
determinations made pursuant to this paragraph (c) shall be final and
binding on Xxxxxxxxxx and the Shareholder.
(e) LIMITATION. It is agreed and understood that the
provisions of this Section shall inure to the benefit of only
Xxxxxxxxxx and the Shareholder and not to the benefit of any other
Person which is not deemed to be a Shareholder under this Agreement.
SECTION 6. AGREEMENT TO SELL VOTING SECURITIES. Subject to the rights
of the Shareholder to propose, negotiate and consummate a Shareholder Proposal
in accordance with Section 5, the Shareholder agrees that the Shareholder will,
and will cause any Affiliates or Associates of the Shareholder to, sell in,
tender into and vote in favor of, as the case may be, any Approved Acquisition
Proposal or any Shareholder Proposal approved by the Board of Directors in
accordance with Section 5, all Voting Securities of Xxxxxxxxxx Beneficially
Owned by the Shareholder or any Affiliate or Associate of the Shareholder. It
is
agreed and understood that the provisions of this Section shall not be binding
upon any Person other than the Shareholder so long as, if the Shareholder
continues to be subject to this Agreement, such Person is not an Affiliate or
Associate of the Shareholder.
SECTION 7. BOARD REPRESENTATION.
(a) THE BOARD; SHAREHOLDER DIRECTORS. The Board, as soon as
practicable after the date of this Agreement but no later than the
Effective Date, and during the term of this Agreement, shall number
nine directors. The Board shall be divided into three classes, with
the
number of directors divided as equally as possible among those
classes.
The Shareholder may request that Xxxxxxxxxx include, and Xxxxxxxxxx
shall include, as the Board's nominees for directors to be submitted
to
a shareholder vote, up to three (3) persons designated by the
Shareholder who are Eligible Persons (the "SHAREHOLDER
11
DIRECTORS"), one of whom shall be a Class I director with an original
term expiring in 2000, one of whom shall be a Class II director with
an
original term expiring in 2001 and one of whom shall be a Class III
director with an original term expiring in 1999/2002. As soon as
practicable after the date of this Agreement and no later than the
Effective Date, the following persons shall be the initial Shareholder
Directors, to act as such until their successors are duly elected and
qualified: __________________ (Class I), Xx. Xxxxxx Xxxxx zu Losebeck
(Class II) and Mr. Xxxxxxxxx Xxxxx (Class III; term expiring in 1999).
If the Shareholder, together with the Affiliates and Associates of the
Shareholder, shall cease to Beneficially Own at least (i) 20% of the
Total Voting Power of Xxxxxxxxxx, the Shareholder shall only be
entitled to request that Xxxxxxxxxx include, and Xxxxxxxxxx shall only
be required to include, as the Board's nominees for directors to be
submitted to a shareholder vote, two (2) Shareholder Directors, (ii)
10% of the Total Voting Power of Xxxxxxxxxx, the Shareholder shall
only
be entitled to request that Xxxxxxxxxx include, and Xxxxxxxxxx shall
only be required to include, as the Board's nominees for directors to
be submitted to a shareholder vote, one (1) Shareholder Director and
(iii) 5% of the Total Voting Power of Xxxxxxxxxx, the Shareholder
shall
not be entitled to request that Xxxxxxxxxx include, and Xxxxxxxxxx
shall not be required to include, as nominee for the Board slate
recommended by the Board, any Shareholder Director.
For the purposes hereof, an "ELIGIBLE PERSON" shall mean any
person who is designated by the Shareholder, other than a person whose
election to the Board, in the written opinion of counsel for
Xxxxxxxxxx, is reasonably likely to violate or be in conflict with, or
result in any material limitation on the ownership or operation of any
business or assets of Xxxxxxxxxx or its Subsidiaries under, any
statute, law, ordinance, regulation, rule, judgment, decree or order
of
any court or governmental or regulatory authority, and who has agreed
in writing with Xxxxxxxxxx, subject to his or her fiduciary duties, to
comply with the provisions of this Section.
(b) COMMITTEES; QUORUM. Each committee of the Board shall
contain such numbers of Shareholder Directors so that the number of
Shareholder Directors, when taken together, on each such committee
shall be as nearly as possible proportional to the total number of
Shareholder Directors on the Board; provided, however, that the
foregoing shall not apply to the audit committee (which shall be
comprised solely of Independent Directors) or the compensation
committee (which shall be comprised of one Independent Director and
one
director who is not an employee of Xxxxxxxxxx or its Subsidiaries and,
for so long as the Shareholder is entitled to nominate Shareholder
Directors pursuant to this Agreement, one Shareholder Director). The
quorum required for the transaction of business by the Board shall
include at least one Shareholder Director and one director who is an
Independent Director, or their designees, attending in person or, if
necessary, via teleconference call.
