EXHIBIT 7.3
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STANDSTILL AGREEMENT
THIS STANDSTILL AGREEMENT (the "Agreement") dated as of this 19th day of
January, 1999, is between MATRIA HEALTHCARE, INC., a Delaware corporation
("Matria"), XXXX X. XXXXXX, a Georgia resident ("MJG"), and SZ INVESTMENTS,
L.L.C., a Delaware limited liability company ("SZI").
Statement of Purpose
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MJG Affiliates (as defined below) and SZI Affiliates (as defined below) are
members of Xxxxxx Medical Management, L.L.C., a Georgia limited liability
company ("GMM"). GMM and Matria have entered into a Purchase and Sale Agreement
dated as of December 21, 1998 (the "Purchase Agreement"), pursuant to which
Matria will acquire substantially all of the assets of GMM, including its
interests in its subsidiaries, for consideration consisting, in part, of
Redeemable Preferred Stock, Warrants, Convertible Preferred Stock and an
Earn-Out Note (each as defined below) of Matria. Upon consummation of the
transactions contemplated by the Purchase Agreement, MJG and SZI will own
indirectly through their respective Affiliates approximately 10.74% and 1.66%,
respectively, of the Fully Diluted Common Stock (as defined below) of Matria.
In addition, the MJG Affiliates and/or SZI Affiliates may acquire Common Stock
of Matria in the open market after the closing of the Purchase Agreement. As a
condition to consummation of the Purchase Agreement, MJG, SZI and Matria have
agreed to enter into this Agreement with respect to the ownership, voting and
disposition of the Voting Securities (as defined below) of Matria owned by the
MJG Affiliates and/or the SZI Affiliates.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties,
intending to be legally bound hereby, agree as follows:
1. Definitions. For all purposes of this Agreement, the following
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terms shall have the respective meanings specified below, and terms used herein
and not defined herein shall have the meaning given in the Purchase Agreement:
"Affiliate" shall have the meaning ascribed to such term pursuant to Rule
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12b-2 under the Exchange Act, as in effect on the date hereof; provided, that in
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no event shall MJG and SZI be deemed to be Affiliates of each other.
"Beneficial Ownership" means beneficial ownership as defined in Rule 13d-3
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of the Exchange Act.
"Board" means the Board of Directors of Matria.
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"Change in Control" means any of the following events: (i) any Person,
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other than an "Existing Shareholder" (as hereinafter defined) is or becomes the
direct or indirect beneficial owner of shares of the Matria's capital stock
representing greater than 50% of the power to vote in the election of directors
under ordinary circumstances, or (ii) Matria sells, transfers or otherwise
disposes of all or substantially all of the assets of Matria other than in any
transaction between Matria and a wholly-owned subsidiary of Matria, or (iii)
Matria is a party to a merger or a consolidation in which the holders of
Matria's voting securities prior to such merger or consolidation own, directly
or indirectly, securities representing less than 50% of the voting power in the
surviving entity.
"Common Stock" means (a) the Common Stock of Matria, par value $.01 per
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share, as described in the Certificate of Incorporation of Matria or any shares
of capital stock issued in exchange, redemption or conversion thereof, and (b)
any other class of capital stock of Matria whether currently outstanding or as
may be hereafter issued or authorized for issuance having the right to share in
distributions either of earnings or assets without limit as to amount or
percentage.
"Convertible Preferred Stock" means the Series A Convertible Preferred
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Stock of Matria, par value $.01 per share, issued pursuant to the Purchase
Agreement and described in the Certificate of Incorporation of Matria.
"Disinterested Majority" means a majority of the members of the Board other
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than the representatives of the MJG Affiliates and/or the SZI Affiliates
nominated and elected to the Board pursuant to Section 4.1 or 4.2 below.
"Earn-Out Note" shall have the meaning ascribed to such term in the
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Purchase Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Existing Shareholder" shall mean Xxxx X. Xxxxxx, SZ Investments, L.L.C.,
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any holder of any of the Convertible Preferred Stock, the Redeemable Preferred
Stock or the Warrants, or any affiliate of any of them.
"Fully Diluted" means, with respect to the Common Stock, all of the
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outstanding Common Stock of Matria determined as if any security or obligation
directly or indirectly exercisable for or convertible into Common Stock had been
so exercised or converted.
"Institutional Investor" shall mean any bank, thrift, investment company
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registered under the Investment Company Act of 1940, pension fund or insurance
company, or any "qualified institutional buyer" as defined in Rule 144A of the
Securities Act.
"Investor" means any of the MJG Affiliates and the SZI Affiliates
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individually, and "Investors" means all of the MJG Affiliates and SZI Affiliates
collectively.
