Looking for an agreement? Search from over 1 million agreements now.

Management Stockholders Agreement

This is an actual contract by Empi.
Browse the agreement preview below and buy the entire agreement for $35
Search This Document
Exhibit 10.22


EXECUTION COPY


MANAGEMENT STOCKHOLDERS AGREEMENT


BY AND AMONG


ENCORE MEDICAL CORPORATION


AND


THE OTHER PARTIES NAMED HEREIN


Dated as of November 3, 2006


Annex I


TABLE OF CONTENTS


Page


1.

Definitions of Words and Phrases


4


2.

Limitations on Transfer


11


3.

Drag-Along Rights; Sponsor Call Right


12


4.

Tag-Along Rights


15


5.

Management Stockholder Put Right


17


6.

First-Refusal Rights


20


7.

Call Option


21


8.

" Piggyback" Registration Rights


22


9.

Representations, Warranties and Covenants


25


10.

Confidentiality


28


11.

Employment by the Company


29


12.

Taxes


29


13.

After-Acquired Securities


29


14.

Recapitalization, Exchange, Etc.


30


15.

Notices


30


16.

Successors, Assigns and Transferees


31


17.

Amendment and Waiver


31


18.

Counterparts


32


19.

Specific Performance; Injunctive Relief


32


20.

Headings; Interpretation


32


21.

Severability


32


22.

Entire Agreement


32


23.

Further Assurances


32


24.

Governing Law


32


25.

Consent to Jurisdiction; No Jury Trial


33


2


26.

Additional Management Stockholders.


33


Annex I

Form of Consent of Spouse

Annex II

Form of Acknowledgment and Agreement


3


MANAGEMENT STOCKHOLDERS AGREEMENT


This MANAGEMENT STOCKHOLDERS AGREEMENT (this " Agreement" ) is dated as of November 3, 2006, by and among Encore Medical Corporation, a Delaware corporation (the " Company" ), Blackstone Capital Partners V L.P., a Cayman Islands limited partnership (" BCP V" ), Blackstone Family Investment Partnership V L.P., a Cayman Islands limited partnership (" BFIP V" ), Blackstone Family Investment Partnership V-A L.P., a Cayman Islands limited partnership (" BFIP V-A" ), Blackstone Participation Partnership V L.P., a Cayman Islands limited partnership (" BPP V" and, together with BCP V, BFIPV, BFIP V-A and any of Blackstone L.P. or its Affiliates that may from time to time hold Sponsor Interests (as hereinafter defined), collectively, the " Sponsors" and each, a " Sponsor" ), Grand Slam Holdings, LLC, a Delaware limited liability company (" Holdco" and, together with any of Blackstone L.P. or its Affiliates that may from time to time directly hold shares of Common Stock, the " Blackstone Encore Stockholders" ), and the parties identified on the signature pages hereto as Management Stockholders and the Permitted Transferees of such parties (and their respective Permitted Transferees) identified on the signature pages to the supplementary agreements or documents referred to in Sections 16 and 26 hereof (the " Management Stockholders" and, together with the Company, the Sponsors and Holdco, the " Parties" ).


RECITALS:


WHEREAS, pursuant to the Company' s 2006 Stock Incentive Plan (as the same may be amended, supplemented or modified from time to time, including any successor or similar stock incentive plan, the " Plan" ), the Company may from time to time grant Awards (as defined in the Plan) to the Management Stockholders; and


WHEREAS, the Parties wish to enter into certain agreements with respect to the holdings by the Sponsor and the Management Stockholders and their respective Permitted Transferees of Common Stock and Common Stock Equivalents each as hereinafter defined.


NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, the receipt and sufficiency of which are hereby acknowledged, the Parties further acknowledge and agree to the following:


1. Definitions of Words and Phrases. As used in this Agreement:

" Affiliate" or " Affiliates" means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with such first Person or any other Person that holds directly or indirectly more than a fifty percent (50%) economic interest in such first person. For the purpose of this definition, " control" will mean, as to any Person, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or membership on the board of managers or directors, by contract (including, without limitation, a limited partnership agreement or general partnership agreement) or otherwise. Any trust or nominee directly or indirectly holding securities principally for the benefit of employees of a Party hereto or its Affiliates shall be deemed to be an Affiliate of such Party hereto. The term " Affiliate" shall, in any event, include BCP V, BFIP V, BFIP V-A and BPP V and any other Sponsors when used with respect to Blackstone.


" Agreement" has the meaning set forth in the Preamble.