12
(c) RESIGNATION. Upon the Shareholder ceasing to Beneficially
Own, together with all Affiliates and Associates of the Shareholder,
at
least 20% of the Total Voting Power of Xxxxxxxxxx, Xxxxxxxxxx may
request that one of the Shareholder Directors (to be chosen by the
Shareholder) then on the Board resign as director of Xxxxxxxxxx and,
upon such request by Xxxxxxxxxx, the Shareholder shall use its best
efforts to cause such Shareholder Director to promptly resign, and
thereupon relinquish all rights and privileges as a member of the
Board. Upon the Shareholder ceasing to Beneficially Own, together with
all Affiliates and Associates of the Shareholder, at least 10% of the
Total Voting Power of Xxxxxxxxxx, Xxxxxxxxxx may request that a second
Shareholder Director (to be chosen by the Shareholder) then on the
Board resign as director of Xxxxxxxxxx, and upon such request by
Xxxxxxxxxx, the Shareholder shall use its best efforts to cause such
Shareholder Director to promptly resign and thereupon relinquish all
rights and privileges as a member of the Board. Upon the Shareholder
ceasing to Beneficially Own, together with all Affiliates and
Associates of the Shareholder, at least 5% of the Total Voting Power
of
Xxxxxxxxxx, Xxxxxxxxxx may request that all or any of the Shareholder
Directors then on the Board resign as directors of Xxxxxxxxxx at the
next annual shareholder meeting for election to their respective
class,
and upon such request by Xxxxxxxxxx, the Shareholder shall use its
best
efforts to cause such Shareholder Directors to promptly resign and
thereupon relinquish all rights and privileges as a member of the
Board.
(d) MANAGEMENT DIRECTORS. One member of the Board will be a
director who is an officer of Xxxxxxxxxx and who is not an Independent
Director, a Shareholder Director or a Champion Director.
(e) INDEPENDENT DIRECTORS. Immediately following the
Effective
Date, two members of the Board will be Independent Directors. One of
such Independent Directors shall be a Class I Director with an
original
term expiring in 2000 and one of such Independent Directors shall be a
Class III director with any original term expiring in 2002. Vacancies
among the Independent Directors occurring prior to the expiration of
their respective terms of office shall be filled by a vote of
seventy-five percent (75%) of the entire remaining Board. Independent
Directors to be nominated for election at a shareholder meeting of
Xxxxxxxxxx will be nominated by a vote of seventy-five percent (75%)
of
the entire Board.
(f) EFFORTS TO NOMINATE AND ELECT DIRECTORS. Xxxxxxxxxx shall
nominate and shall use its best efforts to take and cause to be taken
all necessary action (corporate and other) to elect to the Board the
individuals required to be nominated for election as directors in
accordance with the terms hereof. The Shareholder shall nominate and
shall use its best efforts, and shall use best efforts to cause the
Shareholder Directors and the Affiliates and Associates of the
Shareholder to use their respective reasonable efforts, to take and
cause to be taken all necessary action (corporate and other), which
efforts shall
13
include the voting of all Voting Securities Beneficially Owned by the
Shareholder and the Affiliates and Associates of the Shareholder and
voting, subject to his or her fiduciary duties, as a Shareholder
Director, to nominate and elect to the Board the individuals nominated
by the board in accordance with any nomination provisions hereof then
in effect and the terms of any employment contracts between Xxxxxxxxxx
and its executive officers so long as such employment agreements
remain
in effect.
SECTION 8. DEMAND REGISTRATIONS.
(a) REQUESTS FOR REGISTRATION. At any time during the period
commencing
on the date which is one year after the Effective Date and ending on the date
on
which the Shareholder ceases to Beneficially Own, together with all Affiliates
and Associates of the Shareholder, at least 10% of the outstanding Xxxxxxxxxx
Common Stock, the Shareholder may request that the Company register under the
Securities Act all or any portion of such Registration Shares held by the
Shareholder for sale in the manner specified in such request (provided that the
aggregate number of such Registration Shares requested to be registered shall
have an aggregate fair market value, based on the Current Market Price of such
shares as of the date of such request, of at least $5,000,000 or shall consist
of at least 200,000 Registration Shares). Any such request shall be in a
writing
and will designate the specific number of Registration Shares proposed to be
sold by the Shareholder and the proposed plan of distribution for such
Registration Shares (a "DEMAND REGISTRATION REQUEST") All registrations
requested pursuant to this Section 8 are referred to herein as "DEMAND
REGISTRATIONS."
