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STOCKHOLDERS' AGREEMENT

Shareholder Agreement

STOCKHOLDERS' AGREEMENT | Document Parties: MEDSOURCE TECHNOLOGIES INC | Accellent Holding Corp | Bain Capital Integral Investors, LLC  | BCIP TCV, LLC  | Accellent Holding LLC You are currently viewing:
This Shareholder Agreement involves

MEDSOURCE TECHNOLOGIES INC | Accellent Holding Corp | Bain Capital Integral Investors, LLC | BCIP TCV, LLC | Accellent Holding LLC

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Title: STOCKHOLDERS' AGREEMENT
Governing Law: New York     Date: 12/19/2005
Law Firm: Simpson Thacher & Bartlett LLP; Kirkland & Ellis LLP    

STOCKHOLDERS' AGREEMENT, Parties: medsource technologies inc , accellent holding corp , bain capital integral investors  llc  , bcip tcv  llc  , accellent holding llc
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Exhibit 10.12

 

STOCKHOLDERS’ AGREEMENT

 

This Stockholders’ Agreement (this “Agreement”), is entered into as of November 22, 2005 by and among Accellent Holding Corp., a Delaware corporation (the “Company”), Bain Capital Integral Investors, LLC (“Bain”), BCIP TCV, LLC (“BCIP”) and Accellent Holding LLC, a Delaware limited liability company (the “KKR Investor”).

 

RECITALS

 

WHEREAS, Accellent Acquisition Corp., a Delaware corporation (“AAC”), and Accellent Inc., a Delaware corporation, have entered into that certain Agreement and Plan of Merger dated as of October 7, 2005 (the “Merger Agreement”), pursuant to which a wholly owned subsidiary of AAC will merge (the “Merger”) with and into Accellent Inc. with Accellent Inc. continuing as the surviving corporation after the merger;

 

WHEREAS, pursuant to the terms of the Merger Agreement, AAC will acquire 100% of the outstanding shares of common stock, par value $.01 per share, of Accellent Inc. (the “Common Stock”);

 

WHEREAS, at the effective time of the Merger, the Company will own 100% of AAC, AAC will own 100% of Accellent Inc., and  (i) the KKR Investor and (ii) Bain and BCIP (taken together) will collectively own 75%  and 25%, respectively, of the aggregate outstanding shares of Common Stock of the Company held by Bain, BCIP and the KKR Investor; and

 

WHEREAS, Bain, BCIP, the KKR Investor and the Company wish to enter into this Agreement providing for certain rights and obligations of Bain, BCIP the KKR Investor and the Company.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration, the parties hereto agree as follows:

 

1.                                        Definitions

 

As used in this Agreement, the following capitalized terms shall have the following meanings:

 

Affiliate :  When used with respect to a specified Person, another Person that, either directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified.

 

Bain :  Bain Capital Integral Investors, LLC; provided, that at such time as Bain and its Affiliates own no shares of Common Stock, for all purposes of this Agreement other than Section 5(a), “Bain” shall mean the Bain Holder holding the greatest percentage of Bain Shares, so long as such Bain Holder holds at least 10% of the shares of Common Stock held by Bain at the effective time of the Merger (as appropriately adjusted for stock splits, reverse stock splits,

 



 

recapitalization and similar transactions).  Under no circumstances will any person other than Bain Capital Integral Investors LLC have any rights under Section 5(a).

 

Bain Holder : Bain, BCIP and any Person to whom Bain or BCIP transfers shares of Common Stock and any transferee thereof, in either case who is required by this Agreement to be bound by the provisions of this Agreement.

 

Bain Shares :  As of any date of determination, the shares of Common Stock then held by the Bain Holders.

 

Board :  The Board of Directors of the Company.

 

Exempt Transaction :  Has the meaning set forth in Section 2(c) hereof.

 

KKR Affiliate :  With respect to the KKR Investor shall mean a Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with the KKR Investor.

 

KKR Holder :  The KKR Investor and any Person to whom the KKR Investor transfers shares of Common Stock and any transferee thereof, in either case who is required by this Agreement to be bound by the provisions of this Agreement.

 

KKR Shares :  As of any date of determination, the shares of Common Stock then held by the KKR Holders.

 

Person :  An individual, partnership, limited liability company, joint venture, corporation, trust or unincorporated organization, a government or any department, agency or political subdivision thereof or other entity.

 

Private Sale :  Any sale of securities other than a sale made in a public distribution pursuant to an effective registration statement under the Securities Act.

 

Public Offering :  Any sale of the issued and outstanding shares of Common Stock made in a public distribution pursuant to an effective registration statement under the Securities Act (other than a registration statement on Form S-4 or Form S-8 or any similar or successor forms).

 

Securities Act :  The Securities Act of 1933, as amended from time to time and the rules and regulations promulgated thereunder.