" Appraiser" means an independent, nationally recognized investment banking or valuation firm experienced in valuing private companies similar to the Company, selected by the


4


Board of Directors and reasonably acceptable to an applicable Call Option Management Stockholder (taking into account the fees and expenses of such Appraiser).


" BCP V" has the meaning set forth in the Preamble.


" BFIP V" has the meaning set forth in the Preamble.


" BFIP V-A" has the meaning set forth in the Preamble.


" Blackstone" means the Blackstone Group L.P. or any of its Affiliates (other than the Company).


" Blackstone Encore Stockholders" has the meaning set forth in the Preamble.


" Blackstone Shares" means those 867,794 shares of Common Stock held by Holdco on the date hereof (but subject to subsequent adjustment for any stock dividend, stock split, reverse stock split or other similar event).


" Board of Directors" means the board of directors of the Company.


" BPP V" has the meaning set forth in the Preamble.


" Business Day" means a day other than a Saturday, Sunday, federal or New York State holiday or other day on which commercial banks in New York City are authorized or required by law to close.


" Callable Shares" has the meaning set forth in Section 7(a) hereof.


" Call Event" has the meaning set forth in Section 7(a) hereof.


" Call Option" has the meaning set forth in Section 7(a) hereof.


" Call Option Management Stockholder" has the meaning set forth in Section 7(a) hereof.


" Call Option Notice" has the meaning set forth in Section 7(a) hereof.


" Call Right Sale" means any sale of Shares by Management Stockholders to a Call Right Selling Sponsor as provided for in Section 3(b) hereof.


" Call Right Sale Notice" has the meaning set forth in Section 3(b) hereof.


" Call Right Sale Notice Date" has the meaning set forth in Section 3(b) hereof.


" Call Right Selling Sponsor" has the meaning set forth in Section 3(b) hereof.


" Cause" means, with respect to any Management Stockholder, the termination by the Company of such Management Stockholder' s employment with the Company for " cause" , as defined in the employment agreement (" Employment Agreement" ) between the Company and such Management Stockholder, or, if there is no employment agreement, the termination by the Company of such Management Stockholder' s employment as a result of: (i) the commission by the Management Stockholder of an act of gross negligence, willful misconduct, fraud, embezzlement, misappropriation or breach of fiduciary duty against the Company or any of its Affiliates, or the conviction of the Management Stockholder by a court of competent jurisdiction


5


of, or a plea of guilty or nolo contendere to, any felony or any crime involving moral turpitude or any crime which reasonably could negatively affect the reputation of the Company, or the Management Stockholder' s ability to perform the duties required of his employment; (ii) the commission by the Management Stockholder of a material breach of any of the covenants in this Agreement, which breach has not been remedied within thirty (30) days of the delivery to the Management Stockholder by the Board of Directors of written notice of the facts constituting the breach; or (iii) the habitual and willful neglect by the Management Stockholder of his or her obligations and duties as an employee of the Company or any of its Subsidiary.


" Change in Control" means (i) the sale or disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company to any Person or Group other than Blackstone or (ii) if any Person or Group, other than Blackstone, is or becomes the " beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than fifty percent (50%) of the total voting power of the voting stock of the Company or a successor to the Company, including by way of merger, consolidation or otherwise (other than an offering of stock to the general public through a registration statement filed with the Commission or pursuant to which Blackstone retains, directly or indirectly, more than fifty percent (50%) of the total voting power of the voting stock of the Company) or (iii) the approval by the stockholders of the Company of a plan of complete liquidation of the Company.


" Commission" means the U.S. Securities and Exchange Commission.


" Common Stock" means the Common Stock, par value $0.01 per share, of the Company.


" Common Stock Equivalent" means any stock, warrants, rights, calls, options or other securities exchangeable or exercisable for, or convertible into, Common Stock, including, but not limited to, the Rollover Options and any options or other securities issued under the Plan that are exchangeable or exercisable for, or convertible into, Common Stock.


" Company" has the meaning set forth in the Preamble.


" Confidential Information" has the meaning set forth in Section 10 hereof.


" Determination Date" has the meaning set forth in Section 2(c) hereof.


" Disability" means, with respect to any Management Stockholder, " Disability" as defined in such Management Stockholder' s Employment Agreement or, if not defined therein or if there is no such agreement, " Disability" means that such Management Stockholder shall be unable to perform his or her duties and responsibilities in connection with the conduct of the business and affairs of the Company (or its Subsidiary, if its Subsidiary employs the Management Stockholder) and such inability lasts for (i) a period of at least one hundred eighty (180) consecutive days, or (ii) periods aggregating at least two hundred forty (240) days during any twelve-month period, by reason of such Management Stockholder' s physical or mental disability, whether by reason of injury, illness or similar cause.