(b) NUMBER OF DEMAND REGISTRATIONS. The Company shall not be required
to effect more than two (2) Demand Registrations of Registration Shares
pursuant
to this Section 8, no more than one (1) of which may be requested prior to the
date which is two years after the Effective Date. Notwithstanding anything to
the contrary contained herein, a registration shall count as a Demand
Registration only when (i) a registration statement covering all Registration
Shares as to which registration has been requested shall have become effective
and (A) if the method of disposition is not a firm commitment underwritten
public offering, the Company has maintained the effectiveness of such
registration statement for a period not to exceed 90 days or (B) if such method
of disposition is a firm commitment underwritten public offering, (y) all such
Registration Shares shall have been sold pursuant thereto (unless such
Registration Shares have not been sold as a result of some act or omission by
the Shareholder) or (z) the applicable registration statement shall have been
effective for at least ninety (90) days and the Shareholder has not paid or
reimbursed the Company for all Registration Expenses and Selling Expenses
incurred by the Company in connection therewith; provided, however, that in any
such case, if, after such registration statement has become effective, the
offering of the Registration Shares pursuant thereto is interfered with by any
stop order, injunction or action of the Commission or other governmental agency
not occasioned by the fault of the Shareholder, a Demand Registration shall be
deemed not to have been effected unless such stop order, injunction or other
order or
14
request shall have been vacated or otherwise removed, or (ii) a registration
statement filed by the Company pursuant to a request for a Demand Registration
shall be abandoned or withdrawn upon the request of the Shareholder, unless the
Shareholder elects to pay (or reimburse) all Registration Expenses and Selling
Expenses (if any) incurred by the Company in connection therewith.
(c) SELECTION OF UNDERWRITERS. If the method of disposition specified
by the Shareholder in the Demand Registration Request is an underwritten public
offering, the Company may designate the managing underwriter(s) of such
offering, which designation shall be made after reasonable consultation with
the
Shareholder.
(d) PRIORITY ON DEMAND REGISTRATIONS. The Company shall be entitled to
include in any registration statement referred to in this Section 8, for sale
in
accordance with the method of disposition specified by the Shareholder in
connection with a Demand Registration, shares of Xxxxxxxxxx Common Stock to be
sold by the Company for its own account or by other shareholders of the Company
for their account, except that if the managing underwriter(s) advise the
Company
in writing that in their opinion the number of securities requested to be
included in such registration exceeds the number which can be sold in such
offering without adversely affecting the marketability of the offering, then
the
Company will include in such registration (i) first, the Registration Shares
requested to be registered by the Shareholder, (ii) second, securities the
Company proposes to sell and (iii) third, other securities requested to be
included in such registration.
(e) SUBSEQUENT REGISTRATION RIGHTS. From and after the date hereof,
the
Company shall not, without the prior written consent of the holders of a
majority of the Registration Shares, enter into any agreement with any holder
or
prospective holder of any securities of the Company that would allow such
holder
or prospective holder to require the Company to include shares or securities in
any Demand Registration unless under the terms of such agreement such holder or
prospective holder may include such securities in any such registration only to
the extent that the inclusion of such securities will not reduce the amount of
Registration Shares registered in connection with such Demand Registration.
(f) EXCEPTIONS TO DEMAND REGISTRATIONS. Notwithstanding anything in
this Section 8 to the contrary, the Company shall not be required to file a
registration statement in connection with a Demand Registration (i) within six
months after the effective date of a registration statement filed in connection
with any other Demand Registration or a Piggyback Registration provided that
(A)
the Shareholder shall have been afforded the opportunity to sell Registration
Shares pursuant to such registration statement, (B) all Registration Shares
requested to be registered shall have been so registered and, (C) if such
registration statement shall relate to an underwritten public offering, all
Registration Shares requested to be registered shall have been included therein
to the extent so requested, (ii) if counsel for the Company shall deliver an
opinion reasonably acceptable to the Shareholder that, pursuant to Rule 144
under the Securities Act or
15
otherwise, the Shareholder can publicly sell all the Registration Shares as to
which registration has been requested without registration under the Securities
Act, (iii) the Company elects within 15 days after receiving a request for a
Demand Registration to purchase all but not less than all of the Registration
Shares as to which registration has been requested at a price per share equal
to
the Current Market Price, and the Company closes such purchase within 30 days
after delivery of written notice to the Shareholder that the Company has
elected
to purchase such Registration Shares or (iv) the Board makes a good faith
determination that filing a registration statement, or continuing to permit
offers and sales pursuant to an effective registration statement filed pursuant
to Section 8 hereof, is not in the best interests of the Company or its
shareholders (including because of the reason in Section 8(e)(i)) and delivers
written notice to such effect to the Shareholder or holder whose shares are
registered pursuant to such effective registration statement; provided,
however,
that (A) any such deferral of the filing of the registration statement shall
not
exceed a period equal to 60 days after the date of the Demand Registration
Request or (B) (1) any such suspension of offers and sales under an effective
registration statement shall not exceed a period equal to 60 days after the
date
on which the Company gives notice of such suspension to the Shareholder and (2)
the Company shall not be permitted to suspend such offers and sales for more
than 60 days during any six-month period.
