EXHIBIT 4.1
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (the "AGREEMENT") is entered into as of
September 20, 2000, by and among Veterinary Centers of America, Inc., a Delaware
corporation (the "COMPANY"), Green Equity Investors III, L.P., a Delaware
limited partnership (the "PURCHASER"), VCA Co-Investment Fund I, LLC, a Delaware
limited liability company ("VCA I"), VCA Co-Investment Fund II, LLC, a Delaware
limited liability company ("VCA II"), VCA Co-Investment Fund III, LLC, a
Delaware limited liability company ("VCA III"), VCA Co-Investment Fund IV, LLC,
a Delaware limited liability company ("VCA IV"), VCA Co-Investment Fund V, LLC,
a Delaware limited liability company ("VCA V"), VCA Co-Investment Fund VI, LLC.,
a Delaware limited liability company ("VCA VI"), VCA Co-Investment Fund VII,
LLC., a Delaware limited liability company ("VCA VII") and VCA Co-Investment
Fund VIII, LLC., a Delaware limited liability company ("VCA VIII" and, together
with VCA I, VCA II, VCA III, VCA IV, VCA V, VCA VI and VCA VII, the "VCA
CO-INVESTMENT FUNDS"), GS Mezzanine Partners II, L.P., a Delaware limited
partnership ("GS MEZZANINE"), GS Mezzanine Partners II Offshore, L.P., an
exempted limited partnership organized under the laws of the Cayman Islands ("GS
MEZZANINE OFFSHORE," and, together with GS Mezzanine, the "GS Purchasers"), TCW
Leveraged Income Trust, L.P., a Delaware limited partnership ("TCW I"), TCW
Leveraged Income Trust II, L.P., a Delaware limited partnership ("TCW II"), TCW
Leveraged Income Trust IV, L.P., a Delaware limited partnership ("TCW III"),
TCW/Crescent Mezzanine Partners II, L.P., a Delaware limited partnership ("TCW
IV"), TCW/Crescent Mezzanine Trust II, a closed-end Delaware statutory business
trust ("TCW V" and, together with TCW I, TCW II, TCW III and TCW IV, the "TCW
PURCHASERS"), The Northwestern Mutual Life Insurance Company, a Wisconsin
corporation ("NORTHWESTERN" and, together with the GS Purchasers and the TCW
Purchasers, the "MEZZANINE PURCHASERS"), and each of the management or employee
stockholders named on the signature pages hereto (collectively, the "MANAGEMENT
STOCKHOLDERS" and, individually, a "MANAGEMENT STOCKHOLDER"); provided that such
Management Stockholders shall be (i) those persons identified in the rollover
schedule (the "ROLLOVER SCHEDULE") delivered by the Company to Vicar Recap,
Inc., a Delaware corporation ("RECAP"), pursuant to the Merger Agreement (as
defined below) and (ii) such other persons that are designated by the Board of
Directors (as defined below) after the date of this Agreement as Management
Stockholders. Each of the parties to this Agreement (other than the Company) and
any other Person (as defined in Section 4.1) who in accordance herewith shall
become a party to, or agree to be bound by the terms of, this Agreement after
the date hereof is sometimes hereinafter referred to, individually, as a
"STOCKHOLDER" and, collectively, as "STOCKHOLDERS." The Purchaser and the VCA
Co-Investment Funds are sometimes herein referred to, individually, as an
"INVESTOR" and, collectively, as "INVESTORS."
RECITALS
Prior to the execution of this Agreement, the Company, Recap and Vicar
Operating, Inc., a Delaware corporation and wholly owned subsidiary of the
Company ("OPERATING COMPANY"), have entered into the Amended and Restated
Agreement and Plan of Merger, dated as of August
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11, 2000 (the "MERGER AGREEMENT"). The execution and delivery of this Agreement
is a condition to the parties' obligations under the Merger Agreement.
Pursuant to the Merger Agreement, the Company will, prior to the
Merger, contribute all of its assets (other than the capital stock of Operating
Company), properties, business operations and liabilities to Operating Company
(the "ASSET DROP DOWN"), and following the Asset Drop Down, Recap will merge
with and into the Company, with the Company as the surviving corporation (the
"MERGER").
In connection with the transactions contemplated by the Merger
Agreement and as set forth in the Rollover Schedule, certain shares of common
stock of the Company held by certain Management Stockholders prior to the Merger
shall remain outstanding following the Merger as shares of common stock, par
value $.01 per share, of the Company (the "COMMON STOCK"), and certain
Management Stockholders may provide other consideration of equivalent value to
acquire shares of Common Stock (the "RECAPITALIZATION"); and immediately
following the consummation of the Merger, the Management Stockholders shall
hold, in the aggregate, 266,667 shares of Common Stock.
In connection with the transactions contemplated by the Merger
Agreement, the Investors shall enter into a Subscription Agreement (the
"SUBSCRIPTION AGREEMENT") with Recap and the Company, which shall provide for
the purchase by the Investors, (i) prior to the effective time of the Merger, of
an aggregate of 956,667 shares of common stock of Recap, and (ii) immediately
following the consummation of the Merger, of an aggregate of 2,998,408 shares of
Series A Senior Preferred Stock, par value $.01 per share, of the Company (the
"SENIOR PREFERRED STOCK") and an aggregate of 2,970,822 shares of Series B
Junior Preferred Stock, par value $.01 per share, of the Company (the "JUNIOR
PREFERRED STOCK"). In the Merger, each outstanding share of common stock, par
value $.01 per share, of Recap shall be converted into one share of Common
Stock.
Immediately prior to the consummation of the Merger, the Company and
the Mezzanine Purchasers shall enter into a Purchase Agreement, dated as of the
date of this Agreement (the "MEZZANINE PURCHASE AGREEMENT"), providing for the
issuance and sale by the Company to the Mezzanine Purchasers of 100,000 units of
the Company consisting of $100,000,000 in aggregate principal amount of Senior
Notes due 2010 of the Company, 172,408 shares of Senior Preferred Stock, 170,822
shares of Junior Preferred Stock, and 76,666 warrants (the "WARRANTS") to
purchase an aggregate of 76,666 shares of Common Stock.
Following the consummation of the transactions contemplated by the
Merger Agreement, the Subscription Agreement and the Mezzanine Purchase
Agreement, the Stockholders will own the shares of Common Stock, the shares of
Senior Preferred Stock, and the shares of Junior Preferred Stock set forth on
SCHEDULE 1 hereto. Shares of Common Stock now owned or hereafter acquired by any
Stockholder (including, without limitation, upon exercise of the Warrants) are
collectively referred to as the "COMMON SHARES," shares of Junior Preferred
Stock now owned or hereafter acquired by any
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Stockholder are collectively referred to as the "JUNIOR PREFERRED SHARES,"
shares of Senior Preferred Stock now owned or hereafter acquired by any
Stockholder are collectively referred to as the "SENIOR PREFERRED SHARES,"
Junior Preferred Shares and Senior Preferred Shares are collectively referred to
as the "PREFERRED SHARES," and Common Shares and Preferred Shares are
collectively referred to as the "SHARES."
The Company and each of the Stockholders desire, for their mutual
benefit and protection, to enter into this Agreement to set forth their
respective rights and obligations with respect to their Shares (whether issued
or acquired hereafter), including all shares of Common Stock or other equity
interests of the Company issuable upon the exercise, conversion or exchange of
Warrants, options, or other securities or rights to acquire shares of Common
Stock or other equity interests of the Company, or upon the conversion or
exchange of any security.
The effectiveness of this Agreement is subject to the consummation of
the transactions contemplated by the Merger Agreement. In the event that the
Recapitalization, the Merger or the transactions contemplated by the Merger
Agreement are not consummated, this Agreement shall be null and void without any
liability or obligation by any party hereunder.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1. BOARD OF DIRECTORS AND MANAGEMENT PARTICIPATION
1.1 BOARD OF DIRECTORS. The Board of Directors of the Company (the
"BOARD OF DIRECTORS") to be constituted upon the consummation of the
transactions contemplated by the Merger Agreement will be composed of six (6)
members. So long as Xxxxxx X. Xxxxx is the Chief Executive Officer of the
Company, he shall be nominated to the Board of Directors and each Stockholder
agrees to vote in favor of such nomination. So long as Xxxxxx X. Xxxxx is the
Chief Operating Officer of the Company, he shall be nominated to the Board of
Directors, and each Stockholder agrees to vote in favor of such nomination. The
Purchaser or its affiliates shall be entitled to nominate three (3) members of
the Board of Directors and each Stockholder agrees to vote in favor of such
nomination; PROVIDED, HOWEVER, the Purchaser or its affiliates shall have the
right to elect additional members to the Board of Directors and increase the
number of members that compose the Board of Directors to reflect the percentage
ownership of the Purchaser, the VCA Co-Investment Funds and their respective
affiliates in the Company (each such person designated by the Purchaser or its
affiliates referred to as a "PURCHASER DESIGNEE"), and each Stockholder agrees
to provide such votes or consents and to take all such other actions as the
Purchaser or its affiliates may request in order to effectuate the appointment
or election of such Purchaser Designees. In the event of a vacancy on the Board
of Directors as a result of the disqualification, death or resignation of a
director, the party originally making such nomination shall be entitled to
select and nominate such replacement director and the remaining members of the
Board of Directors agree to fill such vacancy with such replacement director.
Any action taken by the Board of Directors shall include the affirmative vote of
at least one Purchaser Designee. The Company and the Stockholders shall take all
other action necessary to ensure that the Amended and Restated Certificate of
Incorporation of the Company and the Bylaws of the
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Company do not at any time conflict with the provisions of this Agreement. For
so long as he is a member of the Board of Directors, Xxxxxx X. Xxxxx shall serve
on the committee of the Board of Directors that is authorized to make grants of
stock options under the Company's stock award plans.
1.2 DISCHARGE OF INDEBTEDNESS. Following the consummation of the Merger
and effective on or after January 3, 2001, the Company will forgive and
discharge all indebtedness then owing from Xxxxxx X. Xxxxx and Xxxxxx X. Xxxxx
to the Company, not to exceed $700,000 and any and all interest accrued thereon.
ARTICLE 2. RESTRICTIONS ON TRANSFER; PREEMPTIVE RIGHTS
2.1 GENERAL RESTRICTIONS ON TRANSFER. So long as this Agreement is in
effect, each Stockholder agrees that such Stockholder will not, directly or
indirectly, sell, hypothecate, give, bequeath, transfer, assign, pledge or in
any other way whatsoever encumber or dispose of, by operation of law or
otherwise (any such event, a "TRANSFER"), any Shares now or hereafter at any
time owned by such Stockholder (or any interest therein) to another Person
("TRANSFEREE"), to the extent such Transfer is prohibited by this Agreement or,
as to any Management Stockholder, any applicable employment agreement or option
agreement between any Management Stockholder and the Company. The Company shall
not transfer upon its books any Shares to any Person to the extent prohibited by
this Agreement and any purported transfer in violation hereof shall be null and
void and of no effect. Each Stockholder represents and warrants to the Company
that, except as permitted by Section 2.4 and Article 3, there is not any plan or
intention on the part of such Stockholder to sell, exchange or otherwise dispose
of the Shares owned by such Stockholder on the date hereof or following the
consummation of the transactions contemplated by the Merger Agreement.
2.2 COMPLIANCE WITH SECURITIES LAWS. No Stockholder shall Transfer any
Shares, and the Company shall not transfer on its books any Shares, unless (a)
the Transfer is pursuant to an effective registration statement under the
Securities Act of 1933, as amended, or any similar federal statute, and the
rules and regulations of the Commission (as defined in Section 4.1) thereunder,
all as the same shall be in effect at the time (the "SECURITIES ACT") and is in
compliance with any applicable state securities or blue sky laws or (b) such
Stockholder shall have furnished the Company with an opinion of counsel, to the
extent reasonably required by the Company, which opinion and counsel shall be
reasonably satisfactory to the Company, to the effect that no such registration
is required because of the availability of an exemption from registration under
the Securities Act; PROVIDED that any Transfer by a Stockholder that is a
state-sponsored employee benefit plan to a successor trust or fiduciary or
pursuant to a statutory reconstitution shall be expressly permitted and no
opinions of counsel shall be required in connection therewith. As used in this
Agreement, the term "AFFILIATE" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with such Person. For purposes of this Agreement, the term "CONTROL"
(including, with correlative meanings, the terms "controlling," "controlled by,"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of
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the power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities or by contract or
otherwise.
2.3 AGREEMENT TO BE BOUND. No Transfer of Shares, including without
limitation transfers otherwise permitted under Section 2.7, by a Stockholder
shall be effective (and the Company shall not transfer on its books any Shares)
unless (i) the certificates representing such Shares issued to the Transferee
shall bear the legend provided in Section 7.4, if required by such Section 7.4,
and (ii) the Transferee shall have executed and delivered to the Company, as a
condition precedent to such Transfer, an instrument or instruments in form and
substance satisfactory to the Company confirming that the Transferee agrees to
be bound by the terms of this Agreement in the same capacity as the transferor
and accepts the rights and obligations set forth hereunder, PROVIDED, HOWEVER,
that the conditions set forth in this Section 2.3 shall not apply to any sale of
Shares pursuant to an effective registration statement under the Securities Act.
2.4 TAG-ALONG RIGHTS FOR THE STOCKHOLDER PARTIES.
2.4.1 RIGHT TO PARTICIPATE IN SALE. Purchaser, its affiliates
and its limited partner transferees are sometimes referred to in this Agreement,
collectively, as the "PURCHASER PARTIES" and, individually, as a "PURCHASER
PARTY." The VCA Co-Investment Funds and their respective affiliates are
sometimes referred to in this Agreement, collectively, as the "CO-INVESTOR
PARTIES" and, individually, as a "CO-INVESTOR PARTY." The Purchaser Parties and
the Co-Investor Parties are sometimes referred to in this Agreement,
collectively, as the "INVESTOR PARTIES" and, individually, as an "INVESTOR
PARTY." The Mezzanine Purchasers and their respective affiliates are sometimes
referred to in this Agreement, collectively, as the "MEZZANINE PARTIES" and,
individually, as a "MEZZANINE PARTY." The Management Stockholders and their
respective spouses, descendants and ancestors and any trusts solely for the
benefit of any or all of the foregoing are sometimes referred to in this
Agreement, collectively, as the "MANAGEMENT PARTIES" and, individually, as a
"MANAGEMENT PARTY." The Investor Parties, the Mezzanine Parties and the
Management Parties are sometimes referred to in this Agreement, collectively, as
the "STOCKHOLDER PARTIES" and, individually, as a "STOCKHOLDER PARTY." As used
in this Section 2.4.1, (i) the "TRIGGERING TRANSACTION" shall mean the
transaction representing a sale or other disposition of Shares by an Investor
Party other than one or more Exempt Transactions, and (ii) "EXEMPT TRANSACTIONS"
shall mean any sale or other disposition of Shares by an Investor Party as set
forth in Section 2.4.5. If at any time any Investor Party or Investor Parties
propose to enter into an agreement (or substantially contemporaneous agreements,
whether or not with the same or affiliated parties) to sell or otherwise dispose
of for value any Common Shares or Preferred Shares in one or more related
transactions that will result in the transfer of any of the outstanding Common
Shares or Preferred Shares, as the case may be, other than in one or more
related Exempt Transactions (such sale or other disposition for value being
referred to as a "TAG-ALONG SALE," and such Investor Parties being referred to,
collectively, as "SELLING STOCKHOLDERS"), then the Selling Stockholders shall
afford the Stockholder Parties who are not Selling Stockholders (each
individually a "TAG-ALONG STOCKHOLDER" and, collectively, the "TAG-ALONG
STOCKHOLDERS") the opportunity to participate proportionately in such Tag-Along
Sale in accordance with this Section 2.4; PROVIDED, that the Tag-Along
Stockholders of Common Shares
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may participate proportionately only in the event of a Tag-Along Sale of Common
Shares, the Tag-Along Stockholders of Junior Preferred Shares may participate
proportionately only in the event of a Tag-Along Sale of Junior Preferred
Shares, and the Tag-Along Stockholders of Senior Preferred Shares may
participate proportionately only in the event of a Tag-Along Sale of Senior
Preferred Shares. The number of Common Shares, Junior Preferred Shares or Senior
Preferred Shares, as the case may be, that each Tag-Along Stockholder will be
entitled to include in such Tag-Along Sale (the "TAG-ALONG ALLOTMENT") shall be
determined by (x) in the case of Common Shares, multiplying (i) the number of
Common Shares held by such Tag-Along Stockholder on a fully-diluted basis as of
the close of business on the day immediately prior to the Tag-Along Notice Date
(as hereinafter defined) by (ii) a fraction, the numerator of which shall equal
the number of Common Shares proposed by the Selling Stockholders to be sold or
otherwise disposed of pursuant to the Tag-Along Sale and the denominator of
which shall equal the total number of Common Shares that are beneficially owned
by the Selling Stockholders on a fully-diluted basis as of the close of business
on the day immediately prior to the Tag-Along Notice Date (the fraction referred
to in this clause (ii) being the "COMMON SHARE PURCHASER FRACTION"), (y) in the
case of Junior Preferred Shares, multiplying (i) the number of Junior Preferred
Shares held by such Tag-Along Stockholder on a fully-diluted basis as of the
close of business on the day immediately prior to the Tag-Along Notice Date by
(ii) a fraction, the numerator of which shall equal the number of Junior
Preferred Shares proposed by the Selling Stockholders to be sold or otherwise
disposed of pursuant to the Tag-Along Sale and the denominator of which shall
equal the total number of Junior Preferred Shares that are beneficially owned by
the Selling Stockholders on a fully-diluted basis as of the close of business on
the day immediately prior to the Tag-Along Notice Date (the "JUNIOR PREFERRED
SHARE PURCHASER FRACTION"), and (z) in the case of Senior Preferred Shares,
multiplying (i) the number of Senior Preferred Shares held by such Tag-Along
Stockholder on a fully-diluted basis as of the close of business on the day
immediately prior to the Tag-Along Notice Date by (ii) a fraction, the numerator
of which shall equal the number of Senior Preferred Shares proposed by the
Selling Stockholders to be sold or otherwise disposed of pursuant to the
Tag-Along Sale and the denominator of which shall equal the total number of
Senior Preferred Shares that are beneficially owned by the Selling Stockholders
on a fully-diluted basis as of the close of business on the day immediately
prior to the Tag-Along Notice Date (the "SENIOR PREFERRED SHARE PURCHASER
Fraction").