" Drag-Along Notice Date" has the meaning set forth in Section 3(a) hereof.


" Drag-Along Sale" means any sale of Common Stock by the Blackstone Encore Stockholders as provided for in Section 3(a) hereof.


" Drag-Along Sale Notice" has the meaning set forth in Section 3(a) hereof.


6


" Drag-Along Selling Blackstone Encore Stockholder" has the meaning set forth in Section 3(a) hereof.


" Employment Agreement" shall have the meaning set forth in the definition of the term " Cause" .


" Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, or any successor statute thereto.


" Exercise Date" has the meaning set forth in Section 7(a) hereof.


" Fair Market Value" means (i) if there is a public market for the Common Stock on such date, the average of the high and low closing bid prices of the Common Stock of the Company on such stock exchange on which the shares are principally trading on the date in question, or, if there were no sales on such date, on the closest preceding date on which there were sales of shares, or (ii) if there is no public market for the Common Stock on such date, the fair market value of the Common Stock as determined in good faith by the Board of Directors, assuming the Company is valued on a going-concern basis as though it were a publicly traded company with reasonable liquidity and without a controlling shareholder; provided , however , that if a Management Stockholder or Permitted Transferee, as applicable, disagrees with the Board of Directors' determination of Fair Market Value, the Board of Directors shall retain an Appraiser to determine the Fair Market Value, acting reasonably and in good faith in accordance with the previous sentence, at the Company' s expense; provided , further , however , that if the Appraiser determines that Fair Market Value is less than 105% of the amount determined by the Board of Directors, then the challenging Management Stockholder or Permitted Transferee, as applicable, shall pay the fees and expenses of such Appraiser. The determination of Fair Market Value by the Appraiser shall be binding and conclusive on the Company and such Management Stockholder or Permitted Transferee, as applicable.


" Good Reason" means, with respect to any Management Stockholder, " Good Reason" as defined in such Management Stockholder' s Employment Agreement or, if not defined therein or if there is no such agreement, " Good Reason" means, without a Management Stockholder' s consent, (i) a material reduction in the Management Stockholder' s compensation below the amount of compensation in effect on the date of this Agreement, or (ii) a material reduction in the Management Stockholder' s duties or authority, in each case which is not cured within thirty (30) days following the Company' s or its Subsidiary' s, as applicable, receipt of written notice from such Management Stockholder describing the event constituting Good Reason.


" Good Termination" means the termination of a Management Stockholder' s employment with the Company or a Subsidiary of the Company, as the case may be (i) by the Company (or Subsidiary) without Cause, (ii) by the Management Stockholder for Good Reason or (iii) due to death or Disability.


" Group" means any syndicate or group that would be considered a " person" for purposes of Section 13(d) of the Exchange Act.


" Holdco" has the meaning set forth in the Preamble.


" Initial Public Offering" means the closing of the first sale of common equity or equivalent securities of the Company to the public pursuant to an effective registration statement (other than a registration statement on Form S-4 or S-8 or any similar or successor form) filed under the Securities Act after the date hereof.


7


" IPO Effectiveness Date" means the date upon which the Company closes its Initial Public Offering.


" Lapse Date" has the meaning set forth in Section 2(a) hereof.


" Management Stockholder" has the meaning set forth in the Preamble.


" Management Stockholder' s Estate" means, with respect to any Management Stockholder, the conservators, guardians, executors, administrators, testamentary trustees, legatees, or beneficiaries of such Management Stockholder' s estate.


" Management Stockholder' s Family Members" means, with respect to any Management Stockholder, the spouse (or ex-spouse) or lineal descendants (including adopted children) of such Management Stockholder.


" Management Stockholder' s Trust" means, with respect to any Management Stockholder, a limited partnership, limited liability company, trust or custodianship, the beneficiaries of which may include only such Management Stockholder, his or her spouse (or ex-spouse) or his or her lineal descendants (including lineal descendants that have even adopted) or, if at any time after any transfer of Shares to such Management Stockholder' s Trust there shall be no then-living spouse or lineal descendants, such beneficiaries may include the estate of a deceased beneficiary.


" Merger" means the transactions contemplated by the Agreement and Plan of Merger Agreement, dated as of June 30, 2006, among Holdco, Grand Slam Acquisition Corp. and the Company.


" Outside Offer" has the meaning set forth in Section 6(a) hereof.


" Parties" has the meaning set forth in the Preamble.


" Permitted Transferee" means, with respect to a Management Stockholder, any Management Stockholder' s Estate, Management Stockholder' s Family Members or the Management Stockholder' s Trust of such Management Stockholder or any other transferee that acquires Shares in accordance with, and as permitted by, the terms of this Agreement, and, with respect to Blackstone, any transferee that acquires shares of Common Stock or Sponsor Interests in accordance with the terms of this Agreement; provided, in any such event, that such transferee becomes a Party to, and is bound to the same extent as its transferor by the terms of, this Agreement (except as otherwise expressly provided in this Agreement).


" Person" means any individual, corporation, limited liability company, partnership, trust, joint stock company, business trust, unincorporated association, joint venture, governmental authority or other legal entity of any nature whatsoever.


" Piggyback Pro-Rata Portion" has the meaning set forth in Section 8(a) hereof.


" Piggyback Right" has the meaning set forth in Section 8(a) hereof.


" Plan" has the meaning set forth in the Recitals hereto.


" Prospective Purchaser" has the meaning set forth in Section 6(a) hereof.


" Public Company Merger" means any merger of the Company with or into any other entity, the result of which shares of Common Stock, or equity securities of the surviving


8


company received by the stockholders in exchange for Common Stock pursuant to such merger, are listed on the New York Stock Exchange or the Nasdaq Global Market or other internationally recognized stock exchange or listing system.


" Public Offering" means a sale of shares of Common Stock to the public in a firm commitment or best efforts underwritten public offering pursuant to an effective registration statement (other than a registration statement on Form S-4, S-8 or any successor to such forms) filed under the Securities Act.


" Put Right Allotment" has the meaning set forth in Section 5(a) hereof.


" Put Right Notice" has the meaning set forth in Section 5(c) hereof.


" Put Right Notice Date" has the meaning set forth in Section 5(b) hereof.


" Put Right Sale" has the meaning set forth in Section 5(a) hereof.


" Put Right Sale Date" has the meaning set forth in Section 5(b) hereof.


" Put Right Sale Notice" has the meaning set forth in Section 5(b) hereof.


" Put Right Selling Sponsor" has the meaning set forth in Section 5(a) hereof.


" Put Right Stockholder" or " Put Right Stockholders" has the meaning set forth in Section 5(a) hereof.


" Qualified Public Offering" means (i) the Initial Public Offering or (ii) any Public Company Merger, in either case, after which at least 20% of the Company' s outstanding Common Stock, or any Affiliate' s (which Affiliate is a holding company of the Company) outstanding common stock, or equity securities of the surviving company received by the stockholders in exchange for Common Stock pursuant to such Public Company Merger, are listed on the New York Stock Exchange or the Nasdaq Global Market or other internationally recognized stock exchange or listing system.


" Register" , " registered" and " registration" refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act, and the automatic effectiveness or the declaration or ordering of effectiveness by the Commission of such registration statement or document.


" Registrable Shares" means the Shares, provided that such Shares shall cease to be Registrable Shares if and when (i) a registration statement with respect to the disposition of such Shares shall have become effective under the Securities Act and such Shares shall have been disposed of pursuant to such effective registration statement, (ii) such Shares shall have been sold under circumstances in which all applicable conditions of Rule 144 (or any similar provisions then in force) under the Securities Act are met, (iii) such Shares shall have been otherwise transferred, new certificates not bearing restrictive legends shall have been delivered by the Company in lieu thereof and further disposition thereof shall not require registration or qualification of them under the Securities Act or any state securities or blue sky laws, (iv) such Shares may be sold pursuant to Rule 144(k) under the Securities Act or (v) such Shares shall have ceased to be outstanding.


" Regulation S" has the meaning set forth in Section 9(b)(iv ) hereof.


" Restricted Period" has the meaning set forth in Section 9(c)(vi) hereof.


9


" Rollover Option" means any option to purchase Common Stock held by a Management Stockholder immediately prior to the effective time of the Merger, which such option was not exercised prior to the effective time of the Merger.


" Same Effective Price" means the price per share of Common Stock calculated by dividing (i) the total consideration (whether in cash, debt or equity, except as such consideration may be adjusted pursuant to the terms of any agreement relating to the applicable sale) received by a Call Right Selling Sponsor or Put Right Selling Sponsor, as the case may be, for the Sponsor Interests to be transferred in connection with a Call Right Sale or a Put Right Sale, respectively, by (ii) the number of shares of Common Stock that is equal to (A) the percentage of aggregate Sponsor Interests in the applicable Blackstone Encore Stockholder represented by the Sponsor Interest in such Blackstone Encore Stockholder to be transferred in connection with such Call Right Sale or Put Right Sale, respectively, multiplied by (B) the number of shares of Common Stock held by such Blackstone Encore Stockholder immediately prior to the consummation of such Call Right Sale or Put Right Sale, as the case may be.


" Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, or any successor statute thereto.


" Selling Stockholder" has the meaning set forth in Section 6(a) hereof.


" Shares" means, with respect to each Management Stockholder, any and all shares of Common Stock granted to such Management Stockholder pursuant to the Plan or issued to such Management Stockholder upon exercise of any Rollover Option or any option or other award granted pursuant to the Plan.


" Sponsor" has the meaning set forth in the Preamble.


" Sponsor Call Right Sale" means any sale of Sponsor Interests by a Sponsor as provided for in Section 3(b) hereof.


" Sponsor Interests" has the meaning set forth in Section 3(b) hereof.


" Subsidiary" means, with respect to any Person, any corporation, partnership, association or other business entity of which fifty percent (50%) or more of the total voting power of shares of capital stock or equity interests thereof entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof, is at the time owned or controlled, directly or indirectly, by any Person or one or more of the other Subsidiaries of such Person or a combination thereof.


" Tag-Along Allotment" has the meaning set forth in Section 4(a) hereof.


" Tag-Along Notice" has the meaning set forth in Section 4(c) hereof.


" Tag-Along Notice Date" has the meaning set forth in Section 4(b) hereof.


" Tag-Along Sale" has the meaning set forth in Section 4(a) hereof.


" Tag-Along Sale Date" has the meaning set forth in Section 4(b) hereof.


" Tag-Along Sale Notice" has the meaning set forth in Section 4(b) hereof.


" Tag-Along Selling Blackstone Encore Stockholder" has the meaning set forth in Section 4(a) hereof.


10


" Tag-Along Stockholder" or " Tag-Along Stockholders" has the meaning set forth in Section 4(a) hereof.


" Third Party" means any Person other than the Company, the Management Stockholders and their respective Affiliates.

" Transfer" or " transfer" means a transfer, sale, assignment, pledge, incurrence or assumption of any encumbrance, hypothecation or other disposition, whether directly or indirectly, and whether pursuant to the creation of a derivative security, the grant of an option or other right, the imposition of a restriction on disposition or voting by operation of law or otherwise. When used as a verb, " transfer" shall have the correlative meaning. In addition, " transferred" and " transferee" shall have the correlative meanings.


" Transferor" has the meaning set forth in Annex I hereof.


2. Limitations on Transfer .

(a) Until the earliest to occur of (i) the date on which a Change in Control occurs, (ii) the date that is two years and one day after the expiration of any Company or underwriter " lock-up" period applicable to a Management Stockholder following an Initial Public Offering or Public Company Merger (provided that any " lock-up" period imposed by the Company shall not exceed one hundred eighty (180) days, for purposes of calculating the time period in this paragraph (a)) or (iii) subject to the prior expiration of any such Company or underwriter " lock-up" period, the date that is seven years from the date hereof (the period ending on the earlier of (i), (ii) or (iii), the " Lapse Date" ), except as required by law, no Management Stockholder shall transfer any Shares (other than a transfer pursuant to Section 2 through Section 7 hereof, or any transfer to the Company or a Sponsor or its Affiliates) without the prior written consent of Blackstone L.P.

(i) After the Lapse Date, any Management Stockholder may transfer all or a portion of his or her Shares in accordance with and subject to the provisions of this Agreement (including, without limitation, Section 2(d) hereof).

(ii) Any attempt to transfer any Shares or any rights hereunder in violation of this Section 2 shall be null and void ab initio . The Company shall not record on its stock transfer books or otherwise any transfer of Shares in violation of the terms and conditions set forth herein.

(b) Permitted Transfers . Notwithstanding anything to the contrary contained in this Agreement, but subject to Section 2(d) hereof, at any time, each Management Stockholder may transfer all or a portion of his or her Shares to any of his or her Permitted Transferees and such transfer shall not be subject to Section 6 hereof. A Permitted Transferee of Shares pursuant to this Section 2(b) may transfer its Shares pursuant to this Section 2(b) only to the transferor Management Stockholder or to a Person that is a Permitted Transferee of such transferor Management Stockholder.

(c) Good Termination of Management Stockholders . Notwithstanding anything to the contrary contained in this Agreement, but subject to Sections 2(d) , Section 6 and Section 7 hereof, at any time, each Management Stockholder who
-- End of Preview --
Home| About Us| FAQ| Subscription | Contact Us |