SECTION 9. PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. If the Company at any time (other than
pursuant
to a Demand Registration) proposes to register any of its Xxxxxxxxxx Common
Stock or other equity securities under the Securities Act for sale to the
public
for its own account or for the account of other shareholders or both (except
with respect to registration statements on Form S-4 or Form S-8 or another form
not available for registering the Registration Shares for sale to the public)
(a
"PIGGYBACK REGISTRATION"), the Company will promptly (but in any event at least
30 days prior to the filing of the registration statement) give written notice
to the Shareholder of its intention to effect such registration. Upon the
written request of the Shareholder, given within 15 days after receipt of such
notice, to register any of the Shareholder's Registration Shares (a "PIGGYBACK
REGISTRATION REQUEST"), the Company will use its reasonable efforts to cause
the
Registration Shares as to which registration shall have been so requested to be
included in the securities to be covered by the registration statement proposed
to be filed by the Company. Any Registration Shares requested to be registered
in connection with a Piggyback Registration shall be sold under the same method
of distribution as the shares of Xxxxxxxxxx Common Stock being sold by the
Company or such other shareholders.
(b) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company and the managing
underwriter(s) advise the Company in writing that in their opinion the number
of
securities requested to be included in such registration exceeds the number
which can be sold in such offering without adversely affecting the
marketability
of the offering, the Company will include in such registration (i) first, the
16
securities the Company proposes to sell and (ii) second, the Registration
Shares
requested to be included in such registration and other securities requested to
be included in such registration, pro rata among the holders of such securities
on the basis of the number of securities requested to be registered by each
such
holder.
(c) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration
is
an underwritten secondary registration on behalf of holders of the Company's
securities and the managing underwriter(s) advise the Company in writing that
in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting the marketability of the offering, the Company will include
in such registration (i) first, the securities requested to be included therein
by the holders requesting such registration and (ii) second, the Registration
Shares requested to be included in such registration and any other securities
requested to be included in such registration, pro rata among the holders of
such securities on the basis of the number of securities requested to be
registered by each such holder.
(d) ADDITIONAL RIGHTS. The right to Piggyback Registration provided in
this Section 9 is in addition to and not in lieu of the right to Demand
Registration provided in Section 8. The provisions of this Section 9 shall
apply
even though the Shareholder at the time it requests Piggyback Registration
pursuant to this Section 9 is permitted to sell any or all of the Registration
Shares with respect to which such registration was requested under Rule 144 (or
any similar rule or regulation) promulgated under the Securities Act.
SECTION 10. HOLDBACK AGREEMENTS. The Shareholder agrees not to effect
any public sale or distribution (including sales pursuant to Rule 144) of
equity
securities of the Company, or any securities convertible into or exchangeable
or
exercisable for such securities, during the seven (7) days prior to (provided
that the Shareholder receives a notice from the Company of the commencement of
such 7-day period) and the 90-day period beginning on the effective date of any
underwritten Demand Registration or any underwritten Piggyback Registration in
which Registration Shares are included (except as part of such underwritten
registration), unless the underwriter(s) managing the registered public
offering
otherwise agree.