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"Market Price" means, per share of Common Stock, as of the date of notice
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of repurchase pursuant to Section 3.5 or as of the date of any notice of
acceptance of a director's resignation pursuant to Section 4.1, (a) if such
Common Stock is listed on a national securities exchange or traded on The Nasdaq
National Market System ("NMS"), the average mean between the highest price and
the lowest price of which the Common Stock shall have been sold regular way on
the national securities exchange (or if traded on more than one such exchange,
the principal exchange on which such shares are traded) or the NMS each day in
the 20 consecutive trading days ending on said date, or (b) if the Common Stock
shall not be listed on a national securities exchange or traded on the NMS but
shall be traded in the over-the-counter market and quotations therefor are
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ"), the average during the 20 consecutive trading days
ending on such date of the last price (if such last price is then reported on a
real-time basis) or each such day, or, if the last price is not then so
reported, the mean between the bid and asked prices last reported on each such
day, by NASDAQ for the over-the-counter market on said date, or (c) if at any
time quotations for the Common Stock shall not be reported by NASDAQ for the
over-the-counter market and the Common Stock shall not be listed on any national
securities exchange or traded on the NMS, the fair market value per share of
Common Stock as determined by the Board on the basis of available prices for
such Common Stock or in such other manner as the Board may deem reasonable.
"MJG Affiliates" means MJG and any Affiliate of MJG (in each case exclusive
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of any SZI Affiliate).
"MJG Minimum Ownership" means the direct or indirect beneficial ownership
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by any MJG Affiliates and their Permitted Transferees (other than any SZI
Affiliate) of Convertible Preferred Stock, Redeemable Preferred Stock, Warrants,
Common Stock and/or the Earn-Out Note having an aggregate value of at least
$25,000,000. For purposes of this definition, "value" shall be determined as
follows: for Convertible Preferred Stock and Redeemable Preferred Stock, the
aggregate liquidation preference of such stock plus all accrued and unpaid
dividends thereon; for Common Stock, the aggregate Market Price of such stock;
for Warrants, the excess (if any) of the aggregate Market Price of the Common
Stock issuable upon exercise of such Warrants over the aggregate exercise price
of such Warrants; and for the Earn-Out Note, the outstanding balance plus all
accrued and unpaid interest owed thereon, not to exceed $10,000,000 in the
aggregate.
"Permitted Transferee" means (i) any member of GMM as of the date of the
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Purchase Agreement, (ii) any Affiliate of any such member, (iii) any employee or
consultant of any Investor or Xxxxxxxxx & Xxxxxxxxxxx, P.C., (iv) the spouse,
siblings, ancestors, and lineal descendants of any of the foregoing, and (v) any
trust, family limited partnership or similar entity established for the benefit
of any of the foregoing; provided that, in each case, such Person agrees in a
writing, delivered to Matria, to be bound by the provisions of this Agreement
(if not already so bound).
"Person" means any individual, firm, corporation, partnership, limited
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liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, governmental body or other entity of any kind.
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"Redeemable Preferred Stock" means the Series B Redeemable Preferred Stock
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of Matria, par value $.01 per share, issued pursuant to the Purchase Agreement
and described in the Certificate of Incorporation of Matria.
"Securities Act" means the Securities Act of 1933, as amended.
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"SZI Affiliate" means SZI and any of its Affiliates under control of or
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common control with SZI (in each case exclusive of any MJG Affiliates);
provided, however, that, notwithstanding the foregoing, no Person shall be
deemed to be an SZI Affiliate unless (i) Xxx Xxxx or any other executive officer
of SZI has actual knowledge of the relevant action to be attributed to the SZI
Affiliate hereunder or (ii) in the case of publicly held entities that might
otherwise fall within this definition, unless Xxx Xxxx or any other executive
officer of SZI took any action, directly or indirectly, to cause, suggest,
encourage or assist such publicly held entity to take the relevant action to be
attributed to the SZI Affiliate hereunder.
"Voting Securities" means, collectively, Common Stock, any preferred stock
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of Matria that is entitled to vote generally for the election of directors, any
other class or series of Matria securities that is entitled to vote generally
for the election of directors and any other securities, warrants, options or
rights of any nature that are directly or indirectly convertible into,
exchangeable for, or exercisable for the purchase of, or otherwise give the
holder thereof any rights in respect of, Common Stock, Matria preferred stock
that is entitled to vote generally for the election of directors, or any other
class or series of Matria securities that is entitled to vote generally for the
election of directors.
"Warrants" means the warrants to purchase Common Stock of Matria issued
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pursuant to the Purchase Agreement.
