EXHIBIT 10.26
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED FROM TIME TO TIME, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SAID
ACT.
WARRANT
TO PURCHASE COMMON STOCK OF
SUBURBAN OSTOMY SUPPLY CO., INC.
January 22, 1996
THIS CERTIFIES THAT, for value received, THE FIRST NATIONAL BANK OF BOSTON
or its registered assigns (hereinafter called the "Holder") is entitled to
purchase at any time and from time to time after January 22, 1996 until the
Warrant Expiration Date (defined below) from SUBURBAN OSTOMY SUPPLY CO., INC.
(the "Company"), a Massachusetts corporation, 556 fully paid and non-assessable
shares (the "Original Number of Warrant Shares") of Common Stock (defined below)
at the Purchase Price (defined below). The exercise of this Warrant shall be
subject to the provisions, limitations and restrictions herein contained. The
Original Number of Warrant Shares purchasable hereunder and the Purchase Price
are subject to adjustment as hereinafter set forth.
AGREEMENTS
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
Section 1. (a) Definitions. The following words and terms as used in this
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Warrant shall have the following meanings:
"Additional Shares of Common Stock" means Common Stock of the Company,
including treasury shares, issued on or after the Business Day prior to January
22, 1996, except for: (i) shares issued pursuant to the incentive stock option
agreements, each dated July 3, 1995 made by the Company with each of Herbert P.
Gray, Donald H. Benovitz, Stephen N. Aschettino and John Manos, (ii) in addition
to the shares described in clause (i), shares in the aggregate not exceeding,
upon issuance thereof, up to ten percent (10%) of the Outstanding Shares, which
shares are issued to employees of the Company or are issued upon exercise of
options granted to such employees, in each case as approved from time to time by
the Company's Board of Directors, (iii) Common Stock issued upon the exercise of
this Warrant, and (iv) Common Stock issued to any Person in consideration of the
acquisition of stock or assets for such Person.
"Affiliate," with respect to any specified Person controlling, controlled
by, or under common control with such specified Person. For the purposes of
this definition the term "control"
when used with respect to any Person, means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the meaning of the
term "control" or otherwise can directly or indirectly vote more than 10% of the
securities having ordinary voting power for the selection of directors of such
Person.
"Business Day" means a day other than a Saturday, a Sunday or a day on
which banking institutions in Boston, Massachusetts are authorized or obligated
by law or required by executive vote generally in the election of directors of
the Company.
"Common Stock" when used with reference to the stock of the Company means
and includes the Company's authorized Common Stock as constituted on the
Business Day prior to January 22, 1996 and the Company's common stock thereafter
authorized and shall not be limited to a fixed sum or a percentage of par value
in respect of the rights of the holders thereof to receive dividends and to
participate in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution, or winding-up of the Company.
"Commission" means the Securities and Exchange Commission and any other
similar or successor agency of the federal government of the United States of
America administering the Securities Act or the Exchange Act.
"Convertible Securities" means any securities issued by the Company which
are convertible into, or exchangeable or exercisable for, directly or
indirectly, shares of Common Stock.
"Corporate Office" means the Company's office at 75 October Hill Road,
Holliston, Massachusetts 01746 (or such other office as the Company may
designate from time to time by written notice to the Warrantholder).
"Credit Agreement" - that certain Credit Agreement dated as of July 3,
1995, as amended as of January 22, 1996 between the Holder, the Company and St.
Louis Ostomy Distributors, Inc.
"Exchange Act" means the Securities Exchange Act of 1934, and any similar
or successor
federal statute, and the rules and regulations of the Commission thereunder.
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"Market Price" of a share of Common Stock of the Company shall be:
(i) if the Common Stock is listed on a national securities exchange, the
average closing price of such Common Stock on the principal national securities
exchange on which such Common Stock is traded for the ten trading days
immediately preceding on the date for which any determination of Market Value is
made for any purpose hereunder (a "Determination Date"), or, if there shall have
been no sales on any such exchange during the ten trading days immediately
preceding the Determination Date, the average of the highest bid and lowest
asked prices on such principal exchange during such ten trading days; or
(ii) if the Common Stock is not listed on a national securities exchange,
the closing price of such Common Stock on the largest principal securities
exchange on which such Common Stock is traded on the Determination Date, or, if
the Common Stock is not listed on a securities exchange, such closing price on
the NASDAQ National Market System, or, if there shall have been no sales on the
Determination Date on such exchange or the NASDAQ National Market System, as the
case may be, the average of highest bid and lowest asked prices during the ten
trading days immediately preceding the Determination Date on such exchange or
the NASDAQ National Market System, as applicable; or
(iii) if the Common Stock is not listed on a securities exchange or the
NASDAQ National Market System, the average of the representative bid and asked
prices of the Common Stock as of the close of trading during the ten trading
days immediately preceding the Determination Date as quoted in the NASDAQ
System; or
(iv) if the Common Stock is not quoted in the NASDAQ System, the average
of the high and low bid and asked prices during the ten trading days immediately
preceding the Determination Date in the over-the-counter market as reported by
the National Quotation Bureau, Incorporated, or any similar successor
organization; or
(v) if the Common Stock is not listed on or traded in any recognized
securities market, such value as the Company and the Holder may agree upon; or
(vi) if the Company and the Holder cannot agree on a value for the Common
Stock within thirty (30) days after the Company or the Holder has made a written
proposal with respect to such value to the other party, the value of the Company
as determined by an independent appraisal, conducted by an independent financial
expert selected by the Company which expert must be reasonably satisfactory to
the Holder, divided by the number of Outstanding Shares as of such date. In
making the independent appraisal, the independent financial expert shall not
consider items such as discounts for minority interests, lack of marketability
of the Common Stock or blockage. The fees and expenses incurred by the
independent financial expert in rendering its independent appraisal shall be
paid one half by the Warrantholder and one half by the Company. Such independent
financial expert shall complete and deliver its independent appraisal with sixty
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(60) days after the date of such written proposal. If such independent
appraisal is not so timely delivered the Warrantholder, acting in good faith,
shall set such value.
"NASDAQ System" means the inter-dealer quotation system operated by the
National
Association of Securities Dealers, Inc.
"Number of Warrant Shares" - at any time means: (a) if no adjustments have
theretofor been made pursuant to the provisions hereof, the Original Number of
Warrant Shares purchasable under this Warrant, and (b) if any one or more of
such adjustments have been so made, the amount to which the Original Number of
Warrant Shares shall have been so adjusted of Common Stock purchasable under
this Warrant.