SECTION 11. REGISTRATION PROCEDURES. If and whenever the Company is
required by the provisions of Section 8 or 9 hereof to effect the registration
of any Registration Shares, the Company will, as expeditiously as practicable:
(a) prepare and file with the Commission a registration statement on
the applicable form with respect to such Registration Shares and use its
reasonable best efforts to cause such registration statement to become and
remain effective for the Distribution Period, but no longer;
17
(b) notify the Shareholder promptly after it has received notice of
the
time when such registration statement has become effective or any supplement to
any prospectus forming a part of such registration statement has been filed;
(c) notify the Shareholder promptly of any request by the Commission
for the amending or supplementing of such registration statement or prospectus
or of additional information;
(d) prepare and file with the Commission, and promptly notify the
Shareholder of such filing, 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 for the Distribution Period, but no
longer, and to comply with the provisions of the Securities Act with respect to
the dispositions of all Registration Shares covered by such registration
statement;
(e) prepare and file with the Commission promptly upon the request of
the Shareholder during the Distribution Period only, any amendments or
supplements to such registration statement or prospectus which, in the
reasonable opinion of counsel for the Shareholder and counsel for the Company,
is required under the Securities Act or the rules and regulations thereunder in
connection with the distribution of the Registration Shares by the Shareholder;
(f) furnish to the Shareholder and to each underwriter such number of
copies of the registration statement and the prospectus included therein
(including each preliminary prospectus) and such other documents, as such
persons may reasonably request in order to facilitate the public sale or other
disposition of the Registration Shares covered by such registration statement;
(g) use its reasonable best efforts to register or qualify the
Registration Shares covered by such registration statement under the securities
or blue sky laws of such jurisdictions as the Shareholder or, in the case of an
underwritten public offering, the managing underwriter(s), shall reasonably
request; provided, however, that the Company shall not for any purpose be
required to execute a general consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction where it is not so
qualified;
(h) to the extent the Company has such knowledge, immediately notify
the Shareholder and each underwriter at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event as a result of which the prospectus contained in such registration
statement, as then in effect, includes an untrue statement of a material fact
or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing and, upon the reasonable request of the Shareholder or underwriter
during the Distribution Period, prepare and file an amendment or supplement to
such prospectus to correct such misstatement or omission;
18
(i) advise the Shareholder and the managing underwriter(s), if any,
after the Company shall receive notice or otherwise obtain knowledge of the
issuance of any stop order by the Commission suspending the effectiveness of
the
registration statement or amendment thereto or of the initiation or threatening
of any proceeding for that purpose and (iii) use its reasonable best efforts to
prevent the issuance of any stop order or to obtain its withdrawal promptly if
a
stop order should be issued;
(j) if the offering is underwritten, to furnish, at the request of the
Shareholder, on the date that Registration Shares are delivered to the
underwriters for sale pursuant to such registration: (i) an opinion dated such
date of counsel representing the Company for the purposes of such registration,
addressed to the underwriters, stating that such registration statement has
become effective under the Securities Act and that (A) to the knowledge of such
counsel, no stop order suspending the effectiveness thereof has been issued and
no proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act, (B) the registration statement, the
related prospectus, and each amendment or supplement thereof, comply as to form
in all material respects with the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder (except that such
counsel need express no opinion as to financial statements or financial or
statistical data contained therein) and (C) to such other effects as may
reasonably be requested by counsel for the underwriters or by the Shareholder
or
its counsel, and (ii) a letter dated such date from the independent public
accountants retained by the Company, addressed to the underwriters, stating
that
they are independent public accountants within the meaning of the Securities
Act
and that, in the opinion of such accountants, the financial statements of the
Company included in the registration statement or the prospectus, or any
amendment or supplement thereof, comply as to form in all material respects
with
the applicable accounting requirements of the Securities Act, and such letter
shall additionally cover such other financial matters (including information as
to the period ending no more than five business days prior to the date of such
letter) with respect to the registration in respect of which such letter is
being given as are customarily covered in connection with an underwritten
public
offering; and
(k) make available for inspection by the Shareholder, any underwriter
participating in any distribution pursuant to such registration statement, and
any attorney, accountant or other agent retained by the Shareholder or
underwriter, financial and other records, pertinent corporate documents and
properties of the Company as are reasonably necessary to enable them to conduct
an investigation fulfilling their due diligence responsibilities, and cause the
Company's officers, directors and employees to supply all information
reasonably
requested by any the Shareholder, underwriter, attorney, accountant or agent in
connection with such investigation.
SECTION 12. SHAREHOLDER'S COOPERATION. In connection with each
registration hereunder, the Shareholder will furnish in writing to the Company
and any underwriter participating in such offering such information with
respect
to themselves and the proposed distribution by them as shall be reasonably
necessary in order to assure compliance with federal
19
and applicable state securities laws. Reasonable compliance with the obligation
to furnish such information shall be a condition to the rights afforded the
Shareholder hereunder.
SECTION 13. UNDERWRITING AGREEMENT. In connection with each
registration pursuant to Sections 8 and 9 hereof covering an underwritten
public
offering, the Company and the Shareholder agrees to enter into a written
agreement with the managing underwriter(s) selected in the manner herein
provided in such form and containing such provisions as are customary in the
securities business for such an arrangement between underwriters and companies
of the Company's size and investment stature; provided, however, that such
agreement shall not contain any such provision applicable to the Company which
is inconsistent with the provisions hereof; provided, further, however, that
the
time and place of the closing under said agreement shall be as mutually agreed
upon between the Company and such managing underwriter(s).