2.4.2 SALE NOTICE. The Selling Stockholders shall provide each
Tag-Along Stockholder and the Company with written notice (the "TAG-ALONG SALE
NOTICE") not more than twenty (20) days nor less than ten (10) days prior to the
proposed date of the Tag-Along Sale of Common Shares or less than two (2)
Business Days prior to the proposed date of the Tag-Along Sale of Preferred
Shares (the "TAG-ALONG SALE DATE"). For purposes of this Agreement, a "BUSINESS
DAY" shall mean any day that is not a Saturday, a Sunday or a day on which
banking institutions in the Company's principal place of business, the City of
New York or at a place of payment are not required to be open. Each Tag-Along
Sale Notice shall be accompanied by a copy of any written agreement relating to
the Tag-Along Sale and shall set forth: (i) the name and address of each
proposed Transferee of Shares in the Tag-Along Sale; (ii) the number of Shares
proposed to be Transferred by such Selling Stockholders; (iii) the proposed
amount and form of consideration to be paid for such Shares and the terms and
conditions of payment offered
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by each proposed Transferee; (iv) the aggregate number of Shares held of record
by the Selling Stockholders as of the close of business on the day immediately
prior to the date of the Tag-Along Notice (the "TAG-ALONG NOTICE DATE"); (v) the
Tag-Along Stockholder's Tag-Along Allotment assuming the Tag-Along Stockholder
elected to sell the maximum number of Shares possible; (vi) confirmation that
the proposed Transferee has been informed of the Tag-Along Rights provided for
herein and has agreed to purchase Shares from any Tag-Along Stockholder in
accordance with the terms hereof; and (vii) the Tag-Along Sale Date.
2.4.3 TAG-ALONG NOTICE. Any Tag-Along Stockholder wishing to
participate in the Tag-Along Sale shall provide written notice (the "TAG-ALONG
NOTICE") to the Selling Stockholders no less than five (5) days prior to the
Tag-Along Sale Date. The Tag-Along Notice shall set forth the number of Shares
that such Tag-Along Stockholder elects to include in the Tag-Along Sale, which
shall not exceed such Tag-Along Stockholder's Tag-Along Allotment. The Tag-Along
Notice given by any Tag-Along Stockholder shall constitute such Tag-Along
Stockholder's binding agreement to sell the Shares specified in the Tag-Along
Notice on the terms and conditions applicable to the Tag-Along Sale; PROVIDED,
HOWEVER, that in the event that there is any material change in the terms and
conditions of such Tag-Along Sale applicable to the Tag-Along Stockholder
(including, but not limited to, any decrease in the purchase price that occurs
other than pursuant to an adjustment mechanism set forth in the agreement
relating to the Tag-Along Sale) after such Tag-Along Stockholder gives its
Tag-Along Notice, then, notwithstanding anything herein to the contrary, the
Tag-Along Stockholder shall have the right to withdraw from participation in the
Tag-Along Sale with respect to all, but not less than all, of its Shares
affected thereby. If the proposed Transferee does not consummate the purchase of
all of the Shares requested to be included in the Tag-Along Sale by any
Tag-Along Stockholder on the same terms and conditions applicable to the Selling
Stockholders, then such Selling Stockholders shall not consummate the Tag-Along
Sale of any of its Shares to such Transferee, unless the Shares of such Selling
Stockholders and the Tag-Along Stockholders to be sold are reduced or limited
PRO RATA in proportion to the respective number of Shares actually sold in any
such Tag-Along Sale and all other terms and conditions of the Tag-Along Sale are
the same for such Selling Stockholders and the Tag-Along Stockholders.
If a Tag-Along Notice from any Tag-Along Stockholder is not
received by such Selling Stockholders prior to the five (5) day period specified
above, such Selling Stockholders shall have the right to consummate the
Tag-Along Sale without the participation of such Tag-Along Stockholder, but only
on terms and conditions that are no more favorable in any material respect to
such Selling Stockholders (and, in any event, at no greater a purchase price,
except as the purchase price may be adjusted pursuant to the agreement relating
to the relevant Tag-Along Sale) than as stated in the Tag-Along Sale Notice and
only if such Tag-Along Sale occurs on a date within ninety (90) days (or such
necessary longer period, if any, pending any necessary approval or non-objection
by, or any filing with, any governmental or regulatory authority being sought in
good faith by appropriate proceedings promptly initiated and diligently
conducted) of the Tag-Along Sale Date. If such Tag-Along Sale does not occur
within such ninety (90) day period, the Shares that were to be subject to such
Tag-Along Sale thereafter shall continue to be subject to all of the
restrictions contained in this Section 2.4.
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2.4.4 DELIVERY OF CERTIFICATES. On the Tag-Along Sale Date,
each Tag-Along Stockholder shall deliver a certificate or certificates for the
Shares to be sold by such Tag-Along Stockholder in connection with the Tag-Along
Sale, duly endorsed for transfer with signatures guaranteed, to the Transferee
in the manner and at the address indicated in the Tag-Along Notice against
delivery of the purchase price for such Shares.
2.4.5 EXEMPT TRANSFERS. The provisions of this Section
2.4 shall not apply:
(i) to any sale, transfer or other disposition of
Shares by and among Investor Parties and/or Mezzanine Parties;
(ii) to any sale, transfer or other disposition of
Preferred Shares by any Transferee that purchases or otherwise acquires
Preferred Shares after the date of this Agreement;
(iii) to any sale of Shares to the public pursuant to
an effective registration statement under the Securities Act or pursuant to Rule
144 under the Securities Act, as such rule may be amended from time to time, or
any other similar regulation hereafter adopted by the Commission ("RULE 144");
(iv) to any sale, transfer or other disposition of
Common Shares, from and after a Public Offering Event. For the purposes of this
Agreement, a "PUBLIC OFFERING EVENT" shall mean a firm commitment underwritten
initial public offering or public offerings (on a cumulative basis) of shares of
Common Stock of the Company pursuant to a registration statement or registration
statements under the Securities Act with aggregate gross proceeds to the Company
of at least $30 million; or
(v) to any bona fide pledge of Shares to a commercial
bank, savings and loan institution or any other similar lending institution as
security for any indebtedness to such lender, PROVIDED that, prior to any such
pledge, the Company is informed in writing of such pledge and the pledgee shall
deliver to the Company its written agreement, in form and substance satisfactory
to the Company, and that upon any foreclosure such pledgee shall comply with the
terms of Section 2.3 of this Agreement.
2.5 COOPERATION BY THE COMPANY. The Company will provide reasonable
assistance to any Stockholder seeking to sell its Shares, PROVIDED that the
Company shall not be required to provide any confidential information to any
prospective purchaser who has not executed a confidentiality agreement in form
satisfactory to the Company; PROVIDED, FURTHER, that the Company shall not be
obligated to provide confidential information or to execute any confidentiality
agreements that senior officers of the Company, in their good faith judgment,
reasonably believe would be detrimental to the Company's business. After a
Public Offering Event, the Company will also cooperate with any Stockholder in
having all stop transfer instructions or notations and restrictive legends
lifted in connection with the sale (other than to an affiliate of the Company)
of Shares pursuant to Rule 144; PROVIDED that in such a case the Selling
Stockholder shall be required to provide the Company with the opinion provided
for in Section 2.2.
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2.6 INVOLUNTARY TRANSFER. In the case of any Transfer of title or
beneficial ownership of Shares upon default, foreclosure, forfeit, court order,
or otherwise than by a voluntary decision on the part of a Stockholder (an
"INVOLUNTARY TRANSFER"), such Stockholder (or such Stockholder's legal
representatives) shall promptly (but in no event later than two (2) business
days after such Involuntary Transfer) furnish written notice to the Company
indicating that an Involuntary Transfer has occurred, specifying the name of the
Person to whom such Shares have been transferred, giving a detailed description
of the circumstances giving rise to, and stating the legal basis for, the
Involuntary Transfer.
2.7 RIGHT OF FIRST REFUSAL.
2.7.1 RIGHT OF FIRST REFUSAL. No Management Party shall
Transfer any Shares except as specifically permitted by this Section 2.7 or
under the terms of Section 2.4 or Article 3. If at any time any Management Party
(a "SELLING MANAGEMENT PARTY") desires to sell or otherwise dispose of solely
for cash all or any part of the Shares held by such Selling Management Party,
and such Selling Management Party shall have received an irrevocable and
unconditional bona fide arm's-length written offer (the "BONA FIDE OFFER") for
the purchase of such Shares from any third party unaffiliated with such Selling
Management Party (an "OUTSIDE PARTY"), the Selling Management Party shall
provide written notice (the "SALE NOTICE") to each of (i) Purchaser (together
with its assigns, the "PURCHASER BUYER"), (ii) the VCA Co-Investment Funds
(together with their respective assigns, the "CO-INVESTOR BUYERS"), (iii) the
Mezzanine Purchasers (together with their respective assigns, the "MEZZANINE
BUYERS"), (iv) the non-selling Management Stockholders (collectively with the
Purchaser Buyer, the Co-Investor Buyers and the Mezzanine Buyers, the "SECONDARY
BUYERS") and (v) the Company (each of the Secondary Buyers and the Company, a
"POTENTIAL BUYER") setting forth such desire to sell or otherwise dispose of for
cash such Shares, which Sale Notice shall be accompanied by a photocopy of the
original Bona Fide Offer and shall set forth at least the name and address of
the Outside Party and the price and terms of such Bona Fide Offer. Upon the
giving of such Sale Notice, each Potential Buyer shall, subject to the
priorities set forth below, have the option (which option (the "PURCHASE
OPTION"), in the case of the Purchaser Buyer, any of the Co-Investor Buyers and
any of the Mezzanine Buyers only, shall be assignable at such assignor's sole
discretion, but only to such assignor's affiliates) to purchase all, but not
less than all, of such Shares specified in the Sale Notice, on the same terms
and conditions, including but not limited to the offer price for the Shares, as
the Bona Fide Offer. Each Potential Buyer shall have thirty (30) days from
receipt of the Sale Notice to provide written notice (the "ACCEPTANCE NOTICE")
to such Selling Management Party of its desire to exercise such Purchase Option.
If more than one Potential Buyer shall deliver an Acceptance Notice within such
thirty (30) day period, the priority as among the Potential Buyers to match the
Bona Fide Offer and purchase such Shares shall be, to the extent such Potential
Buyers have delivered Acceptance Notices, FIRST, the Company and SECOND, if the
Company shall have failed to deliver an Acceptance Notice, the Secondary Buyers,
based on the allocations set forth below, PROVIDED, HOWEVER, that the Company
and the Secondary Buyers may in their discretion, agree to a different
allocation of the Shares to be purchased as among themselves so long as each of
them agrees to such allocation. If the Company fails to deliver an Acceptance
Notice and (i) at least two Secondary Buyers deliver Acceptance Notices, each of
them shall purchase from such Selling Management Party such number of Shares as
equals
Page 9
(A) the total number of Shares specified in the Sale Notice delivered by such
Selling Management Party multiplied by (B) a fraction, the numerator of which
shall equal the number of Shares held by such Secondary Buyer on a fully-diluted
basis as of the close of business on the day immediately prior to the date on
which such Selling Management Party delivers the Sale Notice to the Potential
Buyers and the denominator of which shall equal the aggregate number of Shares
held by all Secondary Buyers who delivered Acceptance Notices, on a
fully-diluted basis, on such date, or (ii) only one Secondary Buyer delivers an
Acceptance Notice, such Secondary Buyer shall purchase all of the Shares
specified in such Sale Notice.
If a Potential Buyer or Potential Buyers, as applicable,
elects to purchase, in the aggregate, all of the Shares covered by the Bona Fide
Offer on the terms and conditions set forth in the Sale Notice, the Potential
Buyer(s) entitled to purchase such Shares (the "CHOSEN BUYER(S)") shall be
determined in accordance with the priorities set forth above and such Chosen
Buyer(s) shall be obligated to purchase, and such Selling Management Party shall
be obligated to sell, such Shares at the price and terms specified in the Sale
Notice. The closing of the purchase by the Chosen Buyer(s) shall be held on a
business day within ninety (90) days (or such necessary longer period, if any,
pending any necessary approval or non-objection by, or any filing with, any
governmental or regulatory authority being sought in good faith by appropriate
proceedings promptly initiated and diligently conducted) after the giving of the
relevant Acceptance Notice, at the principal offices of the Chosen Buyer(s), or
at such other time and place as may be mutually agreed to by the Chosen Buyer(s)
and the Selling Management Party.
If no Acceptance Notice(s) is (are) delivered within the
periods specified above by one or more Potential Buyers, as applicable, with
respect to all (but not less than all) of the Shares included in the Sale
Notice, the Selling Management Party shall, upon compliance with the provisions
of Section 2.3, have the right to consummate the sale of all (but not less than
all) of the Shares covered by the Sale Notice to the Outside Party but only at
the price and upon terms and conditions no less favorable to the Selling
Management Party than those contained in the Sale Notice (PROVIDED that the
purchase price must be payable solely in cash) and only if such sale occurs on a
date within sixty (60) days of the date of the Sale Notice; PROVIDED, HOWEVER,
that in the event the Selling Management Party has not so transferred all (but
not less than all) of such Shares to the Outside Party within such sixty (60)
day period, then such Shares thereafter shall continue to be subject to all of
the restrictions contained in this Agreement.
2.7.2 NO WAIVER. Any election in any instance by any Potential
Buyer not to exercise its option rights under this Section 2.7 shall not
constitute a waiver of such rights with respect to any other proposed Transfer
of Shares.
2.7.3 EXEMPT TRANSFERS. Subject to the provisions of
Section 2.3, the provisions of this Section 2.7 shall not apply:
(i) to any sale of Shares to the public pursuant to
an effective registration statement under the Securities Act or pursuant to Rule
144;
Page 10
(ii) to any Transfer of Shares by any Stockholder to
any organization that is exempt from taxation pursuant to Section 501(c)(3) or
501(c)(4) of the Internal Revenue Code of 1986, as amended;
(iii) to any Transfer of Shares by any Stockholder by
will, the intestacy laws or the laws of descent;
(iv) to any Transfer of Shares for estate planning
purposes by any Stockholder to such Stockholder's spouse or direct lineal
descendant or ancestor; and
(v) to any Transfer of Shares by any Stockholder to
such Stockholder's spouse or direct lineal descendant or ancestor or to any
trust solely for the benefit of any or all of the foregoing or any beneficiaries
thereof, PROVIDED that each of the following conditions shall be satisfied:
(A) after giving effect to such Transfer, sole voting
power with respect to such Transferred Shares shall be held by the transferor of
such Transferred Shares; and
(B) the Transferee of such Transferred Shares shall
have executed and delivered to the Company, as a condition precedent to such
Transfer, an instrument or instruments in form and substance satisfactory to the
Company confirming that the Transferee agrees to be bound by the terms of this
Agreement and accepts the rights and obligations set forth in this Agreement.
2.8 CALL OPTION.
2.8.1 ANTIN CALL OPTION. Xxxxxx X. Xxxxx ("ANTIN") agrees that
the Company, the Purchaser (or its assigns), each VCA Co-Investment Fund (or its
assigns), each Mezzanine Purchaser (or its assigns) and each Management
Stockholder (or his or her assigns) other than Antin (collectively, the "ANTIN
CALL OPTION Buyers") shall have a call option (the "ANTIN CALL OPTION") to
purchase up to one-half of the Shares held by Antin on the date immediately
after the closing date of the Merger, including Shares subject to stock options
held by Antin on that date (the "ANTIN CALLABLE SHARES"), in the event of a
termination for any reason (including termination because of death or
disability) (a "TERMINATION") of Antin's employment with the Company (or any of
its subsidiaries). The Antin Call Option will expire on the second anniversary
of the closing date of the Merger (the "ANTIN VESTING PERIOD").
2.8.2 EXECUTIVE EMPLOYEE CALL OPTION. Each of Xxxxxx X. Xxxxx,
Xxxx Xxxxxx and Xxxxx Xxxxxx (each, an "EXECUTIVE EMPLOYEE") agrees that the
Company, the Purchaser (or its assigns), each VCA Co-Investment Fund (or its
assigns), each Mezzanine Purchaser (or its assigns) and each Management
Stockholder (or his or her assigns) other than, in the case of each Executive
Employee, such Executive Employee (collectively, the "EXECUTIVE CALL OPTION
BUYERS") shall have a call option (the "EXECUTIVE CALL OPTION") to purchase up
to two-thirds of the Shares held by such Executive Employee on the date
immediately after the closing date of the Merger, including Shares subject to
stock options held by such Executive Employee on that date
Page 11
(the "EXECUTIVE CALLABLE SHARES"), in the event of a Termination of such
Executive Employee's employment with the Company (or any of its subsidiaries).