2.1 Representations and Warranties of Investors:
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(a) MJG represents and warrants to Matria as follows:
(i) MJG has full legal right, power and authority to enter into
and perform this Agreement. This Agreement is a valid and binding obligation of
MJG enforceable against MJG in accordance with its terms, except that such
enforcement may be subject to (A) bankruptcy, insolvency, moratorium and other
similar laws affecting creditors' rights generally and (B) general principles of
equity (regardless of whether asserted at law or in equity).
(ii) Neither the execution and delivery of this Agreement by MJG
nor the consummation by MJG of the transactions contemplated hereby conflicts
with or constitutes a violation of or default under any statute, law,
regulation, order or decree applicable to MJG, or any contract, commitment,
agreement, arrangement or restriction of any kind to which MJG is a party or by
which MJG is bound.
(b) SZI represents and warrants to Matria as follows:
(i) SZI has full legal right, power and authority to enter into
and perform this Agreement. The execution and delivery of this Agreement by SZI
and the consummation by SZI of the transactions contemplated hereby have been
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duly authorized by all necessary limited liability company or other action on
behalf of SZI. This Agreement is a valid and binding obligation of SZI
enforceable against SZI in accordance with its terms, except that such
enforcement may be subject to (A) bankruptcy, insolvency, moratorium and other
similar laws affecting creditors' rights generally and (B) general principles of
equity (regardless of whether asserted at law or in equity).
(ii) Neither the execution and delivery of this Agreement by SZI
nor the consummation by SZI of the transactions contemplated hereby conflicts
with or constitutes a violation of or default under the certificate of formation
or other organizational or governing documents of SZI, any statute, law,
regulation, order or decree applicable to SZI, or any contract, commitment,
agreement, arrangement or restriction of any kind to which SZI is a party or by
which SZI is bound.
2.2 Representations and Warranties of Matria. Matria hereby represents
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and warrants to each Investor as follows:
(a) Matria has full legal right, power and authority to enter into and
perform this Agreement. The execution and delivery of this Agreement by Matria
and the consummation by Matria of the transactions contemplated hereby have been
duly authorized by all necessary corporate or other action on behalf of Matria.
This Agreement is a valid and binding obligation of Matria enforceable against
Matria in accordance with its terms, except that such enforcement may be subject
to (i) bankruptcy, insolvency, moratorium and other similar laws affecting
creditors' rights generally and (ii) general principles of equity (regardless of
whether asserted at law or in equity).
(b) Neither the execution and delivery of this Agreement by Matria nor the
consummation by Matria of the transactions contemplated hereby conflicts with or
constitutes a violation of or default under the charter or by-laws of Matria,
any statute, law, regulation, order or decree applicable to Matria, or any
contract, commitment, agreement, arrangement or restriction of any kind to which
Matria is a party or by which Matria is bound.
3.1 Restrictions on Certain Actions by Investors. Subject to Section
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3.2 hereof, until the fifth anniversary of this Agreement, unless otherwise
approved by a Disinterested Majority, neither MJG, whether directly or
indirectly through any MJG Affiliate, nor SZI, whether directly or indirectly
through any SZI Affiliate, shall:
(a) acquire, announce an intention to acquire, offer or propose to acquire,
solicit an offer to sell or agree to acquire by purchase, by gift, by joining a
partnership, limited partnership, syndicate or other "group" (as such term is
used in Section 13(d)(3) of the Exchange Act, such term to have such meaning
throughout this Agreement) or otherwise, any (i) assets, businesses or
properties of Matria other than in the ordinary course of business or (ii) any
Voting Securities:
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(b) participate in the formation or encourage the formation of any group
(other than any group consisting exclusively of the Investors and/or their
Permitted Transferees), or join or in any way participate with any Person (other
than the Investors and/or their Permitted Transferees), which owns or seeks to
acquire beneficial ownership of Voting Securities;
(c) solicit, or participate in any "solicitation" of "proxies" (other than
with respect to Voting Securities held by the Investors and/or their Permitted
Transferees and/or in compliance with this Agreement) or become a "participant"
in any "election contest" (as such terms are defined or used in Regulation 14A
under the Exchange Act, these terms to have such meaning throughout this
Agreement) with respect to Matria, in each case in opposition to the
recommendation of a Disinterested Majority;
(d) initiate, propose or otherwise solicit stockholders for the approval of
one or more stockholder proposals with respect to Matria or induce any Person
(other than the Investors and/or their Permitted Transferees) to initiate any
stockholder proposal, in each case in opposition to the recommendation of a
Disinterested Majority;
(e) except as contemplated by the terms of the Convertible Preferred Stock,