SECTION 14. EXPENSES. All expenses incurred by the Company in
connection with Demand Registrations and Piggyback Registrations, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel and independent public accountants for the
Company,
fees and disbursements of counsel in connection with registration under state
securities laws, fees of the National Association of Securities Dealers, Inc.,
fees of the New York Stock Exchange (or the principal trading market or stock
exchange for the Registration Shares if other than the New York Stock
Exchange),
fees of transfer agents and registrars and costs of insurance (if any), but not
including any Selling Expenses, are herein referred to as "REGISTRATION
EXPENSES." All underwriting discounts, selling commissions, brokerage fees and
expenses and transfer taxes applicable to the sale of Registration Shares are
herein referred to as "SELLING EXPENSES."
The Company will pay all Registration Expenses in connection with any
Demand Registration or Piggyback Registration. To the extent registration has
been requested pursuant to a Demand Registration Request and such registration
does not count as a Demand Registration as provided in Section 8(b), the
Company
shall pay all Registration Expenses in connection with such registration. All
Selling Expenses in connection with any Demand Registration or Piggyback
Registration shall be borne by the Shareholder or by such persons other than
the
Company (except to the extent the Company shall be a seller) as they may agree.
SECTION 15. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. In the event of a registration of
any of the Registration Shares under the Securities Act pursuant to Section 8
or
9 hereof, the Company will indemnify and hold harmless the Shareholder, each
underwriter of Registration Shares thereunder, and each other person, if any,
who controls the Shareholder or underwriter within the meaning of the
Securities
Act, against any losses, claims, damages or liabilities, joint or several, to
which the Shareholder or underwriter or controlling person may become subject
under the Securities Act
20
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any registration
statement under which such Registration Shares were registered under the
Securities Act pursuant to Section 8 or 9, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Shareholder, each such
underwriter and each such controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company will not be liable in any such case if and
to the extent that any such loss, claim, damage or liability arises out of or
is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by the
Shareholder, such underwriter or such controlling person in writing
specifically
for use in such registration statement or prospectus.
(b) INDEMNIFICATION BY THE SHAREHOLDER. In the event of a registration
of any of the Registration Shares under the Securities Act pursuant to Section
8
or 9 hereof, the Shareholder (severally and not jointly) will indemnify and
hold
harmless the Company, and each person, if any, who controls the Company within
the meaning of the Securities Act, each officer of the Company who signs the
registration statement, each director of the Company, each underwriter and each
person who controls any underwriter within the meaning of the Securities Act,
against all losses, claims, damages or liabilities, joint or several, to which
the Company or officer or director or underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement under which such Registration
Shares were registered under the Securities Act pursuant to Section 8 or 9, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or
alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company and each such officer, director, underwriter and controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Shareholder will be liable hereunder in any such
case if and only to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in reliance upon and in conformity with
information pertaining to such seller, as such, furnished in writing to the
Company by such seller specifically for use in such registration statement or
prospectus; provided, further, however, that the liability of each selling
Shareholder hereunder shall be limited to the proceeds received by such seller
from the sale of Registration Shares covered by such registration statement.
21
(c) NOTICE. Promptly after receipt by an indemnified party hereunder
of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party
hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may
have
to any indemnified party except to the extent the indemnifying party is
prejudiced thereby. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement
thereof, the indemnifying party shall be entitled to participate in and, to the
extent it shall wish, to assume and undertake the defense thereof with counsel
reasonably satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 15 in connection with the defense
thereof other than reasonable costs of investigation and of liaison with
counsel
so selected; provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded based on advice of counsel
that there may be reasonable defenses available to it which are different from
or additional to those available to the indemnifying party or if the interests
of the indemnified party reasonably may be deemed to conflict with the
interests
of the indemnifying party, the indemnified party shall have the right to select
separate counsel (consisting of one law firm) and to assume such legal defenses
and otherwise to participate in the defense of such action, with the expenses
and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred.
Notwithstanding the foregoing, in any such action, any indemnified party shall
have the right to retain its own counsel, but the fees and disbursements of
such
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party shall have failed to retain counsel for the indemnified
party
as aforesaid; (ii) if representation of such indemnified party by the counsel
retained by the indemnifying party would, in the opinion of such counsel, be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding; or (iii) the indemnifying party and such indemnified party shall
have mutually agreed to the retention of such counsel. It is understood that
the
indemnifying party shall not, in connection with any action or related actions
in the same jurisdiction, be liable for the fees and disbursements of more than
one separate firm qualified in such jurisdiction to act as counsel for the
indemnified party. The indemnifying party shall not be liable for any
settlement
of any proceeding effected without its written consent, but if settled with
such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(d) CONTRIBUTION. If the indemnification provided for in this Section
15 is unavailable or insufficient to hold harmless a party that would have been
indemnified for such losses, claims, damages or liabilities (or actions in
respect thereof) under this Section 15, then each indemnifying party hereunder
shall, in lieu of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party in such proportion as is appropriate
to reflect the
22
relative fault of the indemnifying party on the one hand and the indemnified
party on the other in connection with the statements or omissions which
resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. The relative fault
shall
be determined by reference to, among other things, whether the untrue or
alleged
untrue statement of a material fact or the omission or alleged omission to
state
a material fact relates to information supplied by the indemnifying party on
the
one hand or the indemnified party on the other and the parties' relative
intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Shareholder of Registration Shares
agree that it would not be just and equitable if contribution pursuant to this
Section 15 were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable consideration referred
to
in this Section 15. Notwithstanding the provisions of this Section 15(d), the
Shareholder shall not be required to contribute any amount in excess of the
amount by which the total price at which the Registration Shares sold by it
exceeds the amount of any damages which the Shareholder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.
