EXHIBIT 10.13
JOINDER AND SUPPLEMENT TO STOCKHOLDERS AGREEMENT
This JOINDER AND SUPPLEMENT TO STOCKHOLDERS AGREEMENT is made as of
________, 1999, among HF Holdings, Inc., a Delaware corporation (the "Company"),
ICON Health & Fitness, Inc., a Delaware corporation ("ICON"), and each of the
persons designated as an Employee Stockholder on the signature pages of this
Agreement (each an "Employee Stockholder" and, collectively, the "Employee
Stockholders").
RECITALS
1. The Company, ICON and certain other parties thereto have entered
into a Stockholders Agreement dated as of September 27, 1999 ("Stockholders
Agreement");
2. The Company granted options to each Employee Stockholder, and each
Employee Stockholder received from the Company, Options to purchase Common
Stock, par value $0.001, of the Company ("Common Stock"); and
3. The parties believe that it is in the best interests of the
Company and the Stockholders (i) to provide that shares of Common Stock
purchased upon the exercise of Plan Options, as hereinafter defined, shall be
transferable only upon compliance with the terms hereof; (ii) to provide the
Company with certain rights with respect to the purchase of shares of Common
Stock from time to time held or to be held by the Employee Stockholders or any
subsequent holder of Employee Shares, as hereinafter defined, under certain
circumstances; and (iii) to set forth their agreements on certain other matters.
AGREEMENT
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. DEFINITIONS. Capitalized Terms defined in the Stockholders Agreement and not
otherwise defined herein are used herein as so defined, and the following terms
shall have the following respective meanings:
1.1. "Call Note" shall mean a promissory note of the Company (a) which shall
bear interest at the rate of interest at which United States Treasury debt
obligations having a two-year maturity (or as close thereto as reasonably
possible) bear interest on the date of issuance of such note; (b) the principal
of, and all accrued and unpaid interest on, which shall be payable, subject to
clauses (c), (d), and (e) of this Section 1.1, in equal installments, the first
of which shall be due upon issuance of the note, and the second and third of
which shall be due on each of the first and second anniversaries of such
issuance, respectively; (c) payment of which shall not be due unless and until
each of the Company and any of its subsidiaries, including without limitation
ICON, shall be entitled to pay funds for the repurchase of shares of the Company
under the terms of any substantial debt obligation, to which the Company and
each subsidiary is, respectively, a party; (d) which shall be subordinated to
all other indebtedness of the Company, and shall otherwise contain terms and
conditions satisfactory to the lenders of the Company; and (e) all or any part
of which the Company may, at its option, prepay.
1.2. "Call Option Price" shall mean the fair market value of such Employee
Shares as of the date of the Call Notice, as determined by the Board of
Directors of the Company (the "Board") in its discretion. The fair market value
determined by the Board shall be binding upon the Company, each Employee
Stockholder, and their respective successors and assigns.
1.3. "Employee Shares" shall mean all shares of Common Stock acquired upon the
exercise of Plan Options held at any time by any Employee Stockholder or any
subsequent holder thereof.
1.4. "Employee Stockholders" shall mean all persons designated as such on the
signature pages of this Agreement and each other Person who hereafter agrees to
become subject to this Agreement as an Employee Stockholder.
1.5. "Estate" shall mean, as to each Employee Stockholder, the estate thereof.
1.6. "Lien" shall mean any mortgage, pledge, lien, security interest, charge,
claim, equity, encumbrance, restriction on transfer or voting, conditional sale
or other title retention device, transfer for the purpose of subjection to the
payment of any obligation, or restriction on the creation of any of the
foregoing; provided, however, that the term "Lien" shall not include
restrictions on transfer of securities imposed by applicable state and federal
securities laws.
1.7. "Plan Options" shall mean all options to purchase Common Stock of the
Company at any time granted to an Employee Stockholder.
1.8. "Significant Public Float" shall be deemed to exist on and after (i) the
date of closing of the Initial Public Offering of Common Stock of the Company if
as of such date there shall be outstanding shares having an aggregate market
value (calculated on the basis of the offering price to the public in such
Public Offering) of $200,000,000 or more and (ii) if a Significant Public Float
(as defined in clause (i) above) shall not have existed as of the date of
closing of the Initial Public Offering, the first date thereafter on which there
shall be outstanding shares having an aggregate market value (calculated on the
basis of the average of the published best bid and ask or published closing
price, through NASDAQ or on a registered exchange, on the five immediately
preceding trading days) of $200,000,000 or more.
1.9. "Termination Event" shall mean, with respect to any Employee Stockholder,
(i) the termination of the employment of such Person with the Company and each
of its Subsidiaries, whether by reason of death, disability, retirement,
resignation, discharge with or without cause or for any other
reason whatsoever, voluntary or involuntary, or (ii) the failure of any Employee
Stockholder to sell his Employee Shares on the terms and pursuant to the
provisions of Section 6 of the Stockholders Agreement, or, after having executed
a written commitment, on the terms and pursuant to the provisions of Section 7
thereof.
2. JOINDER TO STOCKHOLDERS AGREEMENT. On the terms and subject to the
conditions hereof, the parties hereto agree for themselves and for the benefit
of all persons now or hereafter parties to the Stockholders Agreement, that all
of the Employee Stockholders shall be deemed Junior Management Investors for
purposes of the Stockholders Agreement and that Plan Options and all Shares of
Company Common Stock now or hereafter held by the Employee Stockholders shall be
subject to the Stockholders Agreement, as amended and in effect from time to
time, and shall be subject to all the obligations and entitled to all the rights
applicable to Junior Management Securities thereunder; provided, however, that
if and to the extent that provisions applicable to Junior Management Securities
conflict with provisions applicable hereunder to Employee Shares, such conflict
will be resolved by applying to Employee Shares the provisions applicable
hereunder.
3. OPTIONS TO PURCHASE COMMON STOCK.
3.1. Call Option. Each holder of Employee Shares hereby grants the Company an
option (the "Call Option") to purchase all or any part of the Employee Shares
held by such holder at a price per share equal to the Call Option Price,
exercisable by the Company within 455 days after the occurrence of a Termination
Event other than death of the Employee Stockholder, or within 575 days in the
event of death of the Employee Stockholder, with respect to the Employee
Stockholder to whom or to whose Estate the Employee Shares held by such holder
were originally issued.
3.2. Manner of Exercise of Call Option. The Call Option may be exercised by
sending of written notice thereof (the "Call Notice") to all holders of Employee
Shares originally issued to the Employee Stockholder or such Employee
Stockholder's Estate or Legal Representative with respect to which Employee
Stockholder the Termination Event has occurred (the "Call Employee Stockholder
Group"). The Call Notice shall state that the Company has elected to exercise
the Call Option and the number of Employee Shares with respect to which the Call
Option is being exercised.
3.3. Closing. The closing of the purchase of the Employee Shares pursuant to the
exercise of the Call Option shall take place 20 business days from the date the
Call Notice was sent, at the principal office of the Company, or at such other
time and location as the parties to such purchase may mutually determine. At the
closing the Company shall pay to the Call Employee Stockholder Group the
aggregate Call Option Price for the Employee Shares to be purchased pursuant to
the Call Option (i) by delivery of a Call Note or (ii) at the Company's option,
in cash by wire transfer or check. At such time, the Call Employee Stockholder
Group shall deliver to the Company the certificate or certificates representing
the Employee Shares so purchased, each duly endorsed for transfer and with
signature guaranteed, free and clear of any Liens, with any necessary stock
transfer tax stamps affixed.
3.4. Termination. No Call Notice may be sent from and after the existence of a
Significant Public Float.
4. LEGENDS.
4.1. Employee Shares. Each certificate representing Employee Shares shall, in
addition to any other legends prescribed by law or by the Stockholders
Agreement, have the following legend endorsed conspicuously thereupon:
The shares of stock represented by this certificate are also
subject to certain call rights as provided in the Joinder and
Supplement to Stockholders Agreement dated as of September 27,
1999, as amended and in effect from time to time, and were
originally issued to, or were issued in respect of shares
originally issued to, the following Junior Management Investor:
____________.
4.2. Removal. Any person who acquires Common Stock which is not subject to all
or part of the terms of this Agreement shall have the right to have such legends
(or the inapplicable portion thereof) removed from certificates representing
such Common Stock.
5. EFFECT ON EMPLOYMENT. As an inducement to the Company to issue the Employee
Shares to the Employee Stockholders, and as a condition thereto, each Employee
Stockholder acknowledges and agrees that:
(i) neither the issuance of the Employee Shares to any Employee
Stockholder nor anything contained herein shall give any Employee
Stockholder any right to be retained in the employ of the Company,
affect the right of the Company to discharge or discipline such
Employee Stockholder at any time or affect any right of such Employee
Stockholder to terminate his or her employment at any time; and
(ii) neither the Company nor any Affiliate of the Company shall have
any duty or obligation to affirmatively disclose to any Employee
Stockholder, and no Employee Stockholder shall have any right to be
advised of, any material information regarding the Company or
otherwise at any time prior to, upon or in connection with the
purchase of Employee Shares from such Employee Stockholder in
accordance with the provisions hereof.
6. MISCELLANEOUS.
6.1. Notices. Notices and other communications provided for in this Agreement
shall be in writing and shall be sent by certified mail, return receipt
requested, addressed to the party or parties sought to be charged with notice of
the same at the respective addresses set forth below, subject to written notice
of change of address given by any party to the other parties.
If to the Company, to the address set forth in the Stockholders Agreement, as in
effect from time to time.
If to any holder of Plan Options, to such holder at his, her, or its address in
the Company's personnel records (which address the Company agrees to furnish to
any holder of shares of Common Stock for use in connection with this Agreement
upon written request). Notice to the holder of record of any Plan Options shall
be deemed to be notice to the holder of such options for all purposes hereunder.
If to any holder of Common Stock, to such holder at his, her, or its address in
the stock register maintained by the Company (which address the Company agrees
to furnish to any holder of shares of Common Stock for use in connection with
this Agreement upon written request). Notice to the holder of record of any
shares of Common Stock shall be deemed to be notice to the holder of such shares
for all purposes hereunder.
6.2. Change and Modifications; Termination; Actions under this Agreement. This
Agreement may not be orally changed, modified, extended or terminated, nor shall
any oral waiver of any of its terms be effective. This Agreement may be
terminated, changed, modified or extended (i) insofar as it makes the provisions
of the Stockholders Agreement binding upon and inuring to the benefit of the
parties hereto, by amendment or termination of the Stockholders Agreement in
accordance with the provisions thereof; or (ii) insofar as it provides for
different rights and obligations for Employee Shares from those applicable to
Junior Management Securities, by an agreement in writing signed by the Company
and by the holders of at least a majority of the Employee Shares, but not
otherwise. Copies of any such termination, change, extension or modification
shall be sent by the Company to, and be binding upon, each party hereto and each
holder of Employee Shares.
6.3. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors and assigns, and shall inure to the benefit of persons now or
hereafter parties to the Stockholders Agreement.
6.4. Gender and Number. With respect to words used in this Agreement, the
singular form shall include the plural form, the neuter gender shall include the
feminine or masculine gender, and vice versa, as the context requires.
6.5. Descriptive Headings. The descriptive headings of this Agreement are for
convenience of reference only, are not to be considered a part hereof and shall
not be construed to define or limit any of the terms or provisions hereof.
6.6. Counterparts. This Agreement may be executed in multiple counterparts, each
of which shall be deemed an executed original enforceable as against each party
signing such counterpart, but all of which taken together shall constitute one
instrument.
6.7. Severability. In the event that any provision hereof would, under
applicable law, be invalid or unenforceable, such provision shall, to the extent
permitted under applicable law, be construed by modifying or limiting it so as
to be valid and enforceable to the maximum extent possible under applicable law.
The provisions of this Agreement are severable, and in the event that any
provisions hereof should be held invalid or unenforceable in any respect, it
shall not invalidate, render unenforceable or otherwise affect any other
provision hereof.
6.8. Governing Law, Arbitration. This Agreement shall be construed, its validity
determined and disputes arising under it resolved as provided in Section 15 of
the Stockholders Agreement.
6.9. Remedies. The parties hereto shall have all remedies for breach of this
Agreement available to them provided by law or equity. Without limiting the
generality of the foregoing, the parties agree that in addition to all other
rights and remedies available at law or in equity, the parties shall be entitled
to obtain specific performance of the obligations of each party to this
Agreement and immediate injunctive relief, and that in the event any action or
proceeding is brought in equity to enforce the same, no holder of Shares will
urge, as a defense, that there is an adequate remedy at law.
[THIS SPACE INTENTIONALLY LEFT BLANK]
[Jr. Management Stock Option Plan]
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands under seal,
as of the date first above written.
HF HOLDINGS, INC.
By________________________________
Title:
ICON HEALTH & FITNESS, INC.
By________________________________
Title:
[Jr. Management Stock Option Plan]
EMPLOYEE STOCKHOLDERS
_________________________________
_________________________________
_________________________________
_________________________________
_________________________________