the Redeemable Preferred Stock or this Agreement, seek to place more than one
representative of each of the MJG Affiliates and the SZI Affiliates on the Board
of Directors of Matria, seek the removal of any member of the Board of Directors
of Matria or seek to have called any meeting of the stockholders of Matria, in
each case in opposition to the recommendation of a Disinterested Majority;
(f) deposit any Voting Securities in a voting trust or, except as
specifically contemplated by this Agreement, subject them to a voting agreement
or other agreement or arrangement with respect to the voting of such Voting
Securities, other than any such trust, agreement or other arrangement involving
no Person other than the Investors and their Permitted Transferees;
(g) otherwise act, alone or in concert with any other Person (other than
the Investors and/or their Permitted Transferees), to seek to control the
management, Board, policies or affairs of Matria or solicit, propose, seek to
effect or negotiate with any other Person (including, without limitation,
Matria, but excluding any Investor and its Permitted Transferees) with respect
to any form of business combination or other extraordinary transaction with
Matria or any of its subsidiaries or any restructuring, recapitalization,
similar transaction or other transaction not in the ordinary course of business
with respect to Matria or any of its subsidiaries, solicit, make or propose or
negotiate with any other Person (other than the Investors and/or their Permitted
Transferees) with respect to, or announce an intent to make, any tender offer or
exchange offer for any securities of Matria or any of its subsidiaries, in each
case in opposition to the recommendation of a Disinterested Majority, or
publicly disclose an intent, purpose, plan or proposal with respect to Matria,
any of its subsidiaries or any securities or assets of Matria or any of its
subsidiaries, that would violate the provisions of this Section 3.1, or assist,
participate in, facilitate or solicit any effort or attempt by any Person to do
or seek to do any of the foregoing; or
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(h) request Matria (or its directors, officers, employees or agents) to
amend or waive any provision of this Agreement (including, without limitation,
this Section 3.1(h)) or otherwise seek any modification to or waiver of any of
the agreements or obligations of the Investors under this Agreement in each case
in opposition to the recommendation of a Disinterested Majority.
3.2 Certain Permitted Actions. Notwithstanding the limitations and
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restrictions set forth elsewhere in this Agreement:
(a) The Investors and their Permitted Transferees shall have the right to
acquire the Convertible Preferred Stock and the Redeemable Preferred Stock and
to convert the Convertible Preferred Stock and acquire Common Stock issuable
upon conversion of the Convertible Preferred Stock (or upon conversion, exercise
or exchange of any securities received from Matria in exchange for the
Convertible Preferred Stock) and shall have the right to acquire any Matria
securities distributed as a dividend, because of an adjustment resulting from
the operation of anti-dilution provisions, or otherwise in respect of
Convertible Preferred Stock or any securities received from Matria in exchange
for the Convertible Preferred Stock.
(b) The Investors and their Permitted Transferees shall have the right to
acquire the Warrants and to exercise the Warrants and acquire Common Stock
issuable upon exercise of the Warrants (or upon conversion, exercise or exchange
of any securities received from Matria in exchange for the Warrants) and shall
have the right to acquire any Matria securities distributed as a dividend,
because of an adjustment resulting from the operation of anti-dilution
provisions, or otherwise in respect of the Warrants or any securities received
from Matria in exchange for the Warrants.
(c) In addition to any Matria securities acquired pursuant to paragraphs
(a) or (b) of this Section 3.2, the Investors and their Permitted Transferees
shall have the right to acquire Voting Securities so long as immediately after
such acquisition the Investors and their Permitted Transferees collectively
would have Beneficial Ownership of no more than an aggregate of 35% of the Fully
Diluted Common Stock;
(d) Notwithstanding anything to the contrary in this Agreement, the
Investors shall have the right to discuss any business matters (including but
not limited to subjects that may be within the matters listed in Section 3.1 of
this Agreement) privately with the chief executive officer and other senior
executive officers of Matria (and Matria agrees that its chief executive officer
and other senior executive officers will make themselves reasonably available
for such discussions). Notwithstanding anything to the contrary in this
Agreement, the Investors also may discuss their investment in Matria with each
other, their Permitted Transferees, their own stockholders, and members and with
the investment community, provided that such discussions are not for the purpose
of circumventing Section 3.1 hereof.
(e) As a holder of Common Stock, Convertible Preferred Stock and Warrants,
the Investors and their Permitted Transferees may exercise Rights under Matria's
Stockholder Rights Plan and may acquire the securities issuable upon exercise of
those Rights.
(f) Any purchase of Common Stock by the Investors or their Permitted
Transferees which was contemplated and permitted under the Confidentiality
Agreement referred to in Section 3.1 of the Purchase Agreement shall be deemed a
permitted action hereunder.