SECTION 16. CHANGES IN XXXXXXXXXX COMMON STOCK. If, and as often as,
there are any changes in the Xxxxxxxxxx Common Stock by way of stock split,
stock dividend, distribution, combination or reclassification, or through
merger, consolidation, reorganization or recapitalization, or by any other
means, appropriate adjustment shall be made in the provisions hereof, as may be
required, so that the rights and privileges granted hereby shall continue with
respect to the Xxxxxxxxxx Common Stock as so changed.
SECTION 17. SHAREHOLDER PROTECTION RIGHTS PLAN. Notwithstanding
Article
Eleventh of Xxxxxxxxxx' Amended and Restated Articles of Incorporation,
Xxxxxxxxxx covenants and agrees with the Shareholder that it will not adopt a
shareholder protection rights plan, or similar anti-takeover plan or mechanism,
without the prior approval of a majority of the Shareholder Directors.
SECTION 18. ADDITIONAL AGREEMENTS.
(a) NO AMENDMENT OR WAIVER. The Shareholder shall not, and shall cause
Affiliates and Associates of such Investor not to, publicly request Xxxxxxxxxx
or any of its agents or representatives, directly or indirectly, to amend or
waive any provision of this Agreement.
(b) FURTHER ASSURANCES. Xxxxxxxxxx and the Shareholder shall execute
and deliver such additional instruments and other documents and shall take such
further actions as may be
23
necessary or appropriate to effectuate, carry out and comply with all of the
terms of this Agreement and the transactions contemplated hereby.
(c) EFFECTIVENESS OF THIS AGREEMENT; TERMINATION OF ORIGINAL
AGREEMENT.
This Agreement shall become effective, and each of the Original Agreement and
the Xxxxxxxxxx Shareholder Registration Rights Agreement, dated August 16,
1996,
between Xxxxxxxxxx and the Shareholder shall terminate, without any further
action by the parties, upon the Effective Date.
(d) BRING-DOWN OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Shareholder and Xxxxxxxxxx shall be true and correct as
of
the Effective Date as if made at and as of such date, and each party, at the
request of the other, shall deliver a certificate on the Effective Date to such
effect.
SECTION 19. LEGENDS. (a) The Shareholder agrees that all certificates
representing the Voting Securities subject to this Agreement shall bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO A SHAREHOLDER AGREEMENT DATED MARCH __, 1999 (A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY). THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID
AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH
SAID AGREEMENT SHALL BE VOID."
(b) Upon termination this Agreement in accordance with its terms and
upon request by the Shareholder, Xxxxxxxxxx shall issue new certificates with
the foregoing legend removed.
SECTION 20. SPECIFIC PERFORMANCE. Each party hereto acknowledges that
it will be impossible to measure in money the damage to the other party if a
party hereto fails to comply with any of the obligations imposed by this
Agreement, that every such obligation is material and that, in the event of any
such failure, the other party will not have an adequate remedy at law or
damages. Accordingly, each party hereto agrees that injunctive relief or other
equitable remedy, in addition to remedies at law or damages, is the appropriate
remedy for any such failure and will not oppose the granting of such relief on
the basis that the other party has an adequate remedy at law. Each party hereto
agrees that it shall not seek, and agrees to waive any requirement for, the
securing or posting of a bond in connection with any other party's seeking or
obtaining such equitable relief.
SECTION 21. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns and, except as otherwise provided in this Agreement,
shall not be assignable (by operation of law or otherwise)
24
without the written consent of all other parties hereto; provided, that in the
event of a Surviving Company Merger where Xxxxxxxxxx is not the surviving
corporation, (x) this Agreement shall be assigned to and shall inure to the
benefit of and be binding upon such surviving corporation and (y) any reference
herein to Xxxxxxxxxx shall be deemed to be a reference to such surviving
corporation.