 

2.              (a)  ” Tag-Along” Right With Respect to Private Sales by KKR Holders .  (i)  Private Sales of Shares by KKR Holders .  Subject to the last sentence of Section 3(a), with respect to any proposed Private Sale of any KKR Shares by a KKR Holder or KKR Holders (collectively, for purposes of this Section 2, the “KKR Holder”) during the term of this Agreement to a Person (a “Proposed Purchaser”), other than pursuant to an Exempt Transaction (as defined in Section 2(c)), Bain and the other Bain Holders (collectively, for purposes of this Section 2, “Bain”) shall have the right and option, but not the obligation, to participate in such

 

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sale, on the same terms and subject to the same conditions as the sale by the KKR Holder, for the number of Bain Shares owned by Bain equaling the number derived by multiplying the total number of KKR Shares which the KKR Holder proposes to sell (the “Proposed Number of Shares”) by a fraction, the numerator of which is the total number of Bain Shares held by Bain and the denominator of which is the sum of (A) the total number of Bain Shares, (B) the total number of KKR Shares, and (C) the total number of shares of Common Stock (determined on a fully diluted basis) owned by Persons entitled to the benefits of any other “tag-along” rights arising as a result of such sale (“Other Tag Shares”).  Any transfer by the stockholders of a KKR Holder of any interests in such KKR Holder shall for purposes of this Section 2 be deemed to be a transfer of a proportionate number of the KKR Shares held by such KKR Holder.

 

(ii)            Notices .  The KKR Holder shall notify, or cause to be notified, Bain in writing of each proposed Private Sale subject to Section 2(a)(i) above.  Such notice shall set forth:  (A) the Proposed Number of Shares, (B) the name and address of the Proposed Purchaser, (C) the proposed amount of consideration, the material terms and conditions of such sale (and if the proposed consideration is not cash, the notice shall describe the terms of the proposed consideration) and the proposed closing date of such sale, (D) the total number of KKR Shares and the total number of shares of Common Stock (determined on a fully diluted basis) owned by Persons entitled to the benefits of any other “tag-along” rights arising as a result of such sale and (E) that the Proposed Purchaser has been informed of the “tag-along” right provided for in this Section 2(a) and has agreed to purchase Bain Shares held by Bain in accordance with the terms hereof.  The “tag-along” right may be exercised by Bain by delivery of a written notice from Bain to the KKR Holder (the “Tag-Along Notice”) within 15 days following receipt of the notice specified in the preceding sentence.  The Tag-Along Notice shall state the amount of Bain Shares that Bain proposes to include in such sale to the Proposed Purchaser.  If Bain delivers a Tag-Along Notice to the KKR Holder, Bain shall (A) prior to closing of any such sale, execute and deliver (or cause to be executed and delivered) any purchase agreement or other documentation required by the Proposed Purchaser to consummate the sale (including without limitation all legal opinions, cross-receipts and certificates), which purchase agreement and other documentation shall be on terms substantially identical to those executed by the KKR Holder (it being understood that Bain shall only be required to participate severally on a pro rata basis (based on the number of shares of Common Stock to be sold) in any indemnification or other obligations that the KKR Holder agrees to provide in connection with such sale (other than any such obligations that relate solely to a particular stockholder, such as indemnification with respect to representations and warranties given by a stockholder regarding such stockholder’s title to and ownership of Common Stock and authority to enter into such agreement, in which case only such stockholder shall be liable), and (B) at the closing of any such sale, deliver to the Proposed Purchaser the certificate or certificates representing the Bain Shares to be sold pursuant to such sale by Bain, duly endorsed for transfer with signatures guaranteed, against receipt of the purchase price thereof.

 

(iii)           Number of Shares to be Sold .  If a Tag-Along Notice is received pursuant to Section 2(a)(ii), Bain shall be permitted to sell to the Proposed Purchaser up to the number of Bain Shares determined as set forth in Section 2(a)(i) above (the “Proposed Bain Shares”), and the KKR Holder shall be permitted to sell to the Proposed Purchaser up to a number of shares of

 

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Common Stock (the “Proposed KKR Shares”) equal to the Proposed Number of Shares multiplied by a fraction, the numerator of which is the total number of KKR Shares held by the KKR Holder, and the denominator of which is the sum of the total number of Bain Shares, KKR Shares, and Other Tag Shares; provided that the KKR Holder and Bain shall each have the right to sell a number of additional shares of Common Stock up to the excess of the Proposed Number of Shares over the sum of the number of Proposed KKR Shares and Proposed Bain Shares and the number of Other Tag Shares being sold in such transaction pursuant to other tag-along rights arising as a result of such sale, if the Proposed Purchaser wants to purchase such additional shares.  If both the KKR Holder and Bain desire to sell such additional shares to the Proposed Purchaser, the number of such additional shares of Common Stock to be sold by each of Bain and the KKR Holder shall be determined on a pro rata basis based on the total number of shares owned by the KKR Holder and its Affiliates on the one hand and Bain and its Affiliates on the other hand.  If no Tag-Along Notice is received by the KKR Holder pursuant to Section 2(a)(ii), the KKR Holder shall have the right to sell to the Proposed Purchaser up to the Proposed Number of Shares on terms and conditions no more favorable in any material respect to the KKR Holder than those stated in the Tag-Along Notice within 90 days after the expiration of the notice period.  Any securities not transferred during such 90-day period shall again be subject to the tag-along rights pursuant to the terms of this paragraph.

 

(b)            Piggyback Registration Rights With Respect to Public Sales by KKR Holders .  (i)  Public Offering of Shares by KKR Holders .  With respect to any proposed Public Offering of any KKR Shares by a KKR Holder during the term of this Agreement, Bain shall have the right and option, but not the obligation (and subject to the cutback provisions in Section 2(b)(iii) below), to participate in such public distribution on the same terms and subject to the same conditions as the sale by the KKR Holder for up to a maximum number of Bain Shares equal to the product of (x) the total number of Bain Shares and (y) a fraction, the numerator of which is the number of KKR Shares requested to be registered in the Public Offering and the denominator of which is the total number of KKR Shares.

 

(ii)            Notices .  The KKR Holder shall notify, or cause to be notified, Bain in writing (a “Notice”) of each proposed Public Offering (a “Proposed Registration”).  Such notice may be given before the filing of such registration statement and need not specify any price or other terms or conditions of such sale.  If within 10 days of the delivery of such Notice to Bain, the KKR Holder receives from Bain a written request (a “Request”) to register shares of Common Stock held by Bain (which Request will be irrevocable), shares of Common Stock will be so registered as and to the extent provided in this Section 2(b) if KKR Shares are so registered.  If Bain delivers a Request to the KKR Holder, Bain will participate in such public distribution, if any, at the same price and on the same terms and conditions as the KKR Holder, which price and other terms and conditions will be determined on behalf of the KKR Holder and Bain by the KKR Holder in its sole discretion (after reasonable consultation with Bain if at such time Bain is entitled to information rights pursuant to either sentence of Section 5(b)).  Nothing in this Agreement shall create any obligation on the part of the KKR Holder to cause a registration statement to become effective under the Securities Act or to sell any shares of Common Stock pursuant to an effective registration statement under the Securities Act.

 

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(iii)           Number of Shares to be Sold .  If a registration pursuant to this Section 2(b) involves an underwritten offering and the managing underwriter advises the Company in writing that, in its opinion, the number of shares of Common Stock requested to be included in such registration exceeds the number of shares of Common Stock which can be sold in such offering, so as to be likely to have an adverse effect on the price, timing or distribution of the shares of Common Stock offered in such offering as contemplated by the Company or that the inclusion of additional selling stockholders is likely to have such an adverse effect, then the Company will include in such registration (A) the number of shares of Common Stock held by Bain equal to the number derived by multiplying the total number of shares which, in the opinion of such managing underwriter, can be sold without having the adverse effect referred to above (the “Piggyback Aggregate Registration Number”) by a fraction, the numerator of which is the total number of Bain Shares held by Bain and the denominator of which is the sum of (i) the total number of Bain Shares, (ii) the total number of KKR Shares, and (iii) the total number of shares of Common Stock (determined on a fully diluted basis) held by Persons entitled to the benefits of any other piggyback registration rights arising as a result of such registration (“Other Piggyback Shares”) and (B) the number of shares of Common Stock held by the KKR Holder equal to the Piggyback Aggregate Registration Number multiplied by a fraction, the numerator of which is the total number of KKR Shares and the denominator of which is the sum of (i) the total number of Bain Shares, (ii) the total number of KKR Shares, and (iii) the total number of Other Piggyback Shares; provided that if the Piggyback Aggregate Registration Number is in excess of the number of KKR Shares and Bain Shares determined under clauses (A) and (B) above together with the number of Other Piggyback Shares to be included in such registration pursuant to other piggyback registration rights arising as a result of such registration, then the Company shall also include in such registration a number of additional KKR Shares and Bain Shares equal to such excess, which shall be allocated between Bain and the KKR Holder on a pro rata basis based on the total number of shares owned by the KKR Holder and its Affiliates on the one hand and Bain and its Affiliates on the other hand; and provided further that in the event the aggregate number of shares of Common Stock to be sold in any such public distribution is increased or decreased, then the number of Bain Shares which Bain shall sell in such public distribution shall be increased or decreased by the product of (i) the number of shares of Common Stock by which the total number of shares of Common Stock in such public distribution is increased or decreased and (ii) a fraction the numerator of which equals the number of Bain Shares held by Bain originally so registered and the denominator of which is the total number of shares of Common Stock originally so registered.

 

(iv)           Intentionally Omitted .

 

(v)            Holdback Agreement .  (A) In connection with the initial Public Offering, Bain agrees not to effect any public sale or distribution, including any sale pursuant to Rule 144 (or any successor provision) under the Securities Act, of any shares of Common Stock (other than dispositions made pursuant to the piggyback registration rights described in this Section 2(b)), 180 days (or such lesser period as the managing underwriters may permit) after the effective date of such registration, and (B) in connection with each subsequent Public Offering, Bain agrees not to effect any public sale or distribution, including any sale pursuant to Rule 144 (or any successor provision) under the Securities Act, of any shares of Common Stock (other

 

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than dispositions made pursuant to the piggyback registration rights described in this Section 2(b), within 30 days before and a number of days after to be determined by the managing underwriter and the KKR Investor; provided however , that notwithstanding the restrictions set forth in clauses (A) and (B) above, in no event will Bain be subject to restrictions on sale in connection with any Public Offering that are more restrictive than those applicable to the KKR Investor for each such Public Offering.

 

(vi)           Additional Agreements .  Bain agrees that it will execute and deliver or cause to be executed and delivered such other agreements and other documents (such as legal opinions, cross-receipts and certificates) as the KKR Holder itself is delivering or as the KKR Holder may otherwise reasonably request to implement the provisions of this Section 2(b); provided that such additional agreements will be on terms and conditions reasonably acceptable to Bain (it being understood that Bain shall not be required to make any representations or warranties to the Company or the underwriters or any other Person (other than representations and warranties regarding Bain and its intended method of distribution) nor to undertake any indemnification obligations to the Company or any other Person with respect thereto, except as described in clause (vii) below).

 

(vii)          Indemnification .

 

(A)           With respect to any proposed Public Offering in which a Bain Holder is participating pursuant to the terms of this Agreement, the Company will, and it hereby does, indemnify and hold harmless, to the extent permitted by law, the seller of any Bain Shares covered by such registration statement, each controlling Affiliate of such seller and their respective directors and officers, members or general and limited partners (including any director, officer, affiliate, employee, agent and controlling Person of any of the foregoing) (collectively, the “ Indemnified Parties ”), against any and all losses, claims, damages or liabilities, joint or several, and expenses to which such Indemnified Party may become subject under the Securities Act, common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof, whether or not such Indemnified Party is a party thereto) arise out of or are based upon (a) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such securities were registered under the Securities Act, any preliminary, final or summary prospectus contained therein, or any amendment or supplement thereto, or (b) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in light of the circumstances under which they were made) not misleading, and the Company will reimburse such Indemnified Party for any legal or any other expenses reasonably incurred by it in connection with investigating or defending against any such loss, claim, liability, action or proceeding; provided that the Company shall not be liable to any Indemnified Party in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement or amendment or supplement thereto or in any such preliminary, final or summary prospectus in reliance upon and

 

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in conformity with written information furnished to the Company through an instrument duly executed by such seller specifically stating that it is for use in the preparation thereof; and provided , further , that the Company will not be liable to any Person who participates as an underwriter in the offering or sale of Bain Shares or any other Person, if any, who controls such underwriter within the meaning of the Securities Act, under the indemnity agreement in this clause (vii) with respect to any preliminary prospectus or the final prospectus or the final prospectus as amended or supplemented, as the case may be, to the extent that any such loss, claim, damage or liability of such underwriter or controlling Person results from the fact that such underwriter sold such securities to a person to whom there was not sent or given, at or prior to the written confirmation of such sale, a copy of the final prospectus or of the final prospectus as then amended or supplemented, whichever is most recent, if the Company has previously furnished copies thereof to such underwriter.  For purposes of the last proviso to the immediately preceding sentence, the term “prospectus” shall not be deemed to include the documents, if any, incorporated therein by reference, and no Person who participates as an underwriter in the offering or sale of Bain Shares or any other Person, if any, who controls such underwriter within the meaning of the Securities Act, shall be obligated to send or give any supplement or amendment to any document incorporated by reference in any preliminary prospectus or the final prospectus to any person other than a person to whom such underwriter had delivered such incorporated document or documents in response to a written request therefor.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such seller or any Indemnified Party and shall survive the transfer of such securities by such seller.

 

(B)            In connection with any registration statement in which a Bain Holder or KKR Holder is participating, each such holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such registration statement or prospectus and, to the extent permitted by law.  The Company will require, as a condition to including any Bain Shares or KKR Shares, as applicable, in any registration statement filed in accordance with this Agreement, that the Company shall have received an undertaking reasonably satisfactory to it from the prospective seller of such Bain Shares or KKR Shares or any underwriter to indemnify and hold harmless (in the same manner and to the same extent as set forth in c


 
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