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3.3 Voting. In connection with either (a) the election or removal of
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directors of Matria or (b) any stockholder proposals with respect to Matria in
opposition to the recommendation of a Disinterested Majority, MJG shall, and
shall direct the MJG Affiliates to, and SZI shall, and shall direct the SZI
Affiliates to, vote all Voting Securities owned by them (a) in accordance with
the recommendation of Matria's Board of Directors with respect to such matter,
or (b) in the absence of a recommendation, in the same proportion as the votes
cast by all other holders of Voting Securities with respect to such matter;
provided that each Investor and its Permitted Transferees shall retain the right
to vote, in their sole and absolute discretion, all Voting Securities owned by
such Investor and its Permitted Transferees with respect to the following
matters:
(a) the election of individuals proposed by the Investors to serve as
members of the Board in accordance with Section 4.1 or 4.2 of this Agreement;
(b) the election of individuals proposed by the holders of the Convertible
Preferred Stock or the Redeemable Preferred Stock in accordance with the terms
of such securities; and
(c) matters respecting which a class or series vote of the Convertible
Preferred Stock or the Redeemable Preferred Stock is provided pursuant to law or
pursuant to Matria's charter or by-laws.
By voting as directed by Matria, the Investors and their Permitted Transferees
shall not be deemed to have waived any rights (i) that they may have to enforce
their rights under Matria's Certificate of Incorporation, Matria's Bylaws, the
Purchase Agreement or the Delaware General Corporation Law to challenge the
actions taken or (ii) which they would otherwise be entitled to exercise under
Section 262 of the Delaware General Corporation Law.
3.4 Restrictions on Transfer.
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(a) Until the second anniversary of this Agreement, neither the MJG
Affiliates nor the SZI Affiliates will sell, assign, transfer, grant an option
with respect to or otherwise dispose of any interest in (or enter into an
agreement, arrangement or understanding with respect to the foregoing)
(individually and collectively, "Sell") any Voting Securities, except for the
dispositions described in Section 3.4(c) below, which, to the extent provided in
Section 5.1 hereof, are subject to the right of first offer specified in Section
5.1 hereof.
(b) From and after the second anniversary of this Agreement and until the
fifth anniversary of this Agreement, neither the MJG Affiliates nor the SZI
Affiliates will Sell any Voting Securities except for (i) the dispositions
described in Section 3.4(c) below and (ii) the sale or other disposition of any
Voting Securities to any Person or group if, after due inquiry, the Investor
reasonably believes such Person or group would not have Beneficial Ownership of
15% or more of the then outstanding Common Stock, after taking such sale or
other disposition into account, in each case, which, to the extent provided in
Section 5.1 hereof, are subject to the right of first offer specified in Section
5.1 hereof.
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(c) The Investors and their Permitted Transferees may Sell Voting
Securities (i) pursuant to a transaction approved in writing by a Disinterested
Majority; (ii) pursuant to (A) a "qualifying offer" (as hereinafter defined) or
(B) a "qualifying tender offer" (as hereinafter defined); (iii) in a transfer
made by any Investor or its Permitted Transferees to any other Investor or any
Permitted Transferee or any other Investor's Permitted Transferees provided the
transferee agrees in a writing, delivered to Matria, to be bound by the
provisions of this Agreement (if not already bound) (provided that the
transferor of such Voting Securities shall also continue to remain bound by the
terms of this Agreement, unless Matria shall otherwise, consent in writing, such
consent not to be unreasonably withheld); (iv) pursuant to a bona fide pledge of
Voting Securities by the Investor and its Affiliates as security for bona fide
indebtedness to a brokerage firm or financial institution not affiliated with
the Investor or any of its Affiliates for money borrowed or pursuant to such
pledge by such pledgee; (v) in "brokers' transactions" (as such term is defined
in Rule 144(g) of the Securities Act, which definition shall apply for all
purposes of this Agreement) on the NMS, or if any particular series of Voting
Securities is not listed on the NMS, on the principal national securities
exchange on which such Voting Securities are listed or admitted to trading, and
if not so listed or admitted, in the over-the-counter market, subject in all
cases to the volume limitations presently set forth in Rule 144(c)(1) of the
Securities Act; (vi) in a registered public offering pursuant to the
Registration Rights Agreement; (vii) constituting 5% or less of the then
outstanding Common Stock on a Fully Diluted basis (or, with the prior written
consent of Matria, more than 5%) to any Institutional Investor whom Investor
reasonably believes is Purchasing for investment and not with a view toward
effecting or assisting in a change of control; (viii) to any Person or group if,
after due inquiry, the Investor reasonably believes such Person or group would
not own 5% or more of the then outstanding Common Stock; or (ix) as a result of
a merger, consolidation, share exchange or liquidation of the Investor in which
the Investor is not the survivor, provided that the surviving or successor
entity and each entity that "controls" (as that term is defined in Rule 405 of
the Securities Act) the surviving or successor entity agrees in writing with
Matria to be bound by the provisions of this Agreement.