SECTION 22. ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement shall
supersede all prior agreements, written or oral, among the parties hereto with
respect to the subject matter hereof and contains the entire agreement among
the
parties with respect to the subject matter hereof. This Agreement may not be
amended, supplemented or modified, and no provisions hereof may be modified or
waived, except by an instrument in writing signed by Xxxxxxxxxx and approved by
the unanimous vote of the Independent Directors and, with respect to each
investor, by such investor. No waiver of any provisions hereof by any party
shall be deemed a waiver of any other provisions hereof by any such party, nor
shall any such waiver be deemed a continuing waiver of any provision hereof by
such party.
SECTION 23. MISCELLANEOUS.
(a) GOVERNING LAW AND VENUE. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH AND SUBJECT TO THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO CONFLICTS OF LAWS PRINCIPLES. The parties hereby irrevocably
submit
to the jurisdiction of the courts of the state of New York and the Federal
courts of the United States of America located in the County of New York solely
in respect of the interpretation and enforcement of the provisions of this
Agreement, and in respect of the transactions contemplated hereby, and hereby
waive, and agree not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof or of any such document, that it
is
not subject thereto or that such action, suit or proceeding may not be brought
or is not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement or any such document may not be enforced in
or by such courts, and the parties hereto irrevocably agree that all claims
with
respect to such action or proceeding shall be heard and determined in such a
State or Federal court. The parties hereby consent to and grant any such court
jurisdiction over the person of such parties and over the subject matter of
such
dispute and agree that mailing of process or other papers in connection with
any
such action or proceeding in the manner provided in Section 23(b), shall be
valid and sufficient service thereof.
(b) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given (i) on
the first business day following the date received, if delivered personally or
by telecopy (with telephonic confirmation of receipt by the addressee), (ii) on
the business day following timely deposit with an overnight courier service,
25
if sent by overnight courier specifying next day delivery and (iii) on the
first
business day that is at least five days following deposit in the mails, if sent
by first class mail, to the parties at the following addresses (or at such
other
address for a party as shall be specified by like notice):
If to the Shareholder, to:
Xxxx-Xxxxxxxx XxxX
Xx Xxxxxxxx Xxxx 00
X-00000 Xxxxxxxxx
Xxxxxxx Xxxxxxxx of Germany
Facsimile: (000) 00-000-000-0000
Attention: Managing Director
with copies to:
King & Spalding
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xx. Xxxxxxxx Xxxxxxxx
26
and to:
Xx. Xxxxxxx Xxxxxx Xxxxxxxxxx
-----------------------------
-----------------------------
, Germany
-------------------
Facsimile: (011) 49-541-
-----
If to Xxxxxxxxxx, to:
Xxxxxxxxxx Healthcare Corporation
000 Xxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Board of Directors
(c) SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (i) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (ii) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
(d) COUNTERPARTS. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original and all of which shall together constitute the same
agreement.
(e) TERMINATION.
(i) This Agreement shall terminate automatically without any
action by any party upon the earliest to occur of (A) the Shareholder, together
with all of its Affiliates and Associates, ceasing to Beneficially Own at least
5% of the Total Voting Power of Xxxxxxxxxx or (B) the Shareholder, together
with
all of its Affiliates and Associates, Beneficially Own at least 90% of the
Total
Voting Power of Xxxxxxxxxx; provided, that in the event of a termination
27
pursuant to clause A of this subsection, the Shareholder shall remain subject
to
the obligations of Sections 7(c) and 7(d).
(ii) Notwithstanding Section 23(e)(i) above, this Agreement shall
terminate immediately, without any action by any of the parties, upon
termination of the Settlement Agreement before the Effective Date.
(f) HEADINGS. All Section headings and the recitals herein are for
convenience of reference only and are not part of this Agreement, and no
construction or reference shall be derived therefrom.
(g) OTHER AGREEMENTS. The parties hereto agree that there is not and
has not been any other agreement, arrangement or understanding between the
parties hereto with respect to the matters set forth herein.
(h) THIRD PARTY BENEFICIARIES. Nothing in this Agreement, express or
implied, is intended to confer upon any third party (including any holder of
voting securities of Xxxxxxxxxx) any rights or remedies of any nature
whatsoever
under or by reason of this Agreement. Notwithstanding the above, each of
Xxxxxxxxxx and the Shareholder confirms the respective agreements between them
and the Champion Shareholders which are set forth in the Settlement Agreement,
and the rights of the Champion Shareholders to enforce the provisions set forth
in Sections 4, 6, 7 and 8 of this Agreement, in all material respects, in order
to comply with the agreements set forth in the Settlement Agreement.
28
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this
Agreement, or a counterpart hereof, as of the date first written above.
XXXXXXXXXX HEALTHCARE CORPORATION
By:
--------------------------------------
Name:
Title:
PARK-HOSPITAL GmbH
By:
--------------------------------------
Name:
Title:
