EXHIBIT 10.1(h)
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AMENDED AND RESTATED SECURITIES HOLDERS AGREEMENT
by and among
POLAROID HOLDING COMPANY
ONE EQUITY PARTNERS, LLC
and
THE OTHER INVESTORS NAMED HEREIN
Dated as of February 5, 2003
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TABLE OF CONTENTS
PAGE
ARTICLE I RESTRICTIONS ON TRANSFER OF SECURITIES.................................2
1.1. Restrictions on Transfers of Securities....................2
1.2. Legend.....................................................4
1.3. Notation...................................................5
ARTICLE II OTHER COVENANTS AND REPRESENTATIONS...................................5
2.1. Financial Statements and Other Information.................5
2.2. Sale of the Company........................................6
2.3. Tag-Along Rights...........................................7
2.4. Corporate Opportunity......................................9
ARTICLE III CORPORATE ACTIONS...................................................10
3.1. Directors and Voting Agreements...........................10
3.2. Right to Remove Certain of the Company's Directors........10
3.3. Right to Fill Certain Vacancies in Company's Board........10
3.4. Amendment of Certificate and Bylaws.......................11
3.5. Termination of Voting Agreements..........................11
3.6. Fees and Expenses.........................................11
ARTICLE IV ADDITIONAL RESTRICTIONS ON TRANSFERS OF INCENTIVE
SECURITIES HELD BY MANAGEMENT INVESTORS...................11
4.1. Certain Definitions.......................................11
4.2. Restrictions on Transfer..................................12
4.3. Purchase Option...........................................13
4.4. Involuntary Transfers.....................................16
4.5. Proceeds upon an Approved Sale............................17
4.6. Purchaser Representative..................................18
ARTICLE V MISCELLANEOUS.........................................................18
5.1. Amendment and Modification................................18
5.2. Successors and Assigns....................................19
5.3. Severability..............................................19
5.4. Notices...................................................19
5.5. Governing Law.............................................20
5.6. Headings..................................................20
5.7. Counterparts..............................................20
5.8. Further Assurances........................................20
5.9. Termination...............................................20
5.10. Remedies..................................................20
5.11. Party No Longer Owning Securities.........................20
5.12. No Effect on Employment or Directorship...................21
5.13. Pronouns..................................................21
5.14. Entire Agreement..........................................21
5.15. Regulatory Compliance Cooperation.........................21
5.16. Future Individual Investors...............................21
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SCHEDULES
Schedule I Investors and Securities Purchased
3
DEFINED TERMS
Adjusted Cost Price..........................................................15
Affiliate.....................................................................4
Agreement.....................................................................1
Approved Sale.................................................................7
Cause........................................................................11
Closing Date.................................................................12
Common Stock..................................................................1
Company.......................................................................1
Director Investor.............................................................1
Director Investors............................................................1
Employee Investor.............................................................1
Employee Investors............................................................1
Escrow Amount.................................................................9
Escrow Notice.................................................................9
Exchange Act..................................................................6
Fair Market Value Price......................................................16
First Agreement...............................................................1
Holders.......................................................................8
Incentive Securities.........................................................12
Investor......................................................................1
Investors.....................................................................1
Management Investor...........................................................1
Management Investors..........................................................1
OEP...........................................................................1
OEP Affiliates................................................................3
OEP Associates................................................................3
Option Purchase Price........................................................14
Option Termination Date......................................................14
Permitted Transferee..........................................................3
Preferred Stock...............................................................1
Public Offering...............................................................4
Purchase Option..............................................................14
Regulatory Problem...........................................................22
Required Holders..............................................................7
Schedule I....................................................................1
Securities....................................................................1
Securities Act................................................................2
Seller........................................................................8
Seller's Notice...............................................................8
Special Registration Statement................................................4
Tag-Along Notice..............................................................8
Termination Date.............................................................14
Transfer......................................................................2
Transfer Date................................................................16
Unit Offering.................................................................4
Unvested Shares..............................................................16
Vested Shares................................................................15
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AMENDED AND RESTATED
SECURITIES HOLDERS AGREEMENT
THIS IS AN AMENDED AND RESTATED
SECURITIES HOLDERS AGREEMENT, dated as
of February 5, 2003 (the "AGREEMENT"), by and among
Polaroid Holding Company, a
Delaware corporation (the "COMPANY"), One Equity Partners, LLC, a
Delaware
limited liability company ("OEP") , the individuals listed on the signature
pages hereto as "Employee Investors" (each individually an "EMPLOYEE INVESTOR"
and together, the "EMPLOYEE INVESTORS"), the individuals listed on the signature
pages hereto as "Director Investors" (each individually, a "DIRECTOR INVESTOR"
and together, the "DIRECTOR INVESTORS") and the other individuals listed on the
signature pages hereto. The Employee Investors and the Director Investors are
sometimes referred to herein individually as a "Management Investor" and
collectively as "Management Investors". OEP, each of the Management Investors,
each of the other individuals listed on the signature pages hereto and any other
investor in the Company who becomes a party to or agrees to be bound by this
Agreement are sometimes referred to herein individually as an "INVESTOR" and
collectively as the "INVESTORS."
BACKGROUND
A. Each Investor currently owns, (i) the number of shares of Series
A 8% Cumulative Compounding Preferred Stock, par value $.001 per share
("PREFERRED STOCK"), of the Company, and (ii) the number of shares of Common
Stock, par value $.001 per share ("COMMON STOCK"), of the Company, in each case
as set forth opposite such Investor's name on SCHEDULE I hereto.
B. As used herein, the term "SECURITIES" shall mean Common Stock,
Preferred Stock, and any other shares of capital stock of the Company, and any
securities convertible into or exchangeable for such capital stock, and any
options (including any options issued to Investors), warrants or other rights to
acquire such capital stock or securities, now or hereafter held by any party
hereto, including all other securities of the Company (or a successor to the
Company) received on account of ownership of Common Stock or Preferred Stock,
including all securities issued in connection with any merger, consolidation,
stock dividend, stock distribution, stock split, reverse stock split, stock
combination, recapitalization, reclassification, subdivision, conversion or
similar transaction in respect thereof.
C. OEP and the Company entered into that certain
Securities Holders
Agreement, dated as of November 27, 2002 (the "FIRST AGREEMENT") and desire to
amend and restate the First Agreement in its entirety as set forth herein.
TERMS
In consideration of the mutual covenants contained herein, and
intending to be legally bound hereby, the parties hereto amend and restate the
First Agreement in its entirety and hereby agree as follows:
ARTICLE I
RESTRICTIONS ON TRANSFER OF SECURITIES
1.1. RESTRICTIONS ON TRANSFERS OF SECURITIES. The following restrictions on
Transfer (as defined in Section 1.1(a) below) shall apply to all Securities
owned by any Investor or Permitted Transferee (as defined in Section 1.1(b)
below), except a Permitted Transferee by virtue of Section 1.1(b)(iv) hereof:
(a) No Investor or Permitted Transferee shall Transfer (other than in
connection with a redemption or purchase by the Company) any Securities unless
(i) such Transfer is to a person approved in advance in writing by OEP (so long
as OEP and its Affiliates (as defined hereinafter) and Permitted Transferees
(other than Permitted Transferees under Section 1.1(b)(iv)) own in the aggregate
at least 25% of the outstanding shares of Common Stock calculated on a fully
diluted basis), including shares held by the transferor, except that no advance
written approval is required for a Transfer by OEP, and (ii) such Transfer
complies with the provisions of this Section 1.1, and, in addition, in the case
of Incentive Securities (as defined in Section 4.1(b)), Article IV of this
Agreement. Any purported Transfer in violation of this Agreement shall be null
and void and of no force and effect, and the purported transferee shall have no
rights or privileges in or with respect to the Company. As used herein,
"TRANSFER" includes the making of any sale, exchange, assignment, hypothecation,
gift, security interest, pledge or other encumbrance, or any contract therefor,
any voting trust or other agreement or arrangement with respect to the transfer
or grant of voting rights (except for the voting agreement set forth in Article
III hereof) or any other beneficial interest in any of the Securities, the
creation of any other claim thereto or any other transfer or disposition
whatsoever, whether voluntary or involuntary, affecting the right, title,
interest or possession in or to such Securities.
Prior to any proposed Transfer of any Securities, the holder
thereof shall give written notice to the Company describing the manner and
circumstances of the proposed Transfer, together with, if requested by the
Company, a written opinion of legal counsel, addressed to the Company and the
transfer agent for the Company's securities, if other than the Company, and
reasonably satisfactory in form and substance to the Company, to the effect that
the proposed Transfer of the Securities may be effected without registration
under the Securities Act of 1933, as amended (the "SECURITIES ACT"). Each
certificate evidencing the Securities transferred shall bear the legends set
forth in Section 1.2 hereof, except that such certificate shall not bear the
legend contained in the first paragraph of Section 1.2 hereof if the opinion of
counsel referred to above is to the further effect that such legend is not
required in order to establish compliance with any provision of the Securities
Act.
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Nothing in this Section 1.1(a) shall prevent the Transfer, free
of any restrictions under this Agreement, of Securities by an Investor or a
Permitted Transferee to one or more of its Permitted Transferees or to the
Company; PROVIDED, HOWEVER, that each such Permitted Transferee (except a
Permitted Transferee by virtue of Section 1.1(b)(iv) hereof) shall take such
Securities subject to and be fully bound by the terms of this Agreement
applicable to it with the same effect as if it were an Investor (or if the
Permitted Transferee were a Management Investor, a Management Investor)
hereunder; and PROVIDED FURTHER, HOWEVER, that (i) no person (other than a
Permitted Transferee by virtue of Section 1.1(b)(iv) hereof) shall be a
Permitted Transferee unless such transferee executes and delivers a joinder to
this Agreement reasonably satisfactory in form and substance to the Company
which joinder states that such person agrees to be fully bound by this Agreement
as if it were an Investor (or if the Permitted Transferee were a Management
Investor, a Management Investor) hereunder, and (ii) no Transfer shall be
effected except in compliance with the registration requirements of the
Securities Act and any applicable state securities laws or pursuant to an
available exemption therefrom.
(b) As used herein, "PERMITTED TRANSFEREE" shall mean:
(i) in the case of any Investor or Permitted Transferee who is a
natural person, such person's spouse or children or grandchildren (in each case,
natural or adopted), or any trust for the sole benefit of such person, such
person's spouse or children or grandchildren (in each case, natural or adopted),
or any corporation, partnership or limited liability company in which the direct
and beneficial owner of all of the equity interest is such individual person or
such person's spouse or children or grandchildren (in each case, natural or
adopted);
(ii) in the case of any Investor or Permitted Transferee who is a
natural person, the heirs, executors, administrators or personal representatives
upon the death of such person or upon the incompetency or disability of such
person for purposes of the protection and management of such person's assets;
(iii) in the case of OEP or its Permitted Transferees, (I) any
Affiliate (as hereinafter defined) of OEP (collectively, "OEP AFFILIATES"), (II)
any present or former managing director, director, general partner, limited
partner, officer or employee of OEP or any OEP Affiliate, or any spouse, lineal
descendant (natural or adopted), sibling or parent of any of the foregoing
persons in this clause (II) or any heir, executor, administrator, testamentary
trustee, legatee or beneficiary of any of the foregoing persons described in
this clause (II) (provided that no OEP Affiliate that becomes such an entity
primarily for the purpose of effecting a transfer of Securities shall be
considered a Permitted Transferee) (collectively, "OEP ASSOCIATES"), and (III)
any trust, the beneficiaries of which, or any charitable trust, the grantor of
which, or any corporation, limited liability company or partnership, the
stockholders, members or general and limited partners of which, include only
OEP, OEP Affiliates, or OEP Associates;
(iv) in the case of any Investor or Permitted Transferee, any
person if such person takes such Securities pursuant to a sale in a Public
Offering or following a Public Offering in open market transactions or under
Rule 144 under the Securities Act; and
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(v) in the case of an Investor or Permitted Transferee who is
not a natural person, any Affiliate of such Investor.
(c) As used herein, "AFFILIATE" means, with respect to any person,
any person directly or indirectly controlling, controlled by or under common
control with such person.
(d) As used herein, "PUBLIC OFFERING" means a successfully completed
firm commitment underwritten public offering pursuant to an effective
registration statement under the Securities Act (other than a Special
Registration Statement in respect of the offer and sale of shares of Common
Stock for the account of the Company resulting in aggregate net proceeds to the
Company and any stockholder selling shares of Common Stock in such offering of
not less than $50,000,000).
(e) As used herein, "SPECIAL REGISTRATION STATEMENT" means (I) a
registration statement on Form S-8 or S-4 or any similar or successor form or
any other registration statement relating to an exchange offer or an offering of
securities solely to the Company's employees or security holders or to security
holders of a corporation or other entity being acquired by, or merged with, the
Company or (II) a registration statement registering a Unit Offering.
(f) As used herein, "UNIT OFFERING" means a public offering of a
combination of debt and equity securities of the Company in which not more than
20% of the gross proceeds received from the sale of such securities is
attributed to such equity securities.
1.2. LEGEND. (a) ALL SECURITIES. Any certificates representing Securities
shall bear the following legend (in addition to any other legend required under
applicable law):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR OTHERWISE DISPOSED OF WITHOUT REGISTRATION UNDER THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR THE
DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO THE
TERMS AND CONDITIONS OF A
SECURITIES HOLDERS AGREEMENT BY AND AMONG
THE COMPANY AND THE HOLDERS SPECIFIED THEREIN, AS AMENDED FROM TIME TO
TIME (THE "
SECURITIES HOLDERS AGREEMENT"), A COPY OF WHICH AGREEMENT
IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY. THE SALE, TRANSFER,
ASSIGNMENT OR OTHER DISPOSITION OF THE
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SECURITIES IS SUBJECT TO THE TERMS OF SUCH AGREEMENT AND THE
SECURITIES ARE TRANSFERABLE OR OTHERWISE DISPOSABLE ONLY UPON PROOF OF
COMPLIANCE THEREWITH.
(b) INCENTIVE SECURITIES. In addition to the legends required by
Section 1.2(a) above, the following legend shall appear on certificates
representing Incentive Securities (as defined hereinafter), PROVIDED, that the
Company's failure to cause certificates representing Incentive Securities to
bear such legend shall not affect the Company's Purchase Option described in
Section 4.3:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT FOR A
PERIOD OF TIME TO A PURCHASE OPTION OF THE COMPANY APPLICABLE TO
"INCENTIVE SECURITIES" AS DESCRIBED IN THE
SECURITIES HOLDERS
AGREEMENT, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICE OF THE COMPANY.
1.3. NOTATION. A notation will be made in the appropriate transfer records
of the Company with respect to the restrictions on transfer of the Securities
referred to in this Agreement.
ARTICLE II
OTHER COVENANTS AND REPRESENTATIONS
2.1. FINANCIAL STATEMENTS AND OTHER INFORMATION. (a) The Company shall
deliver to OEP (so long as OEP or its Permitted Transferees (other than
Permitted Transferees pursuant to Section 1.1(b)(iv)) owns any Securities):
(i) as soon as available and in any event within 15 days after
the end of each calendar month, consolidated balance sheets of the Company and
its subsidiaries as of the end of such calendar month, and consolidated
statements of income and cash flows of the Company and its subsidiaries for the
calendar month then ended, shown in comparison to the budgeted amounts for the
same period and the same monthly period from the prior fiscal year, prepared in
conformity with United States generally accepted accounting principles applied
on a consistent basis, except as otherwise noted therein, and subject to the
absence of notes and to year-end adjustments;
(ii) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the Company,
consolidated balance sheets of the Company and its subsidiaries as of the end of
such period, and consolidated statements of income and cash flows of the Company
and its subsidiaries for the period then ended, shown in comparison to the
budgeted amounts for the same period and the same quarterly period from the
prior fiscal year, prepared in conformity with United States generally accepted
accounting
5
principles applied on a consistent basis, except as otherwise noted therein, and
subject to the absence of notes and to year-end adjustments;
(iii) as soon as available and in any event within 90 days after
the end of each fiscal year of the Company, a consolidated and consolidating
balance sheet of the Company and its subsidiaries as of the end of such year,
and consolidated and consolidating statements of income and cash flows of the
Company and its subsidiaries for the year then ended prepared in conformity with
United States generally accepted accounting principles applied on a consistent
basis, except as otherwise noted therein, together with an auditor's report
thereon of a firm of established national reputation;
(iv) to the extent the Company is required by law or pursuant to
the terms of any outstanding indebtedness of the Company to prepare such
reports, any annual reports, quarterly reports and other periodic reports
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), actually prepared by the Company as soon as such
reports are generally available;
(v) prior to the beginning of each fiscal year, an annual budget
which has been approved by the Board of Directors of the Company, prepared on a
month by month basis for the Company and its subsidiaries for such fiscal year
(displaying anticipated statements of income and cash flow), and promptly upon
preparation thereof any other significant budgets prepared by the Company, and
any revisions of such annual or other budgets; and
(vi) such other documents, reports, financial data and other
information as OEP may reasonably request.
(b) INSPECTION AND ACCESS. The Company shall permit any authorized
representatives designated by OEP to visit and inspect any of the properties of
the Company and its subsidiaries, including its and their books of account (and
to make copies and take extracts therefrom), and to discuss its and their
affairs, finances and accounts with its and their officers and their current and
prior independent public accountants (and by this provision the Company
authorizes such accountants to discuss with such representatives the affairs,
finances and accounts of the Company and its subsidiaries, whether or not a
representative of the Company is present), all at such reasonable times and as
often as OEP may reasonably request.
2.2. SALE OF THE COMPANY.
(a) So long as the Company has not consummated a Public Offering, if
the Required Holders (as defined hereinafter) approve the sale of the Company,
whether by merger, consolidation, sale of outstanding capital stock, sale of all
or substantially all of its assets or otherwise (any of the foregoing, an
"APPROVED SALE"), (i) each Investor and Permitted Transferee will consent to,
vote for, and raise no objections against, and waive dissenters and appraisal
rights (if any) with respect to, the Approved Sale, (ii) if the Approved Sale is
structured as a sale of stock, each Investor and Permitted Transferee will agree
to sell and will be permitted to sell all of such Investor's or Permitted
Transferee's Common Stock, Preferred Stock and options to
6
acquire Common Stock on the terms and conditions approved by the Required
Holders, and (iii) if the Approved Sale includes the sale, exchange, redemption,
cancellation or other disposition of securities (other than Common Stock)
convertible into or exchangeable for capital stock of the Company, or options,
warrants or other rights to purchase such capital stock or securities, each
Investor or Permitted Transferee will sell, exchange, redeem, cancel or
otherwise dispose of such securities or options, warrants or other rights on the
terms and conditions approved by the Required Holders. Each Investor and
Permitted Transferee will take all necessary and desirable actions in connection
with the consummation of an Approved Sale. As used herein, the term "REQUIRED
HOLDERS" means the holders of not less than a majority of the Company's then
outstanding Common Stock, provided that such holders include OEP.
(b) The obligations of each of the Investors and Permitted
Transferees with respect to an Approved Sale are subject to the satisfaction of
the conditions that: (i) upon the consummation of the Approved Sale, all of the
Investors and Permitted Transferees will receive the same form and amount of
consideration per share of Common Stock (net of, in the case of an option or any
other right to acquire Common Stock, the exercise price of such option), or if
any holder of Common Stock is given an option as to the form and amount of
consideration to be received in respect of Common Stock, all Investors and
Permitted Transferees holding Common Stock will be given the same option, and
(ii) upon the consummation of the Approved Sale, all of the Investors and
Permitted Transferees holding Preferred Stock will receive the same form and
amount of consideration per share of Preferred Stock, or if any holder of
Preferred Stock is given an option as to the form and amount of consideration to
be received in respect of Preferred Stock, all Investors and Permitted
Transferees holding Preferred Stock will be given the same option.
(c) Each Investor and Permitted Transferee acknowledges that its or
his or her pro rata share (based upon the number of shares of Common Stock owned
(or acquirable pursuant to options, warrants or other rights to purchase Common
Stock, or securities convertible into or exchangeable for Common Stock) by such
holder) of the aggregate proceeds of an Approved Sale may be reduced by
transaction expenses related to such Approved Sale.
2.3. TAG-ALONG RIGHTS.
(a) (i) Except as otherwise provided in Section 2.3(a)(iii) below, no
Seller (as hereinafter defined) shall sell any shares of Common Stock in any
transaction or series of related transactions unless all "HOLDERS" (as
hereinafter defined) are offered an equal opportunity to participate in such
transaction or transactions on a pro rata basis, and, subject to paragraph (ii)
below, on identical terms (including amount and type of consideration paid). For
the avoidance of doubt, such participation on a pro rata basis shall mean that
such Holder shall be entitled to sell the number of shares of Common Stock
proposed to be sold by the Seller, multiplied by a fraction, the numerator of
which is the number of shares of Common Stock then owned by such Holder and the
denominator of which is the number of shares of outstanding Common Stock. If any
Holder elects not to participate in full or in part on a pro-rata basis, the
Seller may increase the number of shares sold by it by the number of shares any
such Holder elects not to include pursuant to the terms hereof. As used in this
Section 2.3, "SELLER" shall mean OEP and OEP
7
Affiliates; "HOLDERS" shall mean any Investor or Permitted Transferee (other
than OEP and OEP Affiliates and other than a Permitted Transferee by virtue of
Section 1.1(b)(iv)).
(ii) Prior to any sale of shares of Common Stock subject to these
provisions, the Seller shall notify the Company in writing of the proposed sale.
Such notice (the "SELLER'S NOTICE") shall set forth: (A) the number of shares of
Common Stock subject to the proposed sale, (B) the name and address of the
proposed purchaser, and (C) the proposed amount of consideration and terms and
conditions of payment offered by such proposed purchaser. The Company shall
promptly, and in any event within 30 days of the Company's receipt of the
Seller's Notice, deliver or cause to be delivered the Seller's Notice to each
Holder. A Holder may exercise the tag-along right by delivery of a written
notice (the "TAG-ALONG NOTICE") to the Seller within 15 days of the date the
Company delivered or caused to be delivered the Seller's Notice. The Tag-Along
Notice shall state the number of shares of Common Stock that the Holder proposes
to include in the proposed sale, up to the maximum pro rata share described
above. If a Holder entitled to participate therein delivers a Tag-Along Notice,
such holder shall be obligated to sell that number of shares of Common Stock
specified in the Tag-Along Notice upon the same terms and conditions as those
under which the Seller is selling, conditioned upon and contemporaneously with
completion of the Seller's sale of its shares of Common Stock. If no Tag-Along
Notice is received during the 15-day period referred to above, the Seller shall
have the right for a 120-day period to effect the proposed sale of shares of
Common Stock on terms and conditions no more favorable to the Seller than those
stated in the Seller's Notice and in accordance with the provisions of this
Section 2.3.
(iii) Notwithstanding anything herein to the contrary, a Seller
may make any of the following Transfers without offering the Holders the
opportunity to participate: (A) Transfers by a Seller to any Permitted
Transferee, PROVIDED that the proposed Permitted Transferee (except a Permitted
Transferee by virtue of Section 1.1(b)(iv) hereof) agrees in writing to be bound
by the provisions of this Agreement; (B) sales pursuant to an effective
registration statement under the Securities Act, (C) sales in connection with an
Approved Sale, and (D) sales of Common Stock to any person other than a
Permitted Transferee that, together with any previous Transfers, aggregate less
than 15% of the Common Stock then outstanding.
(iv) Each Investor acknowledges for itself and its transferees
that OEP may grant in the future tag-along rights relating to shares of Common
Stock to other holders of Common Stock and such holders will (A) have the same
opportunity to participate in sales by OEP as provided to the parties hereto,
and (B) be included in the calculation of the pro rata basis upon which Holders
may participate in a sale.
(v) Each of the parties hereto acknowledges that the Company (A)
may issue Securities to persons in the future and (B) may adopt a stock option
plan pursuant to which employees, directors, consultants or other individuals
may be granted, subject to the terms of such plan, options to purchase Common
Stock or other Securities, and that such persons or participants may become
subject to this Agreement and may be "Holders" for purposes of this Section 2.3.
8
(vi) The tag-along obligations of the Sellers provided under this
Section 2.3 shall terminate upon the earlier of (A) the consummation of a Public
Offering, and (B) the day after the date on which OEP and OEP Affiliates own
less than 10% of the outstanding Common Stock. Upon the termination of such
obligations, the rights of Holders with respect thereto shall also terminate.
(vii) Notwithstanding the requirements of this Section 2.3, a
Seller may sell a Security at any time without complying with the requirements
of the above provisions of this Section 2.3 so long as the Seller deposits into
escrow with an independent third party at the time of the sale that amount of
the consideration received in the sale equal to the Escrow Amount. The "ESCROW
AMOUNT" shall equal the amount of consideration as all the Holders would have
been entitled to receive if they had the opportunity to participate in the sale
on a pro rata basis, determined as if each Holder (A) delivered a Tag-Along
Notice to the Seller in the time period set forth in Section 2.3(a)(ii) and (B)
proposed to include all of its shares of Common Stock which it would have been
entitled to include in the sale. No later than the date of the sale, the Seller
shall notify the Company in writing of the proposed sale. Such notice (the
"ESCROW NOTICE") shall set forth the information required in the Seller's
Notice, and in addition, such notice shall state the name of the escrow agent
and the account number of the escrow account. The Company shall promptly, and in
any event within 10 days, deliver or cause to be delivered the Escrow Notice to
each Holder. A Holder may exercise the tag-along right described in this clause
(vii) by delivery to the Seller, within 15 days of the date the Company
delivered or caused to be delivered the Escrow Notice, of (A) a written notice
specifying the number of shares of Common Stock it proposes to sell, and (B) the
certificates representing such shares of Common Stock, with transfer powers duly
endorsed in blank. Promptly after the expiration of the 15th day after the
Company has delivered or caused to be delivered the Escrow Notice, (A) the
Seller shall purchase that number of shares of Common Stock as Seller would have
been required to include in the sale had Seller complied with the provisions of
Section 2.3(a)(ii), (B) the Company shall cause to be released from the escrow
to the Holder from whom the Seller purchases shares of Common Stock pursuant to
clause (A) of this paragraph the applicable amount of consideration due to such
Holder together with any interest thereon, and (C) all remaining funds and other
consideration held in escrow shall be released to the Seller. If the Seller
received consideration other than cash in the sale, the Seller shall purchase
the shares of Common Stock tendered by paying to the Holders cash and non-cash
consideration in the same proportion as received by the Seller in the sale.
2.4. CORPORATE OPPORTUNITY. To the fullest extent permitted by any
applicable law, the doctrine of corporate opportunity, or any other analogous
doctrine, shall not apply with respect to OEP or any of its Affiliates or
representatives (including any directors of the Company designated by such
persons). In particular, (a) OEP and its Affiliates shall have the right to
engage in business activities, whether or not in competition with the Company or
its subsidiaries or the Company's or its subsidiaries' business activities,
without consulting any other Investor, and (b) OEP shall not have any obligation
to any other Investor with respect to any opportunity to acquire property or
make investments at any time.
9
ARTICLE III
CORPORATE ACTIONS
3.1. DIRECTORS AND VOTING AGREEMENTS.
(a) Each Investor and Permitted Transferee agrees that it shall
take, at any time and from time to time, all action necessary (including voting
the Common Stock entitled to vote owned by him, her or it, calling special
meetings of stockholders and executing and delivering written consents) to
ensure that (i) the number of directors comprising the Board of Directors of the
Company shall be as OEP shall determine, and (ii) the individuals designated by
OEP shall be elected to the Board of Directors of the Company.
(b) Each Investor and Permitted Transferee agrees to take all
necessary action to cause the composition of the Board of Directors of the
Company to remain in accordance with Section 3.1(a) hereof (including, without
limitation, voting or causing to vote or acting by written consent with respect
to, all shares of Common Stock entitled to vote thereon or any other voting
capital stock of the Company now or hereafter owned or held by such Investor or
Permitted Transferee in favor of such persons) and to act itself (if a member of
the Board of Directors) or cause its designee (if any) on the Board of Directors
to vote or act by written consent to cause the Board of Directors of the Company
to be in accordance with Section 3.1(a) hereof.
(c) Any of the rights held by OEP to designate directors of the
Company set forth in paragraph (a) above shall terminate on such date as OEP,
together with its respective Affiliates and Permitted Transferees, collectively
own less than 35% of the outstanding Common Stock.
3.2. RIGHT TO REMOVE CERTAIN OF THE COMPANY'S DIRECTORS. OEP may
request that any director subject to designation by it be removed (with or
without cause) by written notice to the other Investors, and, in any such event,
each Investor and Permitted Transferee shall promptly consent in writing or vote
or cause to be voted all shares of Common Stock entitled to vote thereon now or
hereafter owned or controlled by it for the removal of such person as a
director.
3.3. RIGHT TO FILL CERTAIN VACANCIES IN COMPANY'S BOARD. In the event
that a vacancy is created on the Company's Board of Directors at any time by the
death, disability, retirement, resignation or removal (with or without cause) of
a director subject to designation by OEP or if otherwise there shall exist or
occur any vacancy on the Company's Board of Directors in a directorship subject
to designation by OEP, such vacancy shall not be filled by the remaining members
of the Company's Board of Directors, but each Investor and Permitted Transferee
hereby agrees promptly to consent in writing or vote or cause to be voted all
shares of Common Stock entitled to vote thereon or any other voting capital
stock of the Company now or hereafter owned or controlled by it to elect that
individual designated to fill such vacancy and serve as a director, as shall be
designated by OEP pursuant to Section 3.1 hereof.
10
3.4. AMENDMENT OF CERTIFICATE AND BYLAWS. Each Investor and Permitted
Transferee agrees that it shall not consent in writing or vote or cause to be
voted any shares of Common Stock now or hereafter owned or controlled by it in
favor of any amendment, repeal, modification, alteration or rescission of, or
the adoption of any provision in the Company's Certificate of Incorporation, as
amended, or Bylaws inconsistent with Article III of this Agreement unless OEP
consents in writing thereto.
3.5. TERMINATION OF VOTING AGREEMENTS. The voting agreements in
Sections 3.1, 3.2, 3.3 and 3.4 hereof shall terminate on the date the Company
consummates a Public Offering (if requested by the underwriter with respect to
such offering).
3.6. FEES AND EXPENSES. The Company will reimburse its directors for
reasonable travel and other out of pocket expenses incurred by such persons in
attending meetings of the Board of Directors or any committee thereof. The
Company shall pay such fees or compensation (in addition to expenses) as is
determined by the Board of Directors to any director who is not an employee of
the Company (or its subsidiaries), it being understood that it is not expected
that directors fees will be paid to any Director Investor for the first four
years of his or her service on the Board of Directors of the Company.
ARTICLE IV
ADDITIONAL RESTRICTIONS ON TRANSFERS OF
INCENTIVE SECURITIES HELD BY MANAGEMENT INVESTORS
4.1. CERTAIN DEFINITIONS. The terms defined below shall have the
following meanings when used in this Article IV:
(a) "CAUSE," when used in connection with the termination of an
Employee Investor's employment with the Company or a majority-owned direct or
indirect subsidiary of the Company, shall mean (i) willful fraud or dishonesty
in connection with such Employee Investor's performance of his or her job duties
that results in material harm to the Company and/or its subsidiaries, (ii) the
failure by such Employee Investor to substantially perform his or her job duties
that results in material harm to the Company and/or its subsidiaries, (iii) the
conviction for, or plea of NOLO CONTENDERE to, a charge of commission of a
felony involving moral turpitude, or that can reasonably be expected to cause
material harm to the Company or its reputation, or material harm to any of the
Company's subsidiaries or any of their reputations, or to materially impair such
Employee Investor's ability to perform his or her job duties, or (iv) the
material breach by the Employee Investor of the terms of this Agreement.
"CAUSE," when used in connection with a Director Investor's removal as a member
of the Board of Directors, shall mean (i) the breach by such Director Investor
of his or her fiduciary duties as a director of the Company, (ii) the failure by
such Director Investor to substantially perform his or her duties as a director
of the Company that results in material harm to the Company and/or its
subsidiaries, (iii) the conviction for, or plea of NOLO CONTENDERE to, a charge
of commission of a felony involving moral turpitude, or that can reasonably be
expected to cause material harm to the
11
Company or its reputation, or material harm to any of the Company's subsidiaries
or any of their reputations, or to materially impair such Director Investor's
ability to perform his or her duties as a director of the Company, or (iv) the
material breach by the Director Investor of the terms of this Agreement.
(b) "INCENTIVE SECURITIES" means the shares of Common Stock now
or hereafter owned by a Management Investor, and all other securities of the
Company (or a successor to the Company) received on account of ownership of the
Incentive Securities, including any and all securities issued in connection with
any merger, consolidation, stock dividend, stock distribution, stock split,
reverse stock split, stock combination, recapitalization, reclassification,
subdivision, conversion or similar transaction in respect thereof.
(c) "CLOSING DATE" for purposes of this Article IV shall mean,
with respect to any given Security, the date the Management Investor purchased
or acquired such Security, unless another closing date is specified on Schedule
I hereto opposite such Management Investor's name, in which case the closing
date specified on Schedule I hereto opposite such Manager Investor's name shall
be the Closing Date for such Management Investor.
4.2. RESTRICTIONS ON TRANSFER. In addition to the restrictions
imposed by Section 1.1 hereof, and notwithstanding anything to the contrary
contained herein, none of the Management Investors shall effect a Transfer of
any Incentive Securities other than (a) pursuant to Section 2.2 hereof in
connection with an Approved Sale, (b) pursuant to Section 2.3 hereof in
connection with the exercise of "Tag-Along Rights," (c) pursuant to Section 4.3
hereof in connection with an exercise of the Purchase Option (as such term is
hereinafter defined), (d) with the consent of the Company (as evidenced by a
resolution duly adopted by at least a majority of the members of the Company's
Board of Directors), (e) to a Permitted Transferee of such Management Investor
in question (other than a Permitted Transferee by virtue of Section 1.1(b)(iv)),
or (f) in connection with a Public Offering in which such Management Investor is
permitted to participate. In exercising the consent and approval provided for in
clause (d), the Company may employ its sole discretion in evaluating the nature
of the proposed transferee and the Company may impose such conditions on
Transfer as it deems appropriate in its sole discretion, including, but not
limited to, requirements that the transferee be a director of the Company or an
employee of the Company or a majority-owned direct or indirect subsidiary of the
Company and that the transferee purchase such Management Investor's Incentive
Securities as a "Management Investor" subject to the restrictions of this
Article IV. In the event any Transfer is authorized pursuant to clause (d) above
to a director of the Company or an employee of the Company or a majority-owned
direct or indirect subsidiary of the Company as a "Management Investor," such
director or employee shall execute an agreement, in form and substance
reasonably satisfactory to the Company, pursuant to which such director or
employee shall agree to be bound by the terms and conditions of this Agreement
as a "Management Investor," and such other provisions as the Company may
determine, and upon such execution, such director or employee shall be entitled
to the benefit of such provisions hereof and such other provisions as the
Company determines and are set forth in such agreement. Any purported Transfer
in violation of this Agreement shall be null and void and of no force and
effect, and the purported transferees shall
12
have no rights or privileges in or with respect to the Company. Notwithstanding
the foregoing provisions, each Management Investor agrees that he or she will
not effect a Transfer of any Incentive Securities prior to the lapse of such
period of time following acquisition thereof as may be required to comply with
applicable securities laws.
For the purposes of this Agreement, the "Permitted Transferees"
of any of the Management Investors shall be as set forth in Section 1.1(b)(i) or
(ii) hereof; PROVIDED, HOWEVER, that as a condition to a Transfer to any
Permitted Transferee, such Permitted Transferee shall agree, in writing and in
form and substance reasonably satisfactory to the Company, to become bound, and
thereby shall become bound, by all the terms of this Agreement applicable to the
Management Investor transferring such Incentive Securities. The Termination Date
(as hereinafter defined) for a Permitted Transferee shall be the Termination
Date with respect to the Management Investor who first acquired the Incentive
Securities held by such Permitted Transferee pursuant to this Agreement.
4.3. PURCHASE OPTION.
(a) GENERAL TERMS. In the event that any Employee Investor
shall cease to be employed by the Company or a majority-owned direct or indirect
subsidiary of the Company for any reason (including, but not limited to, death,
temporary or permanent disability, retirement at age 65 or more under normal
retirement policies, resignation or termination by the Company or a
majority-owned direct or indirect subsidiary of the Company with or without
Cause), other than by reason of a leave of absence approved by the Company or a
majority-owned direct or indirect subsidiary of the Company, or in the event
that any Director Investor shall cease to serve as a member of the Board of
Directors for any reason (including, but not limited to, death, resignation or
removal), such Management Investor (or his or her heirs, executors,
administrators, transferees, successors or assigns) shall give prompt notice to
the Company of such termination of service to the Company or its subsidiaries
(except in the case of termination by the Company or a majority-owned direct or
indirect subsidiary of the Company with or without Cause), and the Company or
one or more designee(s) selected by a majority of the members of the Company's
Board of Directors, shall have the right and option by written notice given at
any time within 120 days after the later of the effective date of such
termination of service (such effective date of termination being the
"TERMINATION DATE") or the date of the Company's receipt of the aforesaid notice
(the later of such dates, the "OPTION TERMINATION DATE"), to purchase from such
Management Investor and his or her Permitted Transferees, or his or her heirs,
executors, administrators, transferees, successors or assigns, as the case may
be, any or all of the Incentive Securities then owned by such Management
Investor (and his or her Permitted Transferees), at a purchase price equal to
the Option Purchase Price (as hereinafter defined). The Company or its
designee(s), as the case may be, shall give notice to the terminated Management
Investor (or his or her heirs, executors, administrators, transferees,
successors or assigns) of its intention to purchase Incentive Securities at any
time not later than the Option Termination Date. The right of the Company and
the Company's designee(s) set forth in this Section 4.3 to purchase a terminated
Management Investor's Incentive Securities is hereinafter referred to as the
"PURCHASE OPTION."
13
(b) EXERCISE OF PURCHASE OPTION. The Purchase Option shall be
exercised by written notice to the terminated Management Investor (or his or her
heirs, executors, administrators, transferees, successors or assigns) executed
by the Company or the Company's designee(s), as the case may be. Such notice
shall set forth the number and type (i.e., Vested Shares or Unvested Shares) of
Incentive Securities desired to be purchased and shall set forth a time and
place of closing which shall be no earlier than 10 days and no later than 60
days after the date such notice is sent. At such closing, the seller shall
deliver the certificates evidencing the number of Incentive Securities to be
purchased by the Company and/or its designee(s), accompanied by stock powers
duly endorsed in blank or duly executed instruments of transfer, and any other
documents that are necessary to transfer to the Company and/or its designee(s),
as the case may be, good title to such of the Incentive Securities to be
transferred, free and clear of all pledges, security interests, liens, charges,
encumbrances, equities, claims and options of whatever nature, other than those
imposed under this Agreement, and concurrently with such delivery, the Company
and/or its designee(s), as the case may be, shall deliver to the seller the full
amount of the Option Purchase Price (or the portion thereof to be paid by such
party) for such Incentive Securities in cash or by plain check.
(c) OPTION PURCHASE PRICE. If, (i) any Employee Investor's
employment shall be terminated by the Company or a majority-owned direct or
indirect subsidiary of the Company without Cause, (ii) any Employee Investor
shall cease to be employed by the Company or a majority-owned direct or indirect
subsidiary of the Company by reason of the voluntary termination of employment
by such Management Investor or by reason of death, retirement at age 65 or more
under normal retirement policies, or temporary or permanent disability, (iii)
any Director Investor is removed from the Board of Directors without Cause, or
(iv) any Director Investor shall cease to be a member of the Board of Directors
by reason of death or resignation, the "OPTION PURCHASE PRICE" for the Incentive
Securities to be purchased from such Management Investor, and his or her
Permitted Transferees, or his or her heirs, executors, administrators,
transferees, successors and assigns, pursuant to the Purchase Option shall equal
for each Vested Share held by such Management Investor to be purchased, the Fair
Market Value Price, and for each Unvested Share held by such Management Investor
to be purchased, the Adjusted Cost Price.
Notwithstanding the foregoing and anything to the contrary
contained herein, if any Employee Investor shall cease to be employed by the
Company or any Director Investor shall cease to be a member of the Board of
Directors for any reason other than those set forth in the first sentence of
this Section 4.3(c) (including, but not limited to, any termination or removal
for Cause), the Option Purchase Price for all Incentive Securities to be
purchased from such Management Investor, and his or her Permitted Transferees,
or his or her heirs, executors, administrators, transferees, successors and
assigns, pursuant to the Purchase Option shall equal the number of Vested Shares
and Unvested Shares held by such Management Investor to be purchased multiplied
by the lower of (i) the Fair Market Value Price, and (ii) the original purchase
price per share paid by such Management Investor for the Incentive Securities
(adjusted for any stock dividend upon, or subdivision or combination of, or like
change with respect to the Incentive Securities after the date hereof).
14
As used herein:
(i) "ADJUSTED COST PRICE" for each share of Common Stock
means $0.40 per share (adjusted for any stock dividend upon, or subdivision or
combination of, or like change with respect to the Common Stock after the date
hereof).
(ii) The number of "VESTED SHARES" held by a Management
Investor shall equal the number of Incentive Securities held by such Management
Investor on his or her Termination Date, multiplied by the Vesting Percentage
set forth in the table below opposite the applicable Termination Date of such
Management Investor:
If the Termination Date Occurs: Vesting Percentage
------------------------------- ------------------
On or prior to the first anniversary of the Closing Date 0.000
After the first anniversary of the Closing Date, and on or 0.250
prior to the day that is six months after the first
anniversary of the Closing Date
After the day that is six months after the first 0.375
anniversary of the Closing Date, and on or prior to the
second anniversary of the Closing Date
After the second anniversary of the Closing Date, and on 0.500
or prior to the day that is six months after the second
anniversary of the Closing Date
After the day that is six months after the second 0.625
anniversary of the Closing Date, and on or prior to the
third anniversary of the Closing Date
After the third anniversary of the Closing Date, and on or 0.750
prior to the day that is six months after the third
anniversary of the Closing Date
After the day that is six months after the third 0.875
anniversary of the Closing Date, and on or prior to the
fourth anniversary of the Closing Date
15
After the fourth anniversary of the Closing Date 1.000
PROVIDED, HOWEVER, that, without limiting the applicability of this Section 4.3,
in the event that on or prior to the fourth anniversary of the Closing Date
there shall occur an Approved Sale, (i) the number of Vested Shares held by an
Employee Investor shall equal the sum of (x) the number of Vested Shares that
such Employee Investor would hold if the date of the consummation of the
Approved Sale were deemed to be such Employee Investor's Termination Date, and
(y) 50% of the number of Unvested Shares held by such Employee Investor on the
date of the consummation of the Approved Sale, and (ii) all of the Incentive
Securities held by a Director Investor shall be Vested Shares on the date of the
consummation of the Approved Sale.
(iii) The number of "UNVESTED SHARES" held by a Management
Investor means the number of Incentive Securities held by such Management
Investor on his or her Termination Date, minus the number of Vested Shares held
by such Management Investor.
(iv) "FAIR MARKET VALUE PRICE" for each share of Common
Stock means, as of the date the notice of exercise of the Purchase Option is
given, the fair market value of such share as determined in good faith by the
Company's Board of Directors, in its sole discretion, and the Fair Market Value
Price for an option to purchase Common Stock shall be the Fair Market Value
Price of a share of Common Stock (as so determined) less the exercise price of
such option. The Board's determination of fair market value shall be final and
binding.
4.4. INVOLUNTARY TRANSFERS. In the event that the Incentive
Securities owned by any Management Investor shall be subject to sale or other
Transfer (the date of such sale or transfer shall hereinafter be referred to as
the "TRANSFER DATE") by reason of (i) bankruptcy or insolvency proceedings,
whether voluntary or involuntary, or (ii) distraint, levy, execution or other
involuntary Transfer, then such Management Investor shall give the Company
written notice thereof promptly upon the occurrence of such event stating the
terms of such proposed Transfer, the identity of the proposed transferee, the
price or other consideration, if readily determinable, for which the Incentive
Securities are proposed to be transferred, and the number of Incentive
Securities to be transferred. After its receipt of such notice or, failing such
receipt, after the Company otherwise obtains actual knowledge of such a proposed
Transfer, the Company or one or more designee(s) selected by a majority of the
members of the Board of Directors of the Company shall have the right and option
to purchase any or all of such Incentive Securities which right shall be
exercised by written notice given by the Company (or its designee) to such
proposed transferor within 60 days following the Company's receipt of such
notice or, failing such receipt, the Company's obtaining actual knowledge of
such proposed Transfer. Any purchase pursuant to this Section 4.4 shall be at
the price and on the terms applicable to such proposed Transfer. If the nature
of the event giving rise to such involuntary Transfer is such that no readily
determinable consideration is to be paid for the Transfer of the Incentive
Securities, the price to be paid by the buyer shall be the Option Purchase Price
that would have been applicable hereunder had such Management Investor incurred
a Termination Date as of the date of such proposed Transfer for the Incentive
Securities by reason of a termination of his or her
16
employment without Cause. The closing of the purchase and sale of Incentive
Securities shall be held at the place and the date to be established by the
buyer, which in no event shall be less than 10 or more than 60 days from the
date on which the buyer gives notice of its election to purchase the Incentive
Securities. At such closing, such Management Investor shall deliver the
certificates evidencing the number of Incentive Securities to be purchased by
the buyer, accompanied by stock powers duly endorsed in blank or duly executed
instruments of transfer, and any other documents that are necessary to transfer
to the buyer good title to such of the securities to be transferred, free and
clear of all pledges, security interests, liens, charges, encumbrances,
equities, claims and options of whatever nature other than those imposed under
this Agreement, and concurrently with such delivery, the buyer shall deliver to
such Management Investor the full amount of the purchase price for such
Incentive Securities in cash or by plain check.
4.5. PROCEEDS UPON AN APPROVED SALE. Each Employee Investor agrees,
subject to the conditions set forth in the last sentence of this Section 4.5,
that the proceeds of the sale of any Unvested Shares of such Employee Investor
in connection with an Approved Sale pursuant to Section 2.2 (the "APPROVED SALE
ESCROW AMOUNT") shall not be paid to such Employee Investor and shall instead be
deposited into a trust for the exclusive benefit of the Employee Investors,
until there is an event of forfeiture (as described below), at which time the
funds subject to such forfeiture shall be paid to the Company or its successor.
Such trust shall be established in accordance with such agreements and
instruments as shall be reasonably determined by the Board of Directors of the
Company and shall permit the trustee thereunder to invest the funds of such
trust in such manner, consistent with such trustee's fiduciary obligations, as
such trustee shall reasonably determine. The trust agreement shall provide (i)
that the assets of the trust shall not be subject to the claims of the Company
or any successor to the Company, except as provided herein in the case of
forfeiture and (ii) that in the event an Employee Investor prevails in a suit
against the Company or the trustee regarding his or her right to funds held in
the trust, the Company shall pay the reasonable attorneys' fees and expenses of
the Employee Investor incurred in such suit. On each of the first two
anniversaries of the consummation of an Approved Sale, the trustee shall
distribute to each Employee Investor 50% of such Employee Investor's Approved
Sale Escrow Amount (together with the interest on such funds to be distributed);
PROVIDED, that if earlier, the trustee shall distribute to each Employee
Investor all of or the balance of such Employee Investor's Approved Sale Escrow
Amount (together with the interest earned thereon) on the fourth anniversary of
the Closing Date; PROVIDED FURTHER, HOWEVER, that in the event that the
employment of the Employee Investor is terminated by the Company or its
successor or a subsidiary thereof without Cause or such Employee Investor shall
cease to be employed by the Company or its successor or a subsidiary thereof by
reason of death, retirement at age 65 or more under normal retirement policies,
or temporary or permanent disability, the trustee shall promptly pay all
remaining funds held for the account of such Employee Investor, to such Employee
Investor, or to his or her heirs, administrators, or estate (with interest), and
in the event that the Employee Investor shall cease to be employed by the
Company or its successor or a subsidiary thereof (other than by reason of an
approved leave of absence) for any reason other than death, retirement at age 65
or more under normal retirement policies, temporary or permanent disability, or
termination by the Company or its successor or a subsidiary thereof without
Cause, all interest of the Employee Investor in such funds shall
17
immediately terminate. An Employee Investor shall not be bound by the provisions
of this Section 4.5 unless the Company or a successor of the Company agrees in
writing to continue such Employee Investor's employment through the period
ending on the fourth anniversary of the Closing Date (or, if earlier, the second
anniversary of the closing of the Approved Sale) on terms and conditions at
least as favorable, in the aggregate, to the Employee Investor as the terms and
conditions of his employment prior to the Approved Sale.
4.6. PURCHASER REPRESENTATIVE. If the Company or any Investor enters
into any negotiation or transaction for which Rule 506 (or any similar rule then
in effect) promulgated by the Securities and Exchange Commission under the
Securities Act may be available with respect to such negotiation or transaction
(including a merger, consolidation or other reorganization), each of the
Management Investors will, at the request of the Company, appoint a purchaser
representative (as such term is defined in Rule 501(h) promulgated by the
Securities and Exchange Commission under the Securities Act) reasonably
acceptable to the Company. If each of the Management Investors appoints the
purchaser representative designated by the Company, the Company will pay the
fees of such purchaser representative, but if a Management Investor declines to
appoint the purchaser representative designated by the Company, such Management
Investor will appoint another purchaser representative (reasonably acceptable to
the Company), and such Management Investor will be responsible for the fees of
the purchaser representative so appointed.
ARTICLE V
MISCELLANEOUS
5.1. AMENDMENT AND MODIFICATION. This Agreement may be amended or
modified, or any provision hereof may be waived, provided that such amendment,
modification or waiver is set forth in a writing executed by (i) the Company,
(ii) OEP (so long as OEP and its Permitted Transferees (other than Permitted
Transferees under Section 1.1(b)(iv)) own in the aggregate at least 10% of the
outstanding shares of Common Stock (calculated on a fully diluted basis)), (iii)
the holders of a majority of the outstanding shares of Common Stock (calculated
on a fully diluted basis) held by the Investors, and (iv) in the case of any
amendment to the provisions of Sections 2.3 and 4.3 hereof, the holders of a
majority of the outstanding Common Stock (calculated on a fully diluted basis)
of the Management Investors if such amendment would materially adversely affect
such Management Investors, except that (a) the Company and OEP (so long as OEP
and its Permitted Transferees (other than Permitted Transferees under Section
1.1(b)(iv)) own in the aggregate at least 10% of the outstanding shares of
Common Stock calculated on a fully diluted basis) may amend the provisions of
Section 4.3 hereof with respect to any particular Management Investor with such
Management Investor's consent and without the consent of any other Investor, and
(b) the Company may amend Schedule I to reflect a change in the ownership of
Securities by an Investor or to reflect the addition of an Investor, with such
Investor's consent and without the consent of any other Investor. No course of
dealing between or among any persons having any interest in this Agreement will
be deemed effective to
18
modify, amend or discharge any part of this Agreement or any rights or
obligations of any person under or by reason of this Agreement.
5.2. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the successors and permitted
assigns and executors, administrators and heirs of each party hereto. Except as
contemplated hereby in connection with Transfers of Securities, this Agreement,
and any rights or obligations existing hereunder, may not be assigned or
otherwise transferred by any party without the prior written consent of the
other parties hereto.
5.3. SEVERABILITY. In the event that any provision of this Agreement
or the application of any provision hereof is declared to be illegal, invalid or
otherwise unenforceable by a court of competent jurisdiction, the remaining
provisions shall remain in full force and effect unless deletion of such
provision causes this Agreement to become materially adverse to any party, in
which event the parties shall use reasonable efforts to arrive at an
accommodation which best preserves for the parties the benefits and obligations
of the offending provision.
5.4. NOTICES. All notices provided for or permitted hereunder shall
be made in writing by hand-delivery, registered or certified first-class mail,
fax or reputable courier guaranteeing overnight delivery to the other party at
the following addresses (or at such other address as shall be given in writing
by any party to the others):
If to the Company, to:
Polaroid Holding Company
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to OEP, to:
One Equity Partners, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a required copy to:
Dechert
4000 ▇▇▇▇ Atlantic Tower
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
19
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to any other Investor, to such Investor's address as set
forth on the signature page hereto or such other address as may be specified
from time to time in writing to the Company by any Investor.
All such notices shall be deemed to have been duly given: when
delivered by hand, if personally delivered; four business days after being
deposited in the mail, postage prepaid, if mailed; when confirmation of
transmission is received, if faxed during normal business hours (or, if not
faxed during normal business hours, the next business day after confirmation of
transmission); and on the next business day, if timely delivered to a reputable
courier guaranteeing overnight delivery.
5.5. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of
Delaware, without giving
effect to principles of conflicts of law.
5.6. HEADINGS. The headings preceding the text of the sections and
subsections of this Agreement are for convenience of reference only and shall
not constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
5.7. COUNTERPARTS. This Agreement may be executed in two or more
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same instrument.
5.8. FURTHER ASSURANCES. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
5.9. TERMINATION. This Agreement shall terminate on the written
agreement of the Investors who are parties hereto or when all the Investors
except any one Investor no longer hold any Securities.
5.10. REMEDIES. In the event of a breach or a threatened breach by any
party to this Agreement of its obligations under this Agreement, any party
injured or to be injured by such breach, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The parties
agree that the provisions of this Agreement shall be specifically enforceable,
it being agreed by the parties that the remedy at law, including monetary
damages, for breach of such provision will be inadequate compensation for any
loss and that any defense in any action for specific performance that a remedy
at law would be adequate is waived.
5.11. PARTY NO LONGER OWNING SECURITIES. If a party hereto ceases to
own any Securities, such party will no longer be deemed to be an Investor or
Management Investor for purposes of this Agreement.
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5.12. NO EFFECT ON EMPLOYMENT OR DIRECTORSHIP. Nothing herein
contained shall confer on the Management Investor the right to (a) remain in the
employ of the Company or any of its subsidiaries or Affiliates, or (b) remain a
member of the Board of Directors of the Company.
5.13. PRONOUNS. Whenever the context may require, any pronouns used
herein shall be deemed also to include the corresponding neuter, masculine or
feminine forms.
5.14. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
and understanding among the parties and supersedes all prior agreements and
understandings, written or oral, relating to the subject matter of this
Agreement, it being understood that certain Investors are contemporaneously
entering into other agreements and instruments. No Investor has the right to any
information contained in Schedule I as it relates to any other Investor.
5.15. REGULATORY COMPLIANCE COOPERATION. So long as OEP or its
Permitted Transferees beneficially own any Securities, before the Company
redeems, purchases or otherwise acquires, directly or indirectly, or converts or
takes any action with respect to the voting rights of, any shares of any class
of its capital stock or any securities convertible into or exchangeable for any
shares of any class of its capital stock, or before the Company takes any action
which would result in OEP or its Permitted Transferees having a Regulatory
Problem (as described below), the Company shall give OEP thirty (30) days prior
written notice of such pending action. Upon the written request of OEP made
within thirty (30) days after its receipt of any such notice, stating that after
giving effect to such action OEP would have a Regulatory Problem, the Company
will defer taking such action for such period (not to extend beyond ninety (90)
days after OEP's receipt of the Company's original notice) as OEP requests to
permit it and its Permitted Transferees to reduce the quantity of Securities
held by it and its Permitted Transferees, or to take such other necessary
actions, in order to avoid the Regulatory Problem. In addition, the Company will
not be party to any merger, consolidation, recapitalization or other transaction
pursuant to which OEP would be required to take any voting securities or
securities convertible into voting securities, which might reasonably be
expected to cause OEP to have a Regulatory Problem. For purposes of this
Section, a person will be deemed to have a "REGULATORY PROBLEM" when such person
and such person's Permitted Transferees (i) would own, control or have power
over a greater quantity of securities of any kind issued by the Company than are
permitted to be owned under any requirement of any governmental authority
applicable to such person or (ii) would have been caused to be or could be in
violation of any provision of law applicable to such person.
5.16. FUTURE INDIVIDUAL INVESTORS. The parties hereto agree that any
current or future employee of the Company or other person who purchases
Securities from the Company subsequent to the date hereof may become a signatory
to this Agreement by executing a written instrument setting forth that such
person agrees to be bound by the terms and conditions of this Agreement and this
Agreement will be deemed to be amended to include such person as a Management
Investor (or Investor, as the case may be) and the number of Securities
purchased by him or her.
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IN WITNESS WHEREOF, the parties hereto have executed this
Securities Holders Agreement the day and year first above written.
POLAROID HOLDING COMPANY
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
Chief Administrative and Legal Officer
ONE EQUITY PARTNERS, LLC
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Partner
[SIGNATURE PAGE TO AMENDED AND RESTATED
SECURITIES HOLDERS AGREEMENT]