Exhibit 10.30
EXECUTION
COPY
LVB ACQUISITION,
INC.
MANAGEMENT STOCKHOLDERS’
AGREEMENT
MANAGEMENT STOCKHOLDERS’
AGREEMENT (this “ Agreement ”), dated as of
September 13, 2007, between LVB Acquisition, Inc. (the “
Company ”), the Majority Stockholder (as defined
below) and each individual listed on Exhibit A attached hereto (the
“ Management Stockholder ”).
WHEREAS, the Management Stockholder
may be the owner of shares of common stock of the Company, $0.01
par value per share (“ Common Stock ”) and/or
may be granted options to purchase Common Stock (the “
Options ”), pursuant to the LVB Acquisition, Inc.
Management Equity Incentive Plan (the “ Plan ”);
and
WHEREAS, as a condition to the
issuance of any shares of Common Stock by the Company to the
Management Stockholder, the Management Stockholder is required to
execute this Agreement; and
WHEREAS, the Management Stockholder,
the Majority Stockholder and the Company desire to enter into this
Agreement and to have this Agreement apply to any shares of Common
Stock acquired by the Management Stockholder from whatever source
(in the aggregate, the “ Shares ”);
NOW THEREFORE, in consideration of
the premises hereinafter set forth, and other good and valuable
consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows.
1. Definitions . As used in
this Agreement, the following capitalized terms shall have the
following meanings:
(a) “ Affiliate ”
shall mean, with respect to any entity, any other corporation,
organization, association, partnership, sole proprietorship or
other type of entity, whether incorporated or unincorporated,
directly or indirectly controlling or controlled by or under direct
or indirect common control with such entity.
(b) “ Board ”
shall mean the Board of Directors of the Company or any committee
appointed by the Board to administer the Plan pursuant to the terms
of the Plan.
(c) “ Cause ”,
when used in connection with the termination of a Management
Stockholders’ Employment, shall have the meaning set forth in
any effective employment agreement or, if none, shall mean, unless
otherwise provided in any applicable stock option grant agreement
entered between the Company and the Management Stockholder with
respect to any Options that may be granted under the Plan, the
termination of the Management Stockholder’s Employment with
the Company and all Affiliates on account of (i) a failure of
the Management Stockholder to substantially perform his or her
duties (other than as a result of physical or mental illness or
injury) that has continued after Biomet, Inc. or the Company has
provided written notice of such failure and the Management
Stockholder has not cured such failure within 30 days
of the date of such written notice, provided
that a failure to meet financial performance expectations shall
not, by itself, constitute a failure by the Management Stockholder
to substantially perform his or her duties; (ii) the
Management Stockholder’s willful misconduct or gross
negligence; (iii) a willful or grossly negligent breach by a
Management Stockholder of the Management Stockholder’s
fiduciary duty or duty of loyalty to the Company or its affiliates;
(iv) the commission by the Management Stockholder of any
felony or other serious crime involving moral turpitude; (v) a
material breach of the Management Stockholder’s obligations
under any agreement entered into between the Management Stockholder
and the Company or any of its Affiliates, which, if such breach is
reasonably susceptible to cure, has continued after Biomet, Inc. or
the Company has provided written notice of such breach and the
Management Stockholder has not cured such failure within 30 days of
the date of such written notice; or (vii) a material breach of
the Company’s written policies or procedures that have been
communicated to the Management Stockholder and that causes material
harm to the Company or its business reputation.
(d) “ Change of Control
” shall mean the occurrence of any of the following events
after the Effective Time: (i) any sale, lease, exchange or
other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of the
Company on a consolidated basis to any Person or group of related
persons for purposes of Section 13(d) of the Exchange Act (a
“ Group ”), together with any Affiliates thereof
other than to a Majority Stockholder; (ii) the approval by the
holders of the outstanding voting power of the Company of any plan
or proposal for the liquidation or dissolution of the Company;
(iii) (A) any Person or Group (other than the Majority
Stockholder) shall become the beneficial owner (within the meaning
of Section 13(d) of the Exchange Act), directly or indirectly,
of Common Stock or common stock of Biomet Inc. (or any intermediary
entity between Biomet Inc. and the Company) representing more than
40% of the aggregate outstanding voting power of the Company,
Biomet Inc. or such intermediary entity, as applicable, and such
Person or Group actually has the power to vote such common stock in
any such election and (B) the Majority Stockholder
beneficially owns (within the meaning of Section 13(d) of the
Exchange Act), directly or indirectly, in the aggregate a lesser
percentage of the voting power of the Company or Biomet Inc. (or
any intermediary entity between Biomet Inc. and the Company), as
applicable, than such other Person or Group; (iv) the
replacement of a majority of the Board over a two-year period from
the directors who constituted the Board at the beginning of such
period, and such replacement shall not have been approved by a vote
of at least a majority of the Board then still in office who either
were members of such Board at the beginning of such period or whose
election as a member of such Board was previously so approved or
who were nominated by, or designees of, a Majority Stockholder;
(v) consummation of a merger or consolidation of the Company
with another entity in which holders of the Common Stock of the
Company immediately prior to the consummation of the transaction
hold, directly or indirectly, immediately following the
consummation of the transaction, less than 50% of the common equity
interest in the surviving corporation in such transaction and the
Majority Stockholder does not hold a sufficient amount of voting
power (or similar securities) to elect a majority of the surviving
entity’s board of directors or (vi) a merger,
recapitalization or other direct or indirect sale by the Majority
Stockholder (including through a public offering) of Common Stock
that results in more than 80% of the Common Stock of the Company
(or any resulting company after
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a merger) owned, directly or indirectly, by the
Majority Stockholder immediately following the Closing, no longer
being so owned by the Majority Stockholder.
(e) “ Code ”
shall mean the Internal Revenue Code of 1986, as
amended.
(f) “ Disability
” shall mean, unless otherwise provided in any applicable
stock option grant agreement entered between the Company and the
Management Stockholder with respect to any Options that may be
granted under the Plan, effective employment agreement or other
written agreement, a permanent disability as defined in the
Company’s or an Affiliate’s disability plans, or as
defined from time to time by the Company, in its
discretion.
(g) “ Effective Time
” shall have the meaning set forth in the Merger
Agreement.
(h) “ Employment
” shall mean employment with the Company or any Affiliate and
shall include the provision of services as a director or consultant
for the Company or any Affiliate. “ Employee ”
and “ Employed ” shall have correlative
meanings.
(i) “ Exchange Act
” shall mean the Securities Exchange Act of 1934, as
amended.
(j) “ Fair Market Value
” shall mean, as of any date:
i. prior to the occurrence of an
Initial Public Offering, the value per share of Common Stock
determined pursuant to a valuation made in good faith by the Board
and based upon a reasonable valuation method; or
ii. following an Initial Public
Offering, (i) the closing price on such day of a share of
Common Stock as reported on the principal securities exchange on
which shares of Common Stock are then listed or admitted to trading
or (ii) if not so reported, the average of the closing bid and
ask prices on such day as reported on the National Association of
Securities Dealers Automated Quotation System or (iii) if not
so reported, as furnished by any member of the National Association
of Securities Dealers, Inc. (“ NASD ”) selected
by the Board. The Fair Market Value of a share of Common Stock as
of any such date on which the applicable exchange or inter-dealer
quotation system through which trading in the Common Stock
regularly occurs is closed shall be the Fair Market Value
determined pursuant to the preceding sentence as of the immediately
preceding date on which the Common Stock is traded, a bid and ask
price is reported or a trading price is reported by any member of
NASD selected by the Board. In the event that the price of a share
of Common Stock shall not be so reported or furnished, the Fair
Market Value shall be determined by the Board in good faith to
reflect the fair market value of a share of Common
Stock.
(k) “ Good Reason
” shall have the meaning set forth in any effective
employment agreement or, if none, shall mean, unless otherwise
provided in any applicable stock option grant agreement entered
between the Company and the Management Stockholder with respect to
any Options that may be granted under the Plan, the occurrence of
the following without the Management Stockholder’s consent
(i) a material diminution in a Management Stockholder’s
duties and responsibilities as of the date of grant of the options,
other than a
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change in such Management Stockholder’s
duties and responsibilities that results from becoming part of a
larger organization following a Change in Control, (ii) a
decrease in a Management Stockholder’s base salary or bonus
opportunity as of the date of grant of the options, other than a
decrease in base salary or bonus opportunity that applies to a
similarly situated class of employees of the Company or its
affiliates or (iii) a relocation of a Management
Stockholder’s primary work location more than 50 miles from
the Management Stockholder’s work location on the grant date
of the option, without the Management Stockholder’s prior
written consent; provided that, within thirty days following the
occurrence of any of the events set forth herein, the Management
Stockholder shall have delivered written notice to the Company of
his or her intention to terminate his or her Employment for Good
Reason, which notice specifies in reasonable detail the
circumstances claimed to give rise to the Management
Stockholder’s right to terminate Employment for Good Reason,
and the Company shall not have cured such circumstances within
thirty days following the Company’s receipt of such
notice.
(l) An “ Initial Public
Offering ” shall be deemed to occur on the effective date
of the first registration statement (other than (i) a
registration relating solely to an employee benefit plan or
employee stock plan, a dividend reinvestment plan, or a merger or a
consolidation, (ii) a registration incidental to an issuance
of securities under Rule 144A of the Securities Act, (iii) a
registration on Form S-4 or any successor form, or (iv) a
registration on Form S-8 or any successor form) filed to register
at least 20% of the total then-outstanding equity interests in the
Company or Biomet Inc. (or any intermediary entity between Biomet
Inc. and the Company) under the Securities Act.
(m) “ Majority
Stockholder ,” for purposes of this Agreement, shall
mean, collectively or individually as the context requires,
Blackstone Group, L.P., The Goldman Sachs Group, Inc., Kohlberg
Kravis Roberts & Co., TPG Capital, L.P. and their
respective Affiliates.
(n) “ Merger Agreement
” shall mean the Agreement and Plan of Merger by and among
Biomet, Inc., LVB Acquisition LLC and LVB Acquisition Merger Sub,
Inc., dated as of December 18, 2006 (amended and restated as
of June 7, 2007).
(o) “ Option Shares
” shall mean Shares acquired through the exercise of
Options.
(p) “ Person ”
means an individual, partnership, corporation, limited liability
company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.
(q) “ Rollover Shares
” shall mean Shares acquired through the rollover of shares
in Biomet, Inc. and/or the investment of cash pursuant to the
Rollover Agreement attached hereto as Exhibit B or through a
similar one-time opportunity to purchase Shares.
(r) “ Securities Act
” shall mean the Securities Act of 1933, as
amended.
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(s) “ Transfer ”
shall mean any transfer, sale, assignment, gift, testamentary
transfer, pledge, hypothecation or other disposition of any
interest. “ Transferee ” and “
Transferor ” shall have correlative
meanings.
2. Investment; Issuance of
Shares .
(a) The Management Stockholder
represents that the Shares are being acquired for investment and
not with a view toward the distribution thereof.
(b) Issuance of Shares . The
Management Stockholder acknowledges and agrees that the certificate
for the Shares shall bear the following legends (except that the
second paragraph of this legend shall not be required after the
Shares have been registered and except that the first paragraph of
this legend shall not be required after the termination of this
Agreement):
The shares represented by this
certificate are subject to the terms and conditions of a Management
Stockholders’ Agreement dated as of September 13, 2007
and may not be sold, transferred, hypothecated, assigned or
encumbered, except as may be permitted by the aforesaid Agreement.
A copy of the Management Stockholders’ Agreement may be
obtained from the Secretary of the Company.
The shares represented by this
certificate have not been registered under the Securities Act of
1933. The shares have been acquired for investment and may not be
sold, transferred, pledged or hypothecated in the absence of an
effective registration statement for the shares under the
Securities Act of 1933 or an opinion of counsel for the Company
that registration is not required under said Act.
Upon the termination of this
Agreement, or upon registration of the Shares under the Securities
Act, the Management Stockholder shall have the right to exchange
any Shares containing the above legend (i) in the case of the
registration of the Shares, for Shares legended only with the first
paragraph described above and (ii) in the case of the
termination of this Agreement, for Shares legended only with the
second paragraph described above.
3. Transfer of Shares; Lock-Up;
Call Rights; Put Rights .
(a) Transfer and Lock-Up of
Shares .
(i) The Management Stockholder
agrees that he or she will not cause or permit the Shares or his or
her interest in the Shares to be sold, transferred, hypothecated,
assigned or encumbered except as expressly permitted by this
Section 3; provided , however , that the Shares
or any such interest may be Transferred (A) on the Management
Stockholder’s death by bequest or inheritance to the
Management Stockholder’s executors, administrators,
testamentary trustees, legatees or beneficiaries, (B) with the
prior written consent of the Board (which consent shall not be
unreasonably withheld), during the Management
Stockholder’s
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lifetime for estate planning purposes and
(C) in accordance with Section 4 of this Agreement,
subject in each case to (x) paragraph (ii) of this
Section 3(a), (y) compliance with all applicable tax,
securities and other laws and (z) the agreement by each
Transferee (other than the Company or as otherwise permitted by the
Company) in writing to be bound by the terms of this Agreement as
if such Transferee had been an original signatory hereto and
provided in any such case that, in the case of a Transfer
pursuant to clauses (A) or (B) above, such Transfer will
not be permitted if it would cause the Company to be required to
register the Common Stock under Section 12(g) of the Exchange
Act.
(ii) The Management Stockholder
agrees that, notwithstanding any provision in this Agreement to the
contrary, he or she will not, without the prior written consent of
the Board, during the period following an Initial Public Offering
or any secondary registered equity offering during which the
Majority Stockholders are subject to underwriter-imposed
restrictions on the transfer of shares of Common Stock (the “
Lock-Up Period ”), (A) offer, pledge, announce
the intention to sell, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, or otherwise
transfer or dispose of, directly or indirectly, any Shares, Options
or other securities convertible into or exercisable or exchangeable
for Common Stock (including without limitation, Common Stock which
may be deemed to be beneficially owned by such Management
Stockholder in accordance with the rules and regulations of the
Securities and Exchange Commission) or (B) enter into any swap
or other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any
such transaction described in clause (A) or (B) above is
to be settled by delivery of Common Stock or such other securities,
in cash or otherwise, provided that such restrictions shall be no
more onerous than those applicable to the Majority
Stockholders.
(iii) If the Company files a
registration statement registering shares held by the Majority
Stockholder in an Initial Public Offering or any secondary
registered equity offering, then the Management Stockholder or his
or her Transferee shall have the right, following expiration of the
Lock-Up Period, to sell (subject to Section 4(b)(iii) hereof)
a number of Shares of Common Stock, not to exceed the product of
(A) the total number of Shares, including any shares of Common
Stock underlying vested Options, owned by the Management
Stockholder or Transferee as of the date such registration
statement was filed and (B) a fraction, the numerator of which
is the aggregate number of Shares of Common Stock in which the
Majority Stockholder has a pecuniary interest that the Company has
registered, and the denominator of which is the aggregate number of
Shares of Common Stock in which the Majority Stockholder had a
pecuniary interest as of the date such registration statement was
filed.
(b) Call Rights .
(i) Except as provided in paragraphs
(ii) and (iii) of this Section 3(b), in the event
the Management Stockholder’s Employment with the Company
terminates for any reason prior to the Agreement Termination Date
(as hereinafter defined), the Company (or its designated assignee)
shall have the right, during the 180-day period following the later
to occur of (A) such termination of Employment and
(B) the date on which the Management Stockholder or Transferee
has held the Shares most recently acquired to be sold pursuant to
this Section
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3(b)(i) for at least six (6) months, to
purchase from the Management Stockholder or the Management
Stockholder’s Transferee, and upon the exercise of such right
the Management Stockholder or such Transferee shall sell to the
Company (or its designated assignee), all or any portion of the
Shares held by the Management Stockholder or Transferee as of the
date as of which such right is exercised at a per Share price equal
to the Fair Market Value of a share of Common Stock determined as
of the date such right is exercised, provided that if such
termination of the Management Stockholder’s Employment occurs
due to the Management Stockholder’s death or Disability or is
effected by the Company without Cause or by the Management
Stockholder for Good Reason, the call right described in this
paragraph (i) shall not apply with respect to such Management
Stockholder’s Rollover Shares.
(ii) In the event that either the
Management Stockholder’s Employment with the Company is
terminated for Cause or the Management Stockholder violates any of
the restrictive covenants set forth in the Plan or in any equity
award grant agreement under the Plan:
(A) in either case prior to the
Agreement Termination Date, the Company (or its designated
assignee) shall have the right, during the 180-day period following
the latest to occur of (x) such termination of Employment,
(y) such violation of a restrictive covenant and (z) the
date on which the Management Stockholder or Transferee has held the
Shares most recently acquired to be sold pursuant to this
Section 3(b)(ii) for at least six (6) months, to purchase
from the Management Stockholder or the Management
Stockholder’s Transferee, and upon the exercise of such right
the Management Stockholder or such Transferee shall sell to the
Company (or its designated assignee), all or any portion of the
Shares held by the Management Stockholder or Transferee as of the
date as of which such right is exercised at a per Share price equal
to (I) in the case of a Rollover Share, the Fair Market Value
of such Share determined as of the date such right is exercised or
(II) in the case of an Option Share, the lesser of (a) the
Fair Market Value of a share of Common Stock determined as of the
date such right is exercised or (b) the exercise price per
Share paid by the Management Stockholder to acquire such Share;
or
(B) in either case following the
Agreement Termination Date, the Management Stockholder shall be
obligated to pay to the Company an amount equal to the amount
which, as a result of such Management Stockholder’s exercise
of Options at any time following, or within one year prior to, the
date of termination of his or her Employment, such Management
Stockholder was required to recognize as income for U.S. federal
income tax purposes (or would have been required to recognize as
income if the Management Stockholder was subject to U.S. federal
income taxes).
(iii) In the event that the
Management Stockholder resigns from Employment with the Company
without Good Reason prior to the fifth anniversary of the Effective
Time, the Company (or its designated assignee) shall have the
right, during the 180-day period following the later to occur of
(A) such termination of Employment and (B) the date on
which the Management Stockholder or Transferee has held the Shares
most recently acquired to be sold pursuant to this
Section 3(b)(iii) for at least six (6) months, to
purchase from the Management Stockholder or the Management
Stockholder’s Transferee, and upon the exercise of such right
the Management Stockholder or such Transferee shall sell to the
Company (or its designated assignee), all or any portion of the
Shares held by the Management Stockholder or Transferee as of the
date as of which such right is exercised at a per Share price equal
to (I) in the case of a
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Rollover Share, the Fair Market Value of a share
of Common Stock determined as of the date such right is exercised
or (II) in the case of an Option Share, an amount equal to
(a) the Fair Market Value of a share of Common Stock
determined as of the date such right is exercised less (b) the
amount equal to 20% of the amount (if any) by which the Fair Market
Value of a share of Common Stock determined as of the date such
right is exercised exceeds the Exercise Price per share of Common
Stock (as defined under the Plan or any successor plan).
(iv) The Company (or its designated
assignee) shall exercise the call rights described in this
Section 3(b) by delivering to the Management Stockholder or
Transferee, as applicable, a written notice specifying its intent
to purchase Shares held by the Management Stockholder or Transferee
(the “ Call Notice ”) and the number of Shares
to be purchased. The Company’s call right shall be deemed
exercised as of the date on which the Company delivers such Call
Notice to the Management Stockholder or Transferee. Such purchase
and sale shall occur on such date as the Company (or its designated
assignee) shall specify, which date shall be no later than
forty-five (45) days after the end of the fiscal quarter in
which the Call Notice is delivered. The Company will use
commercially reasonable efforts to make the payment for the Shares
in cash on the date of such purchase and sale; provided
that, despite using such efforts, if such payment will result in
the violation of the terms or provisions of, or result in
a
