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EXHIBIT 10.21
Amendment No. 1 to the
STOCKHOLDERS AGREEMENT
Amendment No. 1, dated as of September 28, 1998 (this
"Amendment"), to the Stockholders Agreement, dated as of June 30, 1997 (the
"Stockholders Agreement"), among North Castle Partners I, LLC, a Delaware
limited liability company ("North Castle"), AEA Investors, Inc., a Delaware
corporation ("AEA") and the other stockholders of Leiner Health Products
Group Inc., a Delaware corporation (the "Company"). Capitalized terms used
and not otherwise defined in this Amendment have the respective meanings
ascribed to them in the Stockholders Agreement.
WHEREAS, North Castle, AEA and the other stockholders of the
Company have heretofore entered into the Stockholders Agreement;
WHEREAS, pursuant to Section 24 of the Stockholders Agreement,
the Stockholders Agreement may be amended by the holder or holders of at least
66 2/3% of the outstanding shares of Common Stock, subject to the written
consent of AEA;
WHEREAS, North Castle holds in excess of 66 2/3% of the
outstanding Common Stock; and
WHEREAS, North Castle and AEA have agreed to amend certain
provisions of the Stockholders Agreement;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, North Castle and AEA do
hereby agree as follows:
1. Section 1(a) of the Stockholders Agreement is hereby
amended and restated in its entirety as follows:
"1. BOARD OF DIRECTORS.
(a) NOMINATING. Until such time as AEA and the Covered
Shareholders have sold or transferred (other than through sales or
transfers to AEA or Covered Shareholders) in excess of 50% of the
Common Stock held by AEA and the Covered Shareholders upon the
consummation of the Merger, AEA shall be entitled to nominate one
person for election to the board of directors (the "BOARD") of the
Company. So long as it owns at least 40% of the Common Stock, North
Castle shall be entitled to nominate persons for election to the Board
equal to one less than the majority of the Board. The Board shall have
no more than ten members in the aggregate for so long as AEA is
entitled to nominate one individual for election to the Board pursuant
to this Section 1(a). If it owns less than 40% of the Common Stock,
North Castle shall be entitled to nominate a number of directors
bearing the same relationship to the total number of directors
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on the Board as the number of shares of Common Stock then held by North
Castle bears to the then outstanding shares of Common Stock. The
Company and each of the other parties hereto agrees to take all steps
within their power, including voting any voting Common Stock owned or
controlled by them or any of their Affiliates, to cause any person so
nominated to be elected to the Board by action of the Stockholders of
the Company."
2. Section 16 of the Stockholders Agreement is hereby amended
and restated in its entirety as follows:
"16. TERM. This Agreement shall be effective as of the date
hereof and shall terminate and be of no further force and effect upon the
earliest to occur of (I) the tenth anniversary of the date hereof, (II) the
termination of this Agreement by the unanimous written consent of the
Stockholders, (III) the establishment of a Public Market for the Common Stock or
(IV) the date upon which North Castle owns less than 40% of the Common Stock.
Upon any such termination of this Agreement, the Company, North Castle and AEA
shall enter into an agreement which will provide that the registration rights
provided in Section 6 and Section 7 will continue and will survive until AEA and
the Covered Shareholders (as a group) and North Castle each owns Common Stock
representing less than 5% of the Company's outstanding Common Stock. A "PUBLIC
MARKET" for the Common Stock shall be deemed to have been established at such
time as 20% of the Common Stock (on a fully diluted basis) shall have been sold
to the public pursuant to an effective registration statement under the
Securities Act other than a Special Registration."
3. This Amendment may be executed in any number of
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same Amendment.
4. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment by their authorized representatives as of the date first above
written.
NORTH CASTLE PARTNERS I, L.L.C.
By: Baird Investment Group, L.L.C.,
its managing member
By: Charles F. Baird, Jr.,
its managing member
/s/ Charles F. Baird
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AEA INVESTORS INC.
By: /s/ Christine J. Smith
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Name: Christine J. Smith
Title: Vice President
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