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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
APRIA HEALTHCARE GROUP INC.
(Name of Issuer)
Common Stock, par value $0.001 per share
(Title of class of securities)
037933108
(CUSIP number)
Ralph V. Whitworth
Relational Investors, LLC
4330 La Jolla Village Drive, Suite 220
San Diego, California 92122
(619) 597-9400
(Name, address and telephone number of person authorized
to receive notices and communications)
February 3, 1998
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-l(b)(3) or (4), check the following box [_].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-l(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
Page 1 of 39 pages
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Pursuant to Rule 13d-2(a) of Regulation 13D-G of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended, the
undersigned hereby amend their Schedule 13D statement dated October 9, 1997, as
amended by Amendment No. 1 dated January 28, 1997 (the "Schedule 13D"), relating
to the common stock, par value $0.001 per share (the "Shares") of Apria
Healthcare Group Inc. (the "Company"). Unless otherwise indicated, all defined
terms used herein shall have the same meanings ascribed to them in the Schedule
13D.
ITEM 4. PURPOSE OF THE TRANSACTION.
The answer to Item 4 is hereby amended and restated in its entirety, as
follows:
As previously reported, the Reporting Persons acquired the Shares of
the Company for investment purposes. In their opinion, such Shares continue to
be undervalued by the market at the present time.
At the invitation of the Board of Directors of the Company, on January
27, 1998, Ralph Whitworth, a Reporting Person, was appointed to the Company's
Board. The Reporting Persons intend to continue their ongoing efforts,
consistent with Mr. Whitworth's fiduciary duties as a member of the Company's
Board of Directors, to influence the Company to maximize the value of the Shares
of the Company.
The Reporting Persons may discuss the Company from time-to-time with
members of the management of the Company, its board of directors and their
advisors, may communicate with other shareholders and interested parties
concerning the Company, and may exercise any and all of their respective rights
as shareholders of the Company in a manner consistent with their equity
interests and Mr. Whitworth's fiduciary duties as a member of the Company's
Board of Directors. The Reporting Persons may modify their plans, in light of
future developments.
Subject to Mr. Whitworth's fiduciary duties as a member of the
Company's Board of Directors, the Reporting Persons may from time-to-time (i)
acquire additional Shares (subject to availability at prices deemed favorable)
in the open market, in privately negotiated transactions or otherwise, or (ii)
dispose of Shares at prices deemed favorable in the open market, in privately
negotiated transactions or otherwise.
On February 3, 1998, Relationship Investors, LLC., a Reporting Person
("RILLC"), entered into a Stockholder Agreement (the "Stockholder Agreement")
with JLL Argosy Apria, LLC ("Investor"), CIBC WG Argosy Merchant Fund 2, LLC
("Argosy"), Joseph Littlejohn & Levy Fund III, L.P. ("JLL"), HBI Financial, Inc.
("HBI") and the Company. Argosy and JLL are members of the Investor. The
Stockholder Agreement contains certain provisions that may result in the
acquisition by the Investor from the Company of shares of Common Stock (and
warrants exercisable for shares of Common Stock) constituting approximately 26%
(approximately 33%, if Investor fully exercises the warrants) of the shares of
Common Stock of the Company that would then be outstanding (after giving effect
to the issuance of such shares and the purchase by the Company of 17.3 million
shares of Common Stock now outstanding in the manner hereinafter described), the
purchase by the Company of approximately 33% of the shares of Common Stock now
outstanding, and a change in the present board of directors (the "Board") of the
Company. The description of certain provisions of the Stockholder Agreement
contained in Item 6 of this Schedule 13D is hereby incorporated into this
Item 4.
Except as set forth above and in Item 6 of this Schedule 13D, none of
the Reporting Persons has any present plans or intentions which would result in
or relate to any of the actions described in subparagraphs (a) through (j) of
Item 4 of Schedule 13D.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
The answer to Item 6 is hereby amended by the addition, following the
last paragraph thereof, of the following:
On February 3, 1998, Investor, Argosy, JLL and the Company entered into
a Stock Purchase Agreement (the "Purchase Agreement") pursuant to which the
Company, upon the satisfaction
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of certain conditions, will offer to purchase from its stockholders 17.3 million
shares of its Common Stock. The tender offer by the Company will be funded by an
equity investment in the Company by Investor. Under the Purchase Agreement,
Investor has agreed, upon the satisfaction of certain conditions, to purchase an
aggregate of 12.3 million shares of the Common Stock of the Company, and
warrants to acquire 5.0 million shares of Common Stock exercisable at $20.00 per
share (the "Transaction"). The purchase price for the shares of Common Stock and
warrants to be acquired by Investor will be $172.2 million.
RILLC entered into the Stockholder Agreement with Investor, CIBC, JLL,
HBI, and the Company, in connection with the Purchase Agreement. The Stockholder
Agreement provides that from the date of the closing of the Transaction (the
"Closing"), until the seventh anniversary thereof, in each election of directors
of the Company, each of the Investor and, for so long as there is a person
designated by RILLC (a "Relational Director") on the Board, RILLC and, for so
long as there is a person designated by HBI (an "HBI Director") on the Board,
HBI will cause all voting securities beneficially owned by each of them and any
of their affiliates to be voted (A) for a person designated by the Investor
("Investor Directors"), or designee(s) of the Investor, (B) for the RILLC
Director or designee of RILLC, (C) for the HBI Director or designee of HBI, and
(D) for the other nominees for the Company's Board nominated in accordance with
the provisions described below, to serve as a member of the Board; provided,
however, that neither RILLC nor HBI is obligated to cause voting securities
beneficially owned by either of them and any of their affiliates to be voted for
Investor Directors, the Relational Director, the HBI Director, or the other
nominees for the Company's Board nominated in accordance with the provisions
described below, if RILLC or HBI, as the case may be, delivers notice to each of
the Company and the Investor, after the date on which the Board sets the record
date for the meeting of stockholders at which such election of directors shall
take place, of its intention not to vote in accordance with the provisions of
clauses (A), (B) or (C), above. Upon receipt of such notice from either RILLC or
HBI, as the case may be, the Board has no further obligation to nominate for
election or appoint as a director of the Company and the Investor shall have no
further obligation to cause voting securities beneficially owned by it or any of
its affiliates to be voted in favor of the election of the Relational Director
or designee of RILLC or the HBI Director or designee of HBI. See Section 2.2 of
the Stockholder Agreement attached hereto as Exhibit 4, which is incorporated in
its entirety into this Item 6.
The Stockholder Agreement also provides that each of RILLC and HBI
agrees that, subject to its fiduciary duties to its investors (as it may
determine in its discretion), (i) it will not sell any voting securities
beneficially owned by it as of February 3, 1998, on or prior to the record date
for the meeting of the stockholders of the Company at which the stockholders
will consider and take action upon the Transaction and, (ii) it will cause all
voting securities beneficially owned by it on the record date to be voted in
favor of approval of the transactions contemplated by the Stock Purchase
Agreement. See Section 2.4 of the Stockholder Agreement attached hereto as
Exhibit 4, which is incorporated in its entirety into this Item 6.
Under the Stockholder Agreement, the parties agree that, effective upon
the Closing, the number of Directors comprising the Board will be nine (9), of
which three will be Investor Directors, and six will be directors (including
George Argyros, Ralph Whitworth, and the Chief Executive Officer of the Company,
who shall be nominated by the Investor and approved by the Board) who are
neither (i) an Investor Director; (ii) an affiliate of, or partner or investor
in, the Investor, Argosy or JLL, or a person who has a material business,
financial or familial relationship with the Investor, Argosy or JLL or any of
their affiliates that could reasonably be expected to affect such director's
judgment; nor (iii) except in the case of the Chief Executive Officer of the
Company, an officer or employee of the Company or any of its subsidiaries. See
Section 4.1 of the Stockholder Agreement attached hereto as Exhibit 4, which is
incorporated in its entirety into this Item 6.
The Stockholder Agreement also provides for the nomination for election
or appointment as a director of the Company of one or more designees of the
Investor (i) at each meeting of the Company's stockholders as necessary, (ii)
upon the death, resignation, retirement, disqualification or removal from office
of any Director, or (iii) upon any increase in the size of the Board such that
Investor Directors will constitute 33 1/3% of the Board (rounded to the nearest
whole person). Under the
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Stockholder Agreement, the parties also agree that the Company's Board will
nominate for election or appoint as a director of the Company one or more
designees of RILLC (i) at each meeting of the Company's stockholders at which
the term of Ralph Whitworth (or a successor Relational Director) expires or (ii)
upon the death, resignation, retirement, disqualification or removal from office
of Ralph Whitworth (or of a successor Relational Director), and one or more
designees of HBI (i) at each meeting of the Company's stockholders at which the
term of George Argyros (or a successor HBI Director) expires or (ii) upon the
death, resignation, retirement, disqualification or removal from office of
George Argyros (or of a successor HBI Director). The Company has agreed to use
all reasonable efforts to solicit proxies in favor of and obtain the election of
each such nominee. See Section 4.2 of the Stockholder Agreement attached hereto
as Exhibit 4, which is incorporated in its entirety into this Item 6.
The Stockholder Agreement provides that the number of Directors which
the Investor, RILLC or HBI will be entitled to designate will be reduced if the
number of shares of Common Stock beneficially owned by the Investor, RILLC or
HBI, respectively, fall below certain stated levels. In addition, if RILLC or
HBI engages in or becomes a member of a group that engages in a proxy contest to
oppose election of the directors nominated by the Board pursuant to the
Stockholder Agreement or becomes a member of a group that has as its purpose the
approval of a transaction that will result in a change of control of the
Company, then the Relational Director or the HBI Director, as the case may be,
is required to tender his resignation from the Board, the voting obligations
with respect to RILLC or HBI, as the case may be, will cease, and the Company
will not be required to nominate for election or appoint as a director of the
Company any designee of RILLC or HBI, as the case may be. See Section 4.2 of the
Stockholder Agreement attached hereto as Exhibit 4, which is incorporated in its
entirety into this Item 6.
The Stockholder Agreement also provides for the appointment of
directors to the executive, audit, compensation and nominating committees of the
Board and of any other committee constituted from time to time by the Board. See
Section 4.1 of the Stockholder Agreement attached hereto as Exhibit 4, which is
incorporated in its entirety into this Item 6.
Item 7. Material to be Filed as Exhibits.
The following Exhibits are filed herewith:
1. Information concerning transactions in the Shares
effected by the Reporting Persons.
2. Customer Agreement with Donaldson, Lufkin & Jenrette
Securities Corporation.
3. Joint Filing Agreement.
4. Stockholder Agreement, dated February 3, 1998, among
JLL Argosy Apria, LLC, CIBC WG Argosy Merchant Fund
2, LLC, Joseph Littlejohn & Levy Fund III, L.P.,
Relational Investors, LLC, HBI Financial, Inc. and
Apria Healthcare Group, Inc.
Exhibits 1 through 3 were filed with the initial Schedule 13D of the
Reporting Persons, dated October 9, 1997.
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SIGNATURES
After reasonable inquiry and to the best of their knowledge and belief,
the undersigned certify that the information contained in this statement is
true, complete and correct.
Dated: February 5, 1998
RELATIONAL INVESTORS, L.P.
RELATIONAL FUND PARTNERS, L.P.
RELATIONAL COAST PARTNERS, L.P.
RELATIONAL PARTNERS, L.P.
By: Relational Investors, LLC
as general partner to each
By: /s/ Ralph V. Whitworth
-------------------------------
Ralph V. Whitworth
Managing Member
RELATIONAL INVESTORS, LLC
By: /s/ Ralph V. Whitworth
-------------------------------
Ralph V. Whitworth
Managing Member
/s/ Ralph V. Whitworth
- -------------------------------
Ralph V. Whitworth
/s/ David H. Batchelder
- -------------------------------
David H. Batchelder
/s/ Joel L. Reed
- -------------------------------
Joel L. Reed
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
- ----------- ----------- --------
<S> <C> <C>
1. Information concerning transactions in the Shares
effected by the Reporting Persons.
2. Customer Agreement with Donaldson,
Lufkin & Jenrette Securities
Corporation.
3. Joint Filing Agreement.
4. Stockholder Agreement, dated February 3, 1998, among JLL
Argosy Apria, LLC, CIBC WG Argosy Merchant Fund 2, LLC,
Joseph Littlejohn & Levy Fund III, L.P., Relational
Investors, LLC, HBI Financial, Inc. and Apria Healthcare
Group, Inc.
</TABLE>
Exhibits 1 through 3 were filed with the initial Schedule 13D
of the Reporting Persons, dated October 9, 1997.
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STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT, dated as of February 3, 1998 (the
"Agreement") is made by and among JLL Argosy Apria, LLC, a Delaware limited
liability company (the "Investor"), Joseph Littlejohn & Levy Fund III, L.P., the
manager member of the Investor ("JLL"), CIBC WG Argosy Merchant Fund 2, LLC
("Argosy"), a member of the Investor, Relational Investors, LLC ("Relational"),
HBI Financial, Inc. ("HBI") and Apria Healthcare Group Inc., a Delaware
corporation (the "Company").
RECITALS
Concurrently with the execution and delivery of this Agreement, the
parties have entered into a stock purchase agreement (the "Stock Purchase
Agreement") pursuant to which the Investor will acquire from the Company 12.3
million shares (the "Initial Shares") of the Company's common stock, par value
$.001 per share ("Common Stock") and warrants (the "Warrants") to purchase 5.0
million shares of Common Stock (the "Warrant Shares," and, together with the
Initial Shares, the "Investor Shares"); and
The parties desire to set forth herein certain agreements concerning the
ownership, voting and disposition of the Investor Shares, the governance of the
Company and certain other matters.
NOW THEREFORE, in consideration of the mutual agreements set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions.
"Affiliate": of any Person, means (i) any other Person controlling,
controlled by or under common control with such Person, (ii) any director or
executive officer of such Person or of any Affiliate of such Person and (iii)
any family member of any director or executive officer of such Person or any
director or executive officer of any Affiliate of such Person.
"Agreement": is defined in the preamble to this Agreement.
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"Argosy": shall mean CIBC WG Argosy Merchant Fund 2, L.L.C., a member
of the Investor.
"Beneficially Own" or "Beneficial Ownership": with respect to any
securities shall have the meaning set forth in Rule 13d-3 under the Exchange
Act.
"Board": shall mean the Board of Directors of the Company.
"CIBC": shall mean Canadian Imperial Bank of Commerce, an Affiliate of
Argosy.
CIBC Fiduciary Shares": means any shares of Common Stock held by CIBC or
any of its Affiliates in a fiduciary capacity for the account of customers of
CIBC or such Affiliates in connection with CIBC Ordinary Course Financial
Service and Brokerage Activities.
"CIBC Ordinary Course Financial Service and Brokerage Activities": means
certain financial service and brokerage activities pursuant to which CIBC or
certain of its Affiliates may buy, sell or hold securities including securities
of the Company for itself and for its customers provided that CIBC or such
Affiliate (i) is acting in such capacity in the ordinary course of its business
and not in concert with the Investor and (ii) there is no oral, written,
electronic or other communication between CIBC or such Affiliate on the one
hand, and either Argosy, JLL or the Investor, on the other hand, with respect to
the Company, the Investor's investment in the Company or the participation of
certain representatives of the Investor in the Board of Directors of the
Company.
"Common Stock": is defined in the recitals to this Agreement.
"Company": is defined in the preamble to this Agreement.
"Demand": is defined in Section 5.1(a)(i) of this Agreement.
"Demand Registration Statement": shall mean a registration statement
filed by the Company pursuant to Section 5.1(a)(i) of this Agreement.
"Demanding Sellers": is defined in Section 5.1(f) of this Agreement.
"Exchange Act": shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder, all as the same
shall be in effect at the time.
"HBI Director" shall mean any person designated by HBI to serve as a
member of the Board, including any person who becomes a member of the Board
pursuant to Section 4.2(c).
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"Initial Shares": is defined in the recitals to this Agreement.
"Investor Director": shall mean any person designated by the Investor to
serve as a member of the Board, including any person who becomes a member of the
Board pursuant to Section 4.2(a).
"Investor ": is defined in the preamble to this Agreement.
"Investor Shares": is defined in the recitals to this Agreement.
"Investor Interested Transaction": shall mean any transaction with or
involving the Investor or any of its Affiliates, on the one hand, and the
Company or any of its Affiliates other than the Investor, on the other hand, or
relating to this Agreement, including, without limitation, any amendment,
modification or waiver of this Agreement and any action or determination with
respect to the enforcement of the Company's rights, or performance of the
Company's obligations, under this Agreement.
"Internal Expenses": is defined in Section 5.6 of this Agreement.
"JLL": shall mean Joseph Littlejohn & Levy III, L.P., the manager member
of the Investor.
"Maximum Demand Number": is defined in Section 5.1(f) of this
Agreement.
"Maximum Piggyback Number": is defined in Section 5.2(b) of this
Agreement.
"Other Demanding Sellers": is defined in Section 5.2(b) of this
Agreement.
"Other Demand Rights": is defined in Section 5.2(b) of this Agreement.
"Permitted Transferee": shall mean, with respect to each Person bound by
the terms of this Agreement, (i) any other Investor; (ii) in respect of the
Investor, any descendant, Affiliate or associate (as such term is defined in
Rule 405 of the Securities Act) of the Investor or any other Permitted
Transferee of such Affiliate; (iii) the Company; (iv) in the event of the
dissolution, liquidation or winding up of any such Person that is a corporation
or a partnership, the partners of a partnership that is such Person, the
stockholders of a corporation that is such Person or a successor partnership all
of the partners of which or a successor corporation all of the stockholders of
which are the Persons who were the partners of such partnership or the
stockholders of such corporation immediately prior to the dissolution,
liquidation or winding up of such Person; (v)
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a transferee by testamentary or intestate disposition; (vi) a transferee by
inter vivos transfer to the transferring Person's spouse, children and/or other
lineal descendants; (vii) a trust transferee by inter vivos transfer, the
beneficiaries of which are the transferring Person, spouse, children and/or
other lineal descendants; (viii) a successor nominee or trustee for the
beneficial owner of the shares for which such Person acts as nominee or trustee,
as the case may be; or (ix) an institutional lender for money borrowed pursuant
to a bona fide pledge of or the granting of a security interest in the
Investor's Registrable Securities; provided, however, that any such Permitted
Transferee shall have agreed in writing in form and substance satisfactory to
the Company to be bound by, and hold the Registrable Securities acquired by it
subject to, the terms of this Agreement.
"Person": shall mean any natural person, corporation, partnership,
limited liability company, firm, association, trust, "group" within the meaning
of Section 13(d)(3) of the Exchange Act, government, governmental agency, or
other legal entity, whether acting in an individual, fiduciary or other
capacity.
"Piggyback Notice": shall mean the notice the Company shall provide to
the Investor as required by Section 5.2(a) of this Agreement.
"Piggyback Seller": shall mean any holder of Registrable Securities
seeking to sell such securities in such Piggyback Registration and provided by
Section 5.2(b) of this Agreement.
"Piggyback Offering": shall have the meaning ascribed in Section
5.2(b)(i) of this Agreement.
"Piggyback Registration Statement": shall mean a registration statement
filed by the Company on its own behalf or on behalf of another stockholder under
which the Investor includes Investor Shares pursuant to Section 5.2(a) of this
Agreement.
"Prospectus": shall mean any prospectus included in the Registration
Statement, including any resale prospectus and any preliminary prospectus, and
any amendment or supplement thereto, and in each case including all material
incorpo rated by reference therein.
"Recapitalization Closing": shall mean the Closing as defined in the
Stock Purchase Agreement.
"Relational Director" shall mean any person designated by Relational to
serve as a member of the Board, including any person who becomes a member of the
Board pursuant to Section 4.2(b).
"Registrable Securities": shall mean any Investor Shares or Warrants.
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"Registration Expenses": shall mean any and all expenses incident to
performance of or compliance with Section 5.6 hereof, including, without
limitation: (i) all applicable registration and filing fees imposed by the SEC
and any national securities exchange on which shares of Common Stock are then
listed; (ii) all fees and expenses incurred in connection with compliance with
state securities or "blue sky" laws (including reasonable fees and disbursements
of counsel for the Company in connection with qualification of any of the
Registrable Securities under any state securities or blue sky laws and the
preparation of a blue sky memorandum) and compliance with the rules of the any
such national securities exchange; (iii) all expenses of any Persons in
preparing or assisting in preparing, printing and distribut ing the Registration
Statement, any Prospectus, certificates and other documents relating to the
performance of and compliance with Section 5.6 hereof; and (iv) the fees and
disbursements of counsel for the Company and of the independent public
accountants of the Company, including the expenses relating to any special
audits or "comfort" letters required by or incident to such performance and
compliance. Registration Expenses shall specifically exclude underwriting
discounts and commis sions, the fees and disbursements of counsel representing
the Investor and transfer taxes, if any, relating to the sale or disposition of
Registrable Securities by the Investor.
"Registration Statement": shall mean a Demand Registration Statement or
a Piggyback Registration Statement, as applicable.
"SEC": shall mean the United States Securities and Exchange Commission.
"Securities Act": shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the SEC thereunder, as the same shall be in effect
at the time.
"Stock Purchase Agreement": is defined in the recitals to this
Agreement.
"Termination Date": shall mean the seventh anniversary of the
Recapitaliza tion Closing.
"Total Voting Power": at any time shall mean the total combined voting
power in the general election of directors of all the Voting Securities then
outstand ing.
"Transfer": shall mean any sale, transfer, pledge, encumbrance or other
disposition.
"Unaffiliated Director": shall mean any member of the Board: (i) who is
not an Investor Director; (ii) who is not an Affiliate of, or partner or
investor in, the
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Investor, Argosy or JLL and who has no material business,
financial or familial relationship with the Investor, Argosy or JLL or any of
their Affiliates that could reasonably be expected to affect such director's
judgment; and (iii) except in the case of the Chief Executive Officer of the
Company, is not an officer or employee of the Company or any of its
subsidiaries.
"Voting Securities": shall mean at any time shares of any class of
capital stock of the Company which are then entitled to vote generally in the
election of directors.
"Warrants": are defined in the recitals to this Agreement.
"Warrant Shares": are defined in the recitals to this Agreement.
ARTICLE II.
ACQUISITION OF ADDITIONAL SHARES AND VOTING
Section 2.1. Acquisition of Additional Shares.
(a) Until the Termination Date, the Investor, Argosy and JLL covenant
and agree with the Company that they will not, and will not permit any of their
Affiliates to, acquire Beneficial Ownership of any Voting Securities other than
the Investor Shares; provided, however, that the Investor, Argosy and/or JLL may
acquire Beneficial Ownership of additional Voting Securities in the event that
the number of shares of Voting Securities outstanding increases prior to the
Termination Date, subject to the limitation that the Voting Securities
Beneficially Owned by them shall not in the aggregate exceed 33.6% of the Total
Voting Power.
(b) If at any time, as the result of any transaction or circumstances,
the Investor and its Affiliates shall acquire Beneficial Ownership of any Voting
Securi ties other than the Investor Shares, inadvertently or otherwise, in
violation of this Agreement, then the Investor shall promptly take such action
as may be necessary or appropriate to divest such Beneficial Ownership of Voting
Securities.
(c) Notwithstanding anything herein to the contrary, CIBC Fiduciary
Shares shall not be treated as being Beneficially Owned by an Affiliate of the
Investor for purposes of this Section 2.1.
Section 2.2. Voting.
(a) From and after the Recapitalization Closing, until the Termination
Date:
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(i) at each annual or special meeting of the stockholders of the
Company, each of the Investor, and, for so long as there is a Relational
Director on the Board, Relational and, for so long as there is an HBI
Director on the Board, HBI shall cause all Voting Securities
Beneficially Owned by each of them and any of their Affiliates to be
present or represented for the purpose of establishing a quorum; and
(ii) subject to Section 2.2(b), in each election of directors of
the Company, each of the Investor and, for so long as there is a
Relational Director on the Board, Relational and, for so long as there
is an HBI Director on the Board, HBI shall cause all Voting Securities
Beneficially Owned by each of them and any of their Affiliates to be
voted (A) for the Investor Directors or designee(s) of the Investor
pursuant to Section 4.2(a), (B) for the Relational Director or designee
of Relational pursuant to Section 4.2(b), (C) for the HBI Director or
designee of HBI pursuant to Section 4.2(c) and (D) for the other
nominees for the Company's Board nominated in accordance with Section
4.2(d).
(b) Notwithstanding Section 2.2(a)(ii), neither Relational nor HBI shall
be obligated to cause all Voting Securities Beneficially Owned by either of them
and any of their Affiliates to be voted in accordance with the Board's
recommendation as to the Unaffiliated Directors or for the Investor Directors or
designee(s) of the Investor pursuant to Section 4.2(a) if Relational or HBI, as
the case may be, delivers notice to each of the Company and the Investor, not
later than 10 days after the date on which the Board sets the record date for
the meeting of stockholders at which such election of directors shall take
place, of its intention not to vote in accordance with Section 2.2(a)(ii). Upon
receipt of such notice from either Relational or HBI, as the case may be, (i)
the Board shall have no further obligation to nominate for election or appoint
as a director of the Company and the Investor shall have no further obligation
to cause Voting Securities Beneficially Owned by it or any of its Affiliates to
be voted in favor of the election of the Relational Director or designee of
Relational pursuant to Section 4.2(b) or the HBI Director or designee of HBI
pursuant to Section 4.2(c), as the case may be.
Notwithstanding anything herein to the contrary, for purposes of
this Section 2.2, CIBC Fiduciary Shares shall not be treated as being
Beneficially Owned by an Affiliate of the Investor.
Section 2.3. Further Restrictions on Conduct. The Investor covenants and
agrees with the Company that until the Termination Date, neither it nor any of
its Affiliates shall:
(a) initiate, propose, make, or in any way participate in, directly or
indirectly, any "solicitation" of "proxies" to vote, or seek to influence any
Person
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with respect to the voting of, any Voting Securities, or become a "participant"
in a "solicitation" or "election contest" (as such terms are defined or used in
Regulation 14A under the Exchange Act), in any election contest with respect to
the election or removal of the members of the Board, except for any of the
foregoing actions taken in support of any recommendation of the Board;
(b) other than a transaction permitted by Section 3.1 (b) (iv) hereof,
solicit, offer, seek or propose to acquire shares of Common Stock in excess of
the number of shares permitted by this Agreement, whether directly or indirectly
through a tender offer, proxy or consent solicitation, exchange offer, merger
proposal or otherwise; provided, however, that this provision shall not prohibit
the Investor from making any such proposals to the Board subject to the
provisions of Section 4.3 hereof.
(c) become a member of a "group" within the meaning of Section 13(d)(3)
of the Exchange Act with any person other than the Investor and its Affili ates.
Notwithstanding anything herein to the contrary, for purposes of
this Section 2.3, CIBC Fiduciary Shares shall not be treated as being
Beneficially Owned by an Affiliate of the Investor.
Section 2.4. Support for Recapitalization. Each of Relational and HBI
agrees that, subject to its fiduciary duties to its investors (as it may
determine in its discretion), (i) it will not sell any Voting Securities
Beneficially Owned by its as of the date hereof on or prior to the record date
for the Company Meeting (as such term is defined in the Stock Purchase
Agreement) and, (ii) it will cause all Voting Securi ties Beneficially Owned by
it on the record date to be voted in favor of approval of the transactions
contemplated by the Stock Purchase Agreement.
ARTICLE III.
RESTRICTIONS ON TRANSFER
Section 3.1. Restrictions on Transfer. The Investor covenants and agrees
with the Company that:
(a) until the second anniversary of the date of this Agreement, the
Investor will not Transfer any of the Investor Shares or Warrants to any Person
other than a Permitted Transferee; and
(b) after the second anniversary of the date of this Agreement, the
Investor will not Transfer any Investor Shares or Warrants except through:
(i) a Transfer through a bona fide underwritten public offering
registered under the Securities Act effected in accordance with the
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provisions of Article V hereof, with an underwriter or underwriters and
pursuant to procedures reasonably acceptable to the Company, intended to
achieve a broad public distribution of the Investor Shares or Warrants
covered thereby;
(ii) Transfers in normal and customary open-market transactions
on a national securities exchange, provided that the total number of
Investor Shares or Warrants so transferred by the Investor in any
one-week period shall not exceed the greater of (a) one percent (1%) of
the outstanding shares of the Company's Common Stock or (b) twenty
percent (20%) of the average weekly trading volume for Common Stock for
the four weeks immediately preceding the week in which the relevant
Transfer occurs;
(iii) a Transfer of Investor Shares or Warrants, other than
pursuant to (ii) above, provided that: (A) the aggregate number of
Investor Shares and Warrants so Transferred in any transaction or series
of related transactions with any Person does not exceed five percent
(5%) of the Voting Securities then outstanding and (B) the Person to
whom the Investor Shares or Warrants are transferred does not and will
not, as the result of such Transfer, Beneficially Own Voting Securities
aggregating five percent (5%) or more of the total number of Voting
Securities then outstanding;
(iv) a Transfer of all or substantially all of the Investor
Shares in a transaction involving the opportunity for all holders of
Voting Securities other than the Investor to dispose of all or a
proportionate part of such Voting Securities for the same consideration
as, and on terms and conditions not materially less favorable than those
available to the Investor; and
(v) a Transfer by the Investor to a Permitted Transferee.
(c) Until the expiration of this Agreement, the Investor will not
Transfer Warrants unless, prior thereto or concurrently therewith, the Investor
has Transferred or Transfers a percentage of the Initial Shares equal to the
percentage of the Warrants proposed to be Transferred.
Section 3.2. Legends. Each stock and warrant certificate representing
any Investor Shares or Warrants now held or hereafter acquired by the Investor
or its transferee, unless registered pursuant to Article V hereof, shall bear
the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR APPLICABLE STATE
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SECURITIES LAWS, AND MAY BE OFFERED, PLEDGED, SOLD, ASSIGNED,
TRANSFERRED OR OTHERWISE DISPOSED OF ONLY IF REGISTERED PURSUANT
TO THE PROVISIONS OF THE ACT AND SUCH LAWS, OR IF AN EXEMPTION
FROM REGISTRATION IS AVAILABLE.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
A STOCKHOLDER AGREEMENT DATED AS OF FEBRUARY 3, 1998 (THE
"AGREEMENT"), WHICH CONTAINS PROVISIONS REGARDING CERTAIN
RESTRICTIONS ON THE VOTING AND TRANSFER OF SUCH SECURITIES AND
CERTAIN OTHER MATTERS. A COPY OF SUCH AGREEMENT IS AVAILABLE FOR
INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY. ANY TRANSFER
OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE IN VIOLATION OF
THE AGREEMENT IS NULL AND VOID."
ARTICLE IV.
BOARD OF DIRECTORS
Section 4.1. Initial Composition of the Board.
(a) Effective upon the Recapitalization Closing, the number of directors
comprising the Board shall be nine (9).
(b) Effective upon the Recapitalization Closing, the number of Investor
Directors shall be three, and shall be the individuals identified on Exhibit A.
Two (2) of the Investor Directors shall be appointed to the class of the Board
whose term expires in 2001 and one (1) Investor Director shall be appointed to
the class of the Board whose term expires in 2000.
(c) Effective upon the Recapitalization Closing, the number of
Unaffiliated Directors shall be six, and shall be the individuals identified on
Exhibit B. The Chief Executive Officer of the Company, who shall be nominated by
the Investor and approved by the Board, shall also be an Unaffiliated Director.
(d) During the term of this Agreement:
(i) an Investor Director shall be appointed as a member of each
of the executive, audit, compensation and nominating committees of the
Board and of any other committee constituted from time to time by the
Board; and
(ii) the HBI Director shall be appointed as a member of not less
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<PAGE> 11
than two of the above-mentioned committees of the Board and the
Relational Director shall be appointed as a member of not less than two
of the above-mentioned committees of the Company's Board; provided that
either the HBI Director or the Relational Director shall be a member of
each such committee and of any other committee constituted from time to
time by the Board.
(e) The Board shall promptly take any action necessary to authorize and
empower the committee described in Section 6.5(c) of the Stock Purchase Agree
ment.
Section 4.2. Subsequent Composition of the Board. From and after the
Recapitalization Closing:
(a) The Company's Board shall nominate for election or appoint as a
director of the Company, as the case may be, one or more designees of the
Investor (i) at each meeting of the Company's stockholders as necessary, (ii)
upon the death, resignation, retirement, disqualification or removal from office
of any Investor Director, or (iii) upon any increase in the size of the Board
such that, subject to Section 4.2(e) hereof Investor Directors shall constitute
33 1/3 of the Board (rounded to the nearest whole person). It is understood that
each Investor Director will have agreed with the Investor to resign from the
Board at the written request of the Investor. The Company shall use all
reasonable efforts to solicit proxies in favor of and obtain the election of
each such nominee.
(b) Subject to subparagraph (f) hereof, the Company's Board shall
nominate for election or appoint as a director of the Company, as the case may
be, one or more designees of Relational (i) at each meeting of the Company's
stockhold ers at which the term of Ralph Whitworth (or a successor director
elected or ap pointed pursuant to this Section 4.2(b)) expires or (ii) upon the
death, resignation, retirement, disqualification or removal from office of Ralph
Whitworth (or of a successor director elected or appointed pursuant to this
Section 4.2(b)). The Com pany shall use all reasonable efforts to solicit
proxies in favor of and obtain the election of each such nominee.
(c) Subject to subparagraph (g) hereof, the Board shall nominate for
election or appoint as a director of the Company, as the case may be, one or
more designees of HBI (i) at each meeting of the Company's stockholders at which
the term of George Argyros (or a successor director elected or appointed
pursuant to this Section 4.2(c)) expires or (ii) upon the death, resignation,
retirement, disqualification or removal from office of George Argyros (or of a
successor director elected or appointed pursuant to this Section 4.2(c)). The
Company shall use all reasonable efforts to solicit proxies in favor of and
obtain the election of each such nominee.
(d) Subject to paragraphs (b) and (c) above, the Company's Board
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shall nominate for election or appoint as a director of the Company, as the case
may be, one or more persons satisfying the requirements of the definition of
Unaffiliated Director (i) at each meeting of the Company's stockholders at which
the term of any Unaffiliated Director or Directors expires, (ii) upon the death,
resignation, retirement, disqualification or removal from office of any
Unaffiliated Director or Directors. The Company shall use all reasonable efforts
to solicit proxies in favor of and obtain the election of each such nominee.
(e) The number of Investor Directors which the Investor shall be
entitled to designate shall be reduced from time to time in accordance with the
following:
(i) if, at the date of determination, the number of Investor
Shares Beneficially Owned by the Investor is less than fifty percent
(50%) of the number of shares and Warrants constituting the Initial
Shares and Warrants (as adjusted for stock dividends, splits,
recombinations and the like) or is less than ten percent (10%) of the
Total Voting Power, the number of Investor Directors that the Investor
shall be entitled to designate shall be reduced to two-ninths of the
Company's Board (rounded to the nearest whole person); and
(ii) if, at the date of determination, the number of Investor
Shares Beneficially Owned by the Investor is less than five percent (5%)
of the Total Voting Power, the number of Investor Directors that the
Investor shall be entitled to designate shall be reduced to one-ninth of
the Company's Board (rounded to the nearest whole person); and
(iii) if the number of Investor Shares Beneficially Owned by the
Investor is less than two percent (2%) of the Total Voting Power (which
percentage shall be adjusted to take into consideration any issuance of
additional shares of Common Stock by the Company having a dilutive
effect on the voting power of the Investor Shares Beneficially Owned by
the Investor), the obligations of the Company set forth in Section
4.2(a) with respect to the Investor shall cease, and the Company shall
not be required to nominate for election or appoint as a director of the
Company any designee of the Investor.
In any circumstance set forth in subparagraphs (i), (ii) and (iii)
above, when the Number of Investor Directors is to be reduced , the Investor
shall direct one or more Investor Directors to tender his resignation (which
resignation need not be accepted by the Board).
(f) If (i) the number of shares of Voting Securities Beneficially Owned
by Relational is less than two percent (2%) of the Total Voting Power (which
percentage shall be adjusted to take into consideration any issuance of
additional shares of Common Stock by the Company having a dilutive effect on
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<PAGE> 13
the voting power of the shares Beneficially Owned by Relational) and the number
of shares of Voting Securities Beneficially Owned by Relational is less than
fifty percent (50%) of the number of shares of Voting Securities Beneficially
Owned by Relational on the date hereof or (ii) Relational engages in or becomes
a member of a group that engages in a proxy contest to oppose election of the
directors nominated by the Board pursuant to Section 4.2(a) or Section 4.2(d) or
becomes a member of a group that has as its purpose the approval of a
transaction that will result in a change of control of the Company, then the
Relational Director shall tender his resignation from the Board (which
resignation need not be accepted by the Board) and the obligations set forth in
Section 2.2 with respect to Relational shall cease, and the Company shall not be
required to nominate for election or appoint as a director of the Company any
designee of Relational.
(g) If (i) the number of shares of Voting Securities Beneficially Owned
by HBI is less than two percent (2%) of the Total Voting Power (which percentage
shall be adjusted to take into consideration any issuance of additional shares
of Common Stock by the Company having a dilutive effect on the voting power of
the shares Beneficially Owned by HBI), and the number of shares of Voting
Securities Beneficially owned by HBI is less than fifty percent (50%) of the
number of shares of Voting Securities Beneficially Owned by HBI on the date
hereof or (ii) HBI engages in or becomes a member of a group that engages in a
proxy contest to oppose election of the directors nominated by the Board
pursuant to Section 4.2(a) or Section 4.2(d) or becomes a member of a group that
has as its purpose the approval of a transaction that will result in a change of
control of the Company, then the HBI Director shall tender his resignation from
the Board (which resignation need not be accepted by the Board) and the
obligations set forth in Section 2.2 with respect to HBI shall cease, and the
Company shall not be required to nominate for election or appoint as a director
of the Company any designee of HBI.
Section 4.3. Investor Interested Transactions. The Company shall not
take any action or make any determination relating to an Investor Interested
Transaction, unless such action or determination has been approved by the
affirmative vote of a majority of the Unaffiliated Directors. Notwithstanding
the foregoing, the Company shall not take any action or make any determination
relating to an Investor Interested Transaction involving (i) the payment of a
management, consulting, advisory or other similar fee to the Investor or any of
its members or any Affiliate of the Investor or any of its members, (ii) except
as permitted by Section 2.1 (a) the acquisition by the Investor or any of its
Affiliates of shares of Common Stock in excess of the Initial Shares and Warrant
Shares or (iii) the participation by the Investor or any of its Affiliates in
any recapitalization or any transaction described in Rule 13e-3(a)(3) of the
Securities Exchange Act of 1934, as amended, involving the Company, unless such
action or determination has been approved by the affirmative vote of all of the
Unaffiliated Directors provided; however, that if such action or determination
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<PAGE> 14
relating to an Interested Investor Transaction is approved by a majority of the
Unaffiliated Directors, then such action or determination relating to an
Interested Investor Transaction may be submitted to a vote of all holders of
Voting Securities other than the Investor, JLL, Argosy and any of their
Affiliates and upon the affirmative vote of a majority of such Voting
Securities not Beneficially Owned by the Investor, JLL, Argosy and any of their
Affiliates, the Company may enter into or participate in such Investor
Interested Transaction. The Investor agrees that the Investor shall not, and
shall not take any action that would cause the Company to, enter into or
participate in any Investor Interested Transaction that has not been approved by
the Unaffiliated Directors as required by this Section 4.3.
ARTICLE V.
REGISTRATION RIGHTS
Section 5.1. Demand Registrations.
(a) Requests for Registration. The Investor shall be entitled to make a
written request of the Company (a "Demand") for registration under the
Securities Act of all or part of the Registrable Securities held by the Investor
(a "Demand Registration"); provided, however, that the Company shall not be
required to honor any Demand unless it relates to the sale of at least an
aggregate of $25,000,000 or more in fair market value of Registrable Securities.
Such Demand shall specify: (i) the aggregate number of Registrable Securities
requested to be registered and (ii) the intended method of distribution in
connection with such Demand Registration to the extent then known.
(b) Number of Demands. The Investor shall be entitled in the aggregate
to four (4) Demand Registrations.
(c) Satisfaction of Obligations. A registration shall not be deemed to
constitute one of the four (4) Demand Registrations referred to in Section
5.1(b) above unless (i) the applicable registration statement under the
Securities Act has been filed with the SEC with respect to such Demand
Registration, and (ii) such registration statement shall have been maintained
continuously effective for a period of at least ninety (90) days or such shorter
period as all Registrable Securities included therein have been disposed of
thereunder in accordance with the manner of distribution set forth in such
registration statement, except as otherwise provided herein.
(d) Availability of Short Form Registrations. The Company shall use its
best efforts to comply with the requirements for use of short form registration
for the sale of securities under the Securities Act.
(e) Restrictions on Demand Registrations. The Company shall not be
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<PAGE> 15
obligated (i) in the case of a Demand Registration, to maintain the
effectiveness of a registration statement under the Securities Act, for a period
longer than ninety (90) days or (ii) to effect any Demand Registration within
one hundred eighty (180) days after the effective date of (A) a "firm
commitment" underwritten registration in which the Investor was given
"piggyback" rights pursuant to Section 5.2 hereof (provided that, with respect
to such a registration in which such piggyback rights were exercised, the
Investor was permitted to include in such registration at least 75% of the
Registrable Securities that the Investor sought to include therein) or (B) any
other Demand Registration. In addition, the Company shall be entitled to
postpone (upon written notice to the Investor) for up to one hundred eighty
(180) days the filing or the effectiveness of a Registration Statement in
respect of a Demand (but no more than once in any period of twelve (12)
consecutive months) if the Board determines in good faith and in its reasonable
judgment that effecting the Demand Registration in respect of such Demand would
have a material adverse effect on any proposal or plan by the Company to engage
in any debt or equity offering, material acquisition or disposition of assets
(other than in the ordinary course of business) or any merger, consolidation,
tender offer or other similar transaction. In the event of a postponement by the
Company of the filing or effec tiveness of a registration statement in respect
of a Demand, the Investor shall have the right to withdraw such Demand in
accordance with Section 5.3 hereof.
(f) Participation in Demand Registrations. The Company shall not include
any securities other than Registrable Securities in a Demand Registration,
except with the written consent of the Investor. If, in connection with a Demand
Registration, any managing underwriter (or, if such Demand Registration is not
an underwritten offering, a nationally recognized independent underwriter
selected by the Investor (which such underwriter shall be reasonably acceptable
to the Company and whose fees and expenses shall be borne solely by the Company)
advises the Company and the Investor that, in its opinion, the inclusion of all
the Registrable Securities and, if authorized pursuant to this paragraph, other
securities of the Company, in each case, sought to be registered in connection
with such Demand Registration would adversely affect the marketability of the
Registrable Securities sought to be sold pursuant thereto, then the Company
shall include in the registration statement applicable to such Demand
Registration only such securities as the Company and the holders of Registrable
Securities sought to be registered therein ("Demanding Sellers") are advised by
such underwriter can be sold without such an effect.
(g) Other Registrations. If the Company has received a Demand and if the
applicable registration statement in respect of such Demand has not been with
drawn or abandoned, the Company will not file or cause to be effected any other
registration of any of its equity securities or securities convertible or
exchangeable into or exercisable for its equity securities under the Securities
Act (other than a registration relating to the Company employee benefit plans,
exchange offers by the Company or a merger or acquisition of a business or
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<PAGE> 16
assets by the Company, including, without limitation, a registration on Form S-4
or S-8 or any successor form), whether on its own behalf or at the request of
any holder or holders of such securities, until a period of at least ninety (90)
days has elapsed from the effective date of any Demand Registration, unless a
shorter period of time is approved by the Investor. Notwithstanding the
foregoing, the Company shall be entitled to postpone any such Demand
Registration and may file or cause to be effected such other registration in
accordance with the terms of Section 5.1(e) hereof.
Section 5.2. Piggyback Registrations.
(a) Right to Piggyback. During the Registration Period, whenever the
Company proposes to register, on its own behalf or on behalf of Persons
exercising Other Demand Rights, any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities under
the Securities Act (other than a registration relating to the Company employee
benefit plans, exchange offers by the Company or a merger or acquisition of a
business or assets by the Company including, without limitation, a registration
on Form S-4 or Form S-8 or any successor form) (a "Piggyback Registration"), the
Company shall give the Investor prompt written notice thereof (but not less than
ten (10) days prior to the filing by the Company with the SEC of any
registration statement with respect thereto). Such notice (a "Piggyback Notice")
shall specify, at a minimum, the number of securities proposed to be registered,
the proposed date of filing of such registration statement with the SEC, the
proposed means of distribution, the pro posed managing underwriter or
underwriters (if any and if known), and a good faith estimate by the Company of
the proposed minimum offering price of such securities. Upon the written request
of the Investor given within ten (10) business days of the Investor's receipt of
the Piggyback Notice (which written request shall specify the number of
Registrable Securities intended to be disposed of by the Investor and the
intended method of distribution thereof), the Company shall include in such
registra tion all Registrable Securities with respect to which the Company has
received such written requests for inclusion.
(b) Priority on Piggyback Registrations. If, in connection with a Piggy
back Registration, any managing underwriter (or, if such Piggyback Registration
is not an underwritten offering, a nationally recognized independent underwriter
selected by the Company (reasonably acceptable to the holders of a majority of
the Registrable Securities sought to be included in such Piggyback Registration
and whose fees and expenses shall be borne solely by the Company)) advises the
Com pany and the holders of the Registrable Securities to be included in such
Piggyback Registration, that, in its opinion, the inclusion of all the
securities sought to be included in such Piggyback Registration by the Company,
any Person who has sought to have shares registered thereunder pursuant to
rights to demand under agreements other than this Agreement (other than pursuant
to so-called "piggyback" or other incidental or participation
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registration rights) (such demand rights being "Other Demand Rights" and such
Persons being "Other Demanding Sellers"), any holders of Registrable Securities
seeking to sell such securities in such Piggyback Registration ("Piggyback
Sellers") and any other proposed sellers, in each case, if any, would adversely
affect the marketability of the securities sought to be sold pursuant thereto,
then the Company shall include in the registration statement applicable to such
Piggyback Registration only such securities as the Company, the Other Demanding
Sellers, and the Piggyback Sellers are so advised by such under writer can be
sold without such an effect (the "Maximum Piggyback Number"), as follows and in
the following order of priority:
(i) if the Piggyback Registration is an offering on behalf of the
Company and not any Person exercising Other Demand Rights (whether or
not other Persons seek to include securities therein pursu ant to
so-called "piggyback" or other incidental or participatory registration
rights) (a "Primary Offering"), then (A) first, such number of
securities to be sold by the Company as the Company, in its reasonable
judgment and acting in good faith and in accordance with sound financial
practice, shall have determined, (B) second, if the number of securities
to be included under clause (A) above is less than the Maximum Piggyback
Number, the number of Registrable Securities sought to be registered by
each Piggyback Seller, pro rata in proportion to the number of
Registrable Securities sought to be registered by all the Piggyback
Sellers;
(ii) if the Piggyback Registration is an offering other than
pursuant to a Primary Offering, then (A) first, such number of securi
ties sought to be registered by each Other Demanding Seller, in
accordance with the respective rights of such Other Demanding Sellers,
(B) second, if the number of securities to be included under clause (A)
above is less than the Maximum Piggyback Number, the number of
Registrable Securities sought to be registered by each Piggyback Seller,
pro rata in proportion to the number of Registrable Securities sought to
be registered by all the Piggyback Sellers.
(c) Withdrawal by the Company. If, at any time after giving written
notice of its intention to register any of its securities as set forth in
Section 5.2 and prior to time the registration statement filed in connection
with such registration is declared effective, the Company shall determine for
any reason not to register such securities, the Company may, at its election,
give written notice of such determina tion to the Investor and thereupon shall
be relieved of its obligation to register any Registrable Securities in
connection with such particular withdrawn or abandoned registration (but not
from its obligation to pay the Registration Expenses in connec tion therewith as
provided herein). In the event that the Piggyback Sellers of such a registration
hold the Requisite Amount of Registrable Securities, such holders may continue
the registration as a Demand Registration. The continuation of such registration
shall be counted as a Demand by the Investor.
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Section 5.3. Withdrawal Rights.
The Investor having notified or directed the Company to include any or
all of its Registrable Securities in a registration statement under the
Securities Act shall have the right to withdraw any such notice or direction
with respect to any or all of the Registrable Securities designated for
registration thereby by giving written notice to such effect to the Company
prior to the effective date of such registration state ment. In the event of any
such withdrawal, the Company shall not include such Registrable Securities in
the applicable registration and such Registrable Securities shall continue to be
Registrable Securities hereunder. No such withdrawal shall affect the
obligations of the Company with respect to the Registrable Securities not so
withdrawn; provided that in the case of a Demand Registration, if such with
drawal shall reduce the number of Registrable Securities sought to be included
in such registration below the Requisite Amount, then the Company shall as
promptly as practicable give each holder of Registrable Securities sought to be
registered notice to such effect, referring to this Agreement and summarizing
this Section 5.3, and within five (5) business days following the effectiveness
of such notice, either the Company or the holders of a majority of the
Registrable Securities sought to be registered may, by written notices made to
each holder of Registrable Securities sought to be registered and the Company,
respectively, elect that such registration statement not be filed or, if
theretofore filed, be withdrawn. During such five (5) business day period, the
Company shall not file such registration statement if not theretofore filed or,
if such registration statement has been theretofore filed, the Company shall not
seek, and shall use its best efforts to prevent, the effectiveness thereof. Any
registration statement withdrawn or not filed (i) in accordance with an election
by the Company, (ii) in accordance with an election by the Investor pursuant to
Section 5.1(e) hereof, (iii) in accordance with an election by the Demanding
Investor prior to the effectiveness of the applicable Demand Registration
Statement or (iv) in accordance with an election by the Investor subsequent to
the effectiveness of the applicable Demand Registration Statement, if any
post-effective amendment or supplement to the applicable Demand Registration
Statement contains adverse information regarding the Company shall not be
counted as a Demand. Except as set forth in clause (iv) of the previous sentence
any Demand withdrawn in accordance with an election by the Investor subsequent
to the effectiveness of the applicable Demand Registration Statement shall be
counted as a Demand unless the Investor reimburses the Company for its
reasonable out-of-pocket expenses (but, without implication that the contrary
would otherwise be true, not including any Internal Expenses, as defined in
Section 5.6 hereof) related to the preparation and filing of such registration
statement (in which event such registration statement shall not be counted as a
Demand hereunder). Upon the written request of the Investor, the Company shall
promptly prepare a definitive statement of such out-of-pocket expenses in
connection with such registration statement in order to assist such holders with
a determination in accordance with the next preceding
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sentence.
Section 5.4. Holdback Agreements.
The Investor agrees not to effect any public sale or distribution
(including sales pursuant to Rule 144) of equity securities of the Company, or
any securities convertible into or exchangeable or exercisable for such
securities, during the ten (10) day period prior to the date which the Company
has, notified the Investor that it intends to commence a Public Offering through
the ninety (90) day period immediately following the effective date of any
Demand Registration or any Piggyback Registration (in each case, except as part
of such registration), or, in each case, if later, the date of any underwriting
agreement with respect thereto; provided, however, that the Investor shall not
be obligated to comply with this Section 5.4 on more than one (1) occasion in
any nine (9) month period.
Section 5.5. Registration Procedures.
(a) Whenever the Investor has requested that any Registrable Securities
be registered pursuant to this Agreement (whether pursuant to Demand
Registration or Piggyback Registration), the Company (subject to its right to
withdraw such registration as contemplated by Section 5.2(c)) shall use its best
efforts to effect the registration and the sale of such Registrable Securities
in accordance with the intended method of disposition thereof and, in connection
therewith, the Company shall as expeditiously as possible:
(i) prepare and file with the SEC a registration statement with
respect to such Registrable Securities on any form for which the Company then
qualifies and is available for the sale of Registrable Securities to be
registered thereunder in accordance with the intended method of distribution and
use its best efforts to cause such registration statement to become effective
within ninety (90) days of the date hereof;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
a continuous period of not less than ninety (90) days (or, if earlier, until all
Registrable Securities included in such registration statement have been sold
thereunder in accordance with the manner of distribution set forth therein) and
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof as
set forth in such registration statement (including, without limitation, by
incorporating in a prospectus supplement or post-effective amendment, at the
request of a seller of Registrable Securities, the terms of the sale of such
Registrable Securities);
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(iii) before filing with the SEC any such registration statement
or prospectus or any amendments or supplements thereto, the Company shall
furnish to counsel selected by the Investor, counsel for the underwriter or
sales or placement agent, if any, and any other counsel for holders of
Registrable Securities, if any, in connection therewith, drafts of all such
documents proposed to be filed and provide such counsel with a reasonable
opportunity for review thereof and comment thereon, such review to be conducted
and such comments to be delivered with reasonable promptness;
(iv) promptly (i) notify each seller of Registrable Securities of
each of (x) the filing and effectiveness of the registration statement and
prospectus and any amendment or supplements thereto, (y) the receipt of any
comments from the SEC or any state securities law authorities or any other
governmental authorities with respect to any such registration statement or
prospectus or any amendments or supplements thereto, and (z) any oral or written
stop order with respect to such registration, any suspension of the registration
or qualification of the sale of such Registrable Securities in any jurisdiction
or any initiation or threatening of any proceedings with respect to any of the
foregoing and (ii) use its best efforts to obtain the withdrawal of any order
suspending the registration or qualification (or the effectiveness thereof) or
suspending or preventing the use of any related prospectus in any jurisdiction
with respect thereto;
(v) furnish to each seller of Registrable Securities, the
underwriters and the sales or placement agent, if any, and counsel for each of
the foregoing, a conformed copy of such registration statement and each
amendment and supplement thereto (in each case, including all exhibits thereto
and documents incorporated by reference therein) and such additional number of
copies of such registration statement, each amendment and supplement thereto
(in such case without such exhibits and documents) the prospectus (including
each preliminary prospectus) included in such registration statement and
prospectus supplements and all exhibits thereto and documents incorporated by
reference therein and such other documents as such seller, underwriter, agent or
counsel may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Seller;
(vi) if requested by the managing underwriter or underwriters of
any registration or by the Investor, subject to approval of counsel to the
Company in its reasonable judgment, promptly incorporate in a prospectus,
supplement or post-effective amendment to the registration statement such
information concerning underwriters and the plan of distribution of the
Registrable Securities as such managing underwriter or underwriters or such
holders reasonably shall furnish to the Company in writing and request be
included therein, including, without limitation, with respect to the number of
Registrable Securities being sold by such holders to such underwriter or
underwriters, the purchase price being paid therefor by such underwriter or
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<PAGE> 21
underwriters and with respect to any other terms of the underwritten offering of
the Registrable Securities to be sold in such offering; and make all required
filings of such prospectus, supplement or post-effective amendment as soon as
possible after being notified of the matters to be incorporated in such
prospectus, supplement or post-effective amendment;
(vii) use its best efforts to register or qualify such
Registrable Securities under such securities or "blue sky" laws of such
jurisdictions as the holders of a majority of Registrable Securities sought to
be registered reasonably request and do any and all other acts and things which
may be reasonably necessary or advisable to enable the holders of a majority of
Registrable Securities sought to be registered to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such holders and keep
such registration or qualification in effect for so long as the registration
statement remains effective under the Securities Act (provided that the Company
shall not be required to (x) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph, (y) subject itself to taxation in any such jurisdiction where it
would not otherwise be subject to taxation but for this paragraph or (z) consent
to the general service of process in any jurisdiction where it would not
otherwise be subject to general service of process but for this paragraph);
(viii) notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, upon the discovery that, or of the happening of any event as a
result of which, the registration statement covering such Registrable
Securities, as then in effect, contains an untrue statement of a material fact
or omits to state any material fact required to be stated therein or any fact
necessary to make the statements therein not misleading, and promptly prepare
and furnish to each such seller a supplement or amendment to the prospectus
contained in such registration statement so that such Registration Statement
shall not, and such prospectus as thereafter delivered to the purchasers of such
Registrable Securities shall not, contain an untrue statement of a material fact
or omit to state any material fact required to be stated therein or any fact
necessary to make the statements therein not misleading;
(ix) cause all such Registrable Securities to be listed on the
New York Stock Exchange and/or any other securities exchange and included in
each established over-the-counter market on which or through which similar
securities of the Company are listed or traded and, if not so listed or traded,
to be listed on the NASD automated quotation system ("Nasdaq") and if listed on
Nasdaq, use its reasonable efforts to secure designation of all such Registrable
Securities covered by such registration statement as a Nasdaq "national market
system security" within the meaning of Rule 11Aa2-1 under the Securities
Exchange Act of 1934, as amended, or, failing that, to secure Nasdaq
authorization for such Registrable Securities;
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(x) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or other agent retained by
any such seller or underwriter all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees, attorneys and independent accountants to supply
all information reasonably requested by any such sellers, underwriters,
attorneys, accountants or agents in connection with such registration statement.
Information which the Company determines, in good faith, to be confidential
shall not be disclosed by such persons unless (x) the disclosure of such
information is necessary to avoid or correct a misstatement or omission in such
registration statement, or (y) the release of such information is ordered
pursuant to a subpoena or other order from a court of competent jurisdiction.
Each seller of Registrable Securities agrees, on its own behalf and on behalf of
all its underwriters, accountants, attorneys and agents, that the information
obtained by it as a result of such inspections shall be deemed confidential and
shall not be used by it as the basis for any market transactions in the
securities of the Company unless and until such is made generally available to
the public. Each seller of Registrable Securities further agrees, on its own
behalf and on behalf of all its underwriters, accountants, attorneys and agents,
that it will, upon learning that disclosure of such information is sought in a
court of competent jurisdiction, give notice to the Company and allow the
Company, at its expense, to undertake appropriate action to prevent disclosure
of the information deemed confidential;
(xi) use its best efforts to comply with all applicable laws
related to such registration statement and offering and sale of securities and
all applicable rules and regulations of governmental authorities in connection
therewith (including, without limitation, the Securities Act and the Exchange
Act) and make generally available to its security holders as soon as practicable
(but in any event not later than fifteen (15) months after the effectiveness of
such registration statement) an earnings statement of the Company and its
subsidiaries complying with Section 11(a) of the Securities Act;
(xii) permit the Investor, if the Investor, in its sole and
exclusive judgment, has determined that it might be deemed to be an underwriter
or controlling person of the Company, to participate in the preparation of such
registration statement and to require the insertion therein of material,
furnished to the Company in writing, which in the reasonable judgment of the
Investor and its counsel should be included;
(xiii) use reasonable best efforts to furnish to each seller of
Registrable Securities a signed counterpart of (x) an opinion of counsel for the
Company and (y) a "comfort" letter signed by the independent public accountants
who have certified the Company's financial statements included or incorporated
by reference in such registration statement, covering such matters
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<PAGE> 23
with respect to such registration statement and, in the case of the accountants'
comfort letter, with respect to events subsequent to the date of such financial
statements, as are customarily covered in opinions of issuer's counsel and in
accountants' comfort letters delivered to the underwriters in underwritten
public offerings of securities for the account of, or on behalf of, an issuer of
common stock, such opinion and comfort letters to be dated the date of such
opinions and comfort letters are customarily dated in such transactions, and
covering in the case of such legal opinion, such other legal matters and, in the
case of such comfort letter, such other financial matters, as the holders of a
majority of the Registrable Securities being sold may reasonably request;
(xiv) take all such other actions as the holders of a majority of
the Registrable Securities being sold or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities; and
(xv) the Company shall use its reasonable best efforts so that in
lieu of exercising any Warrant prior to or simultaneously with the filing or the
effective ness of any registration statement filed pursuant to this Article V,
the holder of such Warrant may sell such Warrant to the underwriter of the
offering being registered upon the undertaking of such underwriter to exercise
such Warrant before making any distribution pursuant to such registration
statement and to include the Common Stock issued upon such exercise among the
securities being offered pursuant to such registration statement. The Company
agrees to cause such Common Stock to be included among the securities being
offered pursuant to such registration statement to be issued within such time as
will permit the underwriter to make and complete the distribution contemplated
by the underwriting.
(b) Underwriting. Without limiting any of the foregoing, in the event
that the offering of Registrable Securities is to be made by or through an
underwriter, the Company shall enter into an underwriting agreement with a
managing underwriter or underwriters selected by the Investor, subject to the
Company's reasonable approval containing representations, warranties,
indemnities and agreements customarily included (but not inconsistent with the
agreements contained herein) by an issuer of common stock in underwriting
agreements with respect to offerings of common stock for the account of, or on
behalf of, such issuers. In connection with the sale of Registrable Securities
hereunder, any seller of such Registrable Securities may, at its option, require
that any and all representations and warranties by, and indemnities and
agreements of, the Company to or for the benefit of such underwriter or under
writers (or which would be made to or for the benefit of such an underwriter or
underwriter if such sale of Registrable Securities were pursuant to a customary
underwritten offering) be made to and for the benefit of such seller and that
any or all of the conditions precedent to the obligations of such underwriter or
underwriters (or which would be so for the benefit of such underwriter or
underwriters under a
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customary underwriting agreement) be conditions precedent to the obligations of
such seller in connection with the disposition of its securities pursuant to the
terms hereof (it being agreed that in connection with any Demand Registration,
without limiting any rights or remedies of the Investor, in the event any such
condition precedent shall not be satisfied and, if not so satisfied, shall not
be waived by the holders of a majority of the Registrable Securities to be
included in such Demand Registration, such Demand Registration shall not be
counted as a permitted Demand hereunder). In connection with any offering of
Registrable Securities registered pursuant to this Agreement, the Company shall
(x) furnish to the underwriter, if any (or, if no underwriter, the sellers of
such Registrable Securities), unlegended certificates representing ownership of
the Registrable Securities being sold, in such denominations as requested and
(y) instruct any transfer agent and registrar of the Registrable Securities to
release any stop transfer order with respect thereto.
(c) Return of Prospectuses. Each seller of Registrable Securities hereun
der agrees that upon receipt of any notice from the Company of the happening of
any event of the kind described in Section 5.5(a)(viii), such seller shall
forthwith discon tinue such seller's disposition of Registrable Securities
pursuant to the applicable registration statement and prospectus relating
thereto until such seller's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 5.5(a)(viii) and, if so directed by the
Company, deliver to the Company all copies, other than permanent file copies,
then in such seller's possession of the prospectus current at the time of
receipt of such notice relating to such Registrable Securities. In the event the
Company shall give such notice, the ninety (90)-day period during which such
registration statement must remain effective pursuant to this Agreement shall be
extended by the number of days during the period from the date of giving of a
notice regarding the happening of an event of the kind described in Section
5.5(a)(viii) to the date when all such sellers shall receive such a supplemented
or amended prospectus and such prospectus shall have been filed with the SEC.
Section 5.6. Registration Expenses.
All Registration Expenses shall be borne by the Company; provided, how
ever, that in the case of a Piggyback Registration, all incremental costs
resulting from applicable federal and blue sky registration and filing fees,
National Association of Securities Dealers filing fees, the expenses and fees
for listing the securities to be registered on each securities exchange and
included in each established over-the-counter market on which similar securities
issued by the Company are then listed or traded or for listing on the New York
Stock Exchange and underwriting discounts and commissions allocable to each
Investor selling Registrable Securities shall be borne by such Investor. The
Company shall be responsible for the fees and expenses not to exceed One Hundred
Thousand Dollars ($100,000) in the aggregate for all sales of Registrable
Securities of one (1) legal counsel retained by the Investor in
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connection with such sales. Notwithstanding the foregoing, the Company shall not
be responsible for any additional counsel, or any of the accountants, agents or
experts retained by the Investor in connection with the sale of Registrable
Securities. The Company will pay its internal expenses including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties, the expense of any annual audit and the expense of
any liability insurance (collectively, "Internal Expenses") and the expenses and
fees for listing the securities to be registered on each securities exchange and
included in each established over-the-counter market on which similar securities
issued by the Company are then listed or traded or for listing on the New York
Stock Exchange.
Section 5.7. Indemnification.
(a) By the Company. The Company agrees to indemnify, to the fullest
extent permitted by law, each holder of Registrable Securities being sold, its
officers, directors, employees and agents and each Person who controls (within
the meaning of the Securities Act) such holder or such an other indemnified
Person against all losses, claims, damages, liabilities and expenses
(collectively, the "Losses") caused by, resulting from or relating to any untrue
or alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or a fact necessary to make the statements therein
not misleading, except insofar as the same are caused by or contained in any
information furnished to the Company by such holder expressly for use therein or
by such holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such holder with a sufficient number of copies of the same. In
connection with an underwritten offering and without limiting any of the
Company's other obligations under this Agreement, the Company shall indemnify
such underwriters, their officers, directors, employees and agents and each
Person who controls (within the meaning of the Securities Act) such underwriters
or such an other indemnified Person to the same extent as provided above with
respect to the indemnification of the holders of Registrable Securities being
sold.
(b) By the Holders of Registrable Securities. In connection with any
registration statement in which a holder of Registrable Securities is
participating, each such holder will furnish to the Company in writing
information regarding such holder's ownership of Registrable Securities and its
intended method of distribution thereof and, to the extent permitted by law,
shall indemnify the Company, its directors, officers, employees and agents and
each Person who controls (within the meaning of the Securities Act) the Company
or such other indemnified Person against all Losses caused by, resulting from or
relating to any untrue or alleged untrue statement of material fact contained in
the registration statement, prospectus or preliminary prospectus or any
amendment
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thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
omission is caused by and contained in such information so furnished in writing
by such holder or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of the
same; provided, however, that each holder's obligation to indemnify the Company
hereunder shall be apportioned between each holder based upon the net amount
received by each holder from the sale of Registrable Securities, as compared to
the total net amount received by all of the holders of Registrable Securities
sold pursuant to such registration statement, no such holder being liable to the
Company in excess of such apportionment.
(c) Notice. Any Person entitled to indemnification hereunder shall give
prompt written notice to the indemnifying party of any claim with respect to
which its seeks indemnification; provided, however, the failure to give such
notice shall not release the indemnifying party from its obligation, except to
the extent that the indemnifying party has been materially prejudiced by such
failure to provide such notice.
(d) Defense of Actions. In any case in which any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfac tory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof the indemnifying party will not (so long as it shall
continue to have the right to defend, contest, litigate and settle the matter in
question in accordance with this paragraph) be liable to such indemnified party
hereunder for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation, supervision and monitoring (unless such indemnified
party reasonably objects to such assumption on the grounds that there may be
defenses available to it which are different from or in addition to the defenses
available to such indemnifying party, in which event the indemnified party shall
be reimbursed by the indemnifying party for the expenses incurred in connection
with retaining separate legal counsel). An indemnifying party shall not be
liable for any settlement of an action or claim effected without its consent.
The indemnifying party shall lose its right to defend, contest, litigate and
settle a matter if it shall fail to diligently contest such matter (except to
the extent settled in accordance with the next follow ing sentence). No matter
shall be settled by an indemnifying party without the consent of the indemnified
party (which consent shall not be unreasonably withheld).
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(e) Survival. The indemnification provided for under this Agreement
shall remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified Person and will survive the transfer of the
Registrable Securities and the termination of this Agreement.
(f) Contribution. If recovery is not available under the foregoing
indemnification provisions for any reason or reasons other than as specified
therein, any Person who would otherwise be entitled to indemnification by the
terms thereof shall nevertheless be entitled to contribution with respect to any
Losses with respect to which such Person would be entitled to such
indemnification but for such reason or reasons. In determining the amount of
contribution to which the respective Persons are entitled, there shall be
considered the Persons' relative knowledge and access to information concerning
the matter with respect to which the claim was asserted, the opportunity to
correct and prevent any statement or omission, and other equitable
considerations appropriate under the circumstances. It is hereby agreed that it
would not necessarily be equitable if the amount of such contribution were
determined by pro rata or per capita allocation. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not found guilty of
such fraudulent misrepresentation. Notwithstanding the foregoing, no Investor
shall be required to make a contribution in excess of the net amount received by
such holder from the sale of Registrable Securities.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
Section 6.1. Representations and Warranties of the Company. The Company
hereby represents and warrants to the other parties hereto as follows: (a) the
Company has all requisite corporate power and authority to enter into this
Agreement and to perform hereunder: (b) the execution and delivery by the
Company of this Agreement, and the performance by the Company hereunder, have
been duly authorized by all necessary corporate action on the part of the
Company; (c) this Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as the enforceability
hereof may be limited by bankruptcy, insolvency or other similar laws affecting
creditors' rights generally or general principles of equity; (d) no consent,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, is required by, or with
respect to, the Company in connection with the execution and delivery of this
Agreement by the Company or performance by the Company hereunder; and (e) the
execution and delivery of this Agreement by the Company and the performance by
the
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Company hereunder does not conflict with, or result in a breach of, any law or
regulation of any governmental authority applicable to the Company or any
material agreement to which the Company is a party.
Section 6.2. Representations and Warranties of the Investor. The
Investor hereby represents and warrants to the other parties hereto as follows:
(a) the Investor has all requisite power and authority to enter into this
Agreement and to perform hereunder; (b) the execution and delivery by the
Investor of this Agreement, and the performance by the Investor hereunder, have
been duly authorized by all necessary action on the part of such Investor; (c)
this Agreement has been duly executed and delivered by the Investor and
constitutes a valid and binding obligation of the Investor enforceable against
the Investor in accordance with its terms, except as the enforceability hereof
may be limited by bankruptcy, insolvency or other similar laws affecting
creditors' rights generally or general principles of equity; (d) no consent,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, is required by, or with
respect to, the Investor in connection with the execution and delivery of this
Agreement by the Investor or the performance by the Investor hereunder; and (e)
the execution and delivery of this Agreement by the Investor and the performance
hereunder by the Investor does not conflict with, or result in a breach of, any
law or regulation of any governmental authority applicable to the Investor or
any material agreement to which the Investor is a party.
ARTICLE VII.
GENERAL PROVISIONS
Section 7.1. Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
If to the Company, to:
Apria Healthcare Group Inc.
3560 Hyland Avenue
Costa Mesa, California 92626
Attention: Robert S. Holcombe, Esq.
Telecopy: (714) 427-4332
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with a copy to:
Gibson, Dunn & Crutcher LLP
333 South Grand Avenue
Los Angeles, California 90071-3197
Attention: Andrew E. Bogen, Esq.
Telecopy No.: (213) 617-3693
If to the Investor, to:
Joseph Littlejohn & Levy
450 Lexington Avenue, Suite 3350
New York, New York 10017
Attention: Paul S. Levy
Telecopy No.: (212) 268-8626
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: J. Gregory Milmoe, Esq.
Telecopy No.: (212) 735-2000
If to Relational Investors, LLC, to:
4330 LaJolla Village Drive
Suite 220
San Diego, California 92122
Attention: Ralph Whitworth
Telecopy No.: (619) 597-8200
If to HBI Financial, Inc., to:
949 South Coast Drive
Suite 600
Costa Mesa, California 92626
Attn: Mr. George Arygros
Telecopy No.: (714) 481-5055
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
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telecommunicated, personally delivered or mailed.
Section 7.2. Assignment; Binding Effect; Benefit; Successors.
(a) Except as otherwise expressly provided in this Agreement, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise).
(b) In the event that the Company shall enter into a merger,
consolidation or other similar type transaction, all of the terms of this
Agreement relating to the Company, as applicable, shall apply to the surviving
corporation.
Section 7.3. Entire Agreement. Upon the effectiveness hereof, this
Agreement and any certificate delivered by the parties in connection herewith
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings (oral and
written) among the parties with respect thereto.
Section 7.4. Amendment. This Agreement may not be amended or modified
except by an instrument in writing signed by or on behalf of each of the parties
hereto.
Section 7.5. Governing Law; Venue and Jurisdiction. This Agreement shall
be governed by, and construed in accordance with, the internal laws of the State
of Delaware (without regard to conflict of laws principles which would require
the application of the laws of any other State). Each of the parties hereto
agrees that any legal action or proceeding with respect to this Agreement may be
brought in the Courts of the State of Delaware or the United States District
Courts located in the State of Delaware and, by execution and delivery of this
Agreement, each party hereto hereby irrevocably submits itself in respect of its
property, generally and unconditionally to the non-exclusive jurisdiction of the
aforesaid courts in any legal action or proceeding arising out of this
Agreement. Each of the parties hereto hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Agreement brought in the courts referred to in the preceding sentence. Each
party hereto hereby consents to process being served in any such action or
proceeding by the mailing of a copy thereof to the address set forth in Section
7.1 hereof and agrees that such service upon receipt shall constitute good and
sufficient service of process or notice thereof. Nothing in this Section 7.5
shall affect or eliminate any right to serve process in any other matter
permitted by law.
Section 7.6. Counterparts; Effective Date. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument. Each counterpart may consist
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of a number of copies of this Agreement, each of which may be signed by less
than all of the parties hereto, but together all such copies are signed by all
of the parties hereto. This Agreement shall become effective at the time of the
Recapitalization Closing and shall be of no further force and effect upon the
termination of the Stock Purchase Agreement.
Section 7.7. Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only and shall be given no
substan tive or interpretive effect whatsoever.
Section 7.8. Interpretation. In this Agreement, unless the context
otherwise requires, words describing the singular number shall include the
plural and vice versa, "including" shall mean including, without limitation, and
words denoting any gender shall include all genders and words denoting natural
persons shall include corporations and partnerships and vice versa.
Section 7.9. Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or otherwise affecting the validity or enforceability of any of the
terms or provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable.
Section 7.10. Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was other
wise breached; and that money damages would not constitute adequate remedy
therefor. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which they may be entitled at law or in equity.
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf as of the day and year first
written above.
APRIA HEALTHCARE GROUP INC.
By:____________________________
Name:
Title:
JLL ARGOSY APRIA, LLC
By: JOSEPH LITTLEJOHN & LEVY
FUND III, L.P., manager member
By: JLL ASSOCIATES, L.P., general partner
By:____________________________
Name: Paul S. Levy
Title: General Partner
RELATIONAL INVESTORS, LLC
By:____________________________
Name: Ralph Whitworth
Title:
HBI FINANCIAL, INC.
By:____________________________
Name: George Argyros
Title:
32
<PAGE> 33
JOSEPH LITTLEJOHN & LEVY
FUND III, LP
By:____________________________
Name:
Title:
CIBC WG ARGOSY MERCHANT
FUND 2, LLC
By:____________________________
Name:
Title:
33