"Outstanding Shares" shall mean all of the shares of Common Stock
exercisable or outstanding on the applicable date as if all options and rights
to convert or exchange Convertible Securities outstanding on such date had been
exercised, whether or not exercisable on such date.
"Person" means in individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or an agency or political subdivision thereof) or other entity of
any kind.
"Public Offering" shall mean the filing by the Company of a registration
statement under the Securities Act on any form with the exception of Form S-8 or
its then equivalent.
"Purchase Price" means, as of any date: (a) if no adjustments have
theretofor been made pursuant to the provisions hereof, One Hundred Twenty-Five
Dollars ($125.00) per Warrant Share (the "Original Purchase Price") and (b) if
any one or more such adjustments have been so made, the amount to which the
Original Purchase Price shall have been so adjusted pursuant to the provisions
hereof.
"Redemption Event" means the occurrence of the repayment in full of the
Reducing Revolver and the termination of the commitments thereunder, other than
following acceleration of the Reducing Revolver by the "Lender" under the Credit
Agreement.
"Redemption Price" means Ninety Thousand Dollars ($90,000.00).
"Reducing Revolver" means the reducing revolving line Of credit pursuant to
the Credit Agreement.
"Securities Act" means the Securities Act of 1933, and any similar or
successor federal
statute, and the rules and regulations of the Commission thereunder.
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"Significant Shareholder Transaction" means a Transfer by the Significant
Holders to Persons who are not Affiliates of such Significant Shareholder of any
of the shares of Common Stock held by them on the date hereof (treating for such
purpose any outstanding Convertible Securities as being the number of shares of
Common Stock issuable upon their conversion).
"Significant Shareholders" means any of Summit Investors II, L.P., Summit
Ventures III, L.P. and Summit Subordinated Debt Fund, L.P.
"Transfer" means, with respect to this Warrant, the Warrant Shares, or any
interest therein, the Common Stock or any Convertible Securities, or any
interest therein, any disposition thereof, whether by sale, assignment, gift,
exchange, pledge, hypothecation or otherwise.
"Warrant Expiration Date" means January 22, 2006.
"Warrant Redemption Notice" means a notice delivered pursuant to Section 19
concerning
redemption of Warrants.
"Warrantholder" means, as of any day, the then registered holder of the
Warrants and
the then registered holder of the Warrant Shares.
"Warrants" means this Warrant and the additional Warrants which may be
issued
hereunder.
"Warrant Shares" means all the shares of the Common Stock purchased or
purchasable
by the Warrantholder upon the exercise of this Warrant.
(b) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references herein (A) to
any Person other than the Company, shall be deemed to include such Person other
than the Company, shall be deemed to include such Person's successors and
assigns; (B) to the Company, shall be deemed to include the Company's
successors, and (C) to any applicable law deemed or referred to herein, shall be
deemed references to such applicable law as the same may have been or may be
amended or supplemented from time to time.
(ii) When used in this Agreement the words "herein," "hereof" and
"hereunder," and words of similar import, shall refer to this Agreement as a
whole and not to any provision of this Agreement, and the words "Section" and
"Exhibit" shall refer to Sections of, and Exhibits to, this Agreement unless
otherwise specified.
(iii) Whenever the context so requires, the neuter gender includes the
masculine or feminine, and the singular number includes the plural, and vice
versa.
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Section 2. Representations and Warranties. The Company represents and
------------------------------
warrants to, and covenants with the Holder of this Warrant or any pall thereof
as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts. The Company has all necessary corporate power and authority, and
has taken all necessary corporate action to execute and deliver and to perform
its obligations under this Warrant, to authorize and reserve for issuance, and
to issue and deliver the Warrant Shares. Upon such issuance, such Common Shares
will be validly issued, fully paid and nonassessable, with no personal liability
attaching to the ownership thereof. The issuance of such Common Shares is not
subject to any preemptive or other similar rights.
(b) This Warrant has been duly authorized, executed and
delivered by the Company and constitutes its legal, valid and binding
obligation, enforceable against the Company in accordance with its terms, except
as rights to indemnity and contribution hereunder may be limited by applicable
law, and except as may be limited by bankruptcy, insolvency, reorganizations,
moratorium or similar laws affecting the enforceability of creditors' rights
generally and subject to general principles of equity.
(c) The execution, delivery, performance and issuance by the
Company of this Warrant and the issuance of Warrant Shares do not and will not,
with or without the giving of notice of the lapse of time, or both:
(i) violate any terms or provisions of the Company's Articles of
Incorporation or Bylaws;
(ii) result in a breach of, constitute a default under, result in
the termination or modification of, or result in the
creation or imposition of any lien, security interest,
charge or encumbrance upon any of the properties of the
Company pursuant to any material indenture, mortgage, deed
of trust, contract, commitment or other material agreement
or instrument to which the Company is a party or by which
any of the Company's properties or assets are bound or
affected; or
(iii) violate any applicable law, rule, regulation, judgment,
order or decree of any government or governmental agency,
instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its properties or
assets.
(d) No consent, approval, authorization, order, registration,
license or permit of any court, government or governmental agency,
instrumentality or other regulatory body or
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official is required for the valid authorization, execution, issuance, sale,
delivery, and performance by the Company of this Warrant or the Warrant Shares.
(e) That all Common Stock which may be issued upon the exercise
of the rights represented by this Warrant will, upon issuance, be validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issue thereof; and
(f) That during the period from which the rights represented by
this Warrant may be exercised, the Company will at all times have authorized,
and reserved for the purpose of issue and delivery upon exercise of the rights
evidenced by this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant.
Section 3. Reserved.
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Section 4. Ownership of Warrants. The Company may deem and treat the
---------------------
Person in whose name the Warrants are registered as the holder and owner thereof
for all purposes, notwithstanding any notations of or writing thereon made by
anyone other than the Company, and shall not be affected by any notice to the
contrary, until presentation of such Warrants for Transfer or replacement as
provided in Section 5. The Company shall maintain at the Corporate Office a
register for the Warrants in which the Company shall record the name and address
of the Person in whose name each Warrant has been issued or to whom the Wan-ants
have been transferred.