For purposes of this Agreement, a "qualifying offer" shall mean (i) any
tender offer or exchange offer commenced by Matria for any Voting Securities;
and (ii) any acquisition transaction involving any Voting Securities proposed by
a Person or entity other than Matria (A) which is approved by, or not opposed
by, a Disinterested Majority of the Board of Directors of Matria, or (B) where
such third party offeror already owns at least 50% of the outstanding Voting
Securities. For purposes of this Agreement, a "qualifying tender offer" shall
mean any acquisition transaction involving any Voting Securities which is a bona
fide tender offer or exchange offer that is commenced by a third party offeror
who does not already own at least 50% of the outstanding Voting Securities at a
price per share greater than the closing price per share on the principal
securities exchange on which the Matria Common Stock is then traded on the last
trading day prior to the first public announcement of such offer, if upon
consummation thereof, such third party offeror would be the beneficial owner of
50% or more of the shares of Matria Common Stock then outstanding.
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3.5 Repurchase of Common Stock. In the event that MJG and SZI, whether
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directly or indirectly through any Affiliate, shall at any time without the
express approval of a Disinterested Majority have in the aggregate Beneficial
Ownership of Common Stock in excess of 35% of the Fully Diluted Common Stock of
Matria (whether due to redemption, open market repurchases, an issuer tender
offer or otherwise), Matria shall have the right and option, in addition to any
other remedy for breach of this Agreement, to repurchase shares of Common Stock
held by MJG Affiliates or the SZI Affiliates (other than shares of Common Stock
acquired upon conversion of the Convertible Preferred Stock or upon exercise of
the Warrants) in order to reduce such beneficial ownership of Common Stock to
such percentage. Such right and option may be exercised by Matria by delivering
written notice to MJG or SZI, as the case may be, on any business day at the
address set forth in Section 7(h) and the closing of the repurchase shall occur
at the principal office of Matria within 10 business days of the date of such
notice. At such closing, Matria shall tender the Market Price per share of the
Common Stock subject to repurchase in immediately available funds and the
selling party shall deliver certificates for the shares to be purchased duly
endorsed for transfer to Matria together with a certificate to the effect that
such selling party owns the shares to be transferred free and clear of any and
all liens, claims and other adverse interests other than restrictions imposed by
applicable securities laws.
3.6 Dispositions in Certain Events. If an Investor acquires any Voting
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Securities in violation of this Agreement, it will immediately dispose of such
Voting Securities to Persons which are not Investors in a manner permitted by
Section 3.4. If Matria shall enter into a definitive agreement providing for a
transaction that will result in a Change in Control, the restrictions in Section
3.5 hereof shall terminate immediately.
3.7 Legend on Certificates. Any certificate representing shares of
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Voting Securities held by Investors or their Affiliates shall bear a conspicuous
legend referring to the restrictions on transfer and voting agreements set forth
in this Agreement.
4.1 Nominations to the Board. Upon closing of the transactions
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contemplated by the Purchase Agreement, Matria shall exercise its good faith
efforts (including effecting any increase in the size of the Board, if
necessary) and take all necessary or appropriate action to insure that (a) MJG
or such other individual as MJG shall designate shall be nominated to a class of
directors of the Board at each annual meeting at which the term of office of
such Person as a director would otherwise expire commencing as of the Closing
Date and continuing until the earlier of the fifth anniversary of this Agreement
or until the MJG Minimum Ownership is no longer satisfied; and (b) Xxx X.
Xxxxxxxx or such other individual as SZI shall designate shall be nominated to a
class of directors of the Board to serve thereon commencing as of the Closing
Date and continuing for a single three year term. In the event that the MJG
Minimum Ownership is not satisfied, MJG's nominee shall immediately withdraw as
a nominee or resign as a director, as the case may be, and MJG shall no longer
have any rights under this Section 4.1 whether or not such party may thereafter
acquire the MGJ Minimum Ownership. Provided that MJG or his designee is
otherwise qualified to serve as a director and MJG or his designee fails to be
nominated to serve as director, MJG shall be released from his obligation under
this Agreement.
4.2 Death, Permanent Disability or Resignation of Board
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Representatives. In the event that any representative nominated and elected to
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the Board pursuant to Section 4.1 ceases to be a member of the Board by reason
of his death, permanent disability or resignation (other than a resignation
required pursuant to Section 4.1), Matria shall exercise its good faith efforts,
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consistent with the fiduciary obligations of the Board under applicable law, to
replace any such representative with another designee of the applicable party or
his personal representative.
4.3 Reporting Obligations. As long as any Investors and/or their
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Permitted Transferees holds any Convertible Preferred Stock, Redeemable
Preferred Stock, Warrants or Common Stock and/or any amount of principal or
interest is owed under the Earn-Out Note, Matria shall deliver to MJG or SZI
(who in turn shall be entitled to distribute copies of the same to any MJG
Affiliate, SZI Affiliate and/or their Permitted Transferees who hold any of the
foregoing securities or instruments) at the addresses set forth in Section 6.1
hereof:
(a) within 105 days after the close of each fiscal year and within 50
days after the close of each of the first three quarters of each fiscal year
financial statements, including any notes thereto (and, in the case of fiscal
year end, an auditors' report by a firm of established national reputation) and
the Management's Discussion and Analysis of Financial Condition and Results of
Operations, for Matria and its subsidiaries in the form required to be included
in an annual or quarterly reports furnished pursuant to the Exchange Act and the
rules and regulations promulgated thereunder; and
(b) within 30 days after the end of each calendar month, a consolidated and
consolidating balance sheet, income statement and cash flow statements, and
consolidated shareholders' equity statement for Matria and its subsidiaries for
the immediately preceding calendar month.
4.4 Reports Under the Exchange Act. With a view to making available to
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the Investors and their Permitted Transferees the benefits of Rule 144 and any
other rule or regulation of the Securities and Exchange Commission that may at
any time permit an Investor to sell securities of Matria to the public without
registration or pursuant to a registration on Form S-3, Matria agrees to:
(a) use its reasonable efforts to make and keep public information
available, as those terms are understood and defined in Rule 144;
(b) use its reasonable efforts to file with the Securities and Exchange
Commission in a timely manner all reports and other documents required under the
Securities Act and the Exchange Act; and
(c) furnish to any Investor and its Permitted Transferees forthwith
upon request (i) a written statement by Matria as to its compliance with the
reporting requirements of Rule 144, or as to whether it qualifies as a
registrant whose securities may be resold pursuant to Form S-3, (ii) a copy of
the most recent annual or quarterly report of Matria and such other reports and
documents so filed by Matria, and (iii) such other information (and Matria shall
take such action) as may be reasonably requested in availing the Investor or its
Permitted Transferees of any rule or regulation of the Securities and Exchange
Commission which permits the selling of any such securities without registration
or pursuant to such form.
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5.1 Right of First Offer. In the event that an Investor desires to
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sell all or part of its holding of Voting Securities (the "Shares") pursuant to
the terms of Section 3.4(b)(ii), Section 3.4(c)(ii)(B), Section 3.4(c)(vii), and
Section 3.4(c)(viii) hereof, such Investor shall first give written notice of
such intent to Matria. Matria shall have a period of 30 days from the receipt
of such written notice to deliver to such Investor an irrevocable written offer
(a "Purchase Offer") to purchase such Shares for cash at the price and upon such
other terms and conditions as are set forth in the Purchase Offer. In the event
Matria delivers such Purchase Offer within the 30 day period, such Investor may
accept or reject in its sole and absolute discretion such Purchase Offer by
delivering written notice of acceptance or rejection within 30 days of the
receipt of such Purchase Offer. In the event of acceptance of such Purchase
Offer, the closing of the sale of the Shares shall occur in the manner provided
in the Purchase Offer. In the event Matria fails to deliver a Purchase Offer or
such Investor rejects such Purchase Offer, such Investor shall have a period of
120 days following the earlier of the expiration of the 30 day period referred
to above or the express rejection of the Purchase Offer to sell the Shares in
accordance with Section 3.4(b)(ii), or Section 3.4(c)(ii)(B), or Section
3.4(c)(vii) or Section 3.4(c)(viii) hereof free and clear of the terms of this
Agreement; provided, that (i) the terms of such sale shall be more favorable
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than the terms contained in the Purchase Offer, if any, and (ii) upon the
expiration of the 120 day period, such Shares, if not then sold pursuant to
Section 3.4(b)(ii), Section 3.4(c)(ii)(B), Section 3.4(c)(vii) or Section
3.4(c)(viii) shall once again be subject to the right of first offer contained
herein.
6.1 Miscellaneous.
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(a) Liability of Investors. Any liability or obligation of any kind
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whatsoever under this Agreement shall be several and not joint as between any
MJG Affiliate(s) and their Permitted Transferees, on the one hand, and any SZI
Affiliate(s) and their Permitted Transferees, on the other hand.
Notwithstanding anything to the contrary in this Agreement, in no event shall
any MJG Affiliate be responsible in any manner for any liability or obligation
of, or the breach of any provision of this Agreement by, any person or group who
is not an MJG Affiliate. Notwithstanding anything to the contrary in this
Agreement, in no event shall any SZI Affiliate be responsible in any manner for
any liability or obligation of, or the breach of any provision of this Agreement
by, any person or group who is not an SZI Affiliate.
(b) Interpretation. For all purposes of this Agreement, the term
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Matria Common Stock shall include any securities of any issuer entitled to vote
generally for the election of directors of such issuer which securities the
holders of Matria Common Stock shall have received or as a matter of right be
entitled to receive as a result of (i) any capital reorganization or
reclassification of the capital stock of Matria, (ii) any consolidation, merger
or share exchange of Matria with or into another corporation or (iii) any sale
of all or substantially all the assets of Matria.
(c) Enforcement.
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(i) The Investors, on the one hand, and Matria, on the other,
acknowledge and agree that irreparable damage would occur if any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, the parties will be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically its provisions in any court of the United States or
any state having jurisdiction, this being in addition to any other remedy to
which they may be entitled at law or in equity.
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(ii) No failure or delay on the part of either party in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege.
(iii) MJG and SZI each shall take all action as may be necessary
to cause its respective controlled Affiliates to comply with the terms of this
Agreement and any violation of this Agreement by any MJG Affiliate or SZI
Affiliate shall be deemed a violation by MJG or SZI, as the case may be.
(d) Entire Agreement. This Agreement, the Purchase Agreement and the
-----------------
documents referred to as Exhibits to the Purchase Agreement constitute the
entire understanding of the parties with respect to the transactions
contemplated by them. This Agreement may be amended only by an agreement in
writing executed by all the parties.
(e) Severability. If any provision of this Agreement is held by a court of
------------
competent jurisdiction to be unenforceable, the remaining provisions shall
remain in full force and effect. It is declared to be the intention of the
parties that they would have executed the remaining provisions without including
any that may be declared unenforceable.
(f) Heading. Descriptive headings are for convenience only and will not
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control or affect the meaning or construction of any provision of this
Agreement.
(g) Counterparts. This Agreement may be executed in two or more
------------
counterparts, and each such executed counterpart will be an original instrument.
(h) Notices. All notices, consents, requests, instructions, approvals and
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other communications provided for in this Agreement and all legal process in
regard to this Agreement will be validly given, made or served, if in writing
and delivered personally, by telecopy (except for legal process) or sent by
registered mail postage paid.
If to Matria:
Matria Healthcare, Inc.
0000 Xxxxxxx Xxxxx
00xx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Telecopy Number: (000) 000-0000
78
with a copy to:
Xxxxxxxx Xxxxxxx LLP
NationsBank Plaza
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx, III, Esq.
Telecopy Number: (000) 000-0000
If to MJG:
Xx. Xxxx X. Xxxxxx
Xxxxxx Medical Management, LLC
0000 Xxxxxxx 00 Xxxxx
X.X. Xxx 000
XxXxxxxxx, Xxxxxxx 00000-0000
Telecopy Number: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxx & Scarborough, L.L.P.
First Union Plaza, Suite 1400
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopy Number: (000) 000-0000
If to SZI:
SZ Investments, L.L.C.
Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxx X. Xxxxxxxx
Telecopy Number: (000) 000-0000
with a copy to:
Xxxxxxxxx & Xxxxxxxxxxx, P.C.
Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: President
Telecopy Number: 000-000-0000
or to such other address or telecopy number as any party may, from time to time,
designate in a written notice given in a like manner. Notice by telecopy shall
be deemed delivered on the day telephone confirmation of receipt is given.
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(i) Successors and Assigns. This Agreement shall bind the successors and
----------------------
assigns of the parties, and inure to the benefit of any successor or assign of
any of the parties; provided, however, that no party may assign this Agreement
without the other party's prior written consent.
(j) Change in Control. Notwithstanding anything to the contrary in this
-----------------
Agreement, all of the provisions of this Agreement shall terminate in the event
of a Change in Control of Matria.
(k) Governing Law. This Agreement will be governed by and construed and
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enforced in accordance with the internal laws of the State of Georgia, without
giving effect to the conflict of laws principles thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first referred to above.
MATRIA HEALTHCARE, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Title: President and Chief Executive Officer
---------------------------------------
/s/ Xxxx X. Xxxxxx
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XXXX X. XXXXXX
SZ INVESTMENTS, L.L.C.
By: /s/ Xxx X. Xxxxxxxx
----------------------
Title: Vice President
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