INVESTORS' AGREEMENT
dated
as of
January 21, 1998
among
XXXXXX SCIENTIFIC INTERNATIONAL, INC.,
XXXXXX X. XXX EQUITY FUND III, L.P.,
THL-CCI LIMITED PARTNERSHIP,
THL FOREIGN FUND III, L.P.,
THL FSI EQUITY INVESTORS, L.P.,
DLJ MERCHANT BANKING PARTNERS II, L.P.,
DLJ MERCHANT BANKING PARTNERS II - A, L.P.,
DLJ OFFSHORE PARTNERS II, X.X.,
XXX XXXXXXXXXXX XXXXXXXX, X.X.,
XXX DIVERSIFIED PARTNERS - A, L.P.,
DLJ MILLENNIUM PARTNERS, L.P.
DLJ MILLENNIUM PARTNERS - A, L.P.,
DLJMB FUNDING II, INC.,
UK INVESTMENT PLAN 1997 PARTNERS,
DLJ EAB PARTNERS, X.X.,
XXX XXX XX, X.X.,
XXX FIRST ESC, L.P.,
CHASE EQUITY ASSOCIATES, L.P.,
XXXXXXX XXXXX KECALP L.P. 1997,
KECALP INC.,
ML IBK POSITIONS, INC.
AND
CERTAIN OTHER PERSONS NAMED HEREIN
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS.....................................................2
Section 1.1 Definitions........................................2
ARTICLE II
CORPORATE GOVERNANCE AND MANAGEMENT............................13
Section 2.1 Composition of the Board..........................13
Section 2.2 Removal...........................................13
Section 2.3 Vacancies.........................................14
Section 2.4 Action by the Board...............................14
Section 2.5 Conflicting Charter or Bylaw
Provision.................................15
ARTICLE III
RESTRICTIONS ON TRANSFER.......................................15
Section 3.1 General...........................................15
Section 3.2 Legends...........................................16
Section 3.3 Permitted Transferees; Transfers by
THL Entities..............................16
Section 3.4 Restrictions on Transfers by
Institutional Shareholders. .............17
Section 3.5 Restrictions on Transfers by
Management Shareholders...................18
Section 3.6 Company Right of First Refusal....................19
Section 3.7 Notifications Regarding Transfers.................20
ARTICLE IV
TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS; PREEMPTIVE RIGHTS.................20
Section 4.1 Rights to Participate in Transfer.................20
Section 4.2 Right to Compel Participation in
Certain Transfers.........................23
Section 4.3 Preemptive Rights.................................26
Section 4.4. Certain Other Purchases of Equity
Securities................................29
ARTICLE V
REGISTRATION RIGHTS............................................30
Section 5.1 Demand Registration...............................30
Section 5.2 Piggyback Registration............................34
Section 5.3 Holdback Agreements...............................35
Section 5.4 Registration Procedures...........................36
Section 5.5 Indemnification by the Company....................40
Section 5.6 Indemnification by Participating
Shareholders..............................41
Section 5.7 Conduct of Indemnification
Proceedings...............................43
Section 5.8 Contribution......................................44
Section 5.9 Participation in Public Offering..................46
Section 5.10 Cooperation by the Company........................46
Section 5.11 No Transfer of Registration Rights................46
ARTICLE VI
CERTAIN COVENANTS AND AGREEMENTS...............................46
Section 6.1 Confidentiality...................................46
Section 6.2 Reports...........................................48
Section 6.3 Limitations on Subsequent
Registration..............................48
Section 6.4 Limitation on Purchase of Equity
Securities................................49
ARTICLE VII
MISCELLANEOUS..................................................51
Section 7.1 Entire Agreement..................................51
Section 7.2 Binding Effect; Benefit...........................51
Section 7.3 Assignability.....................................51
Section 7.4 Amendment; Waiver; Termination....................51
Section 7.5 Notices...........................................52
Section 7.6 Headings..........................................55
Section 7.7 Counterparts......................................55
Section 7.8 Applicable Law....................................55
Section 7.9 Specific Performance..............................55
Section 7.10 Consent to Jurisdiction; Expenses.................55
Section 7.11 Representative....................................56
Section 7.12 Severability......................................59
INVESTORS' AGREEMENT
AGREEMENT dated as of January 21, 1998 among (i) Xxxxxx
Scientific International, Inc. (the "Company"), (ii) Xxxxxx X. Xxx Equity
Fund III, L.P. ("THL"), certain individuals associated with THL listed on
Schedule I attached hereto, THL-CCI Limited Partnership ("THL-CCI"), THL
Foreign Fund III, L.P. and THL FSI Equity Investors, L.P. ("THL/FSI" and
collectively with THL, the individuals listed on Schedule I, THL-CCI, and
THL Foreign Fund III, L.P., the "THL Entities"), (iii) DLJ Merchant
Banking Partners II, L.P. ("DLJMB"), DLJ Offshore Partners II, C.V., DLJ
Diversified Partners, L.P., DLJMB Funding II, Inc., DLJ Merchant Banking
Partners II - A, L.P., DLJ Diversified Partners - A, L.P., DLJ Millennium
Partners, L.P., DLJ Millennium Partners - A, L.P., UK Investment Plan
1997 Partners, DLJ EAB Partners, L.P., DLJ ESC II, L.P., and DLJ First
ESC, L.P. (collectively the "DLJ Entities"), (iv) Chase Equity
Associates, L.P. ("Chase Equity"), (v) Xxxxxxx Xxxxx KECALP L.P. 1997,
KECALP INC., and ML IBK Positions, Inc., (collectively, the "Xxxxxxx
Xxxxx Entities" and, together with each other entity listed in clauses
(iii) and (iv), the "Institutional Shareholders" and, collectively with
(ii), the "Equity Investors") and (vi) certain other Persons listed on
the signature pages hereof (including the trust pursuant to the Trust
Agreement, dated of even date herewith, between the Company and Mellon
Bank, N.A., as trustee (the "Rabbi Trust")) (the "Management
Shareholders" and individually, along with the THL Entities, DLJ
Entities, Chase Equity, and Xxxxxxx Xxxxx Entities, each a "Shareholder")
and such other parties who may become parties of this Agreement pursuant
to the terms hereof.
W I T N E S S E T H :
WHEREAS, pursuant to the Subscription Agreement (as defined
below) the Equity Investors are or will be acquiring securities of FSI
Merger Corp. ("FSI"); and
WHEREAS, pursuant to the terms of the Merger Agreement (as
defined below), FSI will be merged with and into the Company, with the
Company as the surviving corporation (the "Merger"); and
WHEREAS, pursuant to the Merger, the stock of FSI held by the
Equity Investors will be converted into stock of the Company; and
WHEREAS, pursuant to the Merger, the Management Shareholders are
entitled to retain shares of stock of the Company; and
WHEREAS, upon the Merger and pursuant to the Equity Investors'
commitment to purchase cumulative preferred stock of the Company,
warrants to purchase common stock of the Company will be issued to the
Equity Investors; and
WHEREAS, pursuant to the Rabbi Trust and any stock or option
plan, Management Shareholders are or will hold shares of stock of the
Company; and
WHEREAS, the parties hereto may obtain additional shares of
stock of the Company in the future; and
WHEREAS, the parties hereto desire to enter into this Agreement
to govern certain of their rights, duties and obligations after
consummation of the Merger;
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. (a) The following terms, as used
herein, have the following meanings:
"Adverse Person" means any Person whom the Board reasonably
determines is a competitor or a potential competitor of the Company or
its Subsidiaries.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common
control with such Person, provided that no securityholder of the Company
shall be deemed an Affiliate of any other securityholder solely by reason
of any investment in the Company. For the purpose of this definition, 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 the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
voting securities or by contract or otherwise.
"Applicable Law," with respect to any Person, means all
provisions of all laws, statutes, ordinances, rules, regulations,
permits, certificates or orders of any Governmental Authority applicable
to such Person or any of its assets or property or to which such Person
or any of its assets or property is subject, and all judgments,
injunctions, orders and decrees of all courts and arbitrators in
proceedings or actions in which such Person is a party or by which it or
any of its assets of properties is or may be bound or subject.
"beneficially own" shall have the meaning set forth in Rule
13d-3 of the Exchange Act.
"Board" means the board of directors of the Company.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in New York City are authorized by law to
close.
"Closing Date" means January 21, 1998.
"Common Stock" shall mean the common stock, par value $.01 per
share, of the Company, non-voting common stock, par value $.01 per share,
of the Company and any stock into which such common stock and non-voting
common stock may thereafter be converted or changed.
"Demand Registration" means collectively, a THL Demand
Registration, an Institutional Shareholder Demand Registration, or a
Management Shareholder Demand Registration.
"Derivatives" shall mean options, warrants (including the Equity
Warrants) or other rights to acquire any Equity Securities of the
Company.
"Equity Investors" means the Institutional Shareholders and the
THL Entities.
"Equity Securities" means the Common Stock and preferred stock,
securities convertible into or exchangeable for Common Stock or preferred
stock, Derivatives, and any other equity security issued by the Company.
"Equity Warrants" means warrants to purchase Common Stock
pursuant to the Equity Warrant Acquisition Agreement.
"Equity Warrant Acquisition Agreement" means the Common Stock
Warrant Acquisition Agreement, of even date herewith, among the Company,
the Institutional Shareholders and the THL Entities.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Federal Reserve Board" means The Board of Governors of the
United States Federal Reserve System.
"Fully Diluted" means, with respect to any class of Equity
Securities, all outstanding shares of such class and all shares issuable
in respect of securities convertible into or exchangeable for such class,
stock appreciation rights or options, warrants and other irrevocable
rights to purchase or subscribe for such class or securities convertible
into or exchangeable for such class; provided, that no Person shall be
deemed to own such number of Fully Diluted shares of such class as such
Person has the right to acquire from any Person other than the Company.
"Initial Ownership" means, with respect to any class of Equity
Securities, the number of shares of such class of Equity Securities
beneficially owned and (without duplication) which such Persons have the
right to acquire from any Person as of the date hereof, or in the case of
any Person that shall become a party to this Agreement on a later date,
as of such date, taking into account any stock split, stock dividend,
reverse stock split or similar event.
"Initial Public Offering" means the first sale after the date
hereof of Common Stock pursuant to an effective registration statement
under the Securities Act (other than a registration statement on Form S-8
or any successor form).
"Merger Agreement" means the Second Amended and Restated
Agreement and Plan of Merger, as amended, dated as of November 14, 1997,
by and between the Company and FSI.
"New Common Securities" means the Common Stock, whether now
authorized or not, any rights, options or warrants to purchase Common
Stock and any indebtedness or stock of the Company which is convertible
into Common Stock (or which is convertible into a security which is, in
turn, convertible into Common Stock) issued after the date hereof;
provided, that the term "New Common Securities" does not include (i) such
Equity Securities issued as a stock dividend to all holders of Common
Stock pro rata or upon any subdivision or combination of shares of Common
Stock; (ii) shares of Common Stock issued upon exercise of Derivatives
outstanding on the date hereof; and (iii) shares of Common Stock issued
to Xxxxxxx X. Xxxxxxx (or entities designated by Xx. Xxxxxxx who become
upon such issuance a party to this Agreement in accordance with Section
7.3(a) and (b)) in exchange for up to $7,500,000 in cash.
"New Preferred Securities" means any preferred stock, whether
now authorized or not, any rights, options or warrants to purchase
preferred stock and any indebtedness or stock of the Company which is
convertible into preferred stock (or which is convertible into a security
which is, in turn, convertible into preferred stock) issued after the
date hereof; provided, that the term "New Preferred Securities" does not
include such Equity Securities issued as a stock dividend to all holders
of preferred stock pro rata or upon any subdivision or combination of
shares of preferred stock and (ii) shares of preferred stock issued upon
exercise of Derivatives outstanding on the date hereof.
"Non-THL Shareholders" means all Shareholders other than the THL
Entities.
"Percentage Ownership" means, with respect to any Shareholder at
any time, (i) the number of Fully Diluted shares of Common Stock that
such Shareholder beneficially owns (and, without duplication, has the
right to acquire from any Person) at such time, divided by (ii) the total
number of Fully Diluted shares of Common Stock at such time.
"Permitted Transferee" means (i) in the case of Institutional
Shareholders (A) the Company, (B) any THL Entity, (C) any general or
limited partner or shareholder of such Shareholder, and any corporation,
partnership or other entity that is an Affiliate of such Shareholder
(collectively, "Shareholder Affiliates"), (D) any general partner,
limited partner, employee, officer or director of such Shareholder or a
Shareholder Affiliate, or any spouse, lineal descendant (whether natural
or adopted), sibling, parent, heir, executor, administrator, testamentary
trustee, lifetime trustee, legatee or beneficiary of any of the foregoing
persons described in this clause (d) (collectively, "Shareholder
Associates"), and (E) any trust, the beneficiaries of which, or any
corporation, limited liability company or partnership, stockholders,
members or general or limited partners of which include only such
Shareholder, such Shareholder Affiliates or Shareholder Associates;
provided, however, that in order for any of the parties identified in
clauses (C), (D) or (E) to be a Permitted Transferee in connection with a
Transfer (or series of related Transfers) in excess of 2.5% of such
Institutional Shareholder's Initial Ownership of the class of Equity
Securities to be transferred, such party must be acceptable to THL, which
acceptance may not be unreasonably withheld and which acceptance shall
not be required for the Transfer by KECALP Inc. of all of its Equity
Securities to Xxxxxxx Xxxxx KECALP International L.P. 1997, a Cayman
Islands limited partnership; provided, further, however, that the
foregoing proviso shall not be applicable if the number of Shares of a
class of Equity Securities to be Transferred by an Institutional
Shareholder pursuant to clause (C), (D) or (E), together with all other
Transfers of such class of Equity Securities by such Institutional
Shareholder and its Permitted Transferees pursuant to any of such
clauses, is less than (I) the aggregate number of Shares of such class of
Equity Securities Transferred by the THL Entities and their THL
Designated Transferees in accordance with clause (A) or (B) of the
definition of "THL Designated Transferees" multiplied by (II) such
Institutional Shareholders' Initial Proportionate Equity Interest of such
class, treating for purposes of this proviso the Equity Warrants as part
of the class of Common Stock, or
(ii) in the case of a Management Shareholder (A) the Company,
(B) any THL Entity, (C) a spouse or lineal descendant (whether natural or
adopted), sibling, parent, heir, executor, administrator, testamentary
trustee, lifetime trustee, legatee or beneficiary of any of such
Management Shareholder, (D) any trust, the beneficiaries of which, or any
corporation, limited liability company or partnership, stockholders,
members or general or limited partners of which include only the Persons
named in clause (B) or (C), (E) bona fide financial institutions, to the
extent that such transfer is in connection with a pledge in connection
with a borrowing arrangement unrelated to a constructive or synthetic
sale, such as any hedge, sale or purchase of any derivative security or
other action (other than Transfers expressly permitted by the terms
hereof) having the effect of reducing a Management Shareholder's economic
interest in Equity Securities or reducing a Management Shareholder's
exposure to a decrease in fair market value of Equity Securities, or
other similar transaction involving such Management Shareholder's Equity
Securities, or (F) a charitable institution as defined in Section 501(c)
of the Internal Revenue Code of 1986, as amended, which receives a bona
fide gift of Shares, which when aggregated with all other Transfers of
Shares of such class of Equity Securities by such Management Shareholder
and its Permitted Transferees pursuant to this clause (F) does not exceed
10% of such Management Shareholders' Initial Ownership of such class of
Equity Securities.
"Person" means an individual, corporation, limited liability
company, partnership, association, trust or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
"Primary Executives" means the following Management
Shareholders: Xxxx X. Xxxxxxxx and Xxxx X. Xxxxxxx.
"Public Offering" means any primary or secondary public offering
of shares of Common Stock pursuant to an effective registration statement
under the Securities Act other than pursuant to a registration statement
filed in connection with a transaction of the type described in Rule 145
of the Securities Act or for the purpose of issuing securities pursuant
to an employee benefit plan.
"Qualifying Public Offering" means a Public Offering yielding
aggregate gross proceeds of at least $50,000,000.
"Registrable Securities" means at any time, with respect to any
Shareholder or its Permitted Transferees, any shares of Common Stock then
owned by such Shareholder or its Permitted Transferees until (i) a
registration statement covering such securities has been declared
effective by the SEC and such securities have been disposed of pursuant
to such effective registration statement, (ii) such securities are sold
under circumstances in which all of the applicable conditions of Rule 144
(or any similar provisions then in force) under the Securities Act are
met or (iii) such securities are otherwise Transferred, the Company has
delivered a new certificate or other evidence of ownership for such
securities not bearing the legend required pursuant to this Agreement and
such securities may be resold without subsequent registration under the
Securities Act.
"Registration Expenses" means (i) all registration and filing
fees, (ii) fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the securities registered),
(iii) printing expenses, (iv) internal expenses of the Company
(including, without limitation, all salaries and expenses of its officers
and employees performing legal or accounting duties), (v) reasonable fees
and disbursements of counsel for the Company and customary fees and
expenses for independent certified public accountants retained by the
Company (including expenses relating to any comfort letters or costs
associated with the delivery by independent certified public accountants
of a comfort letter or comfort letters requested pursuant to Section
5.4(h) hereof), (vi) the reasonable fees and expenses of any special
experts retained by the Company in connection with such registration,
(vii) reasonable fees and expenses of up to one counsel for the
Shareholders participating in the offering, (viii) fees and expenses in
connection with any review of underwriting arrangements by the National
Association of Securities Dealers, Inc. (the "NASD") including fees and
expenses of any "qualified independent underwriter" and (ix) fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, but shall not include any underwriting fees, discounts,
commissions or transfer taxes attributable to the sale of Registrable
Securities, or any out-of-pocket expenses (except as set forth in clause
(vii) above) of the Shareholders or any fees and expenses of
underwriter's counsel.
"Regulated Stockholder" shall mean Chase Equity Associates, L.P.
and any other Stockholder (i) that is subject to the provisions of
Regulation Y or Regulation K of the Federal Reserve Board, 12 C.F.R. Part
225 (or any successor to such Regulations) and (ii) that holds Equity
Securities of the Company and (iii) that has provided written notice to
the Company of its status as a "Regulated Stockholder" hereunder.
"Regulatory Problem" means any set of facts or circumstance
wherein it has been asserted by any governmental regulatory agency (or a
Regulated Stockholder reasonably believes that there is a risk of such
assertion) that such Regulated Stockholder is not entitled to acquire,
own, hold or control, or exercise any significant right (including the
right to vote) with respect to, any Equity Securities of the Company or
any subsidiary of the Company.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shareholder" means each Person (other than the Company but
including the Equity Investors and the Management Shareholders) who are
or shall become a party to this Agreement, whether in connection with the
execution and delivery hereof as of the date hereof, pursuant to Section
7.3 or otherwise, so long as such Person shall beneficially own any
Equity Securities.
"Shares" means shares of Common Stock and other Equity
Securities held by the Shareholders on the date hereof or acquired
hereafter, but excluding any Derivatives.
"Subscription Agreement" means each Subscription Agreement of
even date herewith between FSI and each of the Equity Investors.
"Subsidiary" means, with respect to any Person, any entity of
which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned
by such Person.
"THL Designated Transferee" means (A) any general or limited
partner of the THL Entities (a "THL Partner"), and any corporation,
partnership, or other entity which is an Affiliate of the THL Entities or
any THL Partner (collectively, the "THL Affiliates"), (B) any managing
director, general partner, director, limited partner, officer or employee
of the THL Entities or a THL Affiliate, or the heirs, executors,
administrators, testamentary trustees, lifetime trustees, legatees or
beneficiaries of any of the foregoing Persons referred to in this clause
(B) (collectively, "THL Associates"), (C) a charitable institution as
defined in Section 501(c) of the Internal Revenue Code of 1986, as
amended, which receives a bona fide gift by a THL Individual of Shares
(D) a bank, financial institution or other lender which receives a bona
fide pledge by a THL Individual of Shares, and (E) any trust, the
beneficiaries of which, or any corporation, limited liability company or
partnership, the stockholders, members or general or limited partners of
which include only the THL Entities, THL Affiliates, THL Associates,
their spouses or their lineal descendants. The term "THL Entities," to
the extent the THL Entities shall have Transferred any of its Shares to
"THL Designated Transferees," shall mean the THL Entities and the THL
Designated Transferees of the THL Entities, taken together, and any right
or action that may be exercised or taken at the election of the THL
Entities may be exercised or taken at the election of the THL Entities
and such THL Designated Transferees, unless otherwise restricted by the
THL Entity engaging in such a transfer.
"THL Individuals" means the Persons listed on Schedule I and
Schedule II.
"Underwritten Public Offering" means a firmly underwritten
public offering of Registrable Securities of the Company pursuant to an
effective registration statement under the Securities Act.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
Term Section
---- -------
Cause 2.2
Confidential Information 6.1(b)
DLJ Entities Representative 7.11(b)
Drag-Along Notice 4.2(b)
Drag-Along Notice Period 4.2(b)
Drag-Along Portion 4.2(a)
Drag-Along Rights 4.2(a)
Drag-Along Sale 4.2(a)
Drag-Along Sale Price(s) 4.2(b)
ethical wall 6.1(a)
Holders 5.1(b)
Indemnified Party 5.7
Indemnifying Party 5.7
Initial Proportionate
Equity Interest 3.4
Inspectors 5.4(g)
Institutional Shareholder
Demand Registration 5.1(g)
Management Representative 7.11(d)
Management Transfer 3.5(a)
Maximum Offering Size 5.1(e)
Xxxxxxx Xxxxx Entities
Representative 7.11(c)
New Securities 4.3(a)
Nominee 2.3(a)
Offer Price 3.6(a)
Offered Shares 3.6(a)
Offeror 3.6(a)
Option Period 3.6(a)
Piggyback Registration 5.2(a)
Preemptive Rights Notice 4.3(a)
Preemptive Rights Portion 4.3(a)
Primary Executive Demand
Registration 5.1(h)
Records 5.4(g)
Representatives 6.1(b)
Shareholder 7.3(a)
Tag-Along Notice 4.1(b)
Tag-Along Notice Period 4.1(b)
Tag-Along Offer 4.1(b)
Tag-Along Person 4.1(a)
Tag-Along Portion 4.1(b)
Tag-Along Response Notice 4.1(b)
Tag-Along Right 4.1(b)
Tag-Along Sale 4.1(a)
Tag-Along Shareholder 4.1(a)
Third Party Purchase Notice 4.4
Third Party Purchase Portion 4.4
THL Demand Registration 5.1(a)
THL Entities Representative 7.11(a)
THL Entity Shareholder 7.3(d)
Threshold Percentage 4.1(a)
Transfer 3.1(a)
Transfer Notice 3.6(a)
Trigger Date 6.4
ARTICLE II
CORPORATE GOVERNANCE AND MANAGEMENT
Section 2.1 Composition of the Board. The Board shall consist of
at least 10, but no more than 11, members (two of which shall be
individuals which are not "Affiliates" or "Associates" (as those terms
are used within the meaning of Rule 12b-2 of the General Rules and
Regulations under the Exchange Act) of any Shareholder or its
Affiliates), of whom seven shall be nominated by THL, one shall be
nominated by DLJMB, one shall be Xxxx X. Xxxxxxxx and one shall be Xxxx
X. Xxxxxxx. Each Shareholder entitled to vote for the election of
directors to the Board agrees that it will vote its shares of Common
Stock or execute consents, as the case may be, and take all other
necessary action (including causing the Company to call a special meeting
of shareholders) in order to ensure that the composition of the Board is
as set forth in this Section 2.1; provided that, no Shareholder shall be
required to vote for another Shareholder's nominee or Xx. Xxxxxxxx or Xx.
Xxxxxxx if the number of shares of Common Stock held by (i) Xx. Xxxxxxxx
and Xx. Xxxxxxx collectively, or (ii) such other Shareholder making the
nomination collectively with its Affiliates, as applicable, is, at the
close of business on the day preceding such vote or execution of
consents, less than 10% of such party's or parties' Initial Ownership of
shares of Common Stock on a Fully Diluted basis; and, provided further,
that for so long as Messrs. Xxxxxxxx and Xxxxxxx collectively own 10% or
more of their collective Initial Ownership of shares of Common Stock on a
Fully Diluted basis, designees nominated by THL and the Equity Investors
shall be selected in good faith after consultation with Messrs. Xxxxxxxx
and Xxxxxxx, which consultation shall involve a consideration of Messrs.
Xxxxxxxx and Xxxxxxx'x views relating to the Company. The initial Board
shall consist of the individuals listed on Schedule III hereto.
Section 2.2 Removal. Each Shareholder agrees that if, at any
time, it is then entitled to vote for the removal of directors of the
Company, it will not vote any of its shares of Common Stock in favor of
the removal of any director who shall have been designated or nominated
pursuant to Section 2.1 unless such removal shall be for Cause or such
director or the Person(s) entitled to designate or nominate such director
shall have consented to such removal in writing, provided that if the
Persons entitled to designate or nominate any director pursuant to
Section 2.1 shall request the removal, with or without Cause, of such
director in writing, such Shareholder shall vote its shares of Common
Stock in favor of such removal. Removal for "Cause" shall mean removal of
a director because of such director's (a) willful and continued failure
substantially to perform his duties with the Company in his established
position, (b) willful conduct which is injurious to the Company or any of
its Subsidiaries, monetarily or otherwise, or (c) conviction for, or
guilty plea to, a felony or a crime involving moral turpitude.
Section 2.3 Vacancies. If, as a result of death, disability,
retirement, resignation, removal (with or without Cause) or otherwise,
there shall exist or occur any vacancy on the Board:
(a) the Shareholder(s) entitled under Section 2.1 to nominate
such director whose death, disability, retirement, resignation or
removal resulted in such vacancy, may, subject to the provisions of
Section 2.1, nominate another individual (the "Nominee") to fill such
vacancy and serve as a director of the Company;
(b) subject to Section 2.1, each Shareholder then entitled to
vote for the election of the Nominee as a director of the Company
agrees that it will vote its shares of Common Stock, or execute a
written consent, as the case may be, in order to ensure that the
Nominee be elected to the Board; and
(c) in the case of removal of either of the Primary Executives
from the Board, the other Primary Executive, if he is still a member
of the Board, shall be entitled to nominate an individual to fill the
resulting vacancy, and the provisions of Section 2.3(b) shall apply
to the election of such nominee.
Section 2.4 Action by the Board. (a) A quorum of the Board shall
consist initially of three directors; provided that THL shall have the
right, subject to applicable law or regulation, in its sole discretion,
until such time as THL owns less than 25% of its Initial Ownership of
shares of Common Stock, to increase or decrease the number of directors
necessary to constitute a quorum.
(b) All actions of the Board shall require the affirmative vote
of at least a majority of the directors at a duly convened meeting of the
Board at which a quorum is present or the unanimous written consent of
the Board; provided that, in the event there is a vacancy on the Board
and an individual has been nominated to fill such vacancy, the first
order of business shall be to fill such vacancy.
Section 2.5 Conflicting Charter or Bylaw Provision. Each
Shareholder shall vote its shares of Common Stock, and shall take all
other actions reasonably necessary, to ensure that the Company's
certificate of incorporation and bylaws (copies of which are attached
hereto as Exhibits A and B) facilitate and do not at any time conflict
with any provision of this Agreement.
ARTICLE III
RESTRICTIONS ON TRANSFER
Section 3.1 General. (a) Each Equity Investor understands and
agrees that the shares of Common Stock purchased pursuant to the
Subscription Agreement and the Equity Warrants received pursuant to the
Equity Warrant Acquisition Agreement have not been registered under the
Securities Act and are restricted securities. Each Shareholder agrees
that it will not, directly or indirectly, sell, assign, transfer, grant a
participation in, pledge or otherwise dispose of ("Transfer") any Shares
or Equity Warrants (or solicit any offers to buy or otherwise acquire, or
take a pledge of any Shares or Equity Warrants) except in compliance with
the Securities Act and the terms and conditions of this Agreement.
(b) Any attempt by any Shareholder to Transfer any Shares or
Equity Warrants not in compliance with this Agreement shall be null and
void and the Company shall not, and shall cause any transfer agent not
to, give any effect in the Company's stock records to such attempted
Transfer.
(c) Notwithstanding anything herein to the contrary, except as
may be otherwise set forth in the applicable instrument, Derivatives
(other than the Equity Warrants) shall be transferable only by will, law
of descent or distribution or pursuant to Section 4.2 hereof.
Section 3.2 Legends. (a) In addition to any other legend that
may be required, each certificate for Shares that is issued to any
Shareholder shall bear a legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED
OR SOLD EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO
ADDITIONAL LIMITATIONS OR RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
INVESTORS' AGREEMENT DATED AS OF JANUARY 21, 1998, COPIES OF WHICH MAY BE
OBTAINED UPON REQUEST FROM XXXXXX SCIENTIFIC INTERNATIONAL INC. OR ANY
SUCCESSOR THERETO."
(b) If any Shares shall cease to be Registrable Securities under
clause (i) or clause (ii) of the definition thereof, the Company shall,
upon the written request of the holder thereof, issue to such holder a
new certificate evidencing such Shares without the first sentence of the
legend required by Section 3.2(a) endorsed thereon. If any Shares cease
to be subject to any and all limitations or restrictions on Transfer set
forth in this Agreement, the Company shall, upon the written request of
the holder thereof, issue to such holder a new certificate evidencing
such Shares without the second sentence of the legend required by Section
3.2(a) endorsed thereon.
Section 3.3 Permitted Transferees; Transfers by THL Entities.
Notwithstanding anything in this Agreement to the contrary, (a) any
Non-THL Shareholder may at any time Transfer any or all of its Shares or
Equity Warrants to one or more of its Permitted Transferees so long as
(i) such Permitted Transferee shall have agreed in writing to be bound by
the terms of this Agreement pursuant to Section 7.3 and (ii) the Transfer
to such Permitted Transferee is not in violation of applicable federal or
state securities laws and (b) any THL Entity may at any time Transfer any
or all of its Shares or Equity Warrants to any third party (including THL
Designated Transferees) so long as (i) the Transfer is in compliance with
Section 4.1 hereof, (ii) if the transferee is to be treated as a THL
Designated Transferee, such transferee shall have agreed in writing to be
bound by the terms of this Agreement pursuant to Section 7.3 and (iii)
the Transfer is not in violation of applicable federal or state
securities laws.
Section 3.4 Restrictions on Transfers by Institutional
Shareholders. Except as provided in Section 3.3, each Institutional
Shareholder and each Permitted Transferee of such Institutional
Shareholder may Transfer its Shares and Equity Warrants only as follows:
(i) in a Transfer made in compliance with Section 4.1 or
4.2;
(ii) in a Public Offering in connection with the exercise
of its rights under Article 5 hereof;
(iii) following the earlier to occur of (A) the date on
which the Percentage Ownership of such Institutional Shareholder and
its Permitted Transferees is less than 25% of its Initial Ownership
of shares of Common Stock and (B) the seventh anniversary of the
Closing Date, to any Person other than any Adverse Person; or
(iv) in a Transfer made after an Initial Public Offering in
compliance with Rule 144 under the Securities Act; provided, however,
notwithstanding the foregoing, the Institutional Shareholder may not
Transfer an aggregate number of Shares of such class of Equity
Securities that, together with all prior Transfers of such class by
such Institutional Shareholder and its Permitted Transferees pursuant
to one or more Rule 144 Transfers, represents more than (A) the
aggregate number of Shares of such class Transferred by the THL
Entities and their THL Designated Transferees (other than, in either
case, to THL Designated Transferees) multiplied by (B) such
Institutional Shareholders' Initial Proportionate Equity Interest of
such class; provided, further, that, for purposes of this subsection
(iv), the Equity Warrants shall be treated as part of the class of
shares of Common Stock and the calculations described herein shall
include the number of shares of Common Stock issuable upon exercise
of such Equity Warrants. The "Initial Proportionate Equity Interest"
of a party is such party's Initial Ownership of such class divided by
the Initial Ownership of THL of such class.
Section 3.5 Restrictions on Transfers by Management
Shareholders. (a) Except as provided in Section 3.3, each Management
Shareholder and each Permitted Transferee of such Management Shareholder
may Transfer its Shares only as follows or as set forth in Section
3.5(b):
(i) in a Transfer made in compliance with Section 4.1 or
4.2;
(ii) in a Public Offering in connection with the exercise
of its rights under Article 5 hereof;
(iii) in a Transfer made after an Initial Public Offering
in compliance with Rule 144 under the Securities Act; provided,
however, notwithstanding the foregoing, the Management Shareholder
may not Transfer an aggregate number of Shares of any class of Equity
Securities that, together with all prior Transfers of such class by
such Management Shareholder and its Permitted Transferees pursuant to
one or more Rule 144 Transfers, represents more than (A) the
aggregate number of Shares of such class Transferred by the THL
Entities and their THL Designated Transferees (other than, in either
case, to THL Designated Transferees) multiplied by (B) such
Management Shareholders' Initial Proportionate Equity Interest of
such class;
(iv) following the tenth anniversary of the Closing Date to
any Third Party other than an Adverse Person; or
(v) subject to Section 3.6, a Transfer by a Management
Shareholder to another Management Shareholder (a "Management
Transfer").
(b) Each Management Shareholder and each Permitted Transferee of
such Management Shareholder may Transfer its Shares to any Person other
than an Adverse Person upon the occurrence of a Qualifying Public
Offering.
Section 3.6 Company Right of First Refusal. (a) If a Management
Shareholder (an "Offeror") desires to Transfer Shares to another
Management Shareholder pursuant to the provisions of Section 3.5(a)(v):
(i) such Offeror shall give notice of such offer (the "Transfer
Notice") to the Company. The Transfer Notice shall state the terms
and conditions of such offer, including the name of the prospective
purchaser, the proposed purchase price per share of such Shares (the
"Offer Price"), payment terms (including a description of any
proposed non-cash consideration), the type of disposition and the
number of such Shares to be transferred ("Offered Shares"). The
Transfer Notice shall further state that the Company may acquire, in
accordance with the provisions of this Agreement, any of the Offered
Shares for the price and upon the other terms and conditions,
including deferred payment (if applicable), set forth therein.
(ii) For a period of ten Business Days after receipt of the
Transfer Notice (the "Option Period"), the Company may, by notice in
writing to the Offeror delivering such Transfer Notice, elect in
writing to purchase all, but not less than all, of the Offered Shares
at the Offer Price. The closing of the purchase of Shares pursuant to
Section 3.5, shall take place at the principal office of the Company
on the tenth day after the expiration of the Option Period. At such
Closing, the Company shall deliver to the Offeror, against delivery
of certificates duly endorsed and stock powers representing the
Shares being acquired by the Company, the Offer Price, on the same
terms as set forth in the Transfer Notice (including any non-cash
consideration described therein), payable in respect of the Shares
being purchased by the Company. All of the foregoing deliveries will
be deemed to be made simultaneously, and none shall be deemed
completed until all have been completed.
(b) The provisions of Section 3.6(a) shall not apply to a
Management Shareholder (other than a Primary Executive) if such
Management Shareholder Transfers Shares aggregating, with all other prior
Transfers of Shares by such Management Shareholder, an amount less than
25% of such Management Shareholder's Initial Ownership.
Section 3.7 Notifications Regarding Transfers. To the extent
that either an Institutional Shareholder proposes a Transfer pursuant to
Section 3.4(iv) or a Management Shareholder proposes a Transfer pursuant
to Section 3.5(a)(iii), such Shareholder shall provide notice to THL at
least five Business Days prior to the proposed Transfer Date of the
number of Shares proposed to be Transferred. Not less that two Business
Days prior to the proposed Transfer Date, THL shall notify such
Shareholder of whether the Transfer is believed to be permitted based on
the formulas set forth in Section 3.4(iv) or 3.5(a)(iii), as applicable.
ARTICLE IV
TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS; PREEMPTIVE RIGHTS
Section 4.1 Rights to Participate in Transfer. (a) If the THL
Entities propose to Transfer (a "Tag-Along Sale") shares of a class of
Equity Securities, other than Transfers of shares of such class (i) in a
Public Offering pursuant to the exercise of their rights under Article 5,
(ii) to any THL Designated Transferee or (iii) up to the Threshold
Percentage, the Non-THL Shareholders may, at their option, elect to
exercise their rights under this Section 4.1 (each such Shareholder, a
"Tag-Along Person); provided, however, that the exception set forth in
clause (iii) shall not apply to the Primary Executives. The "Threshold
Percentage" shall equal 5% in the aggregate of the THL Entities' Initial
Ownership of such class of Equity Securities.
(b) In the event of a proposed Transfer in accordance with
paragraph (a) above, THL shall provide each Non-THL Shareholder written
notice of the terms and conditions of such proposed Transfer ("Tag-Along
Notice") at least 10 days prior to such proposed Transfer and offer each
Tag-Along Person the opportunity to participate in such sale. The
Tag-Along Notice shall identify the number of shares of such class of
Equity Securities to be sold in the Tag-Along Sale ("Tag-Along Offer"),
the price at which the Transfer is proposed to be made, and all other
material terms and conditions of the Tag-Along Offer, including the form
of the proposed agreement, if any. From the date of the Tag-Along Notice,
each Tag-Along Person shall have the right (a "Tag-Along Right"),
exercisable by written notice ("Tag-Along Response Notice") given to THL
within 5 Business Days (the "Tag-Along Notice Period"), to request that
THL include in the proposed Transfer the number of shares of such class
of Equity Securities held by such Tag-Along Person as is specified in
such notice; provided that if the aggregate number of shares of such
class of Equity Securities proposed to be sold by the THL Entities and
all Tag-Along Persons in such transaction exceeds the number of shares of
such class of Equity Securities which can be sold on the terms and
conditions set forth in the Tag-Along Notice, then only the Tag-Along
Portion of shares of the THL Entities and each Tag-Along Person shall be
sold pursuant to the Tag-Along Offer. "Tag-Along Portion" means, with
respect to any class of Equity Securities, the number of shares of such
class held (or, without duplication, that such Shareholder has the right
to acquire from any Person) by the Tag-Along Person or THL, as the case
may be, multiplied by a fraction, the numerator of which is the maximum
number of shares of such class subject to the Tag-Along Offer and the
denominator of which is the aggregate number of shares of such class on a
Fully Diluted basis owned by all Shareholders. In the event the THL
Entities shall propose to Transfer a number of shares of such class in
excess of the Threshold Percentage, the Tag-Along Portion shall be
calculated with respect to all of the shares proposed to be Transferred
by the THL Entities. To the extent that the Tag-Along Notice provides
that shares of Common Stock and Equity Warrants will be transferred (i)
the Equity Warrants and the Common Stock shall be treated as part of a
single class of Equity Securities and, if applicable, Equity Warrants are
referred to in this Section 4.1 as "shares" of such class, (ii) the
calculations described in this Section 4.1 with respect to such Tag-Along
Notice shall include the number of shares of Common Stock issuable upon
exercise of such Equity Warrants and (iii) the allocation between Equity
Warrants and shares of Common Stock subject to the Tag-Along Rights will
be proportional to the allocation of the number of Shares subject to the
Tag-Along Notice as compared with the number of Equity Warrants subject
to the Tag-Along Notice.
(c) If the Tag-Along Persons exercise their Tag-Along Rights
hereunder, each Tag-Along Person shall deliver, together with its
Tag-Along Response Notice, to THL the certificate or certificates
representing the Shares of such Tag-Along Person to be included in the
Transfer, together with a limited power-of-attorney authorizing THL to
Transfer such Shares on the terms set forth in the Tag-Along Notice. It
is understood that to the extent THL can do so without affecting the
other terms on which the Tag-Along Sale is proposed to be made, THL will
seek to exclude from the terms of such Tag-Along Sale any material
restrictions on the ability, following such Tag-Along Sale, of any
Tag-Along Person to conduct its business in a manner consistent with past
practice. Delivery of such certificate or certificates representing the
shares to be Transferred and the limited power-of-attorney authorizing
THL to Transfer such shares shall constitute an irrevocable acceptance of
the Tag-Along Offer by such Tag-Along Persons. If, at the end of a 120
day period after such delivery, THL has not completed the Transfer of all
such shares on substantially the same terms and conditions set forth in
the Tag-Along Notice, THL shall return to each Tag-Along Person the
limited power-of-attorney (and all copies thereof) together with all
certificates representing the shares which such Tag-Along Person
delivered for Transfer pursuant to this Section 4.1.
(d) Concurrently with the consummation of the Tag-Along Sale,
THL shall notify the Tag-Along Persons thereof, shall remit to the
Tag-Along Persons the total consideration (by bank or certified check)
for the Shares of the Tag-Along Persons Transferred pursuant thereto, and
shall, promptly after the consummation of such Tag-Along Sale furnish
such other evidence of the completion and time of completion of such
Transfer and the terms thereof as may be reasonably requested by the
Tag-Along Persons.
(e) If at the termination of the Tag-Along Notice Period any
Tag-Along Person shall not have elected to participate in the Tag-Along
Sale, such Tag-Along Person will be deemed to have waived its rights
under Section 4.1(a), with respect to the Transfer of its securities
pursuant to such Tag-Along Sale.
(f) If any Tag-Along Person declines to exercise its Tag-Along
Rights or elects to exercise its Tag-Along Rights with respect to less
than such Tag-Along Person's Tag-Along Portion, the THL Entities shall be
entitled to Transfer, pursuant to the Tag-Along Offer, a number of shares
held by the THL Entities equal to the number of shares constituting the
portion of such Tag-Along Person's Tag-Along Portion with respect to
which Tag-Along Rights were not exercised.
(g) THL may sell, on behalf of the THL Entities and any
Tag-Along Person who exercises the Tag-Along Rights pursuant to this
Section 4.1, the shares subject to the Tag-Along Offer on the terms and
conditions set forth in the Tag-Along Notice within 120 days of the date
on which Tag-Along Rights shall have been waived, exercised or expire.
Section 4.2 Right to Compel Participation in Certain Transfers.
(a) If (i) the THL Entities propose to Transfer not less than 50% of
their Initial Ownership of Common Stock to a Third Party in a bona fide
sale or (ii) the THL Entities propose a Transfer in which the shares of
Common Stock to be Transferred by Shareholders constitute more than 50%
of the outstanding shares of Common Stock (a "Drag-Along Sale"), THL may
at its option require all Shareholders to sell all Equity Securities
proposed to be sold therein ("Drag-Along Rights") then held by every
Non-THL Shareholder, and (subject to and at the closing of the Drag-Along
Sale) to compel to exercise all, but not less than all, of the
Derivatives (whether then vested or unvested) held by every Non-THL
Shareholder and to sell all of the Shares received upon such exercise to
such Third Party, for the same consideration and otherwise on the same
terms and conditions as the THL Entities; provided, that any Non-THL
Shareholder who holds Derivatives the exercise price per share of which
is greater than the per share price at which the Shares are to be sold to
the Third Party may, if required by THL to exercise such Derivatives, in
place of such exercise, submit to irrevocable cancellation thereof
without any liability for payment of any exercise price with respect
thereto; provided, further, that, upon such Drag-Along Sale, the Primary
Executives shall have the right, but not the obligation, to require the
Equity Investors to, at THL's option, either arrange for the purchase by
a third party or purchase directly all of the Shares held by such Primary
Executive as a condition to consummation of such Drag-Along Sale and, in
which case the number of shares to be sold by each Equity Investor will
be reduced on a proportional basis. The number of shares of each class of
Equity Securities to be sold by each Non-THL Shareholder will be the
Drag-Along Portion of the shares of such class that such Non-THL
Shareholder owns. "Drag-Along Portion" means, with respect to any Non-THL
Shareholder and any class of Equity Securities, the number of Shares of
such class of Equity Securities beneficially owned by such Non-THL
Shareholder multiplied by a fraction, the numerator of which is the
number of shares of such class of Equity Securities proposed to be sold
by the THL Entities on behalf of the THL Entities and the Non-THL
Shareholders (as reduced by the number of shares of such class of Equity
Securities to be sold by the Primary Executives in excess of their pro
rata interest) and the denominator of which is the total number of shares
of such class of Equity Securities beneficially owned by the
Shareholders. In the event the Drag-Along Sale is not consummated with
respect to any shares acquired upon exercise of Derivatives, such
Derivatives shall be deemed not to have been exercised or cancelled, as
applicable. To the extent the Drag-Along Sale relates to Derivatives, and
THL determines not to compel the exercise thereof, the Derivatives shall
be treated as a separate class of Equity Securities and, if applicable,
Derivatives are referred to in this Section 4.2 as "shares" of such
class.
(b) THL shall provide written notice of such Drag-Along Sale to
the Non-THL Shareholders (a "Drag-Along Notice") not later than the
fifteenth day prior to the proposed Drag-Along Sale. The Drag-Along
Notice shall identify the Transferee, the number of shares of any class
of Equity Securities, the consideration for which a Transfer is proposed
to be made for each class of Equity Securities (the "Drag-Along Sale
Price(s)") and all other material terms and conditions of the Drag-Along
Sale. Subject to Section 4.2(d), each Non-THL Shareholder shall be
required to participate in the Drag-Along Sale on the terms and
conditions set forth in the Drag-Along Notice and to tender all its
Shares as set forth below. It is understood that to the extent THL can do
so without affecting the other terms on which the Drag-Along Sale is
proposed to be made, THL will seek to exclude from the terms of such
Drag-Along Sale any material restrictions on the ability, following such
Drag-Along Sale, of any Non-THL Shareholder to conduct its business in a
manner consistent with past practice. The price(s) payable in such
Transfer shall be the Drag-Along Sale Price(s). Not later than the tenth
day following the date of the Drag-Along Notice (the "Drag-Along Notice
Period"), each of the Non-THL Shareholders shall deliver to a
representative of THL designated in the Drag-Along Notice certificates
representing all the Shares beneficially owned and held by such Non-THL
Shareholder, duly endorsed, (or evidence of title and ownership of any
Derivative which are subject to the Drag-Along Sale but which are not
exercised in connection therewith) together with all other documents
required to be executed in connection with such Drag-Along Sale, or if
such delivery is not permitted by applicable law, an unconditional
agreement to deliver such shares pursuant to this Section 4.2 at the
closing for such Drag-Along Sale against delivery to such Non-THL
Shareholder of the consideration therefor. If a Non-THL Shareholder
should fail to deliver such certificates to THL, the Company shall cause
the books and records of the Company to show that such shares are bound
by the provisions of this Section 4.2 and that such shares shall be
Transferred to the purchaser of the shares immediately upon surrender for
Transfer by the holder thereof.
(c) The THL Entities shall have a period of 90 days from the
date of receipt of the Drag-Along Notice to consummate the Drag-Along
Sale on the terms and conditions set forth in such Drag-Along Sale
Notice. If the Drag-Along Sale shall not have been consummated during
such period, THL shall return to each of the Non-THL Shareholders all
certificates or other evidence of title and ownership representing shares
that such Non-THL Shareholder delivered for Transfer pursuant hereto,
together with any documents in the possession of THL executed by the
Non-THL Shareholder in connection with such proposed Transfer, and all
the restrictions on Transfer contained in this Agreement or otherwise
applicable at such time with respect to shares owned by the Non-THL
Shareholders shall again be in effect.
(d) Concurrently with the consummation of the Transfer of shares
pursuant to this Section 4.2, THL shall give notice thereof to all
Shareholders, shall remit to each of the Shareholders who have
surrendered their certificates or other evidence of title and ownership
the total consideration (by bank or certified check) for the shares
Transferred pursuant hereto and shall furnish such other evidence of the
completion and time of completion of such Transfer and the terms thereof
as may be reasonably requested by such Shareholders.
(e) Notwithstanding any provision of this Agreement to the
contrary, in the event the terms on which a Drag-Along Sale is proposed
to be made shall include a provision which materially and adversely
affects the ability of any Non-THL Shareholder to compete in any line of
business or geographic area, such Non-THL Shareholder shall not be
required to participate in the Drag-Along Sale on the terms and
conditions set forth in the Drag-Along Notice. In the event any
Shareholder shall elect, pursuant to the preceding sentence, not to
participate in the Drag-Along Sale, THL Entities and their THL Designated
Transferees shall have the right to purchase, and such Shareholder shall
be obligated to sell to the THL Entities and their THL Designated
Transferees such Shareholder's shares, at the Drag-Along Sale Price(s)
and on substantially the same terms (other than any such non-compete
provision), not later than immediately prior to the consummation of the
Drag-Along Sale. Except as provided above, in connection with any
Drag-Along Sale, all Shareholders shall be subject to (i) the same terms
and conditions of sale and (ii) the same indemnity, contribution,
hold-back, escrow or similar obligations.
Section 4.3 Preemptive Rights. (a) The Company shall provide
each Shareholder with a written notice (a "Preemptive Rights Notice") of
any proposed issuance by the Company of Equity Securities at least 10
days prior to the proposed issuance date. Such notice shall specify the
price at which the Equity Securities are to be issued and the other
material terms of the issuance.
(i) In the event the Company shall issue any New Common
Securities or New Preferred Securities (collectively, the "New
Securities") to any third party (including any Shareholder) prior to
a Qualifying Public Offering, the THL Entities and each Management
Shareholder shall be entitled to purchase, at the price and on the
terms at which such New Securities are proposed to be issued and
specified in such Preemptive Rights Notice, the THL Entities' or such
Management Shareholder's Preemptive Rights Portion of such class of
the New Securities proposed to be issued. "Preemptive Rights Portion"
means, with respect to New Common Securities, the pro rata portion of
New Common Securities proposed to be issued by the Company, which
amount shall be based upon such Shareholder's Initial Ownership of
shares of Common Stock as a percentage of the sum of the Initial
Ownership of shares of Common Stock of (A) the THL Entities, (B) all
Institutional Shareholders and (C) all Management Shareholders and,
with respect to New Preferred Securities, the pro rata portion of New
Preferred Securities proposed to be issued by the Company, which
amount shall be based upon such Shareholder's Initial Ownership of
shares of Preferred Stock as a percentage of the sum of the Initial
Ownership of shares of Preferred Stock of (A) the THL Entities and
(B) all Institutional Shareholders.
(ii) In the event that the Company shall issue any New
Securities to any third party (including any Shareholder) following a
Qualifying Public Offering, the THL Entities shall be entitled to
purchase, at the price and on the terms at which such New Securities
are proposed to be issued and specified in such Preemptive Rights
Notice, the THL Entities' Preemptive Rights Portion of such class of
the New Securities proposed to be issued.
(iii) In the event the THL Entities propose to purchase any
New Securities from the Company pursuant to 4.3(a)(i) or (ii) or
otherwise, (A) prior to a Qualifying Public Offering, each
Institutional Shareholder, and (B) following a Qualifying Public
Offering, each Non-THL Shareholder shall be entitled to purchase, at
the price and on the terms at which the THL Entities propose to
purchase such New Securities and specified in such Preemptive Rights
Notice, such Shareholder's Preemptive Rights Portion of such class of
the New Securities proposed to be issued in the transaction giving
rise to the THL Entities' proposed purchase of New Securities;
provided, however, such Shareholders shall not be entitled to
purchase New Securities unless the THL Entities complete the purchase
of New Securities in accordance with the Preemptive Rights Notice.
A Shareholder may exercise its rights under this Section 4.3 by
delivering written notice of its election to purchase New Securities to
the Company, THL and each Non-THL Shareholder within five days of receipt
of the Preemptive Rights Notice. A delivery of such a written notice
(which notice shall specify the number of New Securities to be purchased
by the Shareholder submitting such notice) by such Shareholder shall
constitute a binding agreement of such Shareholder to purchase, subject
to the purchase by THL of its portion of such New Securities, at the
price and on the terms specified in the Preemptive Rights Notice, the
number of New Securities specified in such Shareholder's written notice.
(b) In the event any Non-THL Shareholder declines to exercise
its preemptive rights under this Section 4.3 or elects to exercise such
rights with respect to less than such Shareholder's Preemptive Rights
Portion, the THL Entities shall have the right to purchase, or any
Non-THL Shareholder designated by THL shall have the right to purchase,
from the Company the number of New Securities constituting the Preemptive
Rights Portion with respect to which such Non-THL Shareholder shall not
have exercised its preemptive rights.
(c) In the case of any issuance of New Securities, the Company
shall have 90 days from the date of the Preemptive Rights Notice to
consummate the proposed issuance of any or all of such New Securities
which the Shareholders have not elected to purchase at the price and upon
terms that are not materially less favorable to the Company than those
specified in the Preemptive Rights Notice. At the consummation of such
issuance, the Company shall issue certificates representing the New
Securities to be purchased by each Shareholder exercising preemptive
rights pursuant to this Section 4.3 registered in the name of such
Shareholder, against payment by such Shareholder of the purchase price
for such New Securities. If the Company proposes to issue New Securities
after such 90-day period, it shall again comply with the procedures set
forth in this Section.
(d) Notwithstanding the foregoing, no Shareholder shall be
entitled to purchase New Securities as contemplated by this Section 4.3
in connection with issuances of New Securities (i) to employees of the
Company or any Subsidiary pursuant to employee benefit plans or
arrangements approved by the Board (including upon the exercise of
employee stock options), or (ii) in connection with any bona fide,
arm's-length restructuring or refinancing of outstanding indebtedness
(including convertible indebtedness) of the Company or any Subsidiary.
The Company shall not be under any obligation to consummate any proposed
issuance of New Securities, regardless of whether it shall have delivered
a Preemptive Rights Notice in respect of such proposed issuance.
(e) The Company will use its reasonable best efforts to provide
the Preemptive Rights Notice at least 15 Business Days prior to any
proposed issuance of New Securities. In the event it is impracticable to
provide the Preemptive Rights Notice at least 15 Business Days prior to
such issuance, any Shareholder may offer to finance or arrange to finance
the purchase by any other Shareholder of such other Shareholder's
Preemptive Rights Portion and such financing or arranging Shareholder
shall be entitled to receive as compensation for such services reasonable
and customary fees and expenses. No Shareholder shall be under any
obligation to provide or arrange such financing for any other
Shareholder.
Section 4.4. Certain Other Purchases of Equity Securities. In
the event, at any time after the date hereof and prior to the Trigger
Date, the THL Entities shall acquire any Equity Securities from any
Person other than the Shareholders, THL shall deliver, within five
Business Days of the date of such acquisition, a notice to each Equity
Investor (a "Third Party Purchase Notice") specifying the class of Equity
Securities, the number of shares of such class acquired and the weighted
average of price per share paid by the THL Entities. Such Third Party
Purchase Notice shall constitute an offer to each such Shareholder to
purchase such Shareholder's Third Party Purchase Portion of the number of
shares of such class acquired by the THL Entities. A Shareholder may
exercise its rights under this Section 4.4 by delivering written notice
of its election to purchase its Third Party Purchase Portion within ten
days of receipt of the Third Party Purchase Notice. A delivery of such
written notice (which shall specify the number of shares of such class of
Equity Securities to be purchased by the Shareholder submitting such
notice) by such Shareholder shall constitute a binding agreement of such
Shareholder to purchase, at the price and on the terms specified in the
Third Party Purchase Notice, the number of shares of a class of Equity
Securities specified in such notice. At the consummation of the Transfer
of the shares of a class of Equity Securities purchased by the THL
Entities to any Shareholder that has exercised its right hereunder, the
THL Entities shall deliver to such Shareholder certificates or other
evidence of title and ownership representing the shares such class of
Equity Securities to be purchased against payment by such Shareholder of
the purchase price for such shares of Equity Securities. "Third Party
Purchase Portion" means, with respect to any Shareholder at any time, the
number of shares of the class of Equity Securities purchased by the THL
Entities in a transaction subject to Section 4.4, multiplied by a
fraction, the numerator of which is (i) the number of shares of such
class of Equity Securities on a Fully Diluted basis that such Shareholder
beneficially owns at such time, and the denominator of which is (ii) the
total number of shares of such class of Equity Securities on a Fully
Diluted basis beneficially owned at such time by all Equity Investors. To
the extent the Third Party Purchase Notice relates to Derivatives, such
Derivatives shall be treated as a separate class of Equity Securities
and, if applicable, Derivatives are referred to in this Section 4.4 as
"shares" of such class.
ARTICLE V
REGISTRATION RIGHTS
Section 5.1 Demand Registration. (a) If the Company shall
receive a written request by THL that the Company effect the registration
under the Securities Act of all or a portion of the THL Entities'
Registrable Securities, and specifying the intended method of disposition
thereof, then the Company shall promptly give written notice of such
requested registration (a "THL Demand Registration") at least five days
prior to the anticipated filing date of the registration statement
relating to such THL Demand Registration to the Non-THL Shareholders and
thereupon will use its best efforts to effect, as expeditiously as
possible, the registration under the Securities Act of:
(i) the Registrable Securities of the THL Entities which
the Company has been so requested to register; and
(ii) subject to the restrictions set forth in Section 5.2,
all other Registrable Securities of the same class as that to which
THL's request relates for which an effective Piggyback Registration
(as such term is defined in Section 5.2) request has been made;
provided, that subject to Section 5.1(d) hereof, the Company shall not be
obligated to effect more than six THL Demand Registrations. In no event
will the Company be required to effect more than one THL Demand
Registration within any four-month period.
(b) Promptly after the expiration of the 2-day period referred
to in Section 5.2(a) hereof, the Company will notify all the Shareholders
to be included in the THL Demand Registration (the "Holders") of the
other Holders and the number of Registrable Securities requested to be
included therein. THL may, at any time prior to the effective date of the
registration statement relating to such registration, revoke such
request, without liability to any of the other Holders, by providing a
written notice to the Company revoking such request, in which case such
request, so revoked, shall not be considered a THL Demand Registration.
(c) The Company will pay all Registration Expenses in connection
with any THL Demand Registration.
(d) A registration requested pursuant to this Section 5.1 shall
not be deemed to have been effected (i) unless the registration statement
relating thereto (A) has become effective under the Securities Act and
(B) has remained effective for a period of at least 180 days (or such
shorter period in which all Registrable Securities of the Holders
included in such registration have actually been sold thereunder);
provided, that if after any registration statement requested pursuant to
this Section 5.1 becomes effective (x) such registration statement is
interfered with by any stop order, injunction or other order or
requirement of the SEC or other governmental agency or court and (y) less
than 75% of the Registrable Securities included in such registration
statement has been sold thereunder, such registration statement shall not
be considered a THL Demand Registration, or (ii) if the Maximum Offering
Size (as defined below) is reduced in accordance with Section 5.1(e) such
that less than 66 2/3% of the Registrable Securities of the THL Entities
sought to be included in such registration are included.
(e) If a THL Demand Registration involves an Underwritten Public
Offering and the managing underwriter shall advise the Company and THL
that, in its view, (i) the number of shares of Registrable Securities
requested to be included in such registration (including any securities
which the Company proposes to be included which are not Registrable
Securities) or (ii) the inclusion of some or all of the shares of
Registrable Securities owned by the Holders, in any such case, exceeds
the largest number of shares which can be sold without having an adverse
effect on such offering, including the price at which such shares can be
sold (the "Maximum Offering Size"), the Company will include in such
registration, in the priority listed below, up to the Maximum Offering
Size:
(A) first, all Registrable Securities requested by THL to
be registered and all Registrable Securities requested to be included
in such registration by any other Holder pursuant to an effective
Piggyback Registration request (allocated, if necessary for the
offering not to exceed the Maximum Offering Size, pro rata among the
THL Entities and such Holders on the basis of the relative number of
Registrable Securities held by such Shareholder); and
(B) second, any securities proposed to be registered by the
Company.
provided, however, that in such case, any Holder may elect to withdraw
such Holder's Registrable Securities from the registration.
(f) Upon written notice to THL, the Company may postpone
effecting a registration pursuant to this Section 5.1 on one occasion
during any period of six consecutive months for a reasonable time
specified in the notice but not exceeding 90 days (which period may not
be extended or renewed), if (i) an investment banking firm of recognized
national standing shall advise the Company and THL in writing that
effecting the registration would materially and adversely affect an
offering of securities of the Company the preparation of which had then
been commenced or (ii) the Company has a bona fide business reason for
determining that it is in possession of material non-public information
the disclosure of which during the period specified in such notice the
Company believes, in its reasonable judgment, would not be in the best
interests of the Company.
(g) After the Company has effected two Demand Registrations
pursuant to this Section 5.1 of Common Stock, the Institutional
Shareholders, upon request of such Institutional Shareholders owning a
majority of the Shares acquired by such Institutional Shareholders on the
Closing Date, may request that the Company register shares of Registrable
Securities then owned by such Institutional Shareholders (an
"Institutional Shareholder Demand Registration"). In no event will the
Company be required to effect more than one such Institutional
Shareholder Demand Registration. The provisions of this Article 5 shall
apply, mutatis mutandis, to any such Institutional Shareholder Demand
Registration.
(h) After the Transfer of Shares of Common Stock representing
more than 20% of the Shares collectively owned by the Equity Investors of
the Initial Ownership on a Fully Diluted basis owned by such Equity
Investors, the Primary Executives may request that the Company register
Shares which are Registrable Securities then owned by them (a "Primary
Executive Demand Registration"). In no event will the Company be required
to effect more than three such Primary Executive Demand Registrations.
The provisions of this Article 5 shall apply, mutatis mutandis, to any
such Primary Executive Demand Registration; provided, that,
notwithstanding anything to the contrary herein, (i) no Primary Executive
Demand Registrations may be made during the six month period following
the Effective Time or within six months after the effective date any
other registration statement (other than registration statement on From
S-4 or S-8 or similar form), and (ii) the Company must use its best
efforts to effect such Primary Executive Demand Registration as soon as
practicable, but in no event later than 120 days following the date of
the demand.
Section 5.2 Piggyback Registration. (a) If the Company proposes
to register any Equity Securities under the Securities Act, whether or
not for sale for its own account (including pursuant to a Demand
Registration), in connection with a public offering (other than a public
offering pursuant to a registration statement filed in connection with a
transaction of the type described in Rule 145 of the Securities Act or
for the purpose of issuing securities pursuant to an employee benefit
plan) it will each such time, subject to the provisions of Section 5.2(b)
hereof, give prompt written notice at least five days prior to the
anticipated filing date of the registration statement relating to such
registration to all Shareholders and their respective Permitted
Transferees (or, in the case of a Demand Registration to all Shareholders
and their Permitted Transferees other than the Shareholder making the
demand), which notice shall set forth such Shareholders' rights under
this Section 5.2 and shall offer all Shareholders the opportunity to
include in such registration statement such number of shares of Common
Stock as each such Shareholder may request (a "Piggyback Registration").
Upon the written request of any such Shareholder made within 2 days (one
of which shall be a Business Day) after the receipt of notice from the
Company (which request shall specify the number of Registrable Securities
intended to be disposed of by such Shareholder), the Company will use its
reasonable best efforts to effect the registration under the Securities
Act of all Registrable Securities which the Company has been so requested
to register by such Shareholders, to the extent requisite to permit the
disposition of the Registrable Securities so to be registered; provided,
that (i) if such registration involves an Underwritten Public Offering,
all such Shareholders requesting to be included in the Company's
registration must sell their Registrable Securities to the underwriters
selected as provided in Section 5.4(f) on the same terms and conditions
as apply to the Company or the other selling Shareholder, as applicable,
and (ii) if, at any time after giving written notice of its intention to
register on its own behalf any stock and prior to the effective date of
the registration statement filed in connection with such registration,
the Company shall determine for any reason not to register such stock,
the Company shall give written notice to all such Shareholders and,
thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration. No
registration effected under this Section 5.2 on behalf of the Company
shall relieve the Company of its obligations to effect a Demand
Registration, to the extent required by Section 5.1 hereof. The Company
will pay all Registration Expenses in connection with each registration
of Registrable Securities requested pursuant to this Section 5.2.
(b) If a registration pursuant to this Section 5.2 involves an
Underwritten Public Offering (other than in the case of an Underwritten
Public Offering resulting from a Demand Registration, in which case the
provisions with respect to priority of inclusion in such offering set
forth in Section 5.1(e) shall apply) and the managing underwriter advises
the Company that, in its view, the number of shares of Common Stock which
the Company and the selling Shareholders intend to include in such
registration exceeds the Maximum Offering Size, the Company will include
in such registration, in the following priority, up to the Maximum
Offering Size:
(i) first, so much of the Equity Securities proposed to be
registered for the account of the Company as would not cause the
offering to exceed the Maximum Offering Size; and
(ii) second, all Registrable Securities requested to be
included in such registration by any Shareholder pursuant to an
effective Piggyback Registration request (allocated, if necessary for
the offering not to exceed the Maximum Offering Size, pro rata among
such Shareholders on the basis of the relative number of shares of
Registrable Securities held by such Shareholder).
Section 5.3 Holdback Agreements. With respect to each and every
firmly Underwritten Public Offering, each Shareholder (collectively with
all of its Affiliates which are Shareholders) owning Shares representing
more than 1% of the then outstanding Shares (including Shares which would
be held upon any conversion or exercise of rights) agrees, and their
Permitted Transferees will agree, not to offer or sell any Shares (except
for Shares, if any, sold in that Public Offering) during the period which
commences on the 14th day prior to the effective date of the applicable
registration statement for a public offering of Shares (except as part of
such registration) and ends on the earlier of: (i) 180 days after the
effective date of the registration statement or (ii) any such shorter
period as the Company and the lead managing underwriter of an
Underwritten Public Offering agree.
Section 5.4 Registration Procedures. Whenever Shareholders
request that any Registrable Securities be registered pursuant to Section
5.1 or 5.2 hereof, the Company will, subject to the provisions of such
Sections, use its best efforts, or reasonable best efforts, as the case
maybe, to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition thereof
as quickly as practicable, and in any event within 60 days of the date of
demand and in connection with any such request:
(a) The Company will as expeditiously as possible prepare and
file with the SEC a registration statement on any form selected by
counsel for the Company and which form shall be available for the
sale of the Registrable Securities to be registered thereunder in
accordance with the intended method of distribution thereof, and use
its best efforts to cause such filed registration statement to become
and remain effective for a period of not less than 180 days (or such
shorter period in which all of the Registrable Securities of the
Holders included in such registration statement shall have actually
been sold thereunder).
(b) The Company will, if requested, prior to filing a
registration statement or prospectus or any amendment or supplement
thereto, furnish to each Shareholder and each underwriter, if any, of
the Registrable Securities covered by such registration statement
copies of such registration statement as proposed to be filed, and
thereafter the Company will furnish to such Shareholder and
underwriter, if any, such number of copies of such registration
statement, each amendment and supplement thereto (in each case
including all exhibits thereto and documents incorporated by
reference therein), the prospectus included in such registration
statement (including each preliminary prospectus) and such other
documents as such Shareholder or underwriter may reasonably request
in order to facilitate the disposition of the Registrable Securities
owned by such Shareholder. Each Shareholder shall have the right to
request that the Company modify any information contained in such
registration statement, amendment and supplement thereto pertaining
to such Shareholder and the Company shall use its reasonable best
efforts to comply with such request; provided, however, that the
Company shall not have any obligation to so modify any information if
so doing would cause the prospectus to contain an untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading.
(c) After the filing of the registration statement, the Company
will (i) cause the related prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Securities Act, (ii) comply with the
provisions of the Securities Act with respect to the disposition of
all Registrable Securities covered by such registration statement
during the applicable period in accordance with the intended methods
of disposition by the sellers thereof set forth in such registration
statement or supplement to such prospectus and (iii) promptly notify
each Shareholder holding Registrable Securities covered by such
registration statement of any stop order issued or threatened by the
SEC or any state securities commission under state blue sky laws and
take all reasonable actions required to prevent the entry of such
stop order or to remove it if entered.
(d) The Company will use its best efforts to (i) register or
qualify the Registrable Securities covered by such registration
statement under such other securities or blue sky laws of such
jurisdictions in the United States as the Managing Underwriter or any
Shareholder or Shareholders holding such Registrable Securities
reasonably (in light of such Shareholder's intended plan of
distribution) requests and (ii) cause such Registrable Securities to
be registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and
operations of the Company and do any and all other acts and things
that may be reasonably necessary or advisable to enable such
Shareholder to consummate the disposition of the Registrable
Securities owned by such Shareholder; provided, however, that the
Company will not be required to (A) qualify generally to do business
in any jurisdiction where it would not otherwise be required to
qualify but for this paragraph (d), (B) subject itself to taxation in
any such jurisdiction or (C) consent to general service of process in
any such jurisdiction.
(e) The Company will immediately notify each Shareholder holding
such Registrable Securities covered by such registration statement,
at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the occurrence of an event
requiring the preparation of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading and promptly prepare and make available to
each such Shareholder and file with the SEC any such supplement or
amendment.
(f) In connection with (i) (A) any THL Demand Registration or
(B) any registration by the Company of Registrable Securities, the
Company shall appoint the underwriter or underwriters chosen by THL
and (ii) (A) any Institutional Shareholder Demand Registration or (B)
any Primary Executive Demand Registration, the Company shall appoint
the underwriter or underwriters chosen by Shareholders holding the
majority of the Registrable Securities to be registered; provided,
that the underwriter or underwriters identified in accordance with
clauses (ii)(A) and (ii)(B) shall be reasonably acceptable to the
Company. The Company will enter into customary agreements (including
an underwriting agreement in customary form) and take such other
actions as are reasonably required in order to expedite or facilitate
the disposition of such Registrable Securities, including the
engagement of a "qualified independent underwriter" in connection
with the qualification of the underwriting arrangements with the
NASD.
(g) Upon execution of confidentiality agreements in form and
substance reasonably satisfactory to the Company, the Company will
make available for inspection by any Shareholder and any underwriter
participating in any disposition pursuant to a registration statement
being filed by the Company pursuant to this Section 5.4 and any
attorney, accountant or other professional retained by any such
Shareholder or underwriter (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and
properties of the Company (collectively, the "Records") as shall be
reasonably requested by any such Person, and cause the Company's
officers, directors and employees to supply all information
reasonably requested by any Inspectors in connection with such
registration statement.
(h) The Company will furnish to each such Shareholder and to
each such underwriter, if any, a signed counterpart, addressed to
such underwriter and the participating Shareholders, of (i) an
opinion or opinions of counsel to the Company and (ii) a comfort
letter or comfort letters from the Company's independent public
accountants, each in customary form and covering such matters of the
type customarily covered by opinions or comfort letters, as the case
may be, as a majority of such Shareholders or the managing
underwriter therefor reasonably requests.
(i) The Company will otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC and the relevant
state blue sky commissions, and make available to its
securityholders, as soon as reasonably practicable, an earnings
statement covering a period of 12 months, beginning within three
months after the effective date of the registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act.
(j) The Company may require each such Shareholder to promptly
furnish in writing to the Company information regarding the
distribution of the Registrable Securities as the Company may from
time to time reasonably request and such other information as may be
legally required in connection with such registration.
(k) Each such Shareholder agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind
described in Section 5.4(e) hereof, such Shareholder will forthwith
discontinue disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until
such Shareholder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 5.4(e) hereof, and, if so
directed by the Company, such Shareholder will deliver to the Company
all copies, other than any permanent file copies then in such
Shareholder's possession, of the most recent prospectus covering such
Registrable Securities at the time of receipt of such notice. In the
event that the Company shall give such notice, the Company shall
extend the period during which such registration statement shall be
maintained effective (including the period referred to in Section
5.4(a) hereof) by the number of days during the period from and
including the date of the giving of notice pursuant to Section 5.4(e)
hereof to the date when the Company shall make available to such
Shareholder a prospectus supplemented or amended to conform with the
requirements of Section 5.4(e) hereof.
(l) The Company will use its best efforts to list such
Registrable Securities on any securities exchange on which the Common
Stock is then listed or on NASDAQ if the Common Stock is then quoted
on NASDAQ not later than the effective date of such registration
statement.
Section 5.5 Indemnification by the Company. The Company agrees
to indemnify and hold harmless each Shareholder holding Registrable
Securities covered by a registration statement, its officers, directors,
employees, partners and agents, and each Person, if any, who controls
such Shareholder within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act (and officers, directors, employees,
partners and agents of such controlling Persons) from and against any and
all losses, claims, damages, joint or several liabilities or expenses
(including reasonable attorneys' fees and expenses and reasonable costs
of investigation) caused by any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or
prospectus relating to the Registrable Securities (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or liabilities
are caused by any such untrue statement or omission or alleged untrue
statement or omission so made in strict conformity with information
furnished in writing to the Company by such Shareholder or on such
Shareholder's behalf expressly for use therein; provided that with
respect to any untrue statement or omission or alleged untrue statement
or omission made in any preliminary prospectus, or in any final
prospectus, as the case may be, the indemnity agreement contained in this
paragraph shall not apply to the extent that any such loss, claim,
damage, liability or expense results from the fact that a current copy of
the final prospectus (or, in the case of a final prospectus, the final
prospectus as amended or supplemented) was not sent or given to the
Person asserting any such loss, claim, damage, liability or expense at or
prior to the written confirmation of the sale of the Registrable
Securities concerned to such Person if it is determined that the Company
has provided such current copy of such final prospectus (or such amended
or supplemented prospectus, as the case may be) to such Shareholder in a
timely manner prior to such sale and it was the responsibility of such
Shareholder under the Securities Act to provide such Person with a
current copy of the prospectus (or such amended or supplemented
prospectus, as the case may be) and such current copy of the final
prospectus (or such amended or supplemented prospectus, as the case may
be) would have cured the defect giving rise to such loss, claim, damage,
liability or expense. The Company also agrees to indemnify any
underwriters of the Registrable Securities, their officers and directors
and each person who controls such underwriters on substantially the same
basis as that of the indemnification of the Shareholders provided in this
Section 5.5.
Section 5.6 Indemnification by Participating Shareholders. Each
Shareholder holding Registrable Securities included in any registration
statement agrees, severally but not jointly, to indemnify and hold
harmless the Company, its officers, directors and agents and each Person
(other than such Shareholder) if any, who controls the Company within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the
Company to such Shareholder, but only (i) with respect to information
furnished in writing by such Shareholder or on such Shareholder's behalf
expressly for use in any registration statement or prospectus relating to
the Registrable Securities, or any amendment or supplement thereto, or
any preliminary prospectus or (ii) to the extent that any loss, claim,
damage, liability or expense described in Section 5.5 results from the
fact that a current copy of the final prospectus (or, in the case of a
prospectus, the prospectus as amended or supplemented) was not sent or
given to the Person asserting any such loss, claim, damage, liability or
expense at or prior to the written confirmation of the sale of the
Registrable Securities concerned to such Person if it is determined that
it was the responsibility of such Shareholder to provide such Person with
a current copy of the final prospectus (or such amended or supplemented
prospectus, as the case may be) and such current copy of the final
prospectus (or such amended or supplemented prospectus, as the case may
be) would have cured the defect giving rise to such loss, claim, damage,
liability or expense. Each such Shareholder shall be prepared, if
required by the underwriting agreement, to indemnify and hold harmless
underwriters of the Registrable Securities, their officers and directors
and each person who controls such underwriters on substantially the same
basis as that of the indemnification of the Company provided in this
Section 5.6. As a condition to including Registrable Securities in any
registration statement filed in accordance with Article 5 hereof, the
Company may require that it shall have received an undertaking reasonably
satisfactory to it from any underwriter to indemnify and hold it harmless
to the extent customarily provided by underwriters with respect to
similar securities.
No Shareholder shall be liable under Section 5.6 for any damage
thereunder in excess of the net proceeds realized by such Shareholder in
the sale of the Registrable Securities of such Shareholder.
Section 5.7 Conduct of Indemnification Proceedings. In case any
proceeding (including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought pursuant
to this Article 5, such Person (an "Indemnified Party") shall promptly
notify the Person against whom such indemnity may be sought (the
"Indemnifying Party") in writing and the Indemnifying Party shall assume
the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Party, and shall assume the payment of
all fees and expenses; provided that the failure of any Indemnified Party
so to notify the Indemnifying Party shall not relieve the Indemnifying
Party of its obligations hereunder except to the extent that the
Indemnifying Party is materially prejudiced by such failure to notify. In
any such proceeding, any Indemnified Party shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party unless (i) the Indemnifying Party
and the Indemnified Party shall have mutually agreed to the retention of
such counsel or (ii) in the reasonable judgment of such Indemnified Party
representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is
understood that the Indemnifying Party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) at any time for all such
Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm
for the Indemnified Parties, such firm shall be designated in writing by
the Indemnified Parties. The Indemnifying Party shall not be liable for
any settlement of any proceeding effected without its written consent,
but if settled with such consent, or if there be a final judgment for the
plaintiff, the Indemnifying Party shall indemnify and hold harmless such
Indemnified Parties from and against any and all losses, claims, damages,
liabilities and expenses or liability (to the extent stated above) by
reason of such settlement or judgment. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending or threatened proceeding in respect of which
any Indemnified Party is or could have been a party and indemnity could
have been sought hereunder by such Indemnified Party, unless such
settlement includes an unconditional release of such Indemnified Party
from all liability arising out of such proceeding.
Section 5.8 Contribution. If the indemnification provided for in
this Article 5 is held by a court of competent jurisdiction to be
unavailable to the Indemnified Parties in respect of any losses, claims,
damages or liabilities referred to herein, then each such Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute
to the amount paid or payable by such Indemnified Party as a result of
such losses, claims, damages or liabilities (i) as between the Company
and the Shareholders holding Registrable Securities covered by a
registration statement and their related Indemnified Parties on the one
hand and the underwriters and their related Indemnified Parties on the
other, in such proportion as is appropriate to reflect the relative
benefits received by the Company and such Shareholders on the one hand
and the underwriters on the other, from the offering of the Shareholders'
Registrable Securities, or if such allocation is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits but also the relative fault of the Company and such
Shareholders on the one hand and of such underwriters on the other in
connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant
equitable considerations and (ii) as between the Company and their
related Indemnified Parties on the one hand and each such Shareholder and
their related Indemnified Parties on the other, in such proportion as is
appropriate to reflect the relative fault of the Company and of each such
Shareholder in connection with such statements or omissions, as well as
any other relevant equitable considerations. The relative benefits
received by the Company and such Shareholders on the one hand and such
underwriters on the other shall be deemed to be in the same proportion as
the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company and
such Shareholders bear to the total underwriting discounts and
commissions received by such underwriters, in each case as set forth in
the table on the cover page of the prospectus. The relative fault of the
Company and such Shareholders on the one hand and of such underwriters on
the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company and such Shareholders or by such
underwriters. The relative fault of the Company on the one hand and of
each such Shareholder on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material
fact relates to information supplied by such party, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Shareholders agree that it would not be just
and equitable if contribution pursuant to this Section 5.8 were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to
in the immediately preceding paragraph. The amount paid or payable by an
Indemnified Party as a result of the losses, claims, damages or
liabilities referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any legal
or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 5.8 no underwriter shall
be required to contribute any amount in excess of the underwriting
discount applicable to securities purchased by such underwriter in such
offering, less the aggregate amount of any damages which such underwriter
has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, and no Shareholder
shall be required to contribute any amount in excess of the amount by
which the net proceeds realized on the sale of the Registrable Securities
of such Shareholder exceeds the amount of any damages which such
Shareholder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. Each
Shareholder's obligation to contribute pursuant to this Section 5.8 is
several in the proportion that the proceeds of the offering received by
such Shareholder bears to the total proceeds of the offering received by
all such Shareholders and not joint.
Section 5.9 Participation in Public Offering. No Person may
participate in any Underwritten Public Offering hereunder unless such
Person (a) agrees to sell such Person's securities on the basis provided
in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents reasonably required under the terms of such
underwriting arrangements and the provisions of this Agreement in respect
of registration rights.
Section 5.10 Cooperation by the Company. In the event any
Shareholder shall Transfer any Registrable Securities pursuant to Rule
144A under the Securities Act, the Company shall cooperate, to the extent
commercially reasonable, with such Shareholder and shall provide to such
Shareholder such information as such Shareholder shall reasonably
request.
Section 5.11 No Transfer of Registration Rights. None of the
rights of Shareholders under this Article 5 shall be assignable by any
Shareholder to any Person acquiring securities of such Shareholder in any
Public Offering or pursuant to Rule 144A of the Securities Act.
ARTICLE VI
CERTAIN COVENANTS AND AGREEMENTS
Section 6.1 Confidentiality. (a) Each Shareholder hereby agrees
that Confidential Information (as defined below) furnished and to be
furnished to it was and will be made available in connection with such
Shareholder's investment in the Company. Each Shareholder agrees that it
will use the Confidential Information only in connection with its
investment in the Company and not for any other purpose. Each Shareholder
further acknowledges and agrees that it will not disclose any
Confidential Information to any Person; provided that Confidential
Information may be disclosed (i) to such Shareholder's Representatives
(as defined below) in the normal course of the performance of their
duties or to any financial institution providing credit to such
Shareholder, (ii) to the extent required by applicable law, rule or
regulation (including complying with any oral or written questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand or similar process to which a Shareholder is
subject; provided that such Shareholder gives the Company prompt notice
of such request(s), to the extent practicable, so that the Company may
seek an appropriate protective order or similar relief (and the
Shareholder shall cooperate with such efforts by the Company, and shall
in any event make only the minimum disclosure required by such law, rule
or regulation)), (iii) to any Person to whom such Shareholder is
contemplating a Transfer of its Shares (provided that such Transfer would
not be in violation of the provisions of this Agreement and as long as
such potential Transferee is advised of the confidential nature of such
information and agrees to be bound by a confidentiality agreement in form
and substance satisfactory to the Company (it being understood that a
confidentiality agreement consistent with the provisions hereof shall be
satisfactory to the Company)) or (iv) if the prior written consent of the
Board shall have been obtained. Nothing contained herein shall prevent
the use (subject, to the extent possible, to a protective order) of
Confidential Information in connection with the assertion or defense of
any claim by or against the Company or any Shareholder. Notwithstanding
the foregoing, each Shareholder or Affiliate of a Shareholder who engages
principally in the business of effecting or recommending transactions,
either as a principal or as agent on behalf of third parties, in,
relating to or involving securities (including public securities of the
Company or its subsidiaries) and including, without limitation,
transactions in which such Shareholder or Affiliate may act as an
investment advisor, an investment company, a broker or dealer in
securities, an underwriter or placement agent of securities, a market
maker, a specialist, an arbitrageur, a block positioner or a provider of
securities research, may engage in such activities with respect to
securities of the Company so long as, prior to engaging in any such
activities (i) such Shareholder has established an effective "ethical
wall" between individuals receiving Confidential Information and those
individuals (including Affiliates) involved in effectuating trades or
other transactions involving such securities of the Company or its
subsidiaries, which "ethical wall" is designed to prevent any transfer,
directly or indirectly, of Confidential Information and (ii) such
purchases, sales, dealings or other transactions are made only in
accordance with such "ethical wall" policies and procedures in accordance
with applicable law, rule or regulation.
(b) "Confidential Information" means any information concerning
the Company and Persons which are or become its subsidiaries or the
financial condition, business, operations or prospects of the Company and
Persons which are or become its subsidiaries in the possession of or
furnished to any Shareholder (including, without limitation by virtue of
its present or former right to designate a director of the Company);
provided that the term "Confidential Information" does not include
information which (i) is or becomes generally available to the public
other than as a result of a disclosure by a Shareholder or its partners,
directors, officers, employees, agents, counsel, investment advisers or
representatives (all such persons being collectively referred to as
"Representatives") in violation of the Merger Agreement or this
Agreement, (ii) is or was available to such Shareholder on a
nonconfidential basis prior to its disclosure to such Shareholder or its
Representatives by the Company or (iii) was or becomes available to such
Shareholder on a non-confidential basis from a source other than the
Company, provided that such source is or was (at the time of receipt of
the relevant information) not, to the best of such Shareholder's
knowledge, bound by a confidentiality agreement with (or other
confidentiality obligation to) the Company or another Person.
Section 6.2 Reports. The Company will furnish all the Equity
Investors with the quarterly and annual financial reports that the
Company is required to file with the Securities and Exchange Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act promptly
after the filing thereof or, in the event the Company is not required to
file such reports, quarterly and annual reports containing the same
information as would be required in such reports on the date that such
reports would otherwise be filed.
Section 6.3 Limitations on Subsequent Registration. The Company
shall not enter into any agreement with any holder or prospective holder
of any securities of the Company (a) which conflicts with the provision
of Article V, (b) that would allow such holder or prospective holder to
include such securities in any registration filed pursuant to Section 5.1
or 5.2 hereof, unless under the terms of such agreement, such holder or
prospective holder may include such securities in any such registration
only to the extent that the inclusion of such securities would not reduce
the amount of the Registrable Securities of the Shareholders included
therein or (c) on terms otherwise more favorable than this Agreement.
Section 6.4 Limitation on Purchase of Equity Securities. Until
the earlier to occur of (i) the seventh anniversary of the Closing Date
or (ii) the date on which at least 40% of the outstanding Common Stock on
a Fully Diluted basis of the Company is held by Persons other than the
Shareholders (the "Trigger Date"), no Non-THL Shareholder shall acquire
any Equity Securities except if (A) with respect to each Institutional
Shareholder, such Shareholder may acquire Equity Securities in a purchase
of Equity Securities pursuant to Section 4.3 or 4.4 hereof, (B) with
respect to each Management Shareholder, such Shareholder may acquire
Equity Securities either in a purchase of Equity Securities pursuant to
Section 4.3 or 4.4 hereof or in any other transaction so long as THL has
been notified at least five Business Days in advance and if given a
reasonable opportunity to consult with such Shareholder prior to the
purchase or (C) in a Transfer from any other Non-THL Shareholder which is
otherwise permitted under the terms of Article 3 hereof.
Section 6.5 Regulated Stockholders.
(a) If a Regulated Stockholder determines that it has a
Regulatory Problem, the Company agrees to take all such actions, subject
to Applicable Law, as are reasonably requested by such Regulated
Stockholder (i) to effectuate and facilitate any transfer by such
Regulated Stockholder of any Equity Securities of the Company then held
by such Regulated Stockholder to any Person designated by such Regulated
Stockholder, (ii) to permit such Regulated Stockholder (or any Affiliate
of such Regulated Stockholder) to exchange all or any portion of the
voting Equity Securities then held by such Person on a share-for-share
basis for shares of a class of non-voting Equity Securities of the
Company, which non-voting Equity Securities, except that such new Equity
Securities shall be non-voting and shall be convertible into voting
Equity Securities on such terms as are requested by such Regulated
Stockholder in light of regulatory considerations then prevailing, and
(iii) to continue and preserve the respective allocation of the voting
interests with respect to the Company provided for in this Agreement and
with respect to such Regulated Stockholder's ownership of the Company's
voting Equity Securities. Such actions may include, without limitation,
(x) entering into such additional agreements as are reasonably requested
by such Regulated Stockholder to permit any Person(s) designated by such
Regulated Stockholder to exercise any voting power which is relinquished
by such Regulated Stockholder upon any exchange of voting Equity
Securities for non-voting Equity Securities of the Company, and (y)
entering into such additional agreements, adopting such amendments to the
charter documents of the Company and taking such additional actions as
are reasonably requested by such Regulated Stockholder in order to
effectuate the intent of the foregoing.
(b) If a Regulated Stockholder has the right or opportunity to
acquire any of the Company's Equity Securities from the Company, any
Stockholder or any other Person (as the result of a preemptive offer, pro
rata offer or otherwise), at such Regulated Stockholder's request, the
Company will offer to sell (or if the Company is not the seller, to
cooperate with the seller and such Regulated Stockholder to permit such
seller to sell) such non-voting Equity Securities on the same terms as
would have existed had such Regulated Stockholder acquired the Equity
Securities so offered and immediately requested their exchange for
non-voting Equity Securities pursuant to clause (a) above.
(c) The Company agrees not to amend or waive the voting or other
provisions of this Agreement or the Company's charter documents if such
amendment or waiver would cause any Regulated Stockholder to have a
Regulatory Problem; provided that any such Regulated Stockholder notifies
the Company that it would have a Regulatory Problem promptly after it has
notice of such amendment or waiver.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Entire Agreement. This Agreement, the Merger
Agreement, the Subscription Agreement and the Equity Warrant Acquisition
Agreement constitute the entire agreement among the parties with respect
to the subject matter hereof and thereof and supersede all prior and
contemporaneous agreements and understandings, both oral and written,
between the parties with respect to the subject matter hereof and
thereof.
Section 7.2 Binding Effect; Benefit. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their
respective heirs, successors, legal representatives and permitted
assigns. Nothing in this Agreement, expressed or implied, is intended to
confer on any Person other than the parties hereto, and their respective
heirs, successors, legal representatives and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
Section 7.3 Assignability. (a) Neither this Agreement nor any
right, remedy, obligation or liability arising hereunder or by reason
hereof shall be assignable by the Company or any Shareholder; provided
that any Person acquiring shares of Common Stock who is required by the
terms of this Agreement to become a party hereto shall execute and
deliver to the Company an agreement to be bound by this Agreement and
shall thenceforth be a "Shareholder."
(b) Any Permitted Transferee of a Management Shareholder who
shall become a party hereto shall be deemed a "Management Shareholder."
(c) Any Permitted Transferee of an Institutional Shareholder who
shall become a party to this Agreement shall be deemed an "Institutional
Shareholder."
Section 7.4 Amendment; Waiver; Termination. (a) No provision of
this Agreement may be waived except by an instrument in writing executed
by the party against whom the waiver is to be effective. No provision of
this Agreement may be amended or otherwise modified except by an
instrument in writing executed by the Company with approval of the Board
of Directors and holders of at least 50% of the shares of Common Stock
held by the parties to this Agreement at the time of such proposed
amendment or modification. Notwithstanding the foregoing or any other
provision of this Agreement, THL may at any time, including after
completion of a Qualifying Public Offering, and without any other action
by any other party, effectuate an amendment to this Agreement to delete
in its entirety Section 4.3(a); provided, however, that if THL causes
such Section to be deleted, so long as the THL Entities own at least 10%
of their Initial Ownership of shares of Common Stock, the THL Entities
shall not purchase any New Securities from the Company unless the Company
offers each Non-THL Shareholder the right to participate in the purchase
of such New Securities in accordance with Section 4.3(a)(iii) as if it
continued to be in effect.
(b) In addition, any amendment or modification of any provision
of this Agreement that would adversely affect THL may be effected only
with the consent of THL.
(c) In addition, any amendment or modification of any provision
of this Agreement that would adversely affect any (i) Institutional
Shareholder may be effected only with the consent of such Institutional
Shareholders holding at least 66 2/3% of the shares of Common Stock held
by such Institutional Shareholders or (ii) Management Shareholder may be
effected only with the consent of the Management Shareholders (which must
include the Primary Executives) holding at least 50% of the shares of
Common Stock held by the Management Shareholders.
(d) This Agreement shall terminate on the tenth anniversary of
the date hereof unless earlier terminated.
Section 7.5 Notices. (a) All notices and other communications
given or made pursuant hereto or pursuant to any other agreement among
the parties, unless otherwise specified, shall be in writing and shall be
deemed to have been duly given and received when sent by fax (with
confirmation in writing via first class U.S. mail) or delivered
personally or on the third Business Day after being sent by registered or
certified U.S. mail (postage prepaid, return receipt requested) to the
parties at the fax number or address set forth below or at such other
addresses as shall be furnished by the parties by like notice:
(i) if to the Company, to:
Xxxxxx Scientific International, Inc.
Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxxxxx 00000
Attention: Xxxx X. XxXxxxx, Esq.
Fax: (000) 000-0000
(ii) if to a Management Shareholder who holds Equity Securities
exclusively through the Rabbi Trust, to such Shareholder's
attention at the following address:
Mellon Bank
1 Mellon Bank Building
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Fax: (000)000-0000
(iii) if to any other Management Shareholder, to such
Shareholder's attention at the following address:
Xxxxxx Scientific International, Inc.
Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxxxxx 00000
Fax: (000) 000-0000
(iv) if to a THL Associate, to such Shareholder's attention at
the following address:
Xxxxxx X. Xxx Company
00 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
(v) if to any other Shareholder, to such Shareholder at
the address specified by such Shareholder on the signature
pages of this Agreement.
Any Shareholder may change its notice address by providing
notice to the Company with a copy, in the case of the Non-THL
Shareholders, to
Xxxxxx X. Xxx Company
00 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. XxXxxx
Fax: (000) 000-0000
Any Person who becomes a Shareholder shall provide its address
and fax number to the Company, which shall promptly provide such
information to each Non-THL Shareholder.
(b) Notices required to be given pursuant to Sections 5.1(a) and
5.1(b) and Section 5.2 by the Company shall be deemed given only if such
notices are also be given telephonically and by fax to the following
persons (or any other individual the respective entities may designate in
writing to the Company to replace such person):
(i) for the benefit of the THL Entities, to Xxxxxxx X.
XxXxxx (tel: 000-000-0000; fax: 000- 000-0000), with a copy to Xxxx
X. Xxxxxxx (tel: 000- 000-0000; fax: 000-000-0000);
(ii) for the benefit of the Management Shareholders, to
Xxxx XxXxxxx (tel: 000-000-0000; fax: 000-000-0000), with a copy to
Xxxx Xxxxx (tel: 000-000-0000; fax: 000-000-0000);
(iii) for the benefit of the DLJ Entities, to Xxxxxxxx Xxxx
(tel: 000-000-0000; fax: 000-000-0000) and Xxxx Xxxxxxx (tel:
000-000-0000; fax: 000-000-0000), with a copy to Xxxxxx X. Xxxxx, Xx.
(tel: 000-000-0000; fax: 000-000-0000);
(iv) for the benefit of Chase Equity, to Xxxxx Xxxxxxxx
(tel: 000-000-0000; fax: 212-622- 3101), with a copy to Xxxx X.
Xxxxxx (tel: 212-408- 2471; fax 000-000-0000);
(v) for the benefit of the Xxxxxxx Xxxxx Entities, to
Xxxxxx Xxxxx (tel: 000-000-0000; fax: 000-000-0000) and Xxxxxxxx
Xxxxxx (tel: 212-449- 9812; fax: 000-000-0000), with a copy to
Xxxxxxx Xxxxxxxxx (tel: 000-000-0000; fax: 000-000-0000).
Section 7.6 Headings. The headings contained in this Agreement
are for convenience only and shall not affect the meaning or
interpretation of this Agreement.
Section 7.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original
and all of which together shall be deemed to be one and the same
instrument.
Section 7.8 Applicable Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware,
without regard to the conflicts of laws rules of such state.
Section 7.9 Specific Performance. Each party hereto acknowledges
that the remedies at law of the other parties for a breach or threatened
breach of this Agreement would be inadequate and, in recognition of this
fact, any party to this Agreement, without posting any bond, and in
addition to all other remedies which may be available, shall be entitled
to obtain equitable relief in the form of specific performance, a
temporary restraining order, a temporary or permanent injunction or any
other equitable remedy which may then be available.
Section 7.10 Consent to Jurisdiction; Expenses. (a) Any suit,
action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the
transactions contemplated hereby shall be brought in any Federal Court
sitting in the State of Delaware or any Delaware State court sitting in
Delaware, and each of the parties hereby consents to the exclusive
jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or
proceeding in any such court or that any such suit, action or proceeding
which is brought in any such court has been brought in an inconvenient
forum. Process in any such suit, action or proceeding may be served on
any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each
party agrees that service of process on such party by any method provided
in Section 7.5 shall be deemed effective service of process on such party
and consents to the personal jurisdiction of any Federal Court sitting in
the State of Delaware, or any Delaware State court sitting in Delaware.
(b) In any dispute arising under this Agreement among any of the
parties hereto, the costs and expenses (including, without limitation,
the reasonable fees and expenses of counsel) incurred by the prevailing
party shall be paid by the party that does not prevail.
Section 7.11 Representative.
(a) Each THL Entities hereby designates and appoints (and each
Permitted Transferee of each such THL Entities is hereby deemed to have
so designated and appointed) each of Xxxxxxx X. XxXxxx, Xxxxx Xxxxxxxx
and Xxxx Xxxxxx, as his attorney-in-fact with full power of substitution
for each of them (the "THL Entities' Representative"), to serve as the
representative of each such person to perform all such acts as are
required, authorized or contemplated by this Agreement to be performed by
such person and hereby acknowledges that the THL Entities' Representative
shall be the only person authorized to take any action so required,
authorized or contemplated by this Agreement by each such person. Each
such person further acknowledges that the foregoing appointment and
designation shall be deemed to be coupled with an interest and shall
survive the death or incapacity of such person. Each such person hereby
authorizes (and each such Permitted Transferee shall be deemed to have
authorized) the other parties hereto to disregard any notice or other
action taken by such person pursuant to this Agreement except for the THL
Entities' Representative. The other parties hereto are and will be
entitled to rely on any action so taken or any notice given by the THL
Entities' Representative and are and will be entitled and authorized to
give notices only to the THL Entities' Representative for any notice
contemplated by this Agreement to be given to any such person. A
successor to the THL Entities' Representative may be chosen by a majority
in interest of the THL Entities' Shareholders, provided that notice
thereof is given by the new THL Entities' Representative to the Company
and to each Non-THL Shareholder.
(b) Each DLJ Entities hereby designates and appoints (and each
Permitted Transferee of each such DLJ Entities' is hereby deemed to have
so designated and appointed) DLJ Merchant Banking II, Inc., as his
attorney-in-fact with full power of substitution for each of them (the
"DLJ Entities' Representative"), to serve as the representative of each
such person to perform all such acts (other than voting of shares of
Common Stock) as are required, authorized or contemplated by this
Agreement to be performed by such person and hereby acknowledges that the
DLJ Entities' Representative shall be the only person authorized to take
any action so required, authorized or contemplated by this Agreement by
each such person. Each such person hereby authorizes (and each such
Permitted Transferee shall be deemed to have authorized) the other
parties hereto to disregard any notice or other action taken by such
person pursuant to this Agreement except for the DLJ Entities'
Representative. The other parties hereto are and will be entitled to rely
on any action so taken or any notice given by the DLJ Entities'
Representative and are and will be entitled and authorized to give
notices only to the DLJ Entities' Representative for any notice
contemplated by this Agreement to be given to any such person. A
successor to the DLJ Entities' Representative may be chosen by a majority
in interest of the DLJ Entities' Shareholders, provided that notice
thereof is given by the new DLJ Entities' Representative to the Company
and to each other DLJ Entity Shareholder.
(c) Each Xxxxxxx Xxxxx Entities hereby designates and appoints
(and each Permitted Transferee of each such Xxxxxxx Xxxxx Entities is
hereby deemed to have so designated and appointed) KECALP Inc., as his
attorney-in-fact with full power of substitution for each of them (the
"Xxxxxxx Xxxxx Entities Representative"), to serve as the representative
of each such person to perform all such acts as are required, authorized
or contemplated by this Agreement to be performed by such person and
hereby acknowledges that the Xxxxxxx Xxxxx Entities Representative shall
be the only person authorized to take any action so required, authorized
or contemplated by this Agreement by each such person. Each such person
further acknowledges that the foregoing appointment and designation shall
be deemed to be coupled with an interest and shall survive the death or
incapacity of such person. Each such person hereby authorizes (and each
such Permitted Transferee shall be deemed to have authorized) the other
parties hereby to disregard any notice or other action taken by such
person pursuant to this Agreement except for the Xxxxxxx Xxxxx Entities
Representative. The other parties hereto are and will be entitled to rely
on any action so taken or any notice given by the Xxxxxxx Xxxxx Entities
Representative and are and will be entitled and authorized to give
notices only to the Xxxxxxx Xxxxx Entities Representative for any notice
contemplated by this Agreement to be given to any such person. A
successor to the Xxxxxxx Xxxxx Entities Representative may be chosen by a
majority in interest of the Xxxxxxx Xxxxx Entities' Shareholders,
provided that notice thereof is given by the new Xxxxxxx Xxxxx Entities
Representative to the Company and to each other Xxxxxxx Xxxxx Entity
Shareholder.
(d) Each Management Shareholder hereby designates and appoints
(and each Permitted Transferee of each such Management Shareholder is
hereby deemed to have so designated and appointed) Xxxx X. Xxxxxxx, as
his attorney-in-fact with full power of substitution for each of them
(the "Management Representative"), to serve as the representative of each
such person to perform all such acts as are required, authorized or
contemplated by this Agreement to be performed by such person and hereby
acknowledges that the Management Representative shall be the only person
authorized to take any action so required, authorized or contemplated by
this Agreement by each such person. Each such person further acknowledges
that the foregoing appointment and designation shall be deemed to be
coupled with an interest and shall survive the death or incapacity of
such person. Each such person hereby authorizes (and each such Permitted
Transferee shall be deemed to have authorized) the other parties hereby
to disregard any notice or other action taken by such person pursuant to
this Agreement except for the Management Representative. The other
parties hereto are and will be entitled to rely on any action so taken or
any notice given by the Management Representative and are and will be
entitled and authorized to give notices only to the Management
Representative for any notice contemplated by this Agreement to be given
to any such person. A successor to the Management Representative may be
chosen by a majority in interest of the Management Shareholders, provided
that notice thereof is given by the new Management Representative to the
Company and to each other Management Shareholder.
Section 7.12 Severability. If one or more provisions of this
Agreement are held to be unenforceable to any extent under applicable
law, such provision shall be interpreted as if it were written so as to
be enforceable to the maximum possible extent so as to effectuate the
parties' intent to the maximum possible extent, and the balance of the
Agreement shall be interpreted as if such provision were so excluded and
shall be enforceable in accordance with its terms to the maximum extent
permitted by law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and
year first above written.
XXXXXX SCIENTIFIC INTERNATIONAL, INC.
By: /s/ Xxxx X. XxXxxxx
---------------------------------
Name: Xxxx X. XxXxxxx
Title: Vice President -
General Counsel and
Secretary
THL Equity Shareholders:
XXXXXX X. XXX EQUITY FUND III, L.P.
By: THL Equity Advisors III Limited
Partnership, as General Partner
By: THL Equity Trust III,
as General Partner
By: /s/ Xxxxxxx X. XxXxxx
---------------------------------
Name: Xxxxxxx X. XxXxxx
Title:
XXXXXX X. XXX FOREIGN FUND III, L.P.
By: THL Equity Advisors III Limited
Partnership, as General Partner
By: THL Equity Trust III,
as General Partner
By: /s/ Xxxxxxx X. XxXxxx
---------------------------------
Name: Xxxxxxx X. XxXxxx
Title:
THL FSI EQUITY INVESTORS, L.P.
By: THL Equity Advisors III
Limited Partnership, as
General Partner
By: THL Equity Trust III,
as General Partner
By: /s/ Xxxxxxx X. XxXxxx
----------------------------------
Name: Xxxxxxx X. XxXxxx
Title:
THL-CCI LIMITED PARTNERSHIP
By: THL Investment Management Corp.
as General Partner
By: /s/ Xxxxxxx X. XxXxxx
---------------------------------
Name: Xxxxxxx X. XxXxxx
Title:
Management Shareholders:
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxx
By: /s/ Xxxx X. Xxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxx
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title:
By: /s/ Xxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxx
By: /s/ Xxxxx X. Xxxxx
---------------------------------
Name: Xxxxx X. Xxxxx
By: /s/ Xxxx X. Xxxxx
---------------------------------
Name: Xxxx X. Xxxxx
By: /s/ Xxxx X. XxXxxxx
---------------------------------
Name: Xxxx X. XxXxxxx
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
By: /s/ A. Xxxxxxxxx Xxxx
---------------------------------
Name: A. Xxxxxxxxx Xxxx
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxx
DLJ Entities' Shareholders:
DLJ MERCHANT BANKING PARTNERS II, L.P.
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/ Xxxxxxxx Xxxx
---------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ MERCHANT BANKING PARTNERS II-A, L.P.
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/ Xxxxxxxx Xxxx
---------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ OFFSHORE PARTNERS II, C.V.
By: DLJ Merchant Banking II, Inc.,
as advisory general partner
By: /s/ Xxxxxxxx Xxxx
---------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ DIVERSIFIED PARTNERS, L.P.
By: DLJ Diversified Partners, Inc.,
as managing general partner
By: /s/ Xxxxxxxx Xxxx
---------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ DIVERSIFIED PARTNERS - A, L.P.
By: DLJ Diversified Partners, Inc.,
as managing general partner
By: /s/ Xxxxxxxx Xxxx
---------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ MILLENNIUM PARTNERS, L.P.
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/ Xxxxxxxx Xxxx
---------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ MILLENNIUM PARTNERS - A, L.P.
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/ Xxxxxxxx Xxxx
---------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJMB FUNDING II, INC.
By: /s/ Xxxxxxxx Xxxx
---------------------------------
Name: Xxxxxxxx Xxxx
Title:
UK INVESTMENT PLAN 1997 PARTNERS
By: Xxxxxxxxx, Lufkin & Xxxxxxxx Inc.,
as general partner
By: /s/ Xxxxxxxx Xxxx
---------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ EAB PARTNERS, L.P.
By: DLJ LBO Plans Management Corporation,
as managing general partner
By: /s/ Xxxxxxxx Xxxx
---------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ ESC II, L.P.
By: DLJ LBO Plans Management Corporation,
as general partner
By: /s/ Xxxxxxxx Xxxx
---------------------------------
Name: Xxxxxxxx Xxxx
Title:
DLJ FIRST ESC, L.P.
By: DLJ LBO Plans Management Corporation,
as general partner
By: /s/ Xxxxxxxx Xxxx
---------------------------------
Name: Xxxxxxxx Xxxx
Title:
The address for each of the DLJ Entities
listed above is:
c/o DLJ Merchant Banking II, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners
By: /s/ Xxxxxxx Xxxxx
---------------------------------
Name: Xxxxxxx Xxxxx
Title: Executive Partner
Address:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxx Xxxxx Entities:
ML IBK POSITIONS, INC.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
KECALP INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President and
Treasurer
XXXXXXX XXXXX KECALP L.P. 1997
By: KECALP Inc., as general partner
By: /s/ Xxxxxx Xxxxx
---------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President and
Treasurer
The address for each of the Xxxxxxx
Xxxxx Entities listed above is:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Individual Shareholders:
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: The 1995 Harkins Gift Trust
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxx
Money Purchase Pension Plan
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
By: /s/ X. Xxxxxx Xxxx
---------------------------------
Name: X. Xxxxxx Xxxx
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxx
By: /s/ Xxxxxxxx Family Limited
Partnership
---------------------------------
Name: Xxxxxxxx Family Limited
Partnership
By: /s/ Xxxxxxx X. XxXxxx
---------------------------------
Name: Xxxxxxx X. XxXxxx
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
By: /s/ Xxxxxx X. Xxxxx, Xx.
---------------------------------
Name: Xxxxxx X. Xxxxx,Xx.
By: /s/ Xxxx X. Xxxxx
---------------------------------
Name: Xxxx X. Xxxxx
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxxx
By: /s/ Xxxx X. Xxxxxx
---------------------------------
Name: Xxxx X. Xxxxxx
By: /s/ Xxxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxxx X. Xxxxxx
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Name: Xxxx X. Xxxxxxxx
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
By: /s/ THL-CCI Limited Partnership
---------------------------------
Name: THL-CCI Limited Partnership
By: Xxxxx X. Master
Title: Vice President
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
By: /s/ Xxxxxxxx X. Xxxxx
---------------------------------
Name: First Trust Co. FBO
Xxxxxxxx X. Xxxxx
By: /s/ Xxxxxxx Xxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxx
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Schedule I
Certain Named Individual Shareholders of THL
--------------------------------------------
Xxxxx X. Xxxxxxx
The 1995 Harkins Gift Trust
Xxxxxx X. Xxxxxxxx Money Purchase Pension Plan (Xxxxx)
Xxxxx X. Xxxxxx
X. Xxxxxx Xxxx
Xxxxx X. Xxxxxxxx
Xxxxxxxx Family Limited Partnership
Xxxxxxx X. XxXxxx
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxx, Xx.
Xxxx X. Xxxxx
Xxxxxx X. Xxxxxxxxx
Xxxx X. Xxxxxx
Xxxxxxxx X. Xxxxxx
Xxxx X. Xxxxxxxx
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxx
First Trust Co. FBO Xxxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxx Xxxxxx
Xxxxxxx X. Xxxxxxx
Schedule II
THL Individuals
---------------
Xxxxxx X. Xxx
Xxxxxxx X. Xxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxx Xxxxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxx
Xxxxxx & Co. for Xxxxxx Xxxxxx Xxx 1988 Irrevocable Trust
Xxxxxx & Co. for Xxxxxxx Xxxxxxx Xxx 1988 Irrevocable Trust
THL Investment Management Corp.
Schedule III
Initial Classified Board of Directors
-------------------------------------
Class I Class II Class III
Term Expiring 1998 Term Expiring 1999 Term Expiring 2000
------------------ ------------------ ------------------
Xxxxxx Xxx Xxxxxxxx Xxxxx [DLJ Nominee]
Xxxxxxx Xxxxxxx Xxxxx Xxxxxxx Xxxxxxx X. XxXxxx
Xxxx Xxxxxx Xxxx Xxxxxxx Xxxx Xxxxxxxx
Xxxxx Xxxxxxxx