Section 5. Transfer and Replacement. The Warrants and all rights
------------------------
thereunder may be Transferred upon presentation of the Warrants, with the
Assignment Form attached thereto duly completed, by the Warrantholder (in person
or by duly authorized attorney) to the Company at the Corporate Office, and
thereupon new Warrants, of the same tenor as the Warrants presented for
Transfer, shall be delivered by the Company in accordance with such Assignment
Form and the transferee's ownership of such Warrants shall be registered in
accordance with Section 4. Following any Transfer of the Warrants or the Warrant
Shares, or any portions thereof, the transferee of such Warrants or Warrant
Shares shall succeed to all rights and obligations of the transferor under the
Agreement and the Warrant(s) and shall be deemed to be a "Warrantholder." Upon
receipt by the Company at the Corporate Office of evidence reasonably
satisfactory to it of the loss, theft, destruction, or mutilation of a Warrant,
the Company will make and deliver a new Warrant of like tenor in replacement of
such Warrant. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated,
or destroyed Warrant shall at any time be enforceable by any Person. The
Warrants shall be promptly canceled by the Company upon the surrender thereof in
connection with any Transfer or replacement. The Company shall pay all taxes
and all other expenses and charges payable in connection with the preparation,
execution and delivery of Warrants pursuant to this Section 5. Notwithstanding
the foregoing, the Holder may not transfer the Warrant or the Warrant Shares to
a direct competitor of the Company.
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Section 6. Warrantholder Not Deemed a Shareholder. No Warrant shall
--------------------------------------
entitle a Warrantholder to vote or receive dividends or be deemed the holder of
shares of the Company for any purpose, nor shall anything contained in the
Warrants be construed to confer upon any Warrantholder any of the rights of a
shareholder of the Company or any right to vote, give or withhold consent to any
corporate action, receive notice of meetings, or receive dividends or
subscription rights, prior to any due exercise of this Warrant, in whole or in
part, by the Warrantholder.
Section 7. No Limitation on Corporate Action. Except as otherwise
---------------------------------
expressly provided in this Secton 7, no provisions of the Warrants and no right
or option granted or conferred thereunder shall in any way limit, affect, or
abridge the exercise by the Company of any of its corporate rights or powers to
recapitalize, amend its Articles of Organization or By-Laws, reorganize,
consolidate or merger with or into another Person, or transfer all or any part
of its property or assets or the exercise of any other of its corporate rights
and powers. Notwithstanding the foregoing, without the prior written consent of
the Warrantholder the Company shall not hereafter amend any of the terms of its
Articles of Organization or By-laws in any manner that would adversely affect
the rights of the Warrantholder unless such amendment has a like effect on all
holders of Common Stock.
Section 8. Representation of Warrantholders. The Warrantholder
--------------------------------
represents that it is acquiring the Warrants for its own account for investment
and not with a view to, or sale in connection with, any distribution thereof or
of any of the Warrant Shares issuable upon the exercise thereof, nor with the
present intention of distributing any of such securities, except that the
Warrantholder does anticipate that it may transfer this Warrant to an Affiliate
of such Warrantholder.
Section 9. Exercise of Warrants: Conversion of Warrants.
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(a) Procedure for Exercise. Subject to the terms and conditions hereof,
----------------------
the Warrantholder may exercise this Warrant, in whole or in part, at any time
during normal business hours on any Business Day during the period beginning on
January 22, 1996 and ending on the Warrant Expiration Date. The rights
represented by the Warrants may be exercised by the Warrantholder by:
(i) delivery to the Company at the Corporate Office this Warrant, with
the Subscription Form attached thereto in the form attached as
Exhibit B hereto duly completed and executed, and
(ii) payment to the Company (in cash or by certified or bank check) of
the Purchase Price (which may be done simultaneously with the sale
of the Warrant Shares in connection with any public offering).
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In the event of exercise of the Warrants, certificates for the Warrant
Shares so purchased, registered in the name of, or as directed by, the Warrants
shall be delivered by the Company to the Warrantholder or its designee or
nominee within a reasonable time, not exceeding 5 Business Days, after such
Warrants shall have been exercised.
Upon receipt of (i) and (ii) immediately preceding, the Warrantholder shall
be deemed to be the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of the Company may
then be closed or that certificates representing such Common Stock may not then
be actually delivered to the Warrantholder. The stock certificate so delivered
shall be in such denomination as may be requested by the Warrantholder and shall
be registered in the name of the Warrantholder or such other name as shall be
designated by the Warrantholder. If this Warrant shall have been exercised only
in part, the Company shall, at the time of delivery of said stock certificate or
certificates, deliver to the Warrantholder a new Warrant evidencing the right of
the Warrantholder to purchase the remaining shares of Common Stock then covered
by this Warrant.
The Company shall pay all expenses, taxes and other charges payable in
connection with the preparation, execution and delivery of stock certificates
pursuant to this Section, regardless of the name or names in which such stock
certificates shall be registered.
(b) Procedure for Conversion. The Warrantholder may convert this
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Warrant, in whole or in part, at any time during normal business hours on any
Business Day during the period beginning January 22, 1996 and ending on the
Warrant Expiration Date into the number of shares of Common Stock of the Company
calculated pursuant to the following formula by surrendering the Warrant with
the Subscription Form attached hereto as Exhibit B (duly completed and executed)
at the Principal Office of the Company specifying the number of shares of Common
Stock of the Company, and the rights to purchase which the Warrantholder desires
to convert:
X = Y x (A-B)
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A
where: X = the number of shares of Common Stock to be issued to the
Warrantholder;
Y = the number of shares of Common Stock subject to this Warrant for
which the conversion right is being exercised as such number may
be affected by the provisions contained in Section 11 hereof;
A = the Market Price of one share of Common Stock;
B = the Purchase Price
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(c) Legends. Unless at the time of exercise or conversion the Warrant
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Shares are registered under the Securities Act, each certificate representing
Warrant Shares initially issued upon exercise or conversion of the Warrants
shall bear the following legend (and any additional legend required by any
applicable state securities laws):
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be sold or transferred
in the absence of such registration or an exemption therefrom under said Act and
are subject to the terms a Warrant dated January 22, 1996."
Any certificate issued any time upon Transfer or replacement of any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to a registration under the Securities Act)
shall also bear such legend, unless, in the opinion of counsel for the
Warrantholder the securities represented thereby are not, at such time, required
by law to bear such legend.
Section 10. Covenants as to Warrant Shares.
------------------------------
(a) The Company covenants and agrees that all Warrant Shares which may
be issued upon any exercise or conversion of the Warrants will, upon issuance,
be validly issued, fully paid and nonassessable. The Company further covenants
and agrees that, during the period within which the Warrants may be exercised,
the Company will at all times have authorized and reserved a sufficient number
of Warrant Shares to provide for the exercise or conversion of such Warrants in
whole.
(b) If any Warrant Shares reserved or to be reserved to provide for the
exercise of the Wan-ants require registration with or approval of any
governmental authority under any federal or state law before such shares may be
validly issued, then the Company covenants that it will in good faith and as
expeditiously as possible endeavor to secure such registration or approval, as
the case may be.
Section 11. Adjustment of Warrants: Purchase Price.
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(a) Stock Splits, Dividends, Distributions and Combinations. In case
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after January 22, 1996, the Company shall:
(1) take a record of the holders of any class of its Common
Stock for the purpose of entitling them to receive a
dividend payable in, or other distribution of, such Common
Stock, or
(2) subdivide the outstanding shares of any class of its Common
Stock into a larger number of shares; or
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(3) combine the outstanding shares of any class of its Common
Stock into a smaller number of shares,
then the Number of Warrant Shares shall be adjusted to that Number of Warrant
Shares determined by the following formula:
A = WSB x TA
--------
TB
where: A = the adjusted Number of Warrant Shares;
WSB = the Number of Warrant Shares in effect
immediately prior to such event;
TA = the total number of outstanding shares of Common
Stock immediately following such event;
TB = the total number of outstanding shares of Common
Stock immediately prior to such event
(b) Reclassification, Consolidation or Merger. In case of any
reclassification or change of outstanding securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value), or as a result of a
subdivision or combination, or in case of any consolidation or merger of the
Company with or into another corporation, other than a merger with another
corporation in which the Company is a continuing corporation and which does not
result in any reclassification or change of outstanding securities issuable upon
exercise of this Warrant, or in case of any sale of all or substantially all of
the assets of the Company, the Company, or any successor or purchasing
corporation, as the case may be, shall execute a new Warrant providing that the
Warrantholder shall have the right to exercise such new Warrant and procure upon
such exercise, in lieu of each share of Common Stock theretofore issuable upon
exercise of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification, change,
consolidation or merger by a holder of one share of Common Stock, provided,
however, that in connection with any consolidation or merger which involves
either (i) the sale of all or substantially all of the assets of the Company or
(ii) a Change of Control of the Company, then the Company may redeem pro-rata
with the redemption of shares of Common Stock of each of the Significant
Shareholders, such Number of Warrant Shares under this Warrant. The Company
shall make such redemption or purchase by simultaneously (i) paying the
Warrantholder, in the same consideration which is being paid to the Significant
Shareholders good funds, an amount equal to the Number of Warrant Shares being
redeemed or purchased, multiplied times the consideration per share being paid
in connection with such merger or consideration to the Significant Shareholders,
or in the case of cancellation of the Warrant with respect to Warrant Shares not
yet issued, such consideration per share being paid to the Significant
Shareholders, less
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the Purchase Price and (ii) issuing a new Warrant, if so requested by the
Warrantholder, for the Number of Warrant Shares remaining and the Warrantholder
shall exchange this Warrant if so requested by the Company. Any new Warrant
issued shall provide for adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Section 11(b). If the
Warrantholder still has Warrant Shares purchasable thereafter, then no
consolidation or merger of the Company with or into another corporation referred
to in the first sentence of this paragraph (b) shall be consummated unless the
successor or purchasing corporation referred to above shall have agreed to issue
a new Warrant as provided in this Section 11(b). The provisions of this
subsection (b) shall similarly apply to successive reclassification, changes,
consolidations, mergers and transfers.
(c) Intentionally Left Blank.
------------------------
(d) Intentionally Left Blank.
------------------------
(e) Intentionally Left Blank.
------------------------
(f) Adjustment to Purchase Price. Upon each adjustment in the Number of
Warrant Shares, the Purchase Price shall be adjusted to an amount equal to the
quotient of (i) the Number of Warrant Shares entitled to be purchased upon
exercise of this Warrant immediately prior to the adjustment, multiplied by the
Purchase Price in effect immediately prior to such adjustment, divided by (ii)
the adjusted Number of Warrant Shares immediately after such adjustment.
(g) Stock Dividends. In the event that the company shall at any time
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declare any dividend or distribution upon its Common Stock payable in stock, the
Number of Warrant Shares shall increase by the number (and the kind) of shares
which would have been issued to the Warrantholder if the Warrant were exercised
immediately prior to such dividend. Such increase shall become effective
immediately after the opening of business on the day following the record date
for such dividend or distribution.
(h) Cash Dividends. In the event that the Company shall at any time
--------------
declare any dividend or distribution upon its Common Stock payable in cash,
assets or other property, the Number of Warrant Shares shall increase to a
number obtained by multiplying (A) the Number of Warrant Shares for which the
Warrant is exercisable immediately prior to such dividend or distribution, by
(B) a fraction: (i) the numerator of which shall be the Market Price per share
of Common Stock on the date of the taking of the record holder of Common Stock
entitled to such dividend or distribution, and (ii) the denominator of which
shall be such Market Price per share of Common Stock, minus the amount allocable
to one share of Common Stock of any such cash, assets or other property so
distributable. Such increase shall become effective immediately after the
opening of business on the day following the record date for such dividend or
distribution.
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(i)) Computation of Adjustments.
--------------------------
(i) Upon each computation of an adjustment in the number of
Warrant Shares which may be purchased upon exercise of the
Warrants, the number of Warrant Shares which may be
purchased upon exercise of such Warrants shall be calculated
to the nearest whole share (e.g., fractions of one-half of a
share, or greater, shall be treated as being a whole share).
(ii) The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for
the account of the Company.
Section 12. Covenants as to Issuances and Sale of Stock.
-------------------------------------------
(a) Preemptive Rights. If at any time after the date hereof but prior
-----------------
to the first registration by the Company of any Common Stock under the
Securities Act the Company proposes to issue, any Additional Shares of Common
Stock or Convertible Security convertible to Additional Shares of Common Stock,
the Company shall first offer in writing to sell to the Warrantholder a portion
thereof which bears the same proportion to the total as the proportion the
Warrant Shares then owned by each such Warrantholder bears to the total
Outstanding Shares. Such offer shall describe such securities and specify the
quantity, the price and the payment terms. If within 10 days after the making of
such offer any Warrantholder accepts the same in writing as to the portion
referred to above or any lesser amount, then the Company shall sell such portion
of such securities, or such lesser amount as such Warrantholder may specify, to
such Warrantholder upon the terms specified. If Additional Shares of Common
Stock are being sold as a unit with other securities, the Warrantholder must
purchase a prorata share of each such security upon exercise of their rights
under this Section.
(b) "Tag Along" Rights. Simultaneously with the issuance by the Company
-----------------
of this Warrant, the Warrantholder and the Significant Shareholders are entering
into a Co-sale Agreement in the form of Exhibit C hereto providing for the
participation of the Warrantholder in certain transactions by the Significant
Shareholders.
Section 13. Merger and Consolidation. In case of any consolidation or
------------------------
merger of the Company with or into any other Person (other than a consolidation
or merger in which the Company is the continuing corporation and which does not
result in the Common Stock being changed into or exchanged for stock or other
securities or property of any other Person), provided, however, that in
connection with any consolidation or merger which involves either (i) the sale
of all or substantially all of the assets of the Company or (ii) a Change of
Control of the Company, then the Warrant Shares shall be subject to repurchase
or redemption or the Warrant subject to cancellation all in the same manner and
under the same terms and conditions as set forth or provided in Section 11(b)
hereof. Any new Warrant shall entitle the Warrantholder to purchase the kind
and number of shares of stock or other securities or property (a) of the Person
resulting
- 13 -
from such consolidtion or surviving such merger or (b) into or for which the
Common Stock has been changed or is exchangeable, as the case may be, to which
the Warrantholder would have been entitled if it had held the Warrant Shares
issuable upon the exercise of its Warrants immediately prior to such
consolidation or merger, and in any such case appropriate provision shall be
made with respect to the rights and interests of the Warrantholder to the end
that the provisions hereof (including, without limitation, provisions for
adjustment of the number of shares purchasable upon the exercise of the
Warrants) shall thereafter be applicable, as nearly as may be practicable, in
relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise of the rights represented by the Warrants.
Section 14. Notice of Adjustment of Warrant Shares. Upon any adjustment
--------------------------------------
of the number of Warrant Shares purchasable pursuant to the Warrants, the
Company shall give notice thereof to Warrantholder, which notice shall state the
number of Warrant Shares purchasable pursuant to the Warrant after such
adjustment, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
Section 15. Intentionally Deleted.
---------------------
Section 16. Notice of Certain Events. Prior to the time that:
------------------------
(a) The Company shall pay any dividend upon, or make any
distribution in respect of, its Common Stock or Convertible Securities; or
(b) there shall be any capital reorganization, or
reclassification of the Common Stock or Convertible Securities, of the Company,
or consolidation or merger of the Company with, or sale of all or substantially
all of its assets to, another person; or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(d) the Company receives notice, or otherwise becomes aware of,
a Change in Control; or
(e) the Company shall determine to register under the Securities
Act (including pursuant to a demand of any stockholder of the Company exercising
registration rights) any Common Stock or Convertible Securities; or
(f) the Company receives notice, or otherwise becomes aware of,
a prospective, pending or completed Significant Shareholder Transaction; then,
in any one or more of such cases, the Company shall give written notice to the
Warrantholder of the date on which (i) the books of the Company shall close or a
record shall be
- 14 -
taken for such dividend, distribution or subscription rights, or (ii) such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, Change in Control, Public Offering, or Significant
Shareholder Transaction shall occur, as the case may be. Such notice shall be
given not less than 20 days prior to the record date or the date on which the
transfer books of the Company are to be closed in respect thereto in the case of
any action specified in clause (i) and, to the extent known by the Company, 20
days prior to the effective date of the action in question in the case of an
action specified in clause(h).
Section 17. No New Warrant on Adjustment. Irrespective of any
----------------------------
adjustment in the number of Warrant Shares issuable upon exercise of the
Warrant, such Warrants, whether theretofore or thereafter issued or reissued,
may continue to express the same Purchase Price and Number of Warrant Shares as
are stated therein and the Purchase Price and the Number of Warrant Shares
specified therein shall be deemed to have been so adjusted.
Section 18. Transfers. Subject to the restrictions contained in the
---------
last sentence of Section 5 hereof, the Warrant and all rights thereunder and the
Warrant Shares purchased upon exercise thereof may be Transferred in whole or
part.
Section 19. Redemption.
----------
(a) Redemption at Option of a Warrantholder. Upon the occurrence of a
---------------------------------------
Redemption Event, the Warrantholder shall have the right, but not the
obligation, in the sole discretion of the Warrantholder, to cause the Company to
redeem all, but not less than all, of its Warrants and/or Warrant Shares, by
delivery to the Company of a duly completed and signed Redemption Notice in the
form of Exhibit D attached hereto, at any time.
Upon a redemption of the Warrant, the Warrantholder shall be
entitled, upon tender of the Warrant, as provided in this Section 19, to receive
from and the Company shall pay to the Warrantholder upon such tender a
redemption price ("Redemption Price") of Ninety Thousand Dollars ($90,000.00) in
payment for all Warrants evidenced hereby and/or all Warrant Shares issuable
upon the exercise hereof, which amount shall not be subject to offset,
counterclaim, deduction or abatement.
(b) Tender and Payment. The Warrantholder shall deliver to the Company
------------------
at the Corporate Office the Warrant or the Warrant Shares, as the case may be,
to be redeemed. Against receipt of the Warrant or the Warrant Shares, as the
case may be, from the Warrantholder the Company shall pay the Redemption Price
to the Warrantholder by certified or bank check or by wire transfer as so
directed by the Warrantholder.
Section 20. Registration Rights.
-------------------
(a) "Piggy Back" Registration. If at any time the Company
-------------------------
shall determine to register under the Securities Act (including pursuant to a
demand of any stockholder of the
- 15 -
Company exercising registration rights) any of its Common Stock of the type
which has been or may be issued upon the exercise of the Warrant, other than on
Form S-8 or its then equivalent, it shall send to the Warrantholder, written
notice of such determination and, if within twenty (20) days after receipt of
such notice, such Warrantholder shall so request in writing, the Company shall
include in such registration statement all or any part of the Warrant Shares the
Warrantholder requests to be registered. In the event that the underwriter
managing such a distribution determines, in its best judgment, a limitation or
exclusion is necessary to effect an orderly public distribution, including all
shares to which the Warrantholder has requested registration, and such
limitation or exclusion is imposed among all of the holders of such Common Stock
having an incidental ("piggy back") right to include such Common Stock in the
registration statement according to the amount of such Common Stock which the
Warrantholder had requested to be included pursuant to such right, then the
Company shall be obligated to include in such registration statement only such
limited portion of the Warrant Shares with respect to which the Warrantholder
has requested inclusion hereunder (or in the event of an exclusion of piggy back
shares, none of such Warrant Shares). In the event of such a pro rata
limitation, no shares of Common Stock held by Persons not having such an
incidental ("piggy back") right may be included in the registration statement.
(b) Effectiveness. The Company will use its best efforts to
-------------
maintain the effectiveness for up to nine (9) months of any registration
statement pursuant to which any of the Warrant Shares are being offered, and
from time to time will amend or supplement such registration statement and the
prospectus contained therein as to the extent necessary to comply with the
Securities Act and any applicable state securities statute or regulation. The
Company will also provide the holder of Warrant Shares with as many copies of
the prospectus contained in any such registration statement as it may reasonably
request. As a condition to inclusion of Warrant Shares in any registration of
shares of the Company, the Warrantholder shall enter into such Underwriting
Agreement having usual and customary terms, including customary representations,
warranties, indemnities and other agreements, provided, however, that no such
agreement shall require the Warrantholder to make any representation or warranty
or indemnification based thereon concerning the Company unless the same is based
upon the actual knowledge of the Warrantholder. Representations as to the
Warrantholder's title to shares, authorization and accuracy of written
information provided by such Warrantholder shall be given without qualification
as to knowledge. In no event shall the Warrantholder be obligated to indemnify
in any amount in excess of the proceeds received by the Warrantholder.
(c) Indemnification of Warrantholder. In the event that the
--------------------------------
Company registers the Warrant Shares under the Securities Act, the Company will
indemnify and hold harmless the Warrantholder and each underwriter of the
Warrant Shares so registered (including any broker or dealer through whom such
shares may be sold) and each Person, if any, who controls such Warrantholder or
any such underwriter within the meaning of Section 15 of the Securities Act from
and against any and all losses, claims, damages, expenses or liabilities, joint
or several, to which they or any of them become subject under the Securities Act
or under any other statute or at common law or otherwise, and, except as
hereinafter provided, will reimburse the
- 16 -
Warrantholder, each such underwriter and each such controlling Person, if any,
for any legal or other expenses reasonably incurred by then or any of them in
connection with investigating or defending any actions whether or not resulting
in any liability, insofar as such losses, claims, damages, expenses, liabilities
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement, in any
preliminary or amended preliminary prospectus or in the final prospectus (in
each case as from time to time amended or supplemented by the Company) or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading or any violation by the Company of any rule or
regulation promulgated under the Securities Act applicable to the Company and
relating to action or inaction required of the Company in connection with such
registration, unless such untrue statement or omission was made in such
registration statement, preliminary or amended, preliminary prospectus or
prospectus in reliance upon and in conformity with information furnished in
writing to the Company in connection therewith by any such Warrantholder, any
such underwriter or any such controlling person expressly for use therein.
Promptly after receipt by the Warrantholder, any underwriter or any controlling
person, of notice of the commencement of any action in respect of which
indemnity may be sought against the Company, such Warrantholder, or such
underwriter or such controlling person, as the case may be, will notify the
Company in writing of the commencement thereof, and, subject to the provisions
hereinafter stated, the Company shall assume the defense of such action
(including the employment of counsel, who shall be counsel satisfactory to such
Warrantholder, such underwriter or such controlling person, as the case may be),
and the payment of expenses insofar as such action shall relate to any alleged
liability in respect of which indemnity may be sought against the Company. Such
Warrantholder, any such underwriter or any such controlling person shall have
the right to employ separate counsel in any such action and to participate in
the defense thereof but the fees and expenses of such counsel shall not be at
the expense of the Company unless the employment of such counsel has been
specifically authorized by the Company. The Company shall not be liable to
indemnify any person for any settlement of any such action effected without the
Company's consent. The Company shall not, except with the approval of each
party being indemnified under this Section 20(c), consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to the parties being so
indemnified of a release from all liability in respect to such claim or
litigation.
(d) Exchange Act Registration. If the Company at any time shall
-------------------------
list any of its Common Stock of the type which may be issued upon the exercise
of the Warrant on any national securities exchange and shall register such
Common Stock under the Exchange Act, the Company will, at its expense,
simultaneously list on such exchange and maintain such listing of, all of the
Common Stock from time to time issuable upon exercise of the Warrants. If the
Company becomes subject to the reporting requirements of either Section 13 or
Section 15(d) of the Exchange Act, the Company will use its best efforts to
timely file with the Securities and Exchange Commission such information as the
Securities and Exchange Commission may require under either of said Sections;
and in such event, the Company shall use its best efforts to take all
- 17 -
action as may be required as a condition to the availability of Rule 144 under
the Securities Act (or any successor exemptive rule hereinafter in effect) with
respect to such Common Stock. The Company shall furnish to the Warrantholder
forthwith upon request (i) a written statement by the Company as to its
compliance with the reporting requirements of Rule 144, (ii) a copy of the most
recent annual or quarterly report of the Company as filed with the Securities
and Exchange Commission, and (iii) such other reports and documents as the
Warrantholder may reasonably request in availing itself of any rule or
regulation of the Securities and Exchange Commission allowing a holder to sell
any such Warrant Shares without registration.
(e) Damages. The Company recognizes and agrees that the
-------
Warrantholder will not have an adequate remedy if the Company fails to comply
with this Section 20 and that damages will not be readily ascertainable, and the
Company expressly agrees that, in the event of such failure, it shall not oppose
an application by the Warrantholder of any other person entitled to the benefits
of this Section 20 requiring specific performance of any and all provisions
hereof or enjoining the Company from continuing to commit any such breach of
this Section 20.
(f) Further Obligations of the Company. Whenever under this
----------------------------------
Section 20, the
Company is required hereunder to register the Warrant Shares, it agrees that it
shall also do the following:
(i) Furnish to the Warrantholder such copies of each preliminary and
final prospectus and such other documents as said Warrantholder may reasonably
request to facilitate the public offering of its Warrant Shares;
(ii) Use its best efforts to register or qualify the Warrant Shares
covered by said registration statement under the applicable securities or "blue
sky" laws of such jurisdictions as the Warrantholder may reasonably request;
provided that the Company shall not be required to register or qualify Warrant
Shares in any jurisdiction in which the Company must consent to a general
consent or service of process, or in which the Company must qualify to do
business by virtue of such registration and the Company is not then otherwise
qualified to do business therein;
(iii) Furnish to the Warrantholder a signed counterpart or a copy thereof,
of:
(1) an opinion of counsel for the Company, dated the effective date of
the registration statement, and
(2) "comfort" letters signed by the Company's independent public
accountants who have examined and reported on the Company's
financial statements included in the registration statement, to the
extent permitted by the standards of the American Institute of
Certified Public Accountants, covering substantially the same
matters with respect to the registration statement (and the
prospectus included therein) and (in the case of the accountants'
"comfort" letters) with respect to events subsequent
- 18 -
to the date of the financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' "comfort"
letters delivered to the underwriters in underwritten public
offerings of securities, to the extent that the Company is required
to deliver or cause the delivery of such Opinion or "comfort"
letters to the underwriters in an underwritten public offering of
securities;
(iv) Permit the Warrantholder or its counsel or other representatives to
inspect and copy such corporate documents and records as may reasonably be
requested by them;
(v) Furnish to the selling Warrantholder a copy of all documents filed
and all correspondence from or to the Securities and Exchange Commission in
connection with any such offering; and
(vi) Use its best efforts to ensure the obtaining of all necessary
approvals from the National Association of Securities Dealers, Inc.
(g) Expenses; Taxes. In the case of a registration hereunder, the
---------------
Company shall bear all costs and expenses of each such registration, including,
but not limited to, printing, legal and accounting expenses, Securities and
Exchange Commission filing fees and "blue sky" fees and expenses, provided,
however, that the Company shall have no obligation to pay or otherwise bear: (i)
any portion of the fees or disbursements for the Warrantholder in connection
with the registration of the Warrant Shares, or (ii) any portion of the
underwriters commissions or discounts attributable to the Warrant Shares being
offered and sold by the Warrantholder. The Company covenants and agrees that it
will pay when due and payable any and all federal and state taxes which may be
payable in respect of the issue of this Warrant or any Common Stock or
certificate thereof issuable upon the exercise of this Warrant.
Section 21. Notice. AU notices and other communications under this
------
Agreement shall (a) be in writing (which shall include communications by telex
and telecopy), (b) be (i) sent by registered or certified mail, return receipt
requested and postage prepaid, or (ii) delivered by hand, and (c) be given at
the following respective addresses and telex and telecopier numbers and to the
attention of the following Persons:
(i) If to the Company, to it at:
Suburban Ostomy Supply Co., Inc.
75 October Hill Road
Holliston, Massachusetts 01746
Telecopier No.: 508-429-1000
Telephone No.: 508-429-7921
Attention: Stephen N. Aschettino, Treasurer
with a copy to:
- 19 -
James Westra, Esq.
Hutchins, Wheeler & Dittmar, P.C.
101 Federal Street
Boston, Massachusetts 02110
(ii) If to the Warrantholder, to it at its address as it appears on
the Warrant register maintained by the Company pursuant to
Section 4; for this purpose the address and telex, telecopier
and telephone numbers of the initial Warrantholder and the
Person to whom notices to such Warrantholder shall be sent are
as follows:
The First National Bank of Boston
100 Federal Street
Boston, MA 02110
Attention: Gregory G. O'Brien, Managing Director
Telecopier No.: 617-434-8102
Telephone No.: 617-434-8206
with a copy to:
James R. Kane, Esq.
Kirkpatrick & Lockhart LLP
One International Place
Boston, Massachusetts 02110-2637
The Company and the Warrantholder may change its address or telex or telecopier
number for purposes of receiving notices hereunder or the person to whom notices
to such party shall be sent by sending a notice thereof (specifically captioned
"Notice of Change of Address") to the other parties to this Warrant. Notices
and other communications hereunder shall be effective or deemed delivered or
furnished (a) if given by mail, on the fifth Business Day after such
communication is deposited in the mail, as provided in this Section 20, (b) if
given by telex or telecopier, when such communication is transmitted to the
number as provided in this Section 20 and the appropriate answer back is
received or receipt is otherwise acknowledged, and (c) if given by hand
delivery, when left at the address of the addressee addressed as provided in
this Section 20, except that notices of a change of address, telex or telecopier
number shall not be deemed furnished until received.
Section 22. Governing Law. This Warrant shall be governed and construed
-------------
in accordance with the laws of the Commonwealth of Massachusetts, without regard
to the conflict of laws provisions thereof.
Section 23. Miscellaneous. This Warrant and any term hereof may be
-------------
changed, waived, discharged, or terminated only by an instrument in writing
signed by the party against which
- 20 -
enforcement of such change, waiver, discharge or termination is sought. The
headings in this Warrant are for purposes of reference only and shall not limit
or otherwise affect the meaning hereof.
Section 24. Conflict with Credit Agreement and Security Documents.
-----------------------------------------------------
Notwithstanding anything herein to the contrary, this Warrant and the rights and
responsibilities of the parties hereto shall be subject to, and void to the
extent of any inconsistency with, the rights and responsibilities of such
parties as set forth in the Credit Agreement and in the "Security Documents" (as
defined in the Credit Agreement).
Section 25. Covenants in Credit Agreement for the Benefit of the
----------------------------------------------------
Warrantholder. For so long as any of the Warrants or Warrant Shares are
- -------------
outstanding, the Company shall comply with its covenants in Sections 7.3, 7.4(a)
(provided that no statement of accountants shall be provided), 7.9, 7. 1 0 and
8.6 of the Credit Agreement for the benefit of the Warrantholder,
notwithstanding that the Credit Agreement may have terminated by reason of the
termination of the lending commitments thereunder or for any other reason.
Solely for the purpose of permitting the Warrantholder to enforce such
covenants, the defined term "Lender," as such defined term is incorporated in
such Sections, shall be deemed to include the Warrantholder.
[SIGNATURE PAGE TO TIES WARRANT FOLLOWS ON THE NEXT PAGE]
- 21 -
[SIGNATURE PAGE OF WARRANT]
IN WITNESS WHEREOF, the Company has caused this Warrant to be issued by its
duly authorized officers and its corporate seal to be hereunto affixed as of the
date first hereinbefore written.
WITNESS: SUBURBAN OSTOMY SUPPLY CO., INC.
/s/ James Westra /s/ Stephen N. Aschettino
____________________________________ By:_________________________________
James Westra Name: Stephen N. Aschettino
Title: Treasurer
- 22 -
EXHIBIT A
ASSIGNMENT FORM
(To be executed upon assignment of Warrant)
For value received, ______________________________ hereby sells, assigns
and transfers unto ____________________ (print name and address) the attached
Warrant, together with all its right, title and interest therein, and does
hereby irrevocably constitute and appoint ____________________ as its attorney
to transfer said Warrant on the books of SUBURBAN OSTOMY SUPPLY CO., INC., a
Massachusetts corporation, with full power of substitution in the premises.
Name:
______________________________
______________________________
______________________________
(print name and address)
______________________________
Note: The above signature should correspond
exactly with the name on the face of the
attached Warrant.
Signature:
______________________________
Date:
Signature Guaranteed:
______________________________
- 23 -
EXHIBIT B
SUBSCRIPTION FORM
(To be executed upon exercise or of Warrant)
The undersigned hereby irrevocably elects to exercise the right represented
by this Warrant to receive ______ shares of Common Stock and herewith [check
one] [_] tenders payment for such shares in the form of cash or a certified or
ban check in the amount of $____________ or [_] elects to convert the Warrant
directly to Common Stock pursuant to Section 9(b) of the Warrant.
The undersigned requests that a certificate for such shares be registered
in the name of _________________________, whose address is ____________________
and that such shares be delivered to ____________________whose address is
______________________.
Name:
__________________________________
(Please print name and address)
Signature:
__________________________________
Date:
Signature Guaranteed:
__________________________________
- 24 -
EXHIBIT C
CO-SALE AGREEMENT
Agreement made and entered into as of January 22, 1996, by and among Summit
Ventures III, L.P., Summit Investors H, L.P. and Summit Subordinated Debt Fund,
L.P. (each of whom is sometimes referred to as a "Significant Shareholder" and
all of whom are referred to herein collectively as the "Significant
Shareholders") Suburban Ostomy Supply Co., Inc., a Massachusetts corporation
(the "Company") and The First National Bank of Boston (together with its
successors and assigns, the "Warrantholder;" as initial Warrantholder, the
"Bank").
The Company has issued a Warrant of even date herewith (the "Warrant") in
favor of the Bank permitting the Bank to purchase the Company's Common Stock.
Capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Warrant.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the Significant Shareholders, the Company and the Warrantholder, the parties do
hereby agree as follows:
1. Each of the Significant Shareholders agrees that it will not sell
or otherwise transfer or dispose ("Transfer") for value any shares of Common
Stock or Convertible Securities of the Company to any third party other than to
an Affiliate without first giving written notice in reasonable detail to the
Warrantholder at least twenty (20) days prior to such sale or agreement to sell
and affording the Warrantholder the opportunity to participate pro-rata in such
sale or agreement to sell, as hereinafter provided. In the event that the
Significant Shareholders have agreed to sell their shares of Common Stock and/or
Convertible Securities (i) in a transaction in which all of the outstanding
capital stock of the Company is being sold, or (ii) in a Group Sale Transaction
(as hereinafter defined) the Warrantholder shall be entitled to and, if so
requested by the Significant Shareholders shall, participate in such transaction
on an equivalent basis to the Significant Shareholders. In such event the
Warrantholder shall sell the same proportion of their Warrant Shares owned or
issuable as that proportion of shares which are being sold or conveyed by the
Significant Shareholders bears to the total number of shares of Common Stock
owned by the Significant Shareholders. The Warrantholders shall be entitled to
receive payment at the same time as the Significant Shareholders receive their
payment.
As used herein, the defined term "Group Sale Transaction" shall refer to a
transfer (whether by sale, merger or otherwise) of in excess of 75% of the
outstanding shares of Common Stock (assuming the full conversion of all
Convertible Securities. In the event that less than all of the Company is sold
in connection with a sale by the Significant Shareholders of their Shares of
Common Stock in a transaction which is not a Group Sale Transaction, the
Warrantholder shall receive proceeds from such sale on a pro-rata basis with the
Significant Shareholders, plus cash
- 25 -
in the amount of their pro-rata share of the fair market value of all noncash
consideration received by the Significant Shareholders. The pro-rata
participation in such sale or agreement to sell which each Warrantholder shall
be entitled, shall be in the proportion that the aggregate number of Warrant
Shares held by such Warrantholder assuming the full conversion of all Warrants
bears to the aggregate number of shares of Common Stock into which any
Convertible Securities held by the Significant Shareholders and the holders of
all other equity holders participating in the sale transaction could then be
converted, assuming the full conversion of all Convertible Securities.
2. All notices and other communications under this Agreement (A) shall
be in writing which shall include communications by telex and telecopy, CB) be
(i) sent by registered or certified mail, return receipt and postage prepaid, or
(ii) delivered by hand, and (C) be given at the following respective addresses
and telex and telecopier numbers and to the attention of the following persons:
(i) if to the Warrantholder or to the Bank, at the address, telex and
telecopier numbers and to the attention of the person listed in the
Warrant; and
(ii) if to the Significant Shareholders at the addresses set forth in
Schedule I annexed hereto.
3. This Agreement shall be governed and construed in accordance with the
laws of the Commonwealth of Massachusetts, without regard to conflict of laws,
provisions thereof.
SUBURBAN OSTOMY SUPPLY CO., INC.
By:______________________________
Name:
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
- 26 -
SIGNATURE PAGE OF CO-SALE AGREEMENT
SUMMIT VENTURES M, L.P.
By: Summit Partners M, L.P.,
General Partner
By: Stamps, Woodsum & Co. III,
General Partner
By:______________________________
General Partner
SUMMIT INVESTORS H, L.P.
By:_____________________________
Authorized Signatory
SUMMIT SUBORDINATED DEBT FUND, L.P.
By: Summit Partners SD, L.P.
Its General Partner
By:______________________________
General Partner
THE FIRST NATIONAL BANK OF BOSTON
By:______________________________
Name:
Title:
- 27 -
EXHIBIT D
FORM OF REDEMPTION NOTICE
The undersigned hereby irrevocably elects to have Suburban Ostomy Supply
Co., Inc., a Massachusetts corporation (the "Company"), redeem all of the
Warrants and Warrant Shares of the undersigned in accordance with Section 19(a)
of the Warrant dated January 22, 1996, pursuant to which such Warrants and
Warrant Shares were issued. The undersigned hereby instructs the Company to pay
the redemption price (check one) ____ by wire transfer to Account #__________,
at ____________________ (specify bank), ABA # or by certified or bank check.
Name:
______________________________
______________________________
______________________________
(print name and address)
Signature:
Date: ______________________________
______________________________
Signature Guaranteed:
- 28 -