As to each Executive Employee, the Executive Call Option will expire as to
one-half of the total number of Executive Callable Shares on each of the second
and the third anniversaries of the closing date of the Merger (the "EXECUTIVE
VESTING PERIOD").
2.8.3 MANAGEMENT EMPLOYEE CALL OPTION. Each Management
Stockholder other than Antin and the Executive Employees (each, a "MANAGEMENT
EMPLOYEE" and, collectively, together with Antin and the Executive Employees,
the "EMPLOYEES") agrees that the Company, the Purchaser (or its assigns), each
VCA Co-Investment Fund (or its assigns), each Mezzanine Purchaser (or its
assigns) and each Management Stockholder (or his or her assigns) other than, in
the case of each Management Employee, such Management Employee (collectively,
the "MANAGEMENT CALL OPTION BUYERS" and, together with the Antin Call Option
Buyers and the Executive Call Option Buyers, the "CALL OPTION BUYERS") shall
have a call option (the "MANAGEMENT CALL OPTION" and, together with the Antin
Call Option and each of the Executive Call Options, the "CALL OPTION") to
purchase up to all of the Shares held by such Management Employee on the date
immediately after the closing date of the Merger, including Shares subject to
stock options held by such Management Employee on that date (the "MANAGEMENT
CALLABLE SHARES" and, together with the Antin Callable Shares and the Executive
Callable Shares, the "CALLABLE SHARES"), in the event of a Termination of such
Management Employee's employment with the Company (or any of its subsidiaries).
As to each Management Employee, the Management Call Option will expire as to
one-fourth of the total number of Management Callable Shares on the first
anniversary of the closing date of the Merger and as to a pro rata portion of
the remaining three-fourths at the end of each month after the first anniversary
for the next thirty-six (36) months (the "MANAGEMENT VESTING PERIOD").
2.8.4 CHANGE OF CONTROL. Notwithstanding anything to the
contrary in Sections 2.8.1, 2.8.2 and 2.8.3, the Call Option will expire as to
all of the total number of Callable Shares held by each Employee upon a Change
of Control of the Company. For purposes of this Agreement, a "CHANGE OF CONTROL"
of the Company shall be deemed to have occurred if (a) there shall be
consummated (x) any sale, transfer or other disposition (including, without
limitation, pursuant to a merger or consolidation) by the Investors and their
respective affiliates and related parties, together with any entities controlled
by Xxxxxxx Xxxxx & Partners, L.P. (collectively, the "INVESTOR GROUP"), to a
third Person of Common Shares that represent more than 50% of the Common Shares
held by the Investor Group immediately following the consummation of the Merger,
as adjusted for stock splits, recapitalizations, subdivisions, combinations or
other such transactions, or (y) any sale, lease or other transfer (in one
transaction or a series of related transactions) of all of the assets of the
Company or either of its laboratory or hospital operating divisions, or (b) the
holders of the capital stock of the Company approve any plan or proposal for the
liquidation or dissolution of the Company, or (c) any Person shall become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) prior
to the time (if any) that the Company issues any equity securities pursuant to a
registration statement filed with the Commission under the Securities Act of a
greater number of voting securities of the Company than the number of voting
securities of the Company beneficially owned (within the meaning of Rule 13d-3
under the Exchange Act) by the Investor Group, or (d)
Page 12
after such time (if any) that the Company issues any equity securities pursuant
to a registration statement filed with the Commission under the Securities Act,
any Person (other than the Investor Group) shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of 30% or more of the
voting securities of the Company.
2.8.5 CALL OPTION PROCEDURE. The occurrence of a Termination
prior to a Change of Control of the Company and the expiration of the Antin
Vesting Period, the Executive Vesting Period or the Management Vesting Period,
as applicable, shall be deemed a "CALL EVENT." Upon the occurrence of a Call
Event, the applicable Call Option Buyers may exercise the applicable Call Option
(in the priority set forth below) by written notice (an "OPTION NOTICE")
delivered to the applicable Employee within ninety (90) days after such Call
Event, and, upon the giving of the Option Notice, the applicable Call Option
Buyers will be obligated to purchase, and such Employee will be obligated to
sell, all or any lesser portion indicated in the Option Notice of the applicable
Callable Shares owned at the time of the Call Event by such Employee, including
all such Shares acquired by a Person pursuant to an Exempt Transfer as set forth
in Section 2.7.3. The priority to exercise any Call Option shall be, FIRST, to
the Company and, SECOND, to the other applicable Call Option Buyers; PROVIDED,
HOWEVER, that the Company and the other applicable Call Option Buyers may elect
not to exercise the Call Option and that the Company and the other applicable
Call Option Buyers may in their discretion agree to a different allocation of
the Shares to be called as among themselves. The exercise price of any Call
Option shall be $15.00 per Share, as adjusted for stock splits,
recapitalizations, subdivisions, combinations or other such transactions. In the
event that the Company exercises a Call Option, any amounts payable to the
Employee by the Company shall be first offset against any outstanding principal
balance of any indebtedness owed to the Company (including any of its
subsidiaries) by the Employee in accordance with the terms of such indebtedness.
The closing for all purchases and sales of Callable Shares pursuant to this
Section 2.8 shall be no later than thirty (30) days following delivery of the
Option Notice and shall be in accordance with the terms governing the repayment
of any indebtedness of such Employee to the Company. Any Shares subject to a
Call Option shall be free and clear of any and all liens, claims, charges and
encumbrances.
2.9 PREEMPTIVE RIGHTS. In the event of a proposed issuance of, or a
proposed granting by the Company of, Common Stock or other equity securities of
the Company, including securities convertible into or exchangeable for Common
Stock, other than: (i) in a Public Offering Event; (ii) in any acquisition of
the Company by, or any merger of the Company with, a third party in a bona fide
arms' length transaction; (iii) the issuance of stock options (or any exercise
thereof) to employees, directors and consultants of the Company or the issuance
of Common Stock upon the exercise of any Warrants; (iv) the issuance of Common
Stock pursuant to the exercise of any convertible securities of the Company; (v)
any stock split, reverse stock split, recapitalization, or similar
reorganization or reclassification; and (vi) the issuance of equity securities
(including securities convertible into, or exchangeable or exercisable for,
equity securities) to banks, financial institutions or similar entities in
transactions approved by the Board of Directors, the principal purpose of which
is other than the raising of capital through the sale of equity securities of
the Company (each proposed issuance or grant other than those described in
clauses (i) though (vi) hereof, a "PROPOSED ISSUANCE"), the Company shall
provide
Page 13
written notice of such Proposed Issuance to each Stockholder no less than thirty
(30) days prior to the proposed date of the Proposed Issuance, and each
Stockholder shall have the right, on the same terms as those of the Proposed
Issuance and during a reasonable time no less than thirty (30) days after the
Company has given such written notice to each Stockholder, to purchase that
proportion of such Common Stock or other securities as is necessary to maintain
such Stockholder's fully-diluted percentage equity interest in the Company on a
record date not more than thirty (30) days prior to the Proposed Issuance (the
"PROPOSED ISSUANCE RECORD DATE"). The price or prices for such Common Stock or
other securities shall be no less favorable to each Stockholder than the price
or prices at which such Common Stock or other securities are proposed to be
offered for sale or granted to others, after deduction of the compensation for
the sale, underwriting or purchase of such Common Stock or other securities by
underwriters, dealers or other purchasers as may be paid by the Company.
ARTICLE 3. DRAG-ALONG SALES
3.1 RIGHT OF INVESTOR PARTIES TO REQUIRE SALE. Notwithstanding any
other provision of this Agreement (but subject to the last sentence of this
Section 3.1), if some or all Investor Parties (collectively, the "DRAG-ALONG
SELLERS") agree to sell or otherwise dispose of (or cause to be sold or
otherwise disposed of) for value either (x) all of the Shares then owned by the
Investor Parties, or (y) 50% or more in the aggregate of the outstanding Common
Shares or Preferred Shares of any series, in each case in one or more related
transactions (a "DRAG-ALONG SALE") to a third Person or third Persons who are
not affiliates of any of the Drag-Along Sellers (a "THIRD PARTY"), then, upon
the written demand of, (a) in the event of a Drag-Along Sale under subsection
(x) of this Section 3.1, Drag Along Sellers holding Common Shares that represent
a majority of the Common Shares held by all of the Drag-Along Sellers, or (b) in
the event of a Drag-Along Sale under subsection (y) of this Section 3.1,
Drag-Along Sellers holding Shares of a class or series that represent a majority
of the Shares of such class or series held by all of the Drag-Along Sellers,
each of the other Stockholders (the "REQUIRED SELLERS") shall be required to
sell to such Third Party (i) in the event of a Drag-Along Sale under subsection
(x) of this Section 3.1, all, but not less than all, of the Shares (including
any and all options or Warrants to acquire such Shares) then held by each such
Required Seller, or (ii) in the event of a Drag-Along Sale under subsection (y)
of this Section 3.1, the Shares (including any options or Warrants to acquire
such Shares, which such options and Warrants shall be calculated on an
as-exercised basis) representing the same percentage of the same class or series
of securities being sold or disposed of by the Drag-Along Sellers then held by
each such Required Seller, in each case at the same price and on the same terms
and conditions as the Drag-Along Sellers have agreed to, in writing, with such
Third Party. Notwithstanding any other provision of this Agreement, no
Transferee that purchases or otherwise acquires Preferred Shares after the date
of this Agreement shall have any of the rights of a Drag-Along Seller under this
Article 3.
3.2 DRAG-ALONG NOTICE. Prior to making any Drag-Along Sale, the
Drag-Along Sellers shall promptly provide each Required Seller with written
notice (the "DRAG-ALONG NOTICE") not more than thirty (30) or less than fifteen
(15) days prior to the proposed date of the Drag-Along Sale of Common Shares or
less than two (2) Business Days prior to the proposed date of the Drag-Along
Sale of Preferred Shares (the "DRAG-ALONG SALE DATE"). The Drag-
Page 14
Along Notice shall set forth: (i) the name and address of the Third Party; (ii)
the name and address of each member of the Drag-Along Sellers; (iii) the
proposed number of Common Shares and/or Preferred Shares to be sold to the Third
Party by each member of the Drag-Along Sellers; (iv) the proposed amount and
form of consideration to be paid per Common Share and/or Preferred Share and the
terms and conditions of payment offered by the Third Party; (v) the number of
Common Shares and Preferred Shares (and options or Warrants to acquire Shares)
held of record as of the close of business on the date of the Drag-Along Sale
Notice (the "DRAG-ALONG NOTICE DATE") by the Required Seller to whom the notice
is sent; (vi) the aggregate number of Common Shares and Preferred Shares held of
record as of the Drag-Along Notice Date by the Drag-Along Sellers; (vi)
confirmation that the Drag-Along Sellers are selling the Shares then held by
them to the Third Party in accordance with Section 3.1(x) or 3.1(y); (vii) the
Drag-Along Sale Date; and (viii) confirmation that the proposed Third Party has
agreed to purchase the Required Sellers' Common Shares, Preferred Shares, and/or
options or Warrants to acquire Shares, as applicable, in accordance with the
terms hereof.
3.3 DELIVERY OF CERTIFICATES. On the Drag-Along Sale Date, each
Required Seller shall deliver (i) letter agreements (each such agreement being
in a reasonable form that is provided to each Required Seller by the Company or
the Drag-Along Sellers) providing for the cancellation of all of such Required
Seller's options and Warrants that are to be sold to the Third Party pursuant to
this Article 3 and (ii) certificates for all of such Required Seller's Common
Shares, Preferred Shares and/or options or Warrants that are to be sold to the
Third Party pursuant to this Article 3, which shall be, as applicable, duly
endorsed for transfer with signatures guaranteed, to the Third Party in the
manner and at the address indicated in the Drag-Along Notice against delivery of
the purchase price for such Required Seller's Common Shares, Preferred Shares
and/or options or Warrants (after subtracting from such purchase price the
exercise prices of all such options and Warrants).
3.4 CONSIDERATION. The provisions of this Article 3 shall apply
regardless of the form of consideration received in the Drag-Along Sale.
3.5 COOPERATION. The Drag-Along Sellers and the Required Sellers shall
cooperate in good faith with each other in connection with the consummation of
the Drag-Along Sale. Each of the Drag-Along Sellers and the Required Sellers
shall be severally obligated to join on a pro rata basis (based on such party's
share of the aggregate proceeds paid in such Drag-Along Sale) in any
indemnification that is to be provided in connection with such Drag-Along Sale,
other than any such indemnification that relates specifically to a particular
party, including indemnification with respect to the representations and
warranties given by such party regarding such party's title to and ownership of
Common Shares, Preferred Shares and/or options or Warrants to acquire Shares or
valid authorization by such party with respect to such Drag-Along Sale (which
representations shall be made solely by such party); PROVIDED that no such party
shall be obligated in connection with such Drag-Along Sale (i) to agree to
indemnify or hold harmless the Third Party with respect to an amount in excess
of the net cash proceeds paid to such party in connection with such Drag-Along
Sale, or (ii) to agree to any post-closing commitment or obligation, including
any non-compete agreement.
Page 15
ARTICLE 4. REGISTRATION RIGHTS
4.1 DEFINITIONS.
"COMMISSION" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act and
Exchange Act.
"DEMAND" means a written request of the Company from either an
Investor Holder, a Management Holder or a Mezzanine Holder to consummate a
Demand Registration.
"DEMAND REGISTRATION" means the registration under the
Securities Act (including, but not limited to, a shelf registration under Rule
415 promulgated under the Securities Act) by the Company of all or part of the
Registrable Shares of the Investor Holders, the Management Holders or the
Mezzanine Holders, as applicable, pursuant to a Demand received by the Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder.
"HOLDER" means a Holder of Registrable Shares. A Person is
deemed to be a Holder of Registrable Shares whenever such Person owns
Registrable Shares; PROVIDED, HOWEVER, that unless the Company is otherwise
notified by the Holder of Registrable Shares, the Holder of Registrable Shares
shall be deemed to be that Person set forth on the books and records of the
Company or the registrar for such Registrable Shares.
"INVESTOR HOLDER" means a Holder of Registrable Investor
Shares, including a Transferee of Registrable Investor Shares if (i) the
Transfer to such Transferee is not prohibited by this Agreement, and (ii) the
Shares Transferred to such Transferee continue to be Registrable Shares.
"MANAGEMENT HOLDER" means a Holder of Registrable Management
Shares, including a Transferee of Registrable Management Shares if (i) the
Transfer to such Transferee is not prohibited by this Agreement, and (ii) the
Shares Transferred to such Transferee continue to be Registrable Shares.
"MEZZANINE HOLDER" means a Holder of Registrable Mezzanine
Shares, including a Transferee of Registrable Mezzanine Shares if (i) the
Transfer to such Transferee is not prohibited by this Agreement, and (ii) the
Shares Transferred to such Transferee continue to be Registrable Shares.
"OTHER HOLDER" means a Person that holds securities of the
Company and is entitled, pursuant to contractual rights with respect to such
securities, to participate in, or demand, a registration under the Securities
Act by the Company of securities of the Company.
Page 16
"PERSON" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or other agency or political
subdivision thereof.
"REGISTRABLE INVESTOR SHARES" means the Shares issued to the
Investor Parties in the Merger or pursuant to the Preferred Stock Subscription
Agreement and any Shares subsequently acquired by any Investor Party (and any
securities issued or issuable with respect to such Shares by way of stock
dividends or stock splits or in connection with a combination of shares,
recapitalization, merger, consolidation, or other reorganization or otherwise).
"REGISTRABLE MANAGEMENT SHARES" means the Common Shares owned
by the Management Stockholders on the date hereof immediately following the
consummation of the Merger and any Common Shares subsequently acquired by any
Management Stockholders (and any securities issued or issuable with respect to
such Common Shares by way of stock dividends or stock splits or in connection
with a combination of shares, recapitalization, merger, consolidation, or other
reorganization or otherwise).
"REGISTRABLE MEZZANINE SHARES" means the Shares issued to the
Mezzanine Parties pursuant to the Mezzanine Purchase Agreement and any Shares
subsequently acquired by any Mezzanine Party (and any securities issued or
issuable with respect to such Shares by way of stock dividends or stock splits
or in connection with a combination of shares, recapitalization, merger,
consolidation, or other reorganization or otherwise).
"REGISTRABLE SHARES" means the Registrable Management Shares,
the Registrable Investor Shares and the Registrable Mezzanine Shares; PROVIDED,
HOWEVER, that any such Shares will cease to be Registrable Shares when (i) a
registration statement covering such Registrable Shares has been declared
effective and such Registrable Shares have been disposed of pursuant to such
effective registration statement, or (ii) such Registrable Shares are
distributed to the public pursuant to Rule 144.
"SELLING HOLDER" means, with respect to any registration
statement, any Holder whose Registrable Shares are included therein.
4.2 DEMAND REGISTRATIONS.
4.2.1 NUMBER OF REGISTRATIONS.
(a) INVESTOR HOLDERS' DEMAND RIGHTS. Notwithstanding
any Demand Registrations consummated by the Company pursuant to Section 4.2.1(b)
or 4.2.1(c) of this Agreement, commencing on the earlier of (i) the date that is
six (6) months after a Public Offering Event, and (ii) the fifth anniversary of
the date of this Agreement, Investor Holders, acting collectively as a group,
holding an aggregate number of Registrable Investor Shares of a class or series
equal to or greater than twenty percent (20%) of the number of Registrable
Investor Shares of such class or series outstanding on the date of their Demand
shall be entitled to make a Demand of the Company to consummate a Demand
Registration of all or part of their Registrable Investor Shares of such class
or series and all or part of their Registrable Investor
Page 17
Shares of any other class or series; PROVIDED, HOWEVER, that following an
initial Demand by Investor Holders pursuant to this Section 4.2.1(a), Investor
Holders, acting collectively as a group, holding an aggregate number of
Registrable Investor Shares of a class or series equal to or greater than
fifteen percent (15%) of the number of Registrable Investor Shares of such class
or series outstanding on the date of their Demand shall be entitled to make a
Demand of the Company to make a subsequent Demand Registration; and, PROVIDED,
FURTHER, that not more than an aggregate of four (4) Demand Registrations with
respect to the Registrable Investor Shares may be made pursuant to the rights
granted by this Section 4.2.1(a).
(b) MANAGEMENT HOLDERS' DEMAND RIGHTS.
Notwithstanding any Demand Registrations consummated by the Company pursuant to
Section 4.2.1(a) or 4.2.1(c) of this Agreement, commencing on the earlier of (i)
the date that is six (6) months after a Public Offering Event, and (ii) the
fifth anniversary of the date of this Agreement, Management Holders, acting
collectively as a group, holding an aggregate number of Registrable Management
Shares at least equal to or greater than thirty-five percent (35%) of the number
of Registrable Management Shares outstanding on the date of their Demand shall
be entitled to make a Demand of the Company to consummate a Demand Registration
of all or part of the Registrable Management Shares; PROVIDED, HOWEVER, that not
more than an aggregate of two (2) Demand Registrations with respect to the
Registrable Management Shares may be made pursuant to the rights granted by this
Section 4.2.1(b).
(c) MEZZANINE HOLDERS' DEMAND RIGHTS. Notwithstanding
any Demand Registrations consummated by the Company pursuant to Section 4.2.1(a)
or 4.2.1(b) of this Agreement, commencing on the earlier of (i) the date that is
six (6) months after a Public Offering Event, and (ii) the fifth anniversary of
the date of this Agreement, Mezzanine Holders, acting collectively as a group,
holding an aggregate number of Registrable Mezzanine Shares of a class or series
equal to or greater than thirty-three percent (33%) of the number of Registrable
Mezzanine Shares of such class or series outstanding on the date of their Demand
shall be entitled to make a Demand of the Company to consummate a Demand
Registration of all or part of the Registrable Mezzanine Shares of such class or
series; PROVIDED, HOWEVER, that not more than two (2) Demand Registrations with
respect to the Registrable Mezzanine Shares may be made pursuant to the rights
granted by this Section 4.2.1(c).
(d) SELECTION OF UNDERWRITER. Any Demand Registration
hereunder shall be on any appropriate form under the Securities Act permitting
registration of such Registrable Shares for resale by the Holder making such
Demand Registration in the manner or manners designated by them (including,
without limitation, pursuant to one or more underwritten offerings). The
determination of whether the offering will involve an underwritten offering, and
the selection of investment bankers and managers, if any, and counsel, shall be
made by the Holders of a majority of the Registrable Shares to be included in
such registration, PROVIDED, HOWEVER, that the selection of investment bankers
and managers, if any, and counsel so selected shall be reasonably satisfactory
to the Company. If requested, the Company shall enter into an underwriting or
purchase agreement with an investment banking firm in connection with a Demand
Registration, containing representations, warranties, indemnities and agreements
then customarily included in underwriting or purchase agreements by such
underwriter with respect to
Page 18
secondary distributions of securities. For purposes of determining whether a
majority of the applicable Registrable Shares are held by the applicable parties
under this Article 4, the Common Shares and the Preferred Shares shall be
assigned relative values that shall be determined by the Board of Directors
acting in good faith.
4.2.2 REGISTRATION. The Company shall file a registration
statement with respect to each Demand Registration and use its best efforts to
cause the same to be declared effective as promptly as practicable following
such Demand, but not later than one hundred twenty (120) days thereafter. Unless
all of the Registrable Investor Shares, Registrable Management Shares or
Registrable Mezzanine Shares, as applicable, covered by the registration
statement have earlier been sold or withdrawn from sale, the Company shall keep
any such registration statement effective for a period of at least one hundred
eighty (180) days after such registration statement is first declared effective
plus a period equal to (x) any period during which the Selling Holders are
prohibited from making sales because of any stop order, injunction or other
order or requirement of the Commission or any other governmental agency or court
plus (y) any Demand Suspension Period (as defined below) plus (z) any holdback
period pursuant to Section 4.6 that occurs while the registration statement is
effective (the "DEMAND PERIOD") and a registration will not count as a Demand
Registration unless it is declared effective by the Commission and remains
effective until the earlier of such time as all of the Registrable Investor
Shares, Registrable Management Shares or Registrable Mezzanine Shares, as
applicable, included in such registration have been sold or disposed of or
withdrawn from sale by the Selling Holders and the expiration of the Demand
Period or, if the registration remains effective for a shorter period, the
Selling Holders have sold at least eighty percent (80%) of each class or series
of their respective Registrable Investor Shares, Registrable Management Shares
or Registrable Mezzanine Shares, as applicable, included in such Demand
Registration. In addition, a request for registration shall not be deemed to
constitute a Demand Registration if: (i) the conditions to closing specified in
the purchase agreement or underwriting agreement entered into in connection with
such Demand Registration are not satisfied other than by reason of some act or
omission by the Investor Holders, the Management Holders or the Mezzanine
Holders, as applicable, that are Selling Holders; (ii) the Company voluntarily
takes any action that would result in the Selling Holders not being able to sell
such Registrable Shares covered thereby during the Demand Period; (iii) after it
has become effective, such Demand Registration becomes subject to any stop
order, injunction or other order or requirement of the Commission or other
governmental agency or court and such order, injunction or requirement is not
promptly withdrawn or lifted, and such Demand Registration has not otherwise
remained effective for the Demand Period (including effective periods both
before and after the order, injunction or requirement is made or imposed); or
(iv) such Demand Registration does not involve an underwritten offering and the
Investor Holders, the Management Holders or the Mezzanine Holders, as
applicable, that are Selling Holders determine not to proceed following any
delay imposed hereunder by the Company; PROVIDED, HOWEVER, that, prior to such
delay, the Investor Holders, the Management Holders or the Mezzanine Holders, as
applicable, that are Selling Holders have not sold more than eighty percent
(80%) of each class or series of their respective Registrable Shares included in
such Demand Registration. Notwithstanding the foregoing, the Company may, at any
time, delay the filing or delay or suspend the effectiveness of the Demand
Registration or, without suspending such effectiveness, instruct the Selling
Holders not to sell any securities included in the Demand
Page 19
Registration, if the Company shall have determined in good faith (as evidenced
by a resolution of the Board of Directors delivered to the Selling Holders) that
proceeding with the Demand Registration at such time may have a material adverse
effect on the Company or the Company shall have determined upon the advice of
counsel that it would be required to disclose any actions taken by the Company
in good faith and for valid business reasons, including without limitation, the
acquisition or divestiture of assets, which disclosure may have a material
adverse effect on the Company or on such actions (a "DEMAND SUSPENSION PERIOD"),
by providing the Selling Holders with written notice of such Demand Suspension
Period and the reasons therefor. The Company shall use its best efforts to
provide such notice at least ten (10) days prior to the commencement of such a
Demand Suspension Period; PROVIDED, HOWEVER, that in any event the Company shall
provide such notice no later than the commencement of such Demand Suspension
Period; and PROVIDED, FURTHER, that in no event shall the Demand Suspension
Periods exceed ninety (90) days in any three hundred sixty (360) day period.
The Company further agrees to supplement or amend such
registration statement with respect to such Demand Registration, as required by
the registration form utilized by the Company or by the instructions applicable
to such registration form or by the Securities Act for the registration of
securities or as reasonably requested (which request shall result in the filing
of a supplement or amendment subject to approval thereof by the Company and
which approval shall not be unreasonably withheld) by any Selling Holder or any
managing underwriter of Registrable Shares to which such Demand Registration
relates, and the Company agrees to furnish to the Selling Holders (and any
managing underwriter) copies, in substantially the form proposed to be used
and/or filed, of any such supplement or amendment prior to its being used and/or
filed with the Commission. The Company shall amend or supplement the
registration statement with respect to such Demand Registration no less
frequently than every forty five (45) days to update the list of Selling Holders
pursuant to written requests by such Holders.
4.2.3 INCLUSION OF REGISTRABLE SHARES. Any Demand shall
specify the number of Registrable Investor Shares, Registrable Management Shares
or Registrable Mezzanine Shares, as applicable, to be registered and the
intended methods of disposition thereof. Within ten (10) days after receipt of
such Demand, the Company shall give written notice of such registration request
to all Holders of Registrable Investor Shares, Registrable Management Shares or
Registrable Mezzanine Shares, as applicable, that have not made the Demand, and
the Company shall include in such registration all Registrable Investor Shares,
Registrable Management Shares or Registrable Mezzanine Shares, as applicable,
with respect to which the Company has received written requests for inclusion
therein within fifteen (15) days after the date on which such notice is given.
Each such request shall also specify the aggregate number of Registrable
Investor Shares, Registrable Management Shares or Registrable Mezzanine Shares,
as applicable, to be registered. Subject to the priority provisions of Section
4.2.4, the Company may also include in such Demand Registration shares of Common
Stock for the account of the Company and any other Persons who hold shares of
Common Stock.
4.2.4 PRIORITY ON DEMAND REGISTRATIONS. If a Demand
Registration is an underwritten registration and the managing underwriter(s) of
such offering determine in good faith that the aggregate number of (i)
Registrable Investor Shares, Registrable Management
Page 20
Shares or Registrable Mezzanine Shares, as applicable, of the Selling Holders
exercising their rights to participate in the Demand Registration on a demand
basis pursuant to this Section 4.2 or on a piggyback basis pursuant to Section
4.3, (ii) securities of the Company to be sold by the Company and (iii)
securities of the Company to be sold by any Other Holders, in each case proposed
to be included in such registration statement, exceeds the maximum number of
securities that can reasonably be expected to be sold within a price range
acceptable to the Investor Holders, the Management Holders or the Mezzanine
Holders, as applicable, that made the Demand, then the total number of
securities of the Company to be offered for the account of the Selling Holders,
the Company and any Other Holders in such registration shall be reduced or
limited PRO RATA (and to zero, if necessary) in proportion to the respective
number of securities requested to be registered to the extent necessary to
reduce the total number of securities requested to be included in such
registration to the maximum number of securities that can reasonably be expected
to be included therein and still satisfy such price requirement. Any request for
registration with respect to which such a market "cutback" occurs shall be
deemed to constitute a Demand Registration for all purposes of this Article 4;
PROVIDED, HOWEVER, that if any such market "cutback" occurs with respect to a
Demand Registration and all such Selling Holders that made the Demand are not
able to sell at least eighty percent (80%) of each class of the Registrable
Shares that such Selling Holders proposed to sell pursuant to such Demand
Registration, then such request for registration will not count against the
number of Demands to which the Investor Holders, the Management Holders or the
Mezzanine Holders, as applicable, that made the Demand are entitled pursuant to
this Section 4.2. For purposes of determining the necessity of a market
"cutback" with respect to any Demand Registration pursuant to this Section 4.2,
and the allocations to the Company and holders of securities of the Company
resulting therefrom, calculations that involve the number of securities of the
Company shall be made on a fully-diluted basis, as applicable, or as otherwise
determined in good faith by the Board of Directors.
4.2.5 COMPLIANCE. Notwithstanding any other provisions hereof,
the Company shall use its best efforts to ensure that (i) any registration
statement filed in connection with a Demand Registration pursuant to this
Section 4.2 or a piggyback registration pursuant to Section 4.3, and any
amendment thereto, and any prospectus forming a part thereof, and any supplement
thereto, complies in all material respects with the Securities Act, (ii) any
registration statement filed in connection with a Demand Registration pursuant
to this Section 4.2 or a piggyback registration pursuant to Section 4.3, and any
amendment thereto, does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(iii) any prospectus forming part of any registration statement filed in
connection with a Demand Registration pursuant to this Section 4.2 or a
piggyback registration pursuant to Section 4.3, and any supplement to such
prospectus, does not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements, in the light of
the circumstances under which they are made, not misleading.
Page 21
4.3 PIGGYBACK REGISTRATION.
4.3.1 RIGHT TO INCLUDE REGISTRABLE SHARES. If the Company at
any time proposes to register any of its equity securities under the Securities
Act, whether or not for sale for its own account and whether or not on account
of receipt by the Company of a Demand pursuant to Section 4.2.1(a), 4.2.1(b) or
4.2.1(c), on a form and in a manner that would permit registration of
Registrable Shares for a public offering under the Securities Act (other than on
a registration statement (i) on Form S-4 or Form S-8 or any successor form
thereto, (ii) filed in connection with a Public Offering Event, or (iii) filed
in connection with an exchange offer), the Company shall give written notice of
the proposed registration to each Holder of Registrable Shares at least fifteen
(15) days prior to the filing thereof, and each Holder shall have the right to
request that all or any part of such Holder's Registrable Shares be included in
such registration by giving written notice to the Company within fifteen (15)
days after the giving of such notice by the Company. If the registration
statement is to cover an underwritten offering, such Registrable Shares shall be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters. Notwithstanding the foregoing, a
Management Holder may not request the registration of his or her respective
Registrable Management Shares if such Registrable Management Shares may, at the
time (or within thirty days thereafter), be distributed to the public pursuant
to paragraph (k), as such paragraph may be amended from time to time, or any
other similar provision hereafter adopted by the Commission, of Rule 144.
4.3.2 PRIORITY ON PIGGYBACK REGISTRATIONS.
(a) COMPANY REGISTRATIONS. If the registration is an
underwritten primary registration on behalf of the Company and not as the result
of a Demand pursuant to Section 4.2.1(a), 4.2.1(b) or 4.2.1(c), and the managing
underwriter(s) of such offering determine in good faith that the aggregate
number of (i) securities of the Company to be sold by the Company; (ii)
Registrable Shares of the Selling Holders exercising their rights to participate
in the registration on a "piggyback" basis pursuant to this Section 4.3 and
(iii) securities of the Company to be sold by Other Holders, in each case
proposed to be included in such registration statement, exceeds the maximum
number of securities that can reasonably be expected to be sold in such offering
without materially and adversely affecting the marketability of the offering or
the selling price to be obtained, then the Company will include in such
registration, FIRST, the securities that the Company proposes to sell and,
SECOND, the securities to be offered for the account of the Selling Holders and
any Other Holders PRO RATA among all such Selling Holders and Other Holders,
taken together, on the basis of the number of securities of the Company
requested to be included by all Selling Holders and Other Holders who have
requested that securities owned by them be so included (it being agreed and
understood, however, that such managing underwriter(s) shall have the right to
eliminate entirely the participation in such registration of all Selling Holders
and Other Holders). For purposes of determining the necessity of a market
"cutback" with respect to any piggyback registration pursuant to this Section
4.3, and the allocations to the Company and/or holders of securities of the
Company resulting therefrom, calculations that involve the number of securities
of the Company shall be made on a fully-diluted basis, as applicable, or as
otherwise determined in good faith by the Board of Directors.
Page 22
(b) OTHER HOLDERS' REGISTRATION. If the registration
is an underwritten secondary registration on behalf of Other Holders pursuant to
demand registration rights arising from a document other than this Agreement and
the managing underwriter(s) determine in good faith that the aggregate number of
(i) securities of the Company to be sold by the Company, (ii) Registrable Shares
of the Selling Holders exercising their rights to participate in the
registration on a "piggyback" basis pursuant to this Section 4.3 and (iii)
securities of the Company to be sold by the Other Holders, in each case proposed
to be included in such registration statement, exceeds the maximum number of
securities that can reasonably be expected to be sold within the price range
acceptable to the Other Holders, then the total number of securities to be
offered in such registration shall be reduced or limited PRO RATA (and to zero,
if necessary) in proportion to the respective number of securities requested to
be registered to the extent necessary to reduce the total number of securities
requested to be included in such registration to the maximum number of
securities that can reasonably be expected to be included therein and still
satisfy such price requirement.
(c) UNDERWRITERS. Except in the case of a Demand
Registration, the Registrable Shares proposed to be registered and sold for the
account of any Selling Holder pursuant to a piggyback registration shall be sold
to prospective underwriters selected or approved by the Company, and on the
terms and subject to the conditions of one or more underwriting agreements
negotiated between the Company, the Investor Holders, if any, the Management
Holders, if any, the Mezzanine Holders, if any, the Other Holders, if any, and
such prospective underwriters. The Selling Holders shall be permitted to
withdraw all or a part of the Registrable Shares held by such Selling Holders
that were to be included in such piggyback registration at any time prior to the
effective date of such registration. The Company may withdraw any registration
statement for such registration at any time before it becomes effective, or
postpone the offering of securities, without obligation or liability to any
Selling Holder participating on a piggyback basis.
4.4. REGISTRATION STATEMENT. In connection with any registration of
Registrable Shares under the Securities Act pursuant to this Agreement, the
Company will furnish each Selling Holder and each underwriter, if any, with a
copy of the registration statement and all amendments thereto and will supply
each such Selling Holder with copies of any prospectus included therein
(including a preliminary prospectus and all amendments and supplements thereto),
in each case including all exhibits, and such other documents as may be
reasonably requested, in such quantities as may be reasonably necessary for the
purposes of the proposed sale or distribution covered by such registration (the
Company hereby consenting to the use in accordance with all applicable law of
each such registration statement (or amendment or post-effective amendment
thereto) and each such prospectus (or preliminary prospectus or supplement
thereto) by each such Selling Holder and the underwriters, if any, in connection
with the offering and sale of the Registrable Shares covered by such
registration statement or prospectus). The Company shall not, however, be
required to maintain the registration statement relating to a Demand
Registration and to supply copies of a prospectus for a period beyond the Demand
Period, and, at the end of such period, the Company may deregister any
Registrable Shares covered by such registration statement and not then sold or
distributed. In connection with any such registration of Registrable Shares, the
Company will, at the request of the managing
Page 23
underwriter with respect thereto (or, if not an underwritten offering, at the
request of Selling Holders holding a majority of the Registrable Shares to be
included in the registration), use its best efforts to register or qualify such
Registrable Shares for sale under the securities laws of such states as is
reasonably requested to permit the distribution of such Registrable Shares and
to use its reasonable efforts to keep each such registration or qualification
effective during the period such registration statement is required to be kept
effective and to do such other acts or things reasonably necessary to enable the
disposition in such jurisdictions of the securities covered by the applicable
registration statement in accordance with applicable "blue sky" securities laws
of such jurisdictions; PROVIDED, HOWEVER, that the Company shall not be required
in connection therewith or as a condition thereof to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction or become subject to taxation in any jurisdiction.
In connection with any offering of Registrable Shares registered
pursuant to this Agreement, the Company shall (i) furnish each Selling Holder,
at the Company's expense and at least three (3) business days prior to the sale
of any Registrable Shares to the underwriters, with unlegended certificates in a
form eligible for deposit with The Depository Trust Company representing
ownership of the Registrable Shares that are sold pursuant to the registration
statement, in such denominations and registered in such names as the managing
underwriter, if any, or such Selling Holder shall reasonably request, and (ii)
instruct the transfer agent and registrar of the Registrable Shares to release
any stop transfer orders with respect to the Registrable Shares so sold.
4.5. REGISTRATION PROCEDURES. In connection with the Company's
obligations to effect a registration pursuant to Sections 4.2 and 4.3 (but
subject to the last sentence of Section 4.3.2(d) and PROVIDED that any time
periods set forth in this Section 4.5 regarding effective periods and the like
shall apply only in the event of a Demand Registration), the Company will as
expeditiously as is reasonably practicable:
(i) prepare and file with the Commission as soon as
practicable (in the case of a Demand Registration) a registration statement with
respect to such Registrable Shares, on a form available for the sale of the
Registrable Shares by the Holders thereof in accordance with the intended method
or methods of distribution thereof and use its commercially reasonable efforts
to cause each such registration statement to become and remain effective;
PROVIDED, HOWEVER, that before filing a registration statement or prospectus or
any amendments or supplements thereto (including documents that would be
incorporated or deemed to be incorporated therein by reference) and, whether or
not filed pursuant to Section 4.2 or 4.3, the Company will furnish to the
Holders of the Registrable Shares covered by such registration statement and the
underwriters, if any, and any attorney, accountant or other agent retained by
the Holders of Registrable Shares covered by such registration statement, copies
of all such documents proposed to be filed, which documents will be subject to
the review and comment of such Holders, such counsel and underwriters, if any.
The Company will not file any registration statement or any amendment thereto or
any prospectus or any supplement thereto in connection with a Demand
Registration pursuant to Section 4.2 (including such documents incorporated by
reference and proposed to be filed after the initial filing of the registration
statement) to which
Page 24
the Holders of a majority of the Registrable Shares covered by such registration
statement or the underwriters, if any, shall reasonably and timely object;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to such registration statement and such supplements to
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective (to the extent otherwise required by this
Agreement) and to comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such registration statement
until such time as all of such securities have been disposed of in accordance
with the intended methods of disposition by the seller or sellers thereof set
forth in such registration statement or the expiration of the Demand Period (in
the case of a Demand Registration), whichever occurs earlier; PROVIDED, HOWEVER,
that the only remedy for any failure to keep the registration statement so
effective shall be as set forth in Section 4.2.2 and, PROVIDED, FURTHER, that
the Company will have no obligation to a Selling Holder participating on a
"piggyback" basis in a registration statement that has become effective to keep
such registration statement effective for a period beyond 120 days from the
effective date of such registration statement;
(iii) cooperate and assist in any filings required to be made
with the National Association of Securities Dealers, Inc. (the "NASD");
(iv) notify each Selling Holder and the managing underwriter,
if any, promptly (and in any event within three (3) business days): (A) when the
prospectus or any prospectus supplement or post-effective amendment has been
filed, and, with respect to the registration statement or any post-effective
amendment, when the same has become effective; (B) of any request by the
Commission or any other federal or state governmental authority for any
amendments or supplements to the registration statement or the prospectus or for
additional information; (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the initiation of
any proceedings for that purpose; (D) if, at any time prior to the closing
contemplated by an underwriting agreement or such other agreement entered into
in connection with such registration statement, the representations and
warranties of the Company contained in such agreement cease to be true and
correct; (E) of the receipt by the Company of any notification with respect to
the suspension of the qualification of the Registrable Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; (F) of the happening of any event that makes any statement made in the
registration statement, the prospectus or any document incorporated or deemed to
be incorporated therein by reference untrue or that requires the making of any
changes in the registration statement, the prospectus or any document
incorporated therein by reference in order to make the statements therein not
misleading; and (G) of the Company's reasonable determination that a
post-effective amendment to a registration statement would be required;
(v) make commercially reasonable efforts to prevent the
issuance of any order suspending the effectiveness of the registration statement
or of any order preventing or suspending the use of a prospectus or suspending
the qualification of any of the Registrable Shares included therein for sale in
any jurisdiction (subject to the proviso at the end of the first paragraph of
Section 4.4), and, in the event of the issuance of any stop order suspending the
Page 25
effectiveness of the registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Registrable Shares included in such registration statement for sale in any
jurisdiction (subject to the proviso at the end of the first paragraph of
Section 4.4), the Company will use its best efforts to promptly obtain the
withdrawal of any such order;
(vi) furnish to each Selling Holder and the managing
underwriters, if any, without any additional charge, one signed copy of the
registration statement and any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(vii) as promptly as reasonably practicable, if required,
based on the advice of the Company's counsel or upon the occurrence of any event
contemplated by Section 4.5(iv)(F), prepare and file a supplement or
post-effective amendment to the registration statement, the related prospectus
or any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the Registrable
Shares, the prospectus will not contain an untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein not
misleading;
(viii) cause all Registrable Shares covered by the
registration statement to be listed on each securities exchange on which
identical securities issued by the Company are then listed if requested by the
Selling Holders holding a majority of the Registrable Shares covered by the
registration statement or the managing underwriters, if any;
(ix) provide and cause to be maintained a transfer agent and
registrar for all Registrable Shares covered by such registration statement from
and after a date not later than the effective date of such registration
statement;
(x) use its best efforts to provide a CUSIP number for the
Registrable Shares, not later than the effective date of the registration
statement;
(xi) use its best efforts to (A) obtain opinions of counsel to
the Company (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters, if any, and not objected
to by the Holders of a majority of the Registrable Shares being sold), and
updates thereof addressed to the Selling Holders, covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by the underwriters, if any; and
(B) obtain "cold comfort" letters and updates thereof (which letters and updates
(in form, scope and substance) shall be reasonably satisfactory to the managing
underwriters, if any, and counsel to the Holders of a majority of the
Registrable Shares being sold) from the Company's independent certified public
accountants addressed to such Selling Holders (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company or of
any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the registration
statement), such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters by accountants in connection
with underwritten offerings and such other matters as the underwriters, if any,
or the Holders of a majority of the
Page 26
Registrable Shares being sold, reasonably request. The above shall be done at
each closing under such underwriting or similar agreement or as and to the
extent required thereunder or, if not an underwritten offering, as otherwise
reasonably requested by the Holders of a majority of the Registrable Shares
being sold;
(xii) make available for inspection by a representative of the
Selling Holders and any attorneys or accountants retained by such Holders (and,
to the extent reasonably requested, furnish copies), in connection with the
preparation of a registration statement pursuant to this Agreement, all
financial and other records and pertinent corporate documents and properties of
the Company, and cause the Company's officers, directors and employees to supply
all information reasonably requested by any such representative(s), attorney(s)
or accountant(s) in connection with such registration; PROVIDED, HOWEVER, that
any records, information or documents that are designated by the Company in
writing as confidential shall be kept confidential by such persons unless
disclosure of such records, information or documents is required by court or
administrative order or under applicable law; and PROVIDED, FURTHER, that
appropriate arrangements are made, to the extent required by applicable
antitrust law, to limit access to such information of the Company to
representatives of the Holders who are not officers or employees of the Selling
Holders; and PROVIDED, FURTHER, that, without limiting the foregoing, no such
information shall be used by any such Person in connection with any market
transactions in securities of the Company or its subsidiaries in violation of
law;
(xiii) enter into such agreements reasonably requested
(including, as applicable, an underwriting agreement in form, scope and
substance as is customary in underwritten secondary offerings and is reasonably
satisfactory to the Company) and take all such other customary and reasonable
actions in connection therewith (including those requested by the managing
underwriters) in order to expedite or facilitate the disposition of the
Registrable Shares, and in such connection, whether or not an underwriting
agreement is entered into and whether or not the registration is an underwritten
registration:
(a) make such representations and warranties to the
Holders of such Registrable Shares included in the registration
statement and the underwriters, if any, with respect to the business of
the Company and the registration statement, prospectus and documents,
if any, incorporated or deemed to be incorporated by reference therein,
in each case, in form, substance and scope as are customarily made by
issuers to underwriters in underwritten offerings and confirm the same,
if and when reasonably requested; and
(b) deliver such documents and certificates as may be
reasonably requested by the Holders of a majority of the Registrable
Shares being included in the registration statement and managing
underwriters, if any, to evidence compliance with clause (a) above and
with any provisions contained in the underwriting agreement or other
similar agreement entered into by the Company.
Page 27
The above shall be done at each closing under such underwriting or similar
agreement or as and, if not an underwritten offering, to the extent otherwise
reasonably requested by the Holders of a majority of the Registrable Shares
being sold pursuant to the registration statement;
(xiv) (A) if so required by the managing underwriter in an
underwritten offering affording Holders of Registrable Shares registration
rights pursuant to Section 4.2 or 4.3, not publicly or privately sell, make any
short sale of, loan, grant any option, effect any public sale or distribution of
or otherwise dispose of its equity securities or securities convertible into or
exchangeable or exercisable for any of such securities during the ten (10) days
prior to, and the ninety (90) days after, any underwritten registration pursuant
hereto has become effective, except as part of such underwritten registration
and except pursuant to any exchange offer or registrations on Form S-4 or S-8 or
any successor or similar forms thereto, except that the Company may make grants
of options under its stock option plans and may issue securities issuable upon
the exercise or conversion of outstanding convertible securities, stock options
and other options, warrants and rights of the Company and (B) if requested, use
reasonable efforts to cause each holder of ten percent (10%) or more of the
securities of the same class as the securities included in any underwritten
registration pursuant to Section 4.2, or any securities convertible into or
exchangeable or exercisable for such securities, in each case purchased from the
Company at any time after the date of this Agreement (other than in a registered
public offering) to agree not to effect any public or private sale or
distribution or otherwise dispose (including sales pursuant to Rule 144) of any
such securities during the ten (10) days prior to, and the ninety (90) days
after, any underwritten registration pursuant hereto has become effective
(except as part of such underwritten registration, if otherwise permitted),
unless the underwriters managing the registered public offering otherwise agree;
(xv) if requested, furnish each Selling Holder with a copy (or
a reasonable number of copies, as requested) of the registration statement
(together with the Exhibits thereto) and each amendment thereto prior to the
filing thereof with the Commission;
(xvi) if requested by the managing underwriters, if any, or a
Holder of Registrable Shares being sold, promptly incorporate in a prospectus,
supplement or post-effective amendment such information as the managing
underwriters, if any, and the Holders of the Registrable Shares being sold
reasonably request to be included therein relating to the sale of the
Registrable Shares, including, without limitation, information with respect to
the number of Registrable Shares being sold to underwriters, the purchase price
being paid therefor by such underwriters and with respect to any other terms of
the underwritten offering of the Registrable Shares to be sold in such offering;
and make all required filings of such prospectus, supplement or post-effective
amendment promptly following notification of the matters to be incorporated in
such supplement or post-effective amendment;
(xvii) upon the occurrence of any event that would cause a
shelf registration statement (A) to contain a material misstatement or omission
or (B) to be not effective and usable for resale of Registrable Shares during
the Demand Period, the Company shall promptly file an amendment to such shelf
registration statement, in the case of clause (A), correcting any such
misstatement or omission and, in the case of either clause (A) or (B), use its
commercially
Page 28
reasonable efforts to cause such amendment to be declared effective and such
shelf registration statement to become usable as soon as reasonably practicable
thereafter;
(xviii) otherwise use its best efforts to (A) comply with all
applicable rules and regulations of the Commission and to take all other steps
reasonably necessary to effect the registration of the Registrable Shares
covered by the registration statement contemplated hereby, and (B) make
available to its securityholders an earnings statement that satisfies the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or
any similar rule promulgated under the Securities Act) no later than forty-five
(45) days after the end of any twelve-month (12) period (or ninety (90) days
after the end of any twelve-month (12) period if such period is a fiscal year)
(or in each case within such extended period of time as may be permitted by the
Commission for filing the applicable report with the Commission) (i) commencing
at the end of any fiscal quarter in which Registrable Shares are sold to
underwriters in a firm commitment or best efforts underwritten offering and (ii)
if not sold to underwriters in such an offering, commencing on the first day of
the first fiscal quarter of the Company after the effective date of a
registration statement, which statements shall cover said twelve-month (12)
periods; and
(xix) in connection with any underwritten offering, cooperate
with all marketing efforts reasonably requested by the managing underwriter(s)
in connection with the sale of the Registrable Shares, including, without
limitation, participation in a reasonable number of road-show presentations (in
major U.S. financial cities) and other marketing activity by Management
Stockholders and other employees of the Company requested by such underwriter or
underwriters PROVIDED that the scheduling of the road-show presentations shall
be set in consultation with the Company and will not require the Company's
involvement at any time or place to which the Company has a reasonable
objection.
4.6 HOLDBACK AGREEMENTS; RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF
REGISTRABLE SHARES. Each Holder of Registrable Shares (whether or not such
Registrable Shares are covered by a registration statement filed pursuant to
Section 4.2 or 4.3) agrees, if requested (pursuant to a timely written notice)
by the managing underwriter(s) in an underwritten offering, not to effect any
public sale or distribution of any of the Company's securities (excluding any
public sale or distribution of the Company's securities by a diversified
investment company that is affiliated with a Holder and is registered under the
Investment Company Act of 1940 in connection with trading activities in the
ordinary course of business), including a sale pursuant to Rule 144 (except as
part of such underwritten offering), during the period beginning ten (10) days
prior to, and ending one hundred eighty (180) days after, the closing date of
the underwritten offering made pursuant to such registration statement.
The foregoing provisions (the "HOLDBACK RESTRICTIONS") shall not apply
to any Holder of Registrable Shares if (i) such Holder is prevented by
applicable statute or regulation from entering into any such agreement;
PROVIDED, HOWEVER, that any such Holder shall undertake not to effect any public
sale or distribution of the class of securities covered by such registration
statement (except as part of such underwritten offering) during such period
unless it has provided sixty (60) days' prior written notice of such sale or
distribution to the managing underwriter, or (ii) the Company's directors,
executive officers or holders of 5% or more of the class of securities
Page 29
covered by such registration statement do not agree to be subject to
restrictions that are reasonably equivalent to the Holdback Restrictions.
4.7 REGISTRATION EXPENSES. Except as otherwise required by state
securities laws or the rules and regulations promulgated thereunder, all
expenses, disbursements and fees incurred by the Company in connection with
carrying out its obligations under this Article 4, including but not limited to
(i) the reasonable and documented fees and expenses of one counsel for the
Selling Holders (which counsel shall be selected by Holders of a majority of the
Registrable Shares included in the applicable registration), (ii) all
registration and filing fees and expenses, including fees with respect to
filings made with the NASD (including, if applicable, the fees and expenses of
any "qualified independent underwriter" and its counsel, as may be required by
the rules and regulations of the NASD), (iii) fees and expenses of compliance
with securities or blue sky laws (including fees and disbursements of counsel
for the underwriters or Selling Holders in connection with blue sky
qualifications of the Registrable Shares and determinations of their eligibility
for investment under the laws of such jurisdiction as the managing underwriters
or Holders of a majority of the Registrable Shares being sold may designate,
subject to the proviso to the last sentence of the first paragraph of Section
4.4), (iv) printing expenses (including printing certificates for the
Registrable Shares to be sold and the registration statements and prospectuses),
messenger and delivery expenses, duplication expenses, word processing expenses
and telephone expenses, (v) fees and disbursements of counsel for the Company,
and (vi) fees and disbursements of all independent certified public accountants
of the Company incurred in connection with such registration (including the
expenses of any special audit and "cold comfort" letters incident to such
registration) and fees and disbursements of underwriters (excluding discounts,
commissions or fees of underwriters, selling brokers, dealer managers or similar
securities industry professionals relating to the distribution of the
Registrable Shares) and other Persons retained by the Company (all such expenses
being herein called "REGISTRATION EXPENSES"), will be borne by the Company
regardless of whether a registration statement becomes effective; PROVIDED,
HOWEVER, that the Company will, in any event, pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit or quarterly review, the fees and expenses of any Person, including
special experts, retained by the Company, the expense of any liability insurance
and the expenses and fees for listing the securities to be registered on each
securities exchange on which similar securities issued by the Company are then
listed or on the NASD automated quotation system; and, PROVIDED, FURTHER, that
each Selling Holder shall pay (x) all costs and expenses of counsel (other than
the counsel costs referred to in (i) above) and accounting or financing
professionals retained by such Selling Holder, (y) all underwriting discounts,
commissions, fees and expenses and all transfer taxes with respect to the Shares
sold by such Selling Holder, and (z) all other expenses incurred by such Selling
Holder and incidental to the sale and delivery of the Shares to be sold by such
Holder.
4.8 CONDITIONS TO HOLDER'S RIGHTS. It shall be a condition of each
Selling Holder's rights under this Article 4 that:
4.8.1 COOPERATION. Such Selling Holder shall cooperate with
the Company by supplying information and executing documents relating to such
Selling Holder or the securities
Page 30
of the Company owned by such Selling Holder in connection with such registration
that are customary for offerings of this type (including agreeing to sell such
Selling Holder's Registrable Shares on the basis provided in any underwriting
arrangements containing customary terms reasonably satisfactory to such Selling
Holder);
4.8.2 UNDERTAKINGS. Such Selling Holder shall enter into any
undertakings and take such other action relating to the conduct of the proposed
offering that the Company or the underwriters may reasonably request as being
necessary to insure compliance with federal and state securities laws and the
rules or other requirements of the NASD or that the Company or the underwriters
may reasonably request to otherwise effectuate the offering; and
4.8.3 INDEMNIFICATION. Such Selling Holder shall execute and
deliver an agreement to indemnify to the fullest extent permitted by law and
hold harmless the Company, each of its directors, each of its officers who has
signed the registration statement, any underwriter (as defined in the Securities
Act), and each person, if any, who controls the Company or such underwriter
within the meaning of the Securities Act, against such losses, claims, damages
or liabilities (including reimbursement for legal and other expenses) to which
the Company or any such director, officer, underwriter or controlling person may
become subject under the Securities Act or otherwise, in such manner as is
customary for registrations of the type then proposed, but only with respect to
written information about or pertaining to such Selling Holder furnished by such
Selling Holder specifically for inclusion in the Registration Statement.
4.9 INDEMNIFICATION.
4.9.1 INDEMNIFICATION BY THE COMPANY. In the case of any
offering registered pursuant to this Agreement, the Company agrees to indemnify
to the fullest extent permitted by law and hold each Selling Holder, each
affiliate of such Selling Holder, each director, officer, agent, representative
and employee of such Selling Holder and its affiliates, each Person who controls
each Selling Holder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and the directors, officers, agents or employees
of each such controlling Person (collectively, "SELLING HOLDER INDEMNIFIED
PERSONS") harmless against any and all losses, claims, damages, liabilities and
actions (including reasonable and documented costs (including, without
limitation, costs of preparation and reasonable attorneys' fees and
disbursements) and expenses, including reasonable expenses of investigation)
(collectively "LOSSES") to which they or any of them may become subject under
the Securities Act or any other statute or common law or otherwise, insofar as
any such Losses shall arise out of, be caused by or shall be based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in the
registration statement relating to the sale of the Registrable Shares covered
thereby, or 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, or (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus (as amended or
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereof), if used prior to the effective date of such
registration statement, or contained in the prospectus (as amended or
supplemented if the Company shall have filed with the Commission any amendment
thereof or supplement thereof, including the
Page 31
information deemed part of such registration statement pursuant to Rule 430A
promulgated under the Securities Act), if used within the period during which
the Company shall be required to keep the registration statement to which such
prospectus relates current pursuant to the terms of this Agreement, or the
omission or alleged omission to state therein (if so used) a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, and the Company agrees to reimburse
each Selling Holder Indemnified Person for any legal or other expenses
reasonably incurred by such Selling Holder Indemnified Person in connection with
investigating or defending any such action or claim as such expenses are
incurred; PROVIDED, HOWEVER, that the indemnification agreement contained in
this Section 4.9.1 shall not apply to such Losses that shall arise from the sale
of Registrable Shares to any Person if such Losses shall arise out of, shall be
caused by or shall be based upon any such untrue statement or alleged untrue
statement, or any such omission or alleged omission, if such statement or
omission shall have been made in reliance upon and in conformity with
information furnished in writing to the Company by such Selling Holder
specifically for use in connection with the preparation of the registration
statement or any preliminary prospectus or prospectus contained in the
registration statement or any such amendment thereof or supplement thereto. This
indemnity shall be in addition to any other indemnification arrangements to
which the Company may otherwise be a party.
4.9.2 INDEMNIFICATION BY HOLDERS OF REGISTRABLE SHARES. Each
Selling Holder agrees to indemnify to the fullest extent permitted by law and
hold the Company, its directors, officers, agents, representatives and
employees, each Person who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, and the directors,
officers, agents, representatives or employees of such controlling persons
harmless against any and all Losses arising out of, caused by or based upon any
untrue statement of a material fact contained in any registration statement,
prospectus or form of prospectus, or arising out of, caused by or based upon any
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of the preliminary prospectus and the
prospectus, in each case, including amendments or supplements, in light of the
circumstances in which they were made) not misleading, to the extent, but only
to the extent, that such untrue statement or omission is contained in any
information furnished in writing by such Selling Holder to the Company,
expressly for use in such registration statement or prospectus; PROVIDED,
HOWEVER, that the obligation to indemnify will be several and not joint and in
no event shall the liability of any Selling Holder hereunder be greater in
amount than the dollar amount of the proceeds (net of the payment of
underwriting discounts and commissions payable by such Selling Holder) received
by any such Selling Holder upon the sale of the Registrable Shares giving rise
to such indemnification obligation. The Company and the Selling Holders shall be
entitled to receive indemnities from underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution to the same extent as provided above with respect to information so
furnished in writing by such Persons expressly for use in any prospectus or
registration statement.
4.9.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person
entitled to indemnity under this Agreement (an "INDEMNIFIED PARTY") shall give
prompt written notice to the party from which such indemnity is sought (the
"INDEMNIFYING PARTY") of any claim or of
Page 32
the commencement of any proceeding with respect to which such Indemnified Party
seeks indemnification or contribution pursuant hereto; PROVIDED, HOWEVER, that
the failure so to notify the Indemnifying Party shall not relieve the
indemnifying party from any obligation or liability except to the extent that
the Indemnifying Party has been prejudiced materially by such failure. The
Indemnifying Party shall have the right (exercisable by giving written notice to
an Indemnified Party promptly after the receipt of written notice from such
Indemnified Party of such claim or proceeding) to assume, at the Indemnifying
Party's expense, the defense of any such claim or proceeding, with counsel
reasonably satisfactory to such Indemnified Party; PROVIDED, HOWEVER, that under
such circumstances an Indemnified Party shall have the right to employ separate
counsel in any such claim or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless: (1) the Indemnifying Party agrees to pay such
fees and expenses; or (2) the Indemnifying Party fails promptly to assume the
defense of such claim or proceeding or fails to employ counsel reasonably
satisfactory to such Indemnified Party; or (3) the Indemnified Party shall have
been advised by counsel that (i) there may be one or more material defenses
available to such Indemnified Party that are different from or additional to
those available to the Indemnifying Party or its affiliates, or (ii) a conflict
of interest likely exists if such counsel represents such Indemnified Party and
such Indemnifying Party or its affiliate, in which case, if such Indemnified
Party notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense thereof, it being
understood, however, that the Indemnifying Party shall not, in connection with
any one such claim or proceeding, or separate but substantially similar or
related claims or proceedings arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (together with appropriate local counsel, which such counsel
shall be designated by the Indemnified Party and be reasonably acceptable to the
Indemnifying Party) at any time for such Indemnified Party, or for fees and
expenses that are not reasonable. Whether or not such defense is assumed by the
Indemnifying Party, such Indemnifying Party will not be subject to any liability
for any settlement made without its consent (which consent shall not be
unreasonably withheld). The Indemnifying Party shall not consent to entry of any
judgment or settle or compromise any pending or threatened claim, action or
proceeding, unless it contains as an unconditional term thereof the giving by
the claimant or plaintiff to the Indemnified Party of a release, in form and
substance satisfactory to such Indemnified Party, from all liability in respect
of such claim or litigation for which such Indemnified Party would be entitled
to indemnification hereunder.
The Indemnifying Party's liability to any such Indemnified
Party hereunder shall not be extinguished solely because any other Indemnified
Party is not entitled to indemnity hereunder.
4.9.4 CONTRIBUTION. If the indemnification provided for in
this Section 4.9 is unavailable to an Indemnified Party for any reason in
respect of any Losses or is insufficient to hold such Indemnified Party
harmless, then, except to the extent that contribution is not permitted under
Section 11(f) of the Securities Act, each applicable Indemnifying Party shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in
Page 33
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party, on the one hand, and such Indemnified Party, on the other
hand, in connection with the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable considerations appropriate
under the circumstances. The relative fault of such Indemnifying Party, on the
one hand, and such Indemnified Party, on the other hand, shall be determined by
reference to, among other things, whether any action in question, including any
untrue statement of a material fact or omission to state a material fact, has
been taken or made by, or relates to information supplied by, such Indemnifying
Party or Indemnified Party, and the parties' relative intent, knowledge, access
to information concerning the matter with respect to which the claim was
asserted and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 4.9.4 were determined by PRO
RATA allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 4.9.4, no Indemnifying
Party that is a Selling Holder shall be required to contribute any amount in
excess of the amount by which the net proceeds received by such Selling Holder
from the sale of Registrable Shares exceeds the amount of any damages that such
Selling Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or 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 was not guilty of such
fraudulent misrepresentation.
The indemnity and contribution agreements contained in this
Section 4.9 are in addition to any liability that the Indemnifying Parties may
have to the Indemnified Parties.
4.9.5 UNDERWRITING AGREEMENT TO GOVERN. At such time as an
underwriting agreement with respect to a particular underwriting is entered
into, the terms of any such underwriting agreement shall govern with respect to
the matters set forth therein to the extent inconsistent with this Section 4.9
PROVIDED that the indemnification provisions of such underwriting agreement as
they relate to Selling Holders shall be customary for registrations of the type
then proposed and shall provide for indemnification by such Selling Holders only
with respect to written information furnished by such Selling Holders.
4.10 RULE 144. Following a Public Offering Event, the Company shall
file the reports required to be filed by it under the Securities Act and the
Exchange Act and will take such further action as any Holder of Registrable
Shares may reasonably request, all to the extent required from time to time to
enable such Holder to sell Registrable Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.
Upon the request of any Holder of Registrable Shares, the Company will deliver
to such Holder a written statement as to whether it has complied with such
requirements.
Page 34
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Stockholders as follows:
5.1.1 ORGANIZATION. It is a corporation duly organized and
validly existing under the laws of the State of Delaware;
5.l.2 AUTHORITY. It has full corporate power and authority to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby;
5.1.3 BINDING OBLIGATION. The execution, delivery and
performance of this Agreement by it and the consummation by it of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on its part, and this Agreement constitutes its
binding obligation, enforceable against it in accordance with its terms, except
insofar as enforceability may be limited by bankruptcy, insolvency, moratorium
or other laws that may affect creditors rights and remedies generally and by
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law); and
5.1.4 NO CONFLICT. The execution, delivery and performance of
this Agreement by it and the consummation by it of the transactions contemplated
hereby will not, with or without the giving of notice or the lapse of time, or
both, (i) violate any provision of law, statute, rule or regulation to which it
is subject, (ii) violate any order, judgment or decree applicable to it, or
(iii) conflict with, or result in a breach or default under, any term or
condition of its certificate of incorporation or its bylaws or any material
agreement or other material instrument to which it is a party or by which it or
its property is bound.
5.2 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each of the
Stockholders represents and warrants to each other and to the Company as
follows:
5.2.1 ORGANIZATION. If it is an entity, it is a corporation,
limited partnership, limited liability company or other entity duly organized
and validly existing under the laws of its respective state of organization;
5.2.2 AUTHORITY. It has full power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby;
5.2.3 BINDING OBLIGATION. The execution, delivery and
performance of this Agreement by it and the consummation by it of the
transactions contemplated hereby have been duly and validly authorized by all
necessary action on its part, and this Agreement constitutes its binding
obligation, enforceable against it in accordance with its terms, except insofar
as enforceability may be limited by bankruptcy, insolvency, moratorium or other
laws that may affect creditors' rights and remedies generally and by principles
of equity (regardless of whether enforceability is considered in a proceeding in
equity or at law); and
Page 35
5.2.4 NO CONFLICT. The execution, delivery and performance of
this Agreement by it and the consummation by it of the transactions contemplated
hereby will not, with or without the giving of notice or the lapse of time, or
both, (i) violate any provision of law, statute, rule or regulation to which it
is subject, (ii) violate any order, judgment or decree applicable to it, or
(iii) conflict with, or result in a breach or default under, any term or
condition of its certificate or articles of incorporation, organizational
documents, bylaws, trust, partnership agreement, operating agreement or
equivalent governing document or any material agreement or other material
instrument to which it is a party or by which it or its property is bound.
ARTICLE 6. TERMINATION OF AGREEMENT
Subject to the next succeeding sentence, this Agreement shall terminate
ten (10) years from the date of this Agreement with respect to all rights and
obligations pertaining to Common Shares and this Agreement shall terminate
twelve (12) years from the date of this Agreement with respect to all rights and
obligations pertaining to Preferred Shares. If any rights and obligations
provided in Article 1, Article 3, Section 2.3, Section 2.4, Section 2.5, Section
2.6, Section 2.7, Section 2.8 or Section 2.9 of this Agreement have not
terminated earlier in accordance with the preceding sentence, such rights and
obligations shall terminate on the date of a Public Offering Event.
ARTICLE 7. GENERAL
7.1 RECAPITALIZATION, EXCHANGES, ETC., AFFECTING THE SHARES. The
provisions of this Agreement shall apply to the full extent set forth herein
with respect to (a) the Shares and any option, right or warrant to acquire
Shares, and (b) any and all shares of capital stock of the Company or any
successor or assign of the Company (whether by merger, consolidation, sale of
assets or otherwise) that may be issued in respect of, in exchange for, or in
substitution for any Shares by combination, recapitalization, reclassification,
merger, consolidation or otherwise. In the event of any change in the
capitalization of the Company as a result of any stock split, stock dividend or
stock combination, the provisions of this Agreement shall be appropriately
adjusted.
7.2 INJUNCTIVE RELIEF. It is hereby agreed and acknowledged that it
will be impossible to measure in money the damages that would be suffered if the
parties fail to comply with any of the obligations herein imposed on them and
that, in the event of any such failure, an aggrieved person will be irreparably
damaged and will not have an adequate remedy of law. Any such person shall,
therefore, be entitled to injunctive relief, including specific performance, to
enforce such obligations, without the posting of any bond, and, if any action
should be brought in equity to enforce any of the provisions of this Agreement,
none of the parties hereto shall raise the defense that there is an adequate
remedy at law.
7.3 NOTICES. Any and all notices, demands or other communications
required or permitted hereunder shall be in writing and shall be made by hand
delivery (deemed given upon receipt), or by certified mail return receipt
requested (deemed given upon execution of such return receipt), addressed to a
Stockholder and/or the Company, as applicable, at the address set forth below
each such person's or entity's signature. Any party may change its address for
notice
Page 36
by notice given to each Stockholder and the Company in accordance with the
foregoing. No objection may be made to the method of delivery of any notice
actually and timely received.
7.4 LEGEND. In addition to any other legend that may be required by
applicable law, each share certificate representing Shares that are subject to
this Agreement shall have endorsed, to the extent appropriate, upon its face the
following words:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY JURISDICTION. SUCH
SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
ASSIGNED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO (I) A REGISTRATION STATEMENT WITH RESPECT
TO SUCH SECURITIES THAT IS EFFECTIVE UNDER SUCH ACT OR
APPLICABLE STATE SECURITIES LAW, OR (II) ANY EXEMPTION FROM
REGISTRATION UNDER SUCH ACT, OR APPLICABLE STATE SECURITIES
LAW, RELATING TO THE DISPOSITION OF SECURITIES, INCLUDING RULE
144, PROVIDED, AN OPINION OF COUNSEL IS FURNISHED TO THE
CORPORATION, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
THE CORPORATION, TO THE EFFECT THAT AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND/OR APPLICABLE STATE
SECURITIES LAW IS AVAILABLE.
IN ADDITION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER COMPLIES WITH
THE PROVISIONS OF A STOCKHOLDERS AGREEMENT (THE "STOCKHOLDERS
AGREEMENT"), A COPY OF WHICH IS ON FILE AND MAY BE INSPECTED
AT THE PRINCIPAL OFFICE OF THE CORPORATION. NO TRANSFER OF THE
SECURITIES WILL BE MADE ON THE BOOKS OF THE CORPORATION UNLESS
ACCOMPANIED BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF SUCH
STOCKHOLDERS AGREEMENT. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO OTHER RIGHTS AND OBLIGATIONS,
INCLUDING VOTING AGREEMENTS, AS SET FORTH IN THE STOCKHOLDERS
AGREEMENT.
To the extent the circumstances or provisions requiring any of the above legends
have ceased to be effective, the Company will upon request reissue certificates
without the applicable legend or legends.
Page 37
7.5 TRANSFEREES BOUND. All Shares owned by a Transferee shall, subject
to the terms of Section 2.3 of this Agreement, for all purposes be subject to
the terms of this Agreement, whether or not such Transferee has executed a
consent to be bound by this Agreement. The foregoing shall not apply in the case
of any Shares acquired by a Transferee pursuant to a sale of Shares pursuant to
an effective registration statement under the Securities Act or, except for
sales to an affiliate of the Company or sales made prior to a Public Offering
Event, pursuant to Rule 144.
7.6 AMENDMENT; WAIVER. This Agreement may be amended, modified,
supplemented or terminated only by a written instrument signed by each of (i)
the Company, (ii) any such Investor Parties that hold Common Shares or options
to acquire Common Shares that represent, on a fully-diluted basis, a majority of
the Common Shares held by all of the Investor Parties, (iii) any such Management
Parties that hold Common Shares or options to acquire Common Shares that
represent, on a fully-diluted basis, a majority of the Common Shares held by all
of the Management Parties, and (iv) any such Mezzanine Parties that hold Common
Shares or Warrants to acquire Common Shares that represent, on a fully-diluted
basis, a majority of the Common Shares held by all of the Mezzanine Parties. No
provision of this Agreement may be waived orally, but only by a written
instrument signed by the party against whom enforcement of such waiver is
sought. Stockholders shall be bound from and after the date of the receipt of a
written notice from the Company setting forth such amendment or waiver by any
consent authorized by this Section 7.6, whether or not the Shares shall have
been marked to indicate such consent; no alteration, modification or impairment
shall be implied by reason of any previous waiver, extension of time, delay or
omission in exercise, or other indulgence.
7.7 ADDITIONAL DOCUMENTS. Each party hereto agrees to execute any and
all further documents and writings within such party's powers and to perform
such other actions that may be or become necessary or expedient to effectuate
and carry out this Agreement.
7.8 NO THIRD-PARTY BENEFITS. None of the provisions of this Agreement
shall be for the benefit of, or enforceable by, any third-party beneficiary.
7.9 SUCCESSORS AND ASSIGNS. Subject to the terms hereof, this Agreement
shall be binding upon and shall inure to the benefit of the Stockholders, and
their respective successors and permitted assigns; PROVIDED, HOWEVER, (i)
neither this Agreement nor any rights or obligations hereunder may be
transferred by the Company and (ii) no rights or obligations of any Stockholder
under this Agreement may be assigned except that any Stockholder may transfer
its rights and obligations hereunder, in whole or in part, in connection with a
Transfer of Shares made in compliance with all of the provisions of this
Agreement. Notwithstanding anything in this Agreement to the contrary, in the
event of a Transfer of Shares by any VCA Co-Investment Fund to its member or
members upon the dissolution of such VCA Co-Investment Fund, such member or
members shall succeed to all rights and obligations under this Agreement of such
VCA Co-Investment Fund, subject to the compliance by such member or members with
the provisions of Section 2.3.
Page 38
7.10 SEVERABILITY. In case any one or more of the provisions contained
in this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein; PROVIDED, HOWEVER, that the parties hereto shall
use their best efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such invalid,
illegal or unenforceable term, provision, covenant or restriction.
7.11 INTEGRATION. This Agreement contains the entire understanding of
the parties with respect to the subject matter hereof. There are no
restrictions, agreements, promises, representations, warranties, covenants or
undertakings with respect to the subject matter hereof other than those
expressly set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to its subject
matter.
7.12 GOVERNING LAW. THE RIGHTS AND LIABILITIES OF THE PARTIES SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF DELAWARE, REGARDLESS OF THE CHOICE
OF LAWS PROVISIONS OF SUCH STATE OR ANY OTHER JURISDICTION.
7.13 ATTORNEYS' FEES. Should any litigation or arbitration be commenced
(including any proceedings in a bankruptcy court) between the parties hereto or
their representatives concerning any provision of this Agreement or the rights
and duties of any person or entity hereunder, the party or parties prevailing in
such proceeding shall be entitled, in addition to such other relief as may be
granted, to the reasonable attorneys' fees and court costs incurred by reason of
such litigation or arbitration.
7.14 HEADINGS. The headings in this Agreement are inserted only as a
matter of convenience, and in no way define, limit, or extend or interpret the
scope of this Agreement or of any particular Section.
7.15 INFORMATION FOR NOTICES. No Stockholder (other than a Stockholder
as of the date of this Agreement with respect to the Shares held as of such
date) shall hold any of its Shares in nominee name unless it otherwise provides
the Company and the other Stockholders with its name and address and other
information reasonably requested by the Company in order to establish such
Stockholder's particular status under this Agreement.
7.16 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.17 CONSENT TO JURISDICTION. Each Stockholder agrees that any
proceeding arising out of or relating to this Agreement or the breach or
threatened breach of this Agreement may be commenced and prosecuted in a court
in the State of California. Each Stockholder hereby irrevocably and
unconditionally consents and submits to the non-exclusive personal jurisdiction
of any court in the State of California in respect of any such proceeding. Each
Stockholder
Page 39
consents to service of process upon such Stockholder with respect to any such
proceeding by registered mail, return receipt requested, and by any other means
permitted by applicable laws and rules. Each Stockholder waives any objection
that such Stockholder may now or hereafter have to the laying of venue of any
such proceeding in any court in the State of California and any claim that it
may now or hereafter have that any such proceeding in any court in the State of
California has been brought in an inconvenient forum.
7.18 NO INCONSISTENT AGREEMENTS. The Company will not hereafter enter
into any agreements with respect to its securities that are inconsistent with or
violate in any material respects the rights granted to the Holders of
Registrable Shares in this Agreement.
7.19 CERTAIN DISTRIBUTIONS EXEMPT; REPRESENTATIVES. Notwithstanding
anything to the contrary contained in this Agreement, any distribution of Shares
by any of the Investors or any other Investor Party, or by any of the Mezzanine
Purchasers or any other Mezzanine Party, to its respective equity participants
in accordance with the terms of its limited partnership agreement, operating
agreement, or other governing agreement or instrument shall be exempt from the
terms and conditions of this Agreement, other than that the Persons receiving
the Shares in connection with any such distribution shall be bound on a
going-forward basis by the terms and conditions of this Agreement. For example,
and not by way of limitation, any such distribution shall not trigger any of the
"tag-along" rights set forth in Section 2.4. For purposes of this Agreement, the
parties hereto shall designate and appoint representatives (each, a
"REPRESENTATIVE") as provided in this Section 7.19. The Investor Parties hereby
designate and appoint Xxxxxxx Xxxxx & Partners, L.P. (or any successor
designated in writing by Investor Parties holding Shares that represent, on a
fully-diluted basis, a majority in value of the Shares held by all of the
Investor Parties) as representative on behalf of the Investor Parties; the
Management Parties hereby designate and appoint Xxxxxx X. Xxxxx (or any
successor designated in writing by Management Parties holding Common Shares or
options to acquire Common Shares that represent, on a fully-diluted basis, a
majority in value of the Common Shares held by all of the Management Parties) as
representative on behalf of the Management Parties; and the Mezzanine Parties
hereby designate and appoint GS Mezzanine Advisors II, L.L.C. (or any successor
designated in writing by Mezzanine Parties holding Shares or Warrants to acquire
Shares that represent, on a fully-diluted basis, a majority in value of the
Shares held by all of the Mezzanine Parties) as representative on behalf of the
Mezzanine Parties. For purposes of determining whether a majority of the
applicable Shares are held by the applicable parties under this Section 7.19,
each Common Share shall be valued at $15.00 and each Preferred Share shall be
valued at $25.00. Each Representative shall have the authority to receive any
notices, settle any claims, agree to any amendments, and grant any consents or
waivers on behalf of the parties that such Representative represents. The
parties hereto shall be entitled to deal exclusively with the respective
Representatives with respect to matters arising out of this Agreement, and the
parties hereto shall be entitled to deliver any notices to the respective
Representatives and rely on any action of the respective Representatives with
respect to actions taken under this Agreement on behalf of the parties hereto.
7.20 APPROVAL OF MANAGEMENT SERVICES AGREEMENT BY STOCKHOLDERS. Each of
the Stockholders, by such Stockholder's execution of this Agreement, hereby (i)
approves the
Page 40
payment by the Company to Xxxxxxx Xxxxx & Partners, L.P. ("LGP") of certain fees
in connection with the consummation of the transactions contemplated by the
Merger Agreement and certain fees in connection with the provision of ongoing
services to the Company, and (ii) approves and adopts the Management Services
Agreement to be entered into between the Company, Operating Company and LGP.
7.21 CERTAIN LIMITATIONS. Notwithstanding anything to the contrary
contained in this Agreement, prior to the issuance or sale of any shares of the
Company's capital stock pursuant to an effective registration statement under
the Securities Act, the Company shall not be required to register any transfer
of Shares on the Company's books if, in the reasonable, good faith judgment of
the Company, registering such transfer would cause the Company to become subject
to registration pursuant to the Exchange Act.
7.22 INFORMATION REGARDING BENEFICIAL OWNERSHIP. Each Stockholder
agrees to promptly provide to the Company any reasonable information or
representations that the Company may request regarding such Stockholder's
beneficial ownership of shares of any class of the Company's capital stock.
Page 41
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first set forth above.
THE COMPANY:
VETERINARY CENTERS OF AMERICA, INC.
By: /S/ XXXXXX X. XXXXX
-------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
THE PURCHASER:
GREEN EQUITY INVESTORS III, L.P.
By: GEI Capital III, LLC, its
general partner
By: /S/ XXXX XXXXXXX
-------------------------------
Name: Xxxx Xxxxxxx
Title: Manager
Page 42
THE VCA CO-INVESTMENT FUNDS:
VCA CO-INVESTMENT FUND I, LLC
By: Xxxxxxx Xxxxx & Partners, L.P.,
its manager
By: LGP Management, Inc.
By: /S/ XXXX XXXXXXX
-------------------------------
Name: Xxxx Xxxxxxx
Title: Manager
VCA CO-INVESTMENT FUND II, LLC
By: Xxxxxxx Xxxxx & Partners, L.P.,
its manager
By: LGP Management, Inc.
By: /S/ XXXX XXXXXXX
-------------------------------
Name: Xxxx Xxxxxxx
Title: Manager
VCA CO-INVESTMENT FUND III, LLC
By: Xxxxxxx Xxxxx & Partners, L.P.,
its manager
By: LGP Management, Inc.
By: /S/ XXXX XXXXXXX
-------------------------------
Name: Xxxx Xxxxxxx
Title: Manager
Page 43
VCA CO-INVESTMENT FUND IV, LLC
By: Xxxxxxx Xxxxx & Partners, L.P.,
its manager
By: LGP Management, Inc.
By: /S/ XXXX XXXXXXX
-------------------------------
Name: Xxxx Xxxxxxx
Title: Manager
VCA CO-INVESTMENT FUND V, LLC
By: Xxxxxxx Xxxxx & Partners, L.P.,
its manager
By: LGP Management, Inc.
By: /S/ XXXX XXXXXXX
-------------------------------
Name: Xxxx Xxxxxxx
Title: Manager
VCA CO-INVESTMENT FUND VI, LLC
By: Xxxxxxx Xxxxx & Partners, L.P.,
its manager
By: LGP Management, Inc.
By: /S/ XXXX XXXXXXX
-------------------------------
Name: Xxxx Xxxxxxx
Title: Manager
Page 44
VCA CO-INVESTMENT FUND VII, LLC
By: Xxxxxxx Xxxxx & Partners, L.P.,
its manager
By: LGP Management, Inc.
By: /S/ XXXX XXXXXXX
-------------------------------
Name: Xxxx Xxxxxxx
Title: Manager
VCA CO-INVESTMENT FUND VIII, LLC
By: Xxxxxxx Xxxxx & Partners, L.P.,
its manager
By: LGP Management, Inc.
By: /S/ XXXX XXXXXXX
-------------------------------
Name: Xxxx Xxxxxxx
Title: Manager
Page 45
THE MEZZANINE PURCHASERS:
GS MEZZANINE PARTNERS II, L.P.
By: GS MEZZANINE ADVISORS II, L.L.C.,
its general partner
By: /S/ XXXXXXXXX X. XXXXXXXXXX
----------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxxx
Title: Vice President
GS MEZZANINE PARTNERS II OFFSHORE, L.P.
By: GS Mezzanine Advisors II, L.L.C.
its general partner
By: /S/ XXXXXXXXX X. XXXXXXXXXX
----------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxxx
Title: Vice President
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW Advisers (Bermuda), Ltd.
as its General Partner
By: /S/ XXXX X. XXXXXXXXX
----------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Group Managing Director
By: TCW Investment Management Company
as Investment Adviser
By: /S/ XXXX X. XXXXXXX
----------------------------------
Name: Xxxx X. Xxxxxxx
Title: Managing Director
Page 46
TCW LEVERAGED INCOME TRUST II, L.P.
By: TCW (XXXX XX), L.P.
as its General Partner
By: TCW Advisers (Bermuda), Ltd.
as its General Partner
By: /S/ XXXX X. XXXXXXXXX
----------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Group Managing Director
By: TCW Investment Management Company
as Investment Adviser
By: /S/ XXXX X. XXXXXXX
----------------------------------
Name: Xxxx X. Xxxxxxx
Title: Managing Director
Page 47
TCW LEVERAGED INCOME TRUST IV, L.P.
By: TCW Asset Management Company
as its Investment Adviser
By: /S/ XXXX X. XXXXXXXXX
----------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Group Managing Director
By: /S/ XXXX X. XXXXXXX
----------------------------------
Name: Xxxx X. Xxxxxxx
Title: Managing Director
By: TCW (XXXX XX), L.L.C.
as General Partner
By: TCW Asset Management Company
as its Managing Member
By: /S/ XXXX X. XXXXXXXXX
----------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Group Managing Director
By: /S/ XXXX X. XXXXXXX
----------------------------------
Name: Xxxx X. Xxxxxxx
Title: Managing Director
TCW/CRESCENT MEZZANINE PARTNERS II, L.P.
By: TCW/Crescent Mezzanine II, L.P.
its general partner or managing
owner
By: TCW/Crescent Mezzanine, L.L.C.
its general partner
By: /S/ XXXX X. XXXXXXX
----------------------------------
Name: Xxxx X. Xxxxxxx
Title: Managing Director
Page 48
TCW/CRESCENT MEZZANINE TRUST II
By: TCW/Crescent Mezzanine II, L.P.
its general partner or managing
owner
By: TCW/Crescent Mezzanine, L.L.C.
its general partner
By: /S/ XXXX X. XXXXXXX
----------------------------------
Name: Xxxx X. Xxxxxxx
Title: Managing Director
THE NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY
By: /S/ XXXX X. XXXXXXX
----------------------------------
Name: Xxxx X. Xxxxxxx
Title: Its Authorized Representative
Page 49
MANAGEMENT STOCKHOLDERS:
/S/ XXXXXX X. XXXXX
------------------------------------
Xxxxxx X. Xxxxx
/S/ XXXXXX XXXXX
------------------------------------
Xxxxxx Xxxxx
/S/ XXXX XXXXXX
------------------------------------
Xxxx Xxxxxx
/S/ XXX XXXXXX
------------------------------------
Xxx Xxxxxx
/S/ XXXXX XXXXXXX
------------------------------------
Xxxxx Xxxxxxx
/S/ XXXX XXXXXX
------------------------------------
Xxxx Xxxxxx
/S/ XXXXXXX XXXXXX
------------------------------------
Xxxxxxx Xxxxxx
/S/ XXXXX XXXXX
------------------------------------
Xxxxx Xxxxx
/S/ XXXX XXXXX
------------------------------------
Xxxx Xxxxx
Page 50
/S/ XXXX XXXXXXX
------------------------------------
Xxxx Xxxxxxx
/S/ XXXXX PALM
------------------------------------
XxXxx Palm
/S/ XXXXXXXX XXXXXXXX
------------------------------------
Xxxxxxxx Xxxxxxxx
/S/ XXXXX XXXXXXX
------------------------------------
Xxxxx Xxxxxxx
/S/ XXXX XXXXXX
------------------------------------
Xxxx Xxxxxx
/S/ XXXXX SULPHIN
------------------------------------
Xxxxx Sulphin
/S/ XXXXXXX XXXXXXXX
------------------------------------
Xxxxxxx XxXxxxxx
/S/ XXXXXX XXXXXXXX
------------------------------------
Xxxxxx Xxxxxxxx
/S/ XXXX XXXXXX
------------------------------------
Xxxx Xxxxxx
Page 51
/S/ XXXX XXXXX
------------------------------------
Xxxx Xxxxx
/S/ XXXX XXXXXX
------------------------------------
Xxxx Xxxxxx
/S/ XXXX XXXXXXX
------------------------------------
Xxxx Xxxxxxx
/S/ XXX XXXXXXXX
------------------------------------
Xxx Xxxxxxxx
/S/ XXXX XXXXXXXXXX
------------------------------------
Xxxx Xxxxxxxxxx
/S/ XXXXX XXXXXXX
------------------------------------
Xxxxx Xxxxxxx
/S/ XXX XXXXXXXX
------------------------------------
Xxx Xxxxxxxx
/S/ XXXXX XXXXXX
------------------------------------
Xxxxx Xxxxxx
/S/ XXXXX XXXXX
------------------------------------
Xxxxx Xxxxx
Page 52
/S/ XXXX XXXXXXX
------------------------------------
Xxxx Xxxxxxx
/S/ XXXX XXXXXXX
------------------------------------
Xxxx Xxxxxxx
/S/ XXXXX XXXXX
------------------------------------
Xxxxx Xxxxx
/S/ XXX XXXXXXXXX
------------------------------------
Xxx Xxxxxxxxx
/S/ XXXX XXXXXX
------------------------------------
Xxxx Xxxxxx
/S/ XXXXX XXXX
------------------------------------
Xxxxx Xxxx
/S/ XXXXX XXXXXXXXX
------------------------------------
Xxxxx Xxxxxxxxx
/S/ XXXX XXXXXXX
------------------------------------
Xxxx Xxxxxxx
/S/ XXXXXXX CARRERRE
------------------------------------
Xxxxxxx Carrerre
Page 53
/S/ XXXXX XXXXXXX
------------------------------------
Xxxxx Xxxxxxx
/S/ XXXXX XXXX
------------------------------------
Xxxxx Xxxx
/S/ XXXXXX XXXXXXX
------------------------------------
Xxxxxx Xxxxxxx
/S/ XXXXX XXXX-XXXXX
------------------------------------
Xxxxx Xxxx-Xxxxx
/S/ XXX XXXXX
------------------------------------
Xxx Xxxxx
/S/ XXXX XXXXXX
------------------------------------
Xxxx Xxxxxx
/S/ XXXX XXXX
------------------------------------
Xxxx Xxxx
/S/ XXXXX XXXXXX
------------------------------------
Xxxxx Xxxxxx
/S/ XXXXX XXXXXX
------------------------------------
Xxxxx Xxxxxx
Page 54
/S/ XXXXX XXXXX
------------------------------------
Xxxxx Xxxxx
/S/ XXXXXXXX XXXXXXX
------------------------------------
Xxxxxxxx Xxxxxxx
/S/ RAY HEIDENHEIM
------------------------------------
Ray Heidenheim
/S/ XXXXXXX XXXXXXX
------------------------------------
Xxxxxxx Xxxxxxx
/S/ XXXXX XXXXXXXX
------------------------------------
Xxxxx Xxxxxxxx
/S/ XXXX XXXXX
------------------------------------
Xxxx Xxxxx
/S/ XXXXXX NIMSGEM
------------------------------------
Xxxxxx Nimsgem
/S/ XXXXXXX X'XXXXX
------------------------------------
Xxxxxxx X'Xxxxx
/S/ XXXXX XXXXXXX
------------------------------------
Xxxxx Xxxxxxx
Page 55
/S/ XXXXX XXXXXXXX
------------------------------------
Xxxxx XxXxxxxx
/S/ XXXXXXX XXXXX
------------------------------------
Xxxxxxx Xxxxx
/S/ XXXXX XXXXXX
------------------------------------
Xxxxx Xxxxxx
/S/ XXXX XXXXXX
------------------------------------
Xxxx Xxxxxx
/S/ OMAR ONDOY
------------------------------------
Omar Ondoy
/S/ XXXXX XXXXXXXX
------------------------------------
Xxxxx Xxxxxxxx
/S/ XXX XXXXXXXX
------------------------------------
Xxx Xxxxxxxx
/S/ XXX XXXXXX
------------------------------------
Xxx Xxxxxx
/S/ XXXXX XXXX
------------------------------------
Xxxxx Xxxx
Page 56
/S/ XXXXX XXXXXXX
------------------------------------
Xxxxx Xxxxxxx
/S/ XXX XXXXXXX
------------------------------------
Xxx Xxxxxxx
/S/ XXX XXX XXXX
------------------------------------
Xxx Xxx Xxxx
/S/ XXXX XXXXXXX
------------------------------------
Xxxx Xxxxxxx
/S/ XXX XXXXXX
------------------------------------
Xxx Xxxxxx
/S/ XXXX XXXXX
------------------------------------
Xxxx Xxxxx
/S/ XXXXXXX CARRERRE
------------------------------------
Xxxxxxx Carrerre
/S/ XXXXXXX XXXXXX
------------------------------------
Xxxxxxx Xxxxxx
/S/ XXXXXXX XXXXXXXXX
------------------------------------
Xxxxxxx Xxxxxxxxx
Page 57
/S/ XXXXX XXXXX
------------------------------------
Xxxxx Xxxxx
/S/ XXXXXX AKHAPARYAN
------------------------------------
Xxxxxx Akhaparyan
/S/ XXXX XXXXXX
------------------------------------
Xxxx Xxxxxx
/S/ XXXX XXXXXXX
------------------------------------
Xxxx Xxxxxxx
/S/ XXXXX XXXXXXX
------------------------------------
Xxxxx Xxxxxxx
/S/ XXXXXX XXXXXXX
------------------------------------
Xxxxxx Xxxxxxx
/S/ XXXXX XXXXX
------------------------------------
Xxxxx Xxxxx
/S/ XXXXX XXXX
------------------------------------
Xxxxx Xxxx
/S/ XXXXX XXXXXX
------------------------------------
Xxxxx Xxxxxx
Page 58
/S/ XXXX XXXXXX
------------------------------------
Xxxx Xxxxxx
/S/ XXXXX XXXXX
------------------------------------
Xxxxx Xxxxx
/S/ XXXX XXXXX
------------------------------------
Xxxx Xxxxx
Page 59
SCHEDULE 1
PRO FORMA OWNERSHIP
I. OWNERSHIP OF COMMON STOCK
% OF TOTAL
---------------
STOCKHOLDER NUMBER OF SHARES PRIMARY FULLY-DILUTED
----------- ---------------- --------- -------------
MANAGEMENT STOCKHOLDERS
-----------------------
Xxxxxx Xxxxx 127,092 10.9% 9.5%
Xxxxxx Xxxxx 26,667 2.3% 2.0%
Xxxx Xxxxxx 3,333 0.3% 0.2%
Xxx Xxxxxx 13,334 1.1% 1.0%
Xxxx Xxxx 2,333 0.2% 0.2%
Xxxxx Xxxxxxx 10,000 0.9% 0.8%
Xxxx Xxxxxx 1,667 0.1% 0.1%
Xxxxxxx Xxxxxx 3,979 0.3% 0.3%
Xxxxx Xxxxx 1,967 0.2% 0.1%
Xxxx Xxxxx 3,334 0.3% 0.3%
Xxxx Xxxxxxx 2,000 0.2% 0.2%
Xxxx Xxxxxxxxxx 3,250 0.3% 0.2%
Xxxxx Xxxxxxx 3,188 0.3% 0.2%
Xxx Xxxxxxxx 406 * *
Xxxxx Xxxxxx 2,927 0.3% 0.2%
Xxxxx Xxxxx 1,667 0.1% 0.1%
Xxxx Xxxxxxx 1,031 * *
Xxxx Xxxxxxx 927 * *
Xxxxx Xxxxx 260 * *
Xxxx Xxxxxxx 1,333 0.1% *
Xxxxxxx Carrerre 594 * *
Xxxxx Xxxx 333 * *
Xxx Xxxxxxxxx 333** 0.0% *
Xxxx Xxxx 3,333** 0.0% 0.2%
Page 60
Xxxx Xxxxxx 3,333** 0.0% 0.2%
Xxxxxxx Xxxxxx 1,354** 0.0% 0.1%
Xxxxx Xxxxx 33** 0.0% *
Xxxx Xxxxx 3,333** 0.0% 0.2%
Xxxxx Xxxxxx 333** 0.0% *
Xxxxx Xxxxxx 266** 0.0% *
Xxxxx Xxxxx 266** 0.0% *
Xxxxxxxx Xxxxxxx 266** 0.0% *
Ray Heidenheim 266** 0.0% *
Xxxxxxx Xxxxxxx 266** 0.0% *
Xxxxx Xxxxxxxx 200** 0.0% *
Xxxxxx Xxxxxxxx 133** 0.0% *
Xxxxxxx X'Xxxxx 133** 0.0% *
XxXxx Palm 333** 0.0% *
Xxxxxxxx Xxxxxxxx 133** 0.0% *
Xxxxx Xxxxxxx 133** 0.0% *
Xxxx Xxxxxx 133** 0.0% *
Xxxxx Xxxxxxx 133** 0.0% *
Xxxxxxx XxXxxxxx 133** 0.0% *
Xxxxxx Xxxxxxxx 133** 0.0% *
Xxxx Xxxxxx 200** 0.0% *
Xxxxx Xxxxxxx 66** 0.0% *
Xxxxx XxXxxxxx 333** 0.0% *
Xxxxxxx Xxxxx 200** 0.0% *
Xxxx Xxxxx 200** 0.0% *
Xxxx Xxxxxx 200** 0.0% *
Xxxx Xxxxxxx 200** 0.0% *
Xxx Xxxxxxxx 200** 0.0% *
Page 61
Xxxxx Xxxxxx 6,000** 0.0% 0.5%
Xxxx Xxxxxxxxxx 2,083** 0.0% 0.2%
Xxxxx Xxxxxxx 2,145** 0.0% 0.2%
Xxx Xxxxxxxx 2,927** 0.0% 0.2%
Xxxxx Xxxxxx 406** 0.0% *
Xxxxx Xxxxx 3,333** 0.0% 0.2%
Xxxx Xxxxxxx 2,302** 0.0% 0.2%
Xxxx Xxxxxxx 406** 0.0% *
Xxxxx Xxxxx 406** 0.0% *
Xxxx Xxxxxx 800** 0.0% *
Omar Ondoy 800** 0.0% *
Xxxxx Xxxxxxxx 933** 0.0% *
Xxxxx Xxxxxxxx 133** 0.0% *
Xxx Xxxxxx 133** 0.0% *
Xxxxx Xxxx 267** 0.0% *
Xxxxx Xxxxxxx 666** 0.0% *
Xxx Xxxxxxx 133** 0.0% *
Xxx Xxx Xxxx 1,000** 0.0% *
Xxxx Xxxxxxx 000** 0.0% *
Xxx Xxxxxx 800** 0.0% *
Xxxx Xxxxxx 200** 0.0% *
Xxxxx Xxxx 133** 0.0% *
Xxxxx Xxxxxxxxx 133** 0.0% *
Xxxx Xxxxx 1,333** 0.0% *
Xxxxxxx Carrerre 406** 0.0% *
Xxxxxxx Xxxxxx 1,000** 0.0% *
Xxxxxxx Xxxxxxxxx 1,000** 0.0% *
Xxxxx Xxxxx 133** 0.0% *
Page 62
Xxxxx Xxxxxxx 133** 0.0% *
Xxxxxx Akhaparyan 133** 0.0% *
Xxxx Xxxxxx 133** 0.0% *
Xxxx Xxxxxxx 66** 0.0% *
Xxxxx Xxxxxxx 133** 0.0% *
Xxxxxx Xxxxxxx 133** 0.0% *
Xxxxxx Xxxxxxx 67** 0.0% *
Xxxxx Xxxx-Xxxxx 67** 0.0% *
Xxxxx Xxxxx 66** 0.0% *
Xxxxx Xxxx 67** 0.0% *
Xxxxx Xxxxxx 1,000** 0.0% *
Xxxx Xxxxxx 200** 0.0% *
Xxxxx Xxxxx 200** 0.0% *
Xxxx Xxxxx 133** 0.0% *
Xxx Xxxxx 67** 0.0% *
Xxxx Xxxxx 67** 0.0% *
Xxxxxxx Xxxxxx 133** 0.0% *
INVESTORS
---------
Green Equity Investors III, L.P. 615,662 52.7% 46.2%
VCA Co-Investment Fund I, LLC 123,441 10.6% 9.3%
VCA Co-Investment Fund II, LLC 55,548 4.8% 4.2%
VCA Co-Investment Fund III, LLC 55,548 4.8% 4.2%
VCA Co-Investment Fund IV, LLC 30,860 2.6% 2.3%
VCA Co-Investment Fund V, LLC 30,860 2.6% 2.3%
VCA Co-Investment Fund VI, LLC 12,345 1.1% 0.9%
VCA Co-Investment Fund VII, LLC 30,860 2.6% 2.3%
VCA Co-Investment Fund VIII, LLC 1,543 0.1% 0.1%
Page 63
% OF TOTAL
--------------
STOCKHOLDER NUMBER OF SHARES PRIMARY FULLY-DILUTED
----------- ---------------- --------- -------------
MEZZANINE PURCHASERS
GS Mezzanine Partners II, L.P. 41,614*** 0.0% 3.1%
GS Mezzanine Partners II Offshore, L.P. 12,691*** 0.0% 1.0%
TCW Leveraged Income Trust, L.P. 1,065*** 0.0% *
TCW Leveraged Income Trust II, L.P. 1,065*** 0.0% *
TCW Leveraged Income Trust IV, L.P. 1,065*** 0.0% *
TCW/Crescent Mezzanine Partners II, L.P. 10,284*** 0.0% 0.8%
TCW/Crescent Mezzanine Trust II 2,493*** 0.0% 0.2%
The Northwestern Mutual Life 6,389*** 0.0% 0.5%
Insurance Company
TOTAL 1,333,333**** 100% 100%
* Less than 0.1%.
** Represents Shares issuable upon exercise of stock options held by such
Stockholder.
*** Represents Shares issuable upon exercise of Warrants held by such
Stockholder.
**** Includes 33,333 Shares reserved for future issuance pursuant to the
Company's 2000 Stock Incentive Plan and 5,391 Shares reserved for future
issuance to newly hired employees of the Company or otherwise unallocated.
Page 64
II. OWNERSHIP OF JUNIOR PREFERRED STOCK
% OF TOTAL
STOCKHOLDER NUMBER OF SHARES (PRIMARY)
----------- ---------------- -----------
INVESTORS
Green Equity Investors III, L.P. 1,801,935 60.7%
VCA Co-Investment Fund I, LLC 361,289 12.2%
VCA Co-Investment Fund II, LLC 162,581 5.5%
VCA Co-Investment Fund III, LLC. 162,581 5.5%
VCA Co-Investment Fund IV, LLC 90,323 3.0%
VCA Co-Investment Fund V, LLC 90,323 3.0%
VCA Co-Investment Fund VI, LLC 36,129 1.2%
VCA Co-Investment Fund VII, LLC 90,323 3.0%
VCA Co-Investment Fund VIII, LLC 4,516 0.2%
MEZZANINE PURCHASERS
GS Mezzanine Partners II, L.P. 92,722 3.1%
GS Mezzanine Partners II Offshore, L.P. 28,278 1.0%
TCW Leveraged Income Trust, L.P. 2,373 *
TCW Leveraged Income Trust II, L.P. 2,373 *
TCW Leveraged Income Trust IV, L.P. 2,373 *
TCW/Crescent Mezzanine Partners II, L.P. 22,914 0.8%
TCW/Crescent Mezzanine Trust II 5,555 0.2%
The Northwestern Mutual Life 14,234 0.5%
Insurance Company
TOTAL 2,970,822 100.0%
* Less than 0.1%.
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III. OWNERSHIP OF SENIOR PREFERRED STOCK
% OF TOTAL
STOCKHOLDER NUMBER OF SHARES (PRIMARY)
----------- ---------------- -----------
INVESTORS
Green Equity Investors III, L.P. 1,818,668 60.7%
VCA Co-Investment Fund I, LLC 364,646 12.2%
VCA Co-Investment Fund II, LLC 164,090 5.5%
VCA Co-Investment Fund III, LLC 164,090 5.5%
VCA Co-Investment Fund IV, LLC 91,161 3.0%
VCA Co-Investment Fund V, LLC 91,161 3.0%
VCA Co-Investment Fund VI, LLC 36,465 1.2%
VCA Co-Investment Fund VII, LLC 91,161 3.0%
VCA Co-Investment Fund VIII, LLC 4,558 0.2%
MEZZANINE PURCHASERS
GS Mezzanine Partners II, L.P. 93,583 3.1%
GS Mezzanine Partners II Offshore, L.P. 28,540 1.0%
TCW Leveraged Income Trust, L.P. 2,395 *
TCW Leveraged Income Trust II, L.P. 2,395 *
TCW Leveraged Income Trust IV, L.P. 2,395 *
TCW/Crescent Mezzanine Partners II, L.P. 23,127 0.8%
TCW/Crescent Mezzanine Trust II 5,606 0.2%
The Northwestern Mutual Life 14,367 0.5%
Insurance Company
TOTAL 2,998,408 100.0%
* Less than 0.1%.
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