Exhibit 10.1

Execution Version

 

 

 

INVESTMENT AGREEMENT

by and between

COVETRUS, INC.

and

CD&R VFC HOLDINGS, L.P.

Dated as of April 30, 2020

 

 

 

 

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TABLE OF CONTENTS

 

     Page   Article I    Definitions    Section 1.01   Definitions      1  
Article II    Purchase and Sale    Section 2.01   Purchase and Sale      8  
Section 2.02   Closing      8   Article III    Representations and Warranties of
the Company    Section 3.01   Organization; Standing      9   Section 3.02  
Capitalization      10   Section 3.03   Authority; Noncontravention      11  
Section 3.04   Governmental Approvals      12   Section 3.05   Company SEC
Documents; Undisclosed Liabilities      12   Section 3.06   Absence of Certain
Changes      13   Section 3.07   Legal Proceedings      13   Section 3.08  
Compliance with Laws; Permits      13   Section 3.