EXHIBIT 4.1
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AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
ENDO PHARMACEUTICALS HOLDINGS INC.
Dated as of July 14, 2000
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TABLE OF CONTENTS
Page
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ARTICLE I
RESTRICTIONS ON TRANSFER OF STOCK................................... 2
1.1 General Restriction on Transfer by Management Stockholders..... 2
1.2 Permitted Transferees.......................................... 3
ARTICLE II
PURCHASES BY ENDO LLC............................................... 4
2.1 Right to Purchase Shares from Management Stockholders.......... 4
2.2 Notice......................................................... 5
2.3 Payment........................................................ 5
2.4 Postponement, etc.............................................. 7
ARTICLE III
PURCHASE PRICE...................................................... 7
3.1 Fair Market Value.............................................. 7
3.2 Carrying Value................................................. 7
3.3 Certain Defined Terms.......................................... 8
ARTICLE IV
PROHIBITION ON PURCHASES............................................ 9
4.1 Prohibited Purchases........................................... 9
ARTICLE V
SALES TO THIRD PARTIES.............................................. 12
5.1 General........................................................ 12
5.2 Agreements to Be Bound......................................... 12
5.3 Involuntary Transfers.......................................... 12
5.4 Tag- and Drag-Along Rights..................................... 13
ARTICLE VI
REGISTRATION RIGHTS................................................. 16
6.1 Incidental Registration........................................ 16
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6.2 Expenses....................................................... 18
6.3 Holdback and Other Agreements.................................. 18
6.4 Indemnification................................................ 19
ARTICLE VII
CHARTER DOCUMENTS.................................................... 19
7.1 Charter Documents.............................................. 19
ARTICLE VIII
TERMINATION.......................................................... 20
8.1 Sale of the Company............................................ 20
8.2 Cessation of Ownership of Stock................................ 20
8.3 Other Termination Events....................................... 20
ARTICLE IX
MISCELLANEOUS PROVISIONS............................................. 21
9.1 Stock Certificate Legend....................................... 21
9.2 Option Plans................................................... 21
9.3 New Management Stockholders.................................... 22
9.4 No Other Arrangements or Agreements............................ 22
9.5 Amendment and Modification..................................... 22
9.6 Assignment..................................................... 22
9.7 Recapitalizations, Exchanges, etc. Affecting the Common Stock.. 23
9.8 Transfer of Common Stock....................................... 23
9.9 Further Assurances............................................. 24
9.10 Governing Law.................................................. 24
9.11 Invalidity of Provision........................................ 24
9.12 Notices........................................................ 24
9.13 Headings; Execution in Counterparts............................ 26
9.14 Entire Agreement; Effect on Certain Other Agreements........... 26
9.15 Injunctive Relief.............................................. 26
9.16 Attorneys' Fees................................................ 26
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AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
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AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, dated as of July 14, 2000
(this "Agreement"), by and among Endo Pharmaceuticals Holdings Inc., a Delaware
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corporation (the "Company"), ▇▇▇▇▇ Investment Associates V, L.P., a Delaware
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limited partnership (together with ▇▇▇▇▇ Equity Partners V, L.P., a Delaware
limited partnership, ("▇▇▇▇▇"), Endo Pharma LLC, a Delaware limited liability
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company (together with its designee, "Endo LLC"), ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
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Black and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (collectively, together with their Permitted
Transferees, the "Initial Management Stockholders"), ▇▇▇▇▇ ▇.▇. ▇▇▇ and the
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▇▇▇▇▇ ▇. ▇▇▇▇▇ Trustee, Revocable Trust U/A, Dated 6/13/97 as Permitted
Transferee of ▇▇▇▇▇ ▇. ▇▇▇▇▇ (the Initial Management Stockholders, together with
▇▇▇▇▇ ▇.▇. ▇▇▇ and any other persons who become parties to this Agreement
pursuant to Sections 10.2 and 10.3 of this Agreement and each of their
respective Permitted Transferees, the "Management Stockholders").
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WHEREAS, the Company, ▇▇▇▇▇ and the Management Stockholders are
parties to that certain Stockholders Agreement, dated as of December 1, 1997
(the "1997 Stockholders Agreement");
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WHEREAS, the Company has entered into an agreement and plan of merger,
dated as of November 26, 1999 (as may be amended and restated from time to
time, the "Merger Agreement"), by and among the Company, Endo Inc. and Algos
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Pharmaceutical Corporation ("Algos") whereby Algos will merge with and into Endo
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Inc., a wholly owned subsidiary of the Company (the "Merger");
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WHEREAS, the Company and Endo LLC have granted, and may grant
additional, options to purchase shares of common stock, par value $.01 per
share, of the Company (the "Common Stock") to the current Management
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Stockholders and certain employees of the Company and its subsidiaries pursuant
to the Endo 1997 Employee Stock Option Plan, the Endo Pharma Amended and
Restated 1997 Employee Stock Option Plan, the Endo Pharma Amended and Restated
1997 Executive Stock Option Plan, the Endo Pharma 2000 Supplemental Employee
Stock Option Plan and the Endo Pharma 2000 Supplemental Executive Stock Option
Plan (collectively, and together with any similar such plan the Company may in
the future adopt, the "Option Plans") and, upon exercise of the options such
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shares of Common Stock will be subject to this Agreement and to the extent such
employees are not already parties to this Agreement, such employees will become
parties to this Agreement pursuant to Section 10.3 hereof;
WHEREAS, the Company may offer additional shares of Common Stock after
the date of this Agreement to employees of the Company and its subsidiaries and
such shares of Common Stock will be subject to this Agreement and to the extent
such employees are not already parties to this Agreement, such employees will
become parties to this Agreement pursuant to Section 10.3 hereof; and
WHEREAS, the Company, Endo LLC and the Management Stockholders believe
it to be in their respective best interests and in the best interests of the
Company that they enter into this Agreement providing for certain rights and
restrictions with respect to the shares of Common Stock owned by the Management
Stockholders or their Permitted Transferees.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth in this Agreement, the parties hereto agree that the 1997
Stockholders Agreement is hereby amended and restated in its entirety and agree
as follows:
ARTICLE I
RESTRICTIONS ON TRANSFER OF STOCK
1.1 General Restriction on Transfer by Management Stockholders.
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No shares of Common Stock owned by any Management Stockholder or any interest
therein may, directly or indirectly, be sold, assigned, transferred or otherwise
disposed of or transferred by such Management Stockholder (collectively,
"Transferred" and any such transaction, a "Transfer"), except for (i) Transfers
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to a transferee pursuant to Section 1.2 hereof (a "Permitted Transferee"), (ii)
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Transfers of shares of Common Stock to the Company, ▇▇▇▇▇, Endo LLC or
Management Stockholders, including pursuant to Article II or III hereof, or
(iii) Transfers of shares of Common Stock pursuant to, or as otherwise permitted
under, Article VI hereof; provided that in the event the employment of a
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Management Stockholder with the Company or any of its Subsidiaries is terminated
for any reason, such Management Stockholder may pledge, hypothecate, mortgage or
encumber his or her shares of Common Stock; provided further that the terms of
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any such pledge, hypothecation, mortgage or encumbrance shall be approved by
Endo LLC in its discretion taking into account the financial situation of Endo
LLC at the time.
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1.2 Permitted Transferees.
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(a) Subject to paragraph (b) of this Section 1.2, any Management
Stockholder may Transfer any shares of Common Stock or any interest therein or
his or her rights to subscribe for the same, if any, (i) with the prior written
consent of Endo LLC's Board of Managers (the "LLC Board"), which consent shall
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not be unreasonably withheld (provided that reasonable grounds to withhold
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consent shall include, but not be limited to, the risk of subjecting the Company
to registration or reporting requirements under federal securities laws), to a
trust or corporation the beneficiaries or stockholders of which are such
Management Stockholder, as the case may be, his or her spouse, parents, any
other family members, (ii) in case of his or her death, by will or by the laws
of intestate succession to executors, administrators, testamentary trustees,
legatees or beneficiaries, or (iii) with the prior written consent of the LLC
Board, to any transferee, including, without limitation, to one or more
Management Stockholders or to any employee who is, in the opinion of the LLC
Board, a current member of management of the Company or any of its subsidiaries,
if any. In addition to the foregoing, any transferee of a Management
Stockholder described above may Transfer shares of Common Stock back to such
Stockholder or to another Permitted Transferee of such Stockholder.
(b) Any Transfer of shares of Common Stock made pursuant to paragraph
(a) of this Section 1.2 to a Permitted Transferee shall be permitted and shall
be effective only if such Permitted Transferee shall agree in writing to be
bound by the terms and conditions of this Agreement pursuant to an instrument of
assumption reasonably satisfactory in form and substance to Endo LLC.
(c) An "affiliate" of, or a person "affiliated" with, a specified
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person, is a person that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the person specified (in the case of ▇▇▇▇▇, including, without limitation, any
partner of such entity or any director or officer of ▇▇▇▇▇ & Company, any
individual retirement account of any such partner, director or officer, any
family member of any such partner, director or officer, or any trust or family
partnership for the benefit of any such partner, director or officer or family
member thereof).
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ARTICLE II
PURCHASES BY ENDO LLC
2.1 Right to Purchase Shares from Management Stockholders.
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(a) Subject to all provisions of this Article III and Article V
hereof, Endo LLC shall have the right to purchase from a Management Stockholder,
and such Management Stockholder shall have the obligation to sell to Endo LLC,
all, but not less than all, of the shares of Common Stock owned by such
Management Stockholder:
(i) at the fair market value of such shares, as determined
pursuant to Section 4.1 hereof ("Fair Market Value"), if such Management
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Stockholder's employment with the Company or any of its subsidiaries is
terminated as a result of (v) the termination by the Company or one of its
subsidiaries of such employment without Cause, (w) the resignation of such
Management Stockholder for Good Reason, (x) the resignation of such
Management Stockholder without Good Reason, (y) the retirement of such
Management Stockholder upon or after reaching the age of 65 or, if
different, the Company's normal retirement age ("Retirement"), or (z) the
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death or Disability (as defined in Section 4.3 hereof) of such Management
Stockholder; and
(ii) at the lesser of the Fair Market Value and the Carrying
Value (as defined in Section 4.2 hereof) of such shares, if such Management
Stockholder's employment with the Company or any of its subsidiaries is
terminated by the Company or one of its subsidiaries with Cause.
(b) In the event that Endo LLC does not exercise such right to
purchase the shares of Common Stock from a Management Stockholder by giving
notice within the 30-day period referred to in Section 3.2 hereof, ▇▇▇▇▇, or a
party designated by ▇▇▇▇▇, shall have the right to purchase, at its option, the
shares of Common Stock referred to in Section 3.1(a) hereof from such Management
Stockholder, by giving notice not later than the end of the succeeding 10-day
period.
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(c) In the event that the purchase of, or the payment for, some or
all of the shares of Common Stock referred to in Section 3.1(a) hereof by Endo
LLC is prohibited under Article V hereof, subject to Section 3.1(b) hereof, an
Initial Management Stockholder may elect, at his or her option, to purchase some
or all of such shares of Common Stock, within 20 days of the determination by
Endo LLC that its purchase of, or its payment for, such shares would be
prohibited by Article V hereof.
2.2 Notice. If Endo LLC desires to purchase shares of Common
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Stock from a Management Stockholder pursuant to Section 3.1 hereof, it shall
notify such Management Stockholder not more than 30 days after the occurrence of
the event giving rise to Endo LLC's right to acquire such Management
Stockholder's shares of Common Stock (or in the case of the Management
Stockholder's death, it shall notify such Management Stockholder's estate within
30 days of notice to Endo LLC of the Management Stockholder's death). If Endo
LLC does not deliver such notice within such 30-day period and ▇▇▇▇▇ (or its
designee) desires to purchase such shares, then ▇▇▇▇▇ (or its designee) shall
notify such Management Stockholder not later than the end of the succeeding 10-
day period.
2.3 Payment.
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(a) Subject to Article V and Section 3.4 hereof, payment for shares
of Common Stock purchased pursuant to Section 3.1(a) and (b) hereof shall be
made on the date that is (i) in any case in which the price to be paid for such
shares may only be the Carrying Value thereof, the 30th business day following
the date on which notice is given pursuant to Section 3.2 hereof, or (ii) in all
other cases, the 15th business day following the date of the determination of
Fair Market Value pursuant to Section 4.1 hereof.
(b) If the termination of employment of such Management Stockholder
is as a result of his or her resignation without Good Reason, and:
(i) if the date of termination of employment occurs prior to
December 1, 2002, then the purchase price of the purchased shares
shall be paid within 15 days following the surrender of the
certificates representing the purchased shares, and
(ii) if the date of termination of employment occurs on or after
December 1, 2002, then the portion of the purchase price of the
purchased shares equal to the Carrying Value of such shares on the
date of termination of employment shall be paid by the 15th day fol-
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lowing the surrender of the certificates representing the purchased
shares and the remainder shall be paid on the last day of the 18/th/
month following the date of termination of employment.
(c) Notwithstanding the foregoing, in the event that the termination
of employment of a Management Stockholder giving rise to Endo LLC's right to
acquire such Management Stockholder's shares of Common Stock results from the
death or Disability of such Management Stockholder prior to December 1, 2002,
then such Management Stockholder shall have the right to elect (which election
shall be irrevocable), within 90 days of the receipt of the notice specified in
Section 3.2 hereof, to defer the effectiveness of Endo LLC's purchase right with
respect to all or any portion of such Management Stockholder's shares of Common
Stock until December 1, 2002. Notwithstanding the foregoing, no such election
may be made by such Management Stockholder with respect to a portion of such
Management Stockholder's shares of Common Stock unless such election is made
with respect to at least one-third of the shares of Common Stock owned by such
Management Stockholder at the time of such termination of employment. If a
Management Stockholder shall fail to make an election with respect to when Endo
LLC's purchase right shall be effective, such Management Stockholder shall be
deemed to have elected to have Endo LLC's purchase right be effective
immediately with respect to all of such Management Stockholder's shares of
Common Stock.
In the event Endo LLC's purchase right with respect to all or any
portion of any shares of Common Stock is not effective until December 1, 2002 by
reason of the election made by a Management Stockholder under this Section
3.3(c), December 1, 2002 shall be deemed to be the date of termination for
purposes of determining the purchase price to be paid for the shares of Common
Stock to be purchased after December 1, 2002. Endo LLC shall, subject to
Article V hereof, pay to such Management Stockholder whose employment so
terminates the Fair Market Value of such shares by the 15/th/ day following the
date of determination of Fair Market Value with respect to such deemed
termination date.
(d) Any payments based on Fair Market Value required to be made by
Endo LLC under this Section 3.3 shall accrue interest at 6% simple interest per
annum on the amounts not paid from the date of termination of employment (or the
date of deemed termination, including with respect to the election made pursuant
to Section 3.3(c) hereof) to the date Endo LLC makes such payments.
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2.4 Postponement, etc.
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(a) The date of payment and closing of any purchase and sale under
this Article III may be postponed to the extent necessary to permit such
purchase and sale under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the regulations promulgated thereunder, if applicable to
such sale. No party shall be required to consummate any purchase and sale under
this Article III until such time as such transaction would not violate
applicable law, other than violations which would not have a direct or indirect
material adverse effect on such party.
(b) Notwithstanding anything to the contrary in this Article III, in
no event shall any sale of Common Stock that was received by a Management
Stockholder upon the exercise of an employee stock option occur prior to the
six-month anniversary of such exercise.
ARTICLE III
PURCHASE PRICE
3.1 Fair Market Value.
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(a) Fair Market Value. For the purposes of this Agreement, the
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"Fair Market Value" of any share of Common Stock being purchased by or sold to
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Endo LLC or ▇▇▇▇▇ (or its designees) pursuant to this Agreement shall be the
average for the ten consecutive trading days prior to such transaction of the
last sales price for a share of Common Stock on the principal securities
exchange on which the Common Stock is then listed or, if the Common Stock is not
so listed, on the National Association of Securities Dealers Automated Quotation
System or, if not so quoted, on the principal market on which the Common Stock
is then traded.
(b) Notice to Stockholders. After notice has been given pursuant
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to Section 2.2, 3.2 or 6.3 hereof, Endo LLC shall promptly deliver a letter
setting forth the Fair Market Value to ▇▇▇▇▇ and to each Management Stockholder
whose Common Stock is to be purchased pursuant to Section 2.1, 3.1 or 6.3
hereof.
3.2 Carrying Value. For the purposes of Sections 3.1 and 6.5
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hereof, "Carrying Value" of any share of Common Stock being purchased by Endo
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LLC shall be equal to the price paid by the selling Management Stockholder for
any such share.
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3.3 Certain Defined Terms. As used in this Agreement, the
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following terms shall have the meanings ascribed to them below, except with
respect to Initial Management Stockholders (and such other Management
Stockholders as determined, from time to time, by resolution of the LLC Board)
with employment agreements with the Company which define such terms differently,
in which case such terms shall have the meanings ascribed to them in such
Initial Management Stockholder's respective employment agreement (or the
employment agreements of such other Management Stockholders as determined, from
time to time, by resolution of the LLC Board):
(a) Cause. The term "Cause" used in connection with a termination
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of employment of a Management Stockholder shall mean a termination of such
Management Stockholder's employment by the Company or any of its subsidiaries
due to (i) the continued failure, after written notice, by such Management
Stockholder substantially to perform his or her duties with the Company or any
of its subsidiaries (other than any such failure resulting from incapacity due
to reasonably documented physical illness or injury or mental illness), (ii) the
engagement by such Management Stockholder in serious misconduct that causes, or
in the good faith judgment of the Board may cause, harm (financial or otherwise)
to the Company or any of its subsidiaries including, without limitation, (A) the
disclosure of material secret or confidential information of the Company or any
of its subsidiaries (B) the potential debarment of the Company or any of its
subsidiaries by the U.S. Food and Drug Administration or any successor agency
(the "FDA"), or (C) the possibility that the registration of the Company or any
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of its subsidiaries with the U.S. Drug Enforcement Administration or any
successor agency (the "DEA") could be revoked or an application with the DEA
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could be denied, (iii) the potential debarment of such Management Stockholder by
the FDA, or (iv) the material breach by the Management Stockholder of this
Agreement or any other agreement between such Management Stockholder, on the one
hand, and the Company or ▇▇▇▇▇, on the other hand.
(b) Good Reason. A termination of a Management Stockholder's
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employment with the Company or any of its subsidiaries shall be for "Good
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Reason" if such Management Stockholder voluntarily terminates his or her
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employment with the Company or any of its subsidiaries as a result of any of the
following:
(i) without the Management Stockholder's prior written consent, a
material reduction by the Company or any of its subsidiaries in his or her
current salary, other than any such reduction which is part of a general
salary reduction or other concessionary arrangement affecting all employees
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or affecting the group of employees of which the Management Stockholder is
a member;
(ii) the taking of any action by the Company or any of its
subsidiaries that would substantially diminish the aggregate value of the
benefits provided him or her under the Company's or any such subsidiary's
medical, health, accident, disability, life insurance, thrift and
retirement plans in which he or she was participating on the date of his or
her execution of this Agreement, other than any such reduction that is (A)
required by law, (B) implemented in connection with a general concessionary
arrangement affecting all employees or affecting the group of employees of
which the Management Stockholder is a member or (C) generally applicable to
all beneficiaries of such plans; or
(iii) the assignment to the Management Stockholder of duties
inconsistent with his or her status within the Company, or
a substantial adverse alteration in the nature or status of
his or her responsibilities from those in effect on the
date hereof.
(c) Disability. The termination of the employment of any
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Management Stockholder by the Company or any of its subsidiaries shall be deemed
to be by reason of a "Disability" if, as a result of such Management
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Stockholder's incapacity due to reasonably documented physical illness or injury
or mental illness, such Management Stockholder shall have been unable for more
than six months within any 12-month period to perform his or her duties with the
Company or any of its subsidiaries on a full time basis and within 30 days after
written notice of termination has been given to such Management Stockholder,
such Management Stockholder shall not have returned to the full time performance
of his or her duties. The date of termination in the case of a termination for
"Disability" shall be the last day of the aforementioned 30-day period.
ARTICLE IV
PROHIBITION ON PURCHASES
4.1 Prohibited Purchases. Notwithstanding anything to the
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contrary herein, Endo LLC shall not be permitted or obligated to purchase any
shares of Common Stock from a Management Stockholder (or make any payment for
any
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purchased shares of Common Stock) pursuant to Section 2.1 or Section 3.1 hereof
to the extent (i) Endo LLC or the Company (if the Company were to be the sole
source of the funds necessary to make any such payment or purchase) is
prohibited from purchasing such shares (or incurring debt to finance the
purchase of such shares or making payment for such purchased shares) by any debt
instruments or other agreements (the "Agreements") entered into by Endo LLC, the
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Company or any of their respective subsidiaries or by applicable law, (ii) an
event of default under any Agreement has occurred and is continuing or a
condition exists which would, with notice or lapse of time or both, result in an
event of default under any Agreement or (iii) the purchase of such shares by
Endo LLC or the Company (if the Company were to be the sole source of the funds
necessary to make any such payment or purchase) (including the incurrence of any
debt which in the judgment of the LLC Board is necessary to finance such
purchase or the payment for such purchased shares) (A) could, in the judgment of
the LLC Board, result in the occurrence of an event of default under any
Agreement or create a condition which would or might, with notice or lapse of
time or both, result in an event of default under any Agreement, (B) would, in
the judgment of the LLC Board, be imprudent in view of the financial condition
(present or projected) of Endo LLC and its subsidiaries, if any, taken as a
whole, or the Company and its subsidiaries, taken as a whole, or the anticipated
impact of the purchase of (or payment for) such shares on Endo LLC's, the
Company's (if the Company were to be the sole source of the funds necessary to
make any such payment or purchase) or any of their respective subsidiaries'
ability to meet their respective obligations, including under any Agreement or
(C) could, in the judgment of the LLC Board, constitute a fraudulent conveyance
or transfer or render Endo LLC or the Company (if the Company were to be the
sole source of the funds necessary to make any such payment or purchase)
insolvent under applicable law or violate limitations in the Delaware General
Corporation Law on repurchases of stock. If shares of Common Stock which Endo
LLC has the right or obligation to purchase (or make payment for) on any date
exceed the total amount permitted to be purchased on such date pursuant to the
preceding sentence (the "Maximum Amount"), Endo LLC shall purchase (or pay for)
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on such date only that number of shares of Common Stock up to the Maximum Amount
(and shall not be required to purchase more than the Maximum Amount) in such
amounts as the LLC Board shall in good faith determine, applying the following
order of priority:
(a) first, the shares of Common Stock of all Management Stockholders
whose shares of Common Stock are being (or were) purchased by Endo LLC by reason
of termination of employment due to death or Disability up to the Maximum Amount
and, to the extent that the number of shares of Common Stock that Endo LLC is
obligated or has the right to purchase (or pay for) from such Manage-
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ment Stockholders exceeds the Maximum Amount, such shares of Common Stock pro
rata among such Management Stockholders on the basis of the number of shares of
Common Stock held by each of such Management Stockholders that Endo LLC is
obligated or has the right to purchase (or pay for), and
(b) second, to the extent that the Maximum Amount is in excess of the
amount Endo LLC purchases (or pays for) pursuant to clause (a) above, the shares
of Common Stock of all Management Stockholders whose shares of Common Stock are
being (or were) purchased (or paid for) by Endo LLC by reason of termination of
employment without Cause or due to Retirement or resignation for Good Reason up
to the Maximum Amount and, to the extent that the number of shares of Common
Stock that Endo LLC is obligated or has the right to purchase from such
Management Stockholders exceeds the Maximum Amount, such shares of Common Stock
pro rata among such Management Stockholders on the basis of the number of shares
of Common Stock held by each of such Management Stockholders that Endo LLC is
obligated or has the right to purchase (or pay for), and
(c) third, to the extent the Maximum Amount is in excess of the
amounts Endo LLC purchases (or pays for) pursuant to clauses (a) and (b) above,
the shares of Common Stock of all Management Stockholders whose shares of Common
Stock are being (or were) purchased (or paid for) by Endo LLC for any other
reason up to the Maximum Amount and, to the extent that the number of shares of
Common Stock that Endo LLC is obligated or has the right to purchase (or pay
for) from such Management Stockholders exceeds the Maximum Amount, the shares of
Common Stock of such Management Stockholders in such order of priority and in
such amounts as the LLC Board in its sole discretion shall in good faith
determine to be appropriate under the circumstances.
Subject to Sections 2.1(c)and 3.1(c) hereof, notwithstanding anything
to the contrary contained in this Agreement, if Endo LLC is unable to purchase
any Management Stockholder's shares pursuant to Section 2.1 or 3.1 of this
Agreement by reason of this Article V (or make any payment for any purchased
shares), Endo LLC may nonetheless in the case of Section 3.1 hereof exercise its
option to purchase such shares and in the case of purchases pursuant to Sections
2.1 or 3.1 hereof shall purchase (or make payment for) such shares at the
earliest practicable date permitted under this Article V and any payment
therefor shall accrue simple interest (or if such payment is accruing interest
at such time, shall continue to accrue interest) at 6% per annum from the date
such payment would have been made but for this Article V to the date such
payment is actually made. All payments of interest accrued hereunder shall be
paid only at the date of payment by Endo LLC for the shares of Common
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Stock being purchased. Any shares as to which Endo LLC has exercised its right
to purchase pursuant to Section 3.1 hereof may not otherwise be sold by the
Management Stockholder notwithstanding non-payment therefor pursuant to this
Article V.
ARTICLE V
SALES TO THIRD PARTIES
5.1 General. No Management Stockholders shall sell any of his or
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her shares of Common Stock to a third party for the term of this Agreement;
provided that such restriction shall not apply to any sale or other transaction
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described in clause (i) or (ii) of Section 1.1 hereof or to any sale pursuant to
a Registration under the Act, subject to Article VII hereof. Endo LLC may not
sell the shares of Common Stock it owns to a third party at any time after the
date of this Agreement unless Endo LLC as transferor first complies with Section
6.4 hereof.
5.2 Agreements to Be Bound. Notwithstanding anything contained in
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this Article VI, any sale to a third party or any Involuntary Transfer (as
defined in Section 6.3 hereof) to an Involuntary Transferee (as defined in
Section 6.3 hereof) shall be permitted under the terms of this Agreement only if
such third party or Involuntary Transferee, as the case may be, shall agree in
writing to be bound by the terms and conditions of this Agreement pursuant to an
instrument of assumption reasonably satisfactory in form and substance to Endo
LLC.
5.3 Involuntary Transfers. In the case of any transfer of title
---------------------
or beneficial ownership of shares of Common Stock upon default, foreclosure,
forfeit, divorce, court order, or otherwise than by a voluntary decision on the
part of a Management Stockholder (an "Involuntary Transfer"), Endo LLC shall
--------------------
have the right to purchase such shares pursuant to this Section 6.3. Upon the
Involuntary Transfer of any shares of Common Stock, such Management Stockholder
shall promptly (but in no event later than two days after such Involuntary
Transfer) furnish written notice (the "Notice") to Endo LLC indicating that the
------
Involuntary Transfer has occurred, specifying the name of the person to whom
such shares have been transferred (the "Involuntary Transferee") and giving a
----------------------
detailed description of the circumstances giving rise to, and stating the legal
basis for, the Involuntary Transfer. Upon the receipt of the Notice, and for 30
days thereafter, Endo LLC shall have the right to purchase, and the Involuntary
Transferee shall have the obligation to sell, all, but not less than all, of the
shares of Common Stock acquired by the Involuntary Transferee
12
for a purchase price equal to the lesser of (i) the Fair Market Value of such
shares of Common Stock on the date of transfer to the Involuntary Transferee and
(ii) the amount of the indebtedness or other liability that gave rise to the
Involuntary Transfer plus the excess, if any, of the Carrying Value of such
shares of Common Stock over the amount of such indebtedness or other liability
that gave rise to the Involuntary Transfer.
Notwithstanding the foregoing, the LLC Board may, for good cause shown
by the Management Stockholder who made the Involuntary Transfer, determine that
payment of a purchase price equal to the Fair Market Value of such shares of
Common Stock on the date of transfer to the Involuntary Transferee would be
appropriate under the circumstances, and direct that payment be made in such
amount.
▇▇▇▇▇ shall have the right to require Endo LLC to assign to ▇▇▇▇▇ (or
a designee of ▇▇▇▇▇) Endo LLC's right to purchase pursuant to this Section 6.3.
5.4 Tag- and Drag-Along Rights.
--------------------------
(a) Tag-Along Rights. Endo LLC shall not, in any one transaction
----------------
or any series of similar transactions not effected through a broker or over a
national securities exchange, Transfer more than 25% of the shares of Common
Stock it owns as of the date of the Merger, except pursuant to Section 6.4(b)
hereof, to any third party or parties unaffiliated with Endo LLC (a "Third
-----
Party") unless the Management Stockholders (collectively, the "Offerees"), are
----- --------
offered the right, at the option of each Offeree, to include in such Transfer to
the Third Party such number of shares of Common Stock then owned by each such
Offeree, as determined in accordance with this Section 6.4(a). If Endo LLC
receives from a Third Party a bona fide offer or offers to Transfer which it
intends to accept, or proposes to Transfer to a Third Party, shares of its
Common Stock, Endo LLC shall provide written notice (the "Tag-Along Notice") to
----------------
each of the Offerees, setting forth the consideration per share to be paid by
such Third Party and the other material terms and conditions of such
transaction. The Tag-Along Notice shall offer the Offerees the opportunity to
participate in the proposed Transfer of shares to the Third Party according to
the terms and conditions of this Section 6.4(a) and for the same type of
consideration and for an amount of consideration per share not less than that
offered to Endo LLC by the Third Party. At any time within 20 days after its
receipt of the Tag-Along Notice, each of the Offerees may irrevocably accept the
offer included in the Tag-Along Notice for up to such number of shares of Common
Stock as is determined in accordance with the provisions of this Section 6.4(a)
by furnishing written notice of
13
such acceptance to Endo LLC. Promptly following such acceptance by an Offeree,
each such Offeree shall deliver to Endo LLC the certificate or certificates
representing the shares of Common Stock to be Transferred pursuant to such offer
by such Offeree, together with a limited power-of-attorney authorizing Endo LLC
to sell or otherwise dispose of such shares of Common Stock pursuant to the
proposed Transfer to the Third Party.
Each Offeree shall have the right to participate in the proposed
Transfer to the Third Party by Transferring in connection therewith shares of
Common Stock equal to the product of (x) the total number of shares to be
acquired by the Third Party, times (y) a fraction, the numerator of which shall
be the total number of shares of Common Stock then owned by such Offeree, and
the denominator of which shall be the number of shares of Common Stock then
owned by Endo LLC plus the total number of shares of Common Stock then owned by
the Offerees. The maximum number of shares of Common Stock that may be
Transferred by each Offeree to the Third Party in accordance with this Section
6.4(a) shall be the total number of shares of Common Stock then owned by such
Offeree.
If within 20 days after the receipt of the Tag-Along Notice, any
Offeree has not accepted the offer contained in the Tag-Along Notice, such
Offeree will be deemed to have waived any and all rights with respect to, or to
participate in, the Transfer of Common Stock described in the Tag-Along Notice
and Endo LLC shall have 45 days in which to Transfer not more than the amount of
Common Stock described in the Tag-Along Notice, for an amount and type of
consideration per share not materially more favorable to Endo LLC than was set
forth in the Tag-Along Notice. If, at the end of 65 days following the receipt
of the Tag-Along Notice, Endo LLC has not completed the Transfer of Common Stock
of Endo LLC and Common Stock of any Offeree, Endo LLC shall return to such
Offeree all certificates representing shares of Common Stock which such Offeree
delivered for Transfer pursuant to this Section 6.4(a), and all the restrictions
on sale or other disposition contained in this Agreement with respect to Common
Stock then or thereafter owned by the Offeree shall again be in effect.
As promptly as practicable (but in no event later than 5 days) after
the consummation of the Transfer of Common Stock of Endo LLC and Common Stock of
the Offerees to the Third Party in accordance with this Section 6.4(a), Endo LLC
shall notify the Offerees thereof, shall remit to each of the Offerees the total
consideration in respect of the shares of Common Stock of such Offeree which
were so Transferred, and shall furnish such other evidence of the completion and
time of
14
completion of such Transfer and the terms thereof as may be reasonably requested
by the Offerees.
(b) Drag-Along Rights. If Endo LLC shall propose to Transfer at
-----------------
least 60% of all shares of Common Stock then owned by Endo LLC to a Third Party,
then (in addition to the rights of the Management Stockholders to participate in
such Transfer pursuant to Section 6.4(a) hereof) Endo LLC may, at its option,
require the Management Stockholders (collectively, the "Remaining Holders") to
-----------------
include in such Transfer to the Third Party such number of shares of Common
Stock then owned by such Remaining Holder, as determined in accordance with this
Section 6.4(b).
Endo LLC shall send written notice (the "Drag-Along Notice") of the
-----------------
exercise of their rights pursuant to this Section 6.4(b) to each of the
Remaining Holders, setting forth the consideration per share to be paid by the
Third Party and the other material terms and conditions of such transaction.
The Drag-Along Notice shall state that the Remaining Holders shall be required
to participate in the proposed Transfer of shares of Common Stock to the Third
Party according to the terms and conditions of this Section 6.4(b) and for the
same type of consideration and for an amount of consideration per share not less
than that offered to Endo LLC by the Third Party. Within 15 days following the
receipt of the Drag-Along Notice, each of the Remaining Holders shall deliver to
a representative of Endo LLC designated in the Drag-Along Notice certificates
representing all shares of Common Stock held by such Remaining Holder, duly
endorsed, together with all other documents required to be executed in
connection with such transaction. In the event that any Remaining Holder should
fail to deliver such certificates to Endo LLC, the Company shall cause the books
and records of the Company to show that such shares are bound by the provisions
of this Section 6.4(b) and that such shares may be Transferred only to the Third
Party.
Each Remaining Holder shall be required to participate in the proposed
Transfer to the Third Party by Transferring in connection therewith shares of
Common Stock equal to the product of (x) the total number of shares to be
acquired by the Third Party, times (y) a fraction, the numerator of which shall
be the total number of shares of Common Stock then owned by such Remaining
Holder, and the denominator of which shall be the total number of shares of
Common Stock then owned by Endo LLC plus the total number of shares of Common
Stock then owned by the Remaining Holders. The maximum number of shares of
Common Stock that may be Transferred by each Remaining Holder to the Third Party
in accordance with this Section 6.4(b) shall be the total number of shares of
Common Stock then owned by such Remaining Holder.
15
If, within 120 days after Endo LLC gave the Drag-Along Notice, it
shall not have completed the Transfer of all the shares of Common Stock of the
Remaining Holders in accordance with this Section 6.4(b), Endo LLC shall return
to each of the Remaining Holders all certificates representing shares of Common
Stock that such Remaining Holder delivered for Transfer pursuant hereto and that
were not purchased pursuant to this Section 6.4(b).
Promptly (but in no event later than 5 days) after the consummation of
the Transfer of Common Stock of Endo LLC and Remaining Holders pursuant to this
Section 6.4(b), Endo LLC shall give notice thereof to the Remaining Holders,
shall remit to each of the Remaining Holders the total consideration in respect
of the shares of Common Stock of such Remaining Holder which were so
transferred, 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 Remaining Holders.
ARTICLE VI
REGISTRATION RIGHTS
6.1 Incidental Registration. If Endo LLC, pursuant to that
-----------------------
certain registration rights agreement, dated as of July 17, 2000, by and between
the Company and Endo LLC (the "Endo LLC Registration Rights Agreement"), demands
--------------------------------------
that the Company register any of its shares of Common Stock or any other of its
common equity securities (collectively, "Other Securities") under the Act for
----------------
sale for cash to the public under the Act, then Endo LLC will at such time give
prompt written notice to each any Management Stockholder or any of their
respective Permitted Transferees (each, a "Holder") of its intention to do so
------
and of the rights of such Holder under this Section 7.1, at least 20 days prior
to the Company's anticipated filing date of the registration statement relating
to such demand registration. Such notice shall offer each such Holder the
opportunity to include in such registration statement such number of shares of
Common Stock as such Holder may request, in accordance with this Section 7.1.
Upon the written request of a Holder made within 10 days after the receipt of
the Endo LLC's notice (which request shall specify the number of shares of
Common Stock intended to be disposed of and the intended method of disposition
thereof), Endo LLC will use its best efforts to cause the Company to effect, in
connection with the registration of the Other Securities, the registration under
the Act of all shares of Common Stock which the Company has been so requested to
register, to the extent required to permit the
16
disposition (in accordance with such intended methods of disposition) of such
shares of Common Stock so requested to be registered, provided that:
-------- ----
(a) if, at any time after Endo LLC has given such written notice of
the Company's intention to register any Other Securities pursuant to a demand by
Endo LLC and prior to the effective date of the registration statement filed in
connection with such demand registration, Endo LLC shall determine for any
reason not to demand such registration, Endo LLC shall give written notice of
such determination to the Holders, and thereupon the Company shall be relieved
of its obligation to register the shares of Common Stock requested to be
registered in connection with the demand registration of such Other Securities;
(b) if the registration referred to in the first sentence of Section
7.1(a) hereof is to be an underwritten registration on behalf of the Company,
and the managing underwriter(s) advises the Company in writing that, in such
firm's opinion, such offering would be materially and adversely affected by the
inclusion therein of any of the Common Stock requested to be included therein,
the Company shall include in such registration: (i) first, all securities for
which Endo LLC has demanded registration ("Endo LLC Securities"), (ii) second,
-------------------
up to the full number of shares of Common Stock requested to be included in such
registration by the Management Stockholders, which, in the good faith opinion of
such firm, can be so sold without so materially and adversely affecting such
offering (and, if less than the full number of such shares of Common Stock,
allocated pro rata among the Management Stockholders on the basis of the number
of shares of Common Stock requested to be included therein by the Management
Stockholders); provided, however, that with respect to the Management
-------- -------
Stockholders, if the underwriter in connection with such registration determines
that such offering would be materially and adversely affected by the inclusion
of Common Stock owned by the Management Stockholders for reasons including, but
not limited to, the status of the owners of such securities as Management
Stockholders such underwriter may in its sole discretion exclude all or, in such
manner as either in its sole discretion deems appropriate, the Common Stock
owned by Management Stockholders from such offering, and (iii) third, an amount
of other securities, if any, requested to be included therein in excess of the
number or dollar amount of Company Securities and Common Stock of the Holders
which, in the opinion of such firm, can be so sold without materially and
adversely affecting such offering (allocated among the holders of such other
securities in such proportions as such holders and the Company may agree); and
17
(c) no registration of Common Stock effected under this Section 7.1
shall relieve the Company of its obligation to effect a registration of shares
of Common Stock pursuant to the Endo LLC Registration Rights Agreement.
6.2 Expenses. The Company will pay all expenses in connection
--------
with any registration pursuant to this Article VII (including any registration
not consummated as contemplated by Section 7.1(a) hereof) and any other actions
that may be taken in connection with any such registration as contemplated by
this Article VII; provided, however, that the Company will not be obligated to
-------- -------
pay underwriting discounts or commissions or transfer taxes, if any, relating to
the sale or disposition of shares sold pursuant to any such registration.
6.3 Holdback and Other Agreements.
-----------------------------
(a) If and whenever the Company proposes to register any of its
equity securities under the Securities Act for its own account (other than on
Form S-4 or S-8 or any successor form) or is required to use its best efforts to
effect the registration of any shares of Common Stock under the Securities Act
pursuant to Section 7.1 hereof, each Holder agrees by acquisition of such shares
of Common Stock not to effect any sale or distribution, including any sale
pursuant to Rule 144 under the Securities Act, or to request registration under
Section 7.1 hereof of any shares of Common Stock within seven days prior to and
90 days (unless advised by the managing underwriter that a longer period, not to
exceed 180 days, is required, or such shorter period as the managing underwriter
for any underwritten offering may agree) after the effective date of the
registration statement relating to such registration, except as part of such
registration or unless, in the case of a private sale of distribution, the
transferee agrees in writing to be subject to this Section 7.3. If requested by
such managing underwriter, each holder of shares of Common Stock agrees to
execute a holdback agreement, in customary form, consistent with the terms of
this Section 7.3(a).
(b) The Company agrees not to effect any public sale or distribution
of its equity securities or securities convertible into or exchangeable or
exercisable for any of such securities within seven days prior to and 90 days
(unless advised in writing by the managing underwriter that a longer period, not
to exceed 180 days, is required, or such shorter period as the managing
underwriter for any underwritten offering may agree) after the effective date of
any registration statement filed pursuant to Section 7.1 hereof (except (i) as
-
part of such registration, (ii) as permitted by the related underwriting, (iii)
-- ---
pursuant to an employee equity compensation plan, (iv) pursuant to an
--
acquisition or strategic relationship, bank or
18
equipment financing or similar transaction or (v) pursuant to a registration on
-
Form S-4 or S-8 or any successor form). In addition, upon the request of the
managing underwriter, the Company shall use its best efforts to cause each
holder of its equity securities or any securities convertible into or
exchangeable or exercisable for any of such securities, whether outstanding on
the date of this Agreement or issued at any time after the date of this
Agreement (other than any such securities acquired in a public offering), to
agree not to effect any such public sale or distribution of such securities
during such period, except as part of any such registration if permitted, and to
cause each such holder to enter into a similar agreement to such effect with the
Company.
6.4 Indemnification. The Company may require as a condition to
---------------
including any Common Stock in any registration statement filed pursuant to
Section 7.1 hereof that the Company shall have received an undertaking from the
prospective seller of Common Stock to indemnify directors, officers and other
persons, if any, who may control the Company within the meaning of the Act with
respect to any statement or alleged statement in or omission or alleged omission
from such registration statement, prospectus contained therein, or any amendment
or supplement thereto, if such statement or alleged statement or such omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company through an instrument duly executed by such
prospective seller of Common Stock specifically stating that it is for use in
the preparation of such registration statement, prospectus contained therein, or
amendment or supplement thereto. The parties hereto hereby acknowledge and
agree that, unless otherwise expressly agreed to in writing by such prospective
seller to the contrary, for all purposes of this agreement the only information
furnished or to be furnished by such prospective seller, in its capacity as
such, to the Company for use in any registration statement, prospectus contained
therein, or any amendment or supplement thereto are statements specifically
relating to (i) transactions between the prospective seller and its affiliates,
on the one hand, and the Company, on the other hand, (ii) the beneficial
ownership of shares of Common Stock by the prospective seller and its affiliates
and (iii) the name and address of the prospective seller and its affiliates.
19
ARTICLE VII
CHARTER DOCUMENTS
7.1 Charter Documents. The Company has previously furnished to
-----------------
the Management Stockholders copies of its Certificate of Incorporation and By-
Laws, each as shall be in effect on the date of the closing of the Merger (the
"Charter Documents"). From and after the date of this Agreement, each
------------------
Management Stockholder shall vote its shares of voting stock of the Company, at
any regular or special meeting of stockholders of the Company or in any written
consent executed in lieu of such a meeting of stockholders, and shall take all
actions necessary, to ensure that the Charter Documents do not, at any time,
conflict with the provisions of this Agreement.
ARTICLE VIII
TERMINATION
8.1 Sale of the Company. This Agreement shall terminate (a) in the
-------------------
event of a sale of the Company or all or substantially all of its assets to a
party (whether by merger, stock sale or otherwise) other than Endo LLC or one of
its affiliates or (b) in the event that all parties to this Agreement cease to
own any shares of Common Stock or any interest therein. In the event that Endo
LLC shall come to own less than five percent of the outstanding Common Stock,
this Agreement shall also terminate, except with respect to Article VII hereof
which shall survive such termination indefinitely.
8.2 Cessation of Ownership of Stock. Any party to, or person or
-------------------------------
entity who is subject to, this Agreement (other than the Company and ▇▇▇▇▇)
which ceases to own shares of Common Stock or any interest therein shall cease
to be a party to, or person or entity who is subject to, this Agreement and
thereafter shall have no rights or obligations hereunder.
8.3 Other Termination Events.
------------------------
(a) This Agreement may be terminated by the affirmative vote of the
members of Endo LLC owning a majority of the issued and outstanding membership
interests in Endo LLC.
20
(b) Notwithstanding anything to the contrary contained herein, every
provision of this Agreement, other than the provisions contained in Section 6.5
and Article VII hereof, shall terminate upon the fifteenth anniversary of this
Agreement.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Stock Certificate Legend. A copy of this Agreement shall be
------------------------
filed with the Secretary of the Company and kept with the records of the
Company. Each certificate representing shares of Common Stock owned by the
Management Stockholders shall bear upon its face the following legend:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"),
AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL TO THE HOLDER,
WHICH COUNSEL MUST BE, AND THE FORM AND SUBSTANCE OF WHICH OPINION ARE,
SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION, TRANSFER OR OTHER DISPOSITION IS EXEMPT FROM REGISTRATION OR
IS OTHERWISE IN COMPLIANCE WITH THE ACT, SUCH LAWS AND THE AMENDED AND
RESTATED STOCKHOLDERS AGREEMENT, DATED AS OF JULY 14, 2000."
All Management Stockholders shall be bound by the requirements of such
legends to the extent that such legends are applicable. Upon a registration
under the Act of any shares of Common Stock, the certificate representing such
shares shall be replaced, at the expense of the Company, with certificates not
bearing the legend required by this Section 10.1.
9.2 Option Plans. Pursuant to the Option Plans, the Company has
------------
required that participants thereunder must become parties to this Agreement upon
21
exercise of the options and that they will be "Management Stockholders"
hereunder with respect to such shares. In addition, Endo LLC, notwithstanding
any requirement set forth in Section 10.4 hereof, can determine that any options
granted pursuant to the Option Plans and outstanding and vested as of the option
holder's termination of employment with the Company and its subsidiaries shall
be deemed to be Common Stock for purposes of Sections 2 and 3 hereof; provided,
--------
however, that appropriate adjustments shall be made to reflect the existence of
-------
an exercise price for such options.
9.3 New Management Stockholders. Each of the Management
---------------------------
Stockholders hereby agrees that the Company may require that any executive
employee of the Company or any of its subsidiaries who after the date of this
Agreement is offered shares of Common Stock shall, as a condition precedent to
the acquisition of such shares of Common Stock, become a party to this Agreement
by executing the same and delivering it to the Company at its address specified
in Section 10.11 hereof. Upon such execution and delivery, such executive
employee shall be a "Management Stockholder" for all purposes of this Agreement.
9.4 No Other Arrangements or Agreements. Each Management Stockholder
-----------------------------------
hereby represents, warrants and covenants to Endo LLC and to each other
Management Stockholder that, except for, if applicable, the exchange agreement
entered into on December 1, 1997, by and between the Company and each Management
Stockholder (collectively, the "Exchange Agreements") and the exchange agreement
-------------------
entered into as of the date of this Agreement, by and between Endo LLC and each
Management Stockholder (collectively, the "LLC Exchange Agreements"), he or she
-----------------------
has not entered into or agreed to be bound by, and will not enter into or agree
to be bound by, any other arrangements or agreements of any kind with any other
party with respect to the shares of Common Stock, including, but not limited to,
arrangements or agreements with respect to the acquisition, disposition or
voting of shares of Common Stock (whether or not such agreements and
arrangements are with the Company, other Management Stockholders or holders of
Common Stock that are not parties to this Agreement). Each Management
Stockholder represents, warrants and covenants to Endo LLC and to each other
Management Stockholder that it has not entered into or agreed to be bound by,
and will not enter into or agree to be bound by, any voting agreements with
respect to its shares of Common Stock.
9.5 Amendment and Modification. This Agreement may be amended,
--------------------------
modified or supplemented only with the written consent of (i) ▇▇▇▇▇ and (ii) the
Management Stockholders owning a majority of the outstanding Common
22
Stock then owned by all Management Stockholders; provided that Endo LLC may, at
-------- ----
any time and from time to time, in its sole discretion, release all or a portion
of any Management Stockholder's shares of Common Stock from this Agreement.
9.6 Assignment. The provisions of this Agreement shall be binding
----------
upon and inure to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns; provided, however, that none of
-------- -------
Endo LLC, the Company and any Management Stockholder shall assign any of its
rights or obligations pursuant to this Agreement without the prior written
consent of ▇▇▇▇▇. Endo LLC, with the prior written consent of ▇▇▇▇▇, shall have
the right, but not the obligation, to assign any of its rights, and delegate any
of its obligations, to purchase any shares of Common Stock of any Management
Stockholder pursuant to Sections 2 and 3 hereof to any affiliate of Endo LLC,
any one or more persons or entities who are or become parties to this Agreement
or any employee stock ownership plan that the Company may have (or any
combination of the foregoing). In the case of Permitted Transferees, third
parties and Involuntary Transferees, such Permitted Transferees, third parties
or Involuntary Transferees, as the case may be, shall be deemed the Management
Stockholder hereunder for purposes of obtaining the benefits or enforcing the
rights of such Management Stockholder hereunder; provided, however, that no
-------- -------
Permitted Transferee, third party or Involuntary Transferee, as the case may be,
shall derive any rights under this Agreement unless and until such Permitted
Transferee, third party or Involuntary Transferee, as the case may be, has
delivered to Endo LLC a valid undertaking to become, and becomes, bound by the
terms of this Agreement to which the transferring Management Stockholder is
subject.
9.7 Recapitalizations, Exchanges, etc. Affecting the Common Stock.
-------------------------------------------------------------
Except as otherwise provided herein, the provisions of this Agreement shall
apply to the full extent set forth herein with respect to (i) the shares of
Common Stock and (ii) any and all shares of capital stock of the Company or any
successor or assign of the Company (whether by merger, consolidation, exchange,
sale of assets or otherwise), which may be issued in respect of, in exchange
for, or in substitution for the shares of Common Stock, by reason of any stock
dividend, split, reverse split, combination, recapitalization, reclassification,
merger, consolidation or otherwise. References to the "Company" set forth
herein shall be deemed to refer to any such successor or assign and such entity
shall execute an appropriate instrument of assumption agreeing to be bound by
the terms hereof. Except as otherwise provided herein, this Agreement is not
intended to confer upon any person, except for the parties hereto, any rights or
remedies hereunder.
23
9.8 Transfer of Common Stock. If at any time Endo LLC purchases
------------------------
any shares of Common Stock pursuant to this Agreement, Endo LLC may pay the
purchase price determined under this Agreement for the shares of Common Stock it
purchases by wire transfer of funds or Endo LLC check in the amount of the
purchase price, and upon receipt of payment of such purchase price or, pursuant
to Section 2.3, Section 3.3 or Article V hereof, any portion thereof, the
selling Management Stockholder shall deliver to Endo LLC the certificates
representing the number of shares of Common Stock being purchased in a form
suitable for transfer, duly endorsed in blank, and free and clear of any lien,
claim or encumbrance. In the event that any Management Stockholder refuses or
otherwise fails to deliver, in accordance with the preceding sentence,
certificates representing the number of shares of Common Stock being purchased,
the shares of Common Stock purchased from such Management Stockholder shall
(notwithstanding such refusal or failure) be deemed, upon receipt by such
Management Stockholder of the purchase price therefor, to not be outstanding for
any purposes. Notwithstanding anything in this Agreement to the contrary, Endo
LLC shall not be required to make any payment for shares of Common Stock
purchased hereunder until delivery to it of the certificates representing such
shares. If Endo LLC is purchasing less than all the shares of Common Stock
represented by a single certificate, the Company, after Endo LLC makes such
purchase, shall deliver to the selling Management Stockholder a certificate for
any unpurchased shares of Common Stock.
9.9 Further Assurances. Each party hereto or person or entity
------------------
subject hereto shall do and perform or cause to be done and performed all such
further acts and things and shall execute and deliver all such other agreements,
certificates, instruments and documents as any other party hereto or person or
entity subject hereto may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
9.10 Governing Law. This Agreement and the rights and obligations
-------------
of the parties hereunder and the persons subject hereto shall be governed by,
and construed and interpreted in accordance with, the law of the State of
Delaware, without giving effect to the choice of law principles thereof.
9.11 Invalidity of Provision. The invalidity or unenforceability
-----------------------
of any provision of this Agreement in any jurisdiction shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of this Agreement, including that
provision, in any other jurisdiction.
24
9.12 Notices. All notices and other communications hereunder shall
-------
be in writing and, unless otherwise provided herein, shall be deemed duly given
if delivered personally, telecopied (which is confirmed) or sent by registered
or certified mail (postage prepaid, return receipt requested) or by Fedex or
other similar courier service to the parties at the following addresses (or at
such other address as the person or entity to whom notice is given may have
previously furnished to the others in writing as set forth in this Section 10.12
(provided that any change of address shall be effective only upon receipt
thereof)):
(a) If to the Company, to it at:
Endo Pharmaceuticals Holdings Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
▇▇▇▇▇ & Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to a Management Stockholder, as listed on the signature
page hereto, or, if not so listed, to it at its address as
reflected in the stock records of the Company, or as such
Management Stockholder shall designate to the Company in
writing, with a copy to ▇▇▇▇▇ at its address indicated
below (provided that any such designation shall be
effective only upon receipt thereof).
(c) If to Endo LLC, to it at:
Endo Pharma LLC
c/o Kelso & Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
25
9.13 Headings; Execution in Counterparts. The headings and captions
-----------------------------------
contained herein are for convenience and shall not control or affect the meaning
or construction of any provision hereof. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and
which together shall constitute one and the same instrument.
9.14 Entire Agreement; Effect on Certain Other Agreements. This
----------------------------------------------------
Agreement, the Exchange Agreements and the LLC Exchange Agreements embody the
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
representations, warranties, covenants or undertakings relating to the shares of
Common Stock, other than those expressly set forth or referred to herein or in
the Exchange Agreements or the LLC Exchange Agreements. This Agreement, the
Exchange Agreements and the LLC Exchange Agreements supersede all prior
agreements and understandings among the parties with respect to such subject
matter.
9.15 Injunctive Relief. The Company, Endo LLC and the Management
-----------------
Stockholders hereby acknowledge that they each shall be irreparably damaged in
the event this Agreement is not specifically enforced. Each of the parties
therefore agrees that in the event of a breach of any provision of this
Agreement, the aggrieved party may elect to institute and prosecute proceedings
in any court of competent jurisdiction to enforce specific performance or to
enjoin the continuing breach of this Agreement. Such remedies shall, however,
be cumulative and not exclusive, and shall be in addition to any other remedy
which the Company, Endo LLC or the Management Stockholders may have. Each
Management Stockholder hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts in New York and Delaware for the
purposes of any suit, action or other proceeding arising out of or based upon
this Agreement or the subject matter hereof. Each Management Stockholder hereby
consents to service of process by mail made in accordance with Section 10.12
hereof.
9.16 Attorneys' Fees. If any legal action or any arbitration or
---------------
other proceeding is brought for the enforcement of this Agreement, or because of
an alleged dispute, breach, default or misrepresentation in connection with any
of the provisions of this Agreement, the successful or prevailing party or
parties shall be entitled to recover such reasonable attorneys' fees and other
costs incurred in that action or proceeding, in addition to any other relief to
which it or they may be entitled, as may be ordered in connection with such
proceeding.
26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
ENDO PHARMACEUTICALS HOLDINGS INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive Officer
▇▇▇▇▇ INVESTMENT ASSOCIATES V, L.P.
By: ▇▇▇▇▇ Partners V, L.P., General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------
General Partner
ENDO PHARMA LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇.▇. ▇▇▇
------------------------------------------
▇▇▇▇▇ ▇.▇. ▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇, TRUSTEE REVOCABLE
TRUST U/A, DATED 6/13/97
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
The undersigned, by its signature below hereby becomes a party to the
Amended and Restated Stockholders Agreement, dated as of July __, 2000, among
Endo Pharmaceuticals Holdings Inc. and certain of its stockholders (the
"Stockholders Agreement") pursuant to Section 10.3 thereof and agrees to be
----------------------
bound by the terms of the Stockholders Agreement and, for all purposes thereof,
to be a "Management Stockholder".
----------------------
IN WITNESS WHEREOF, the undersigned has executed this instrument as of
the ____ day of ___________, 20__.
___________________________
Signature
___________________________
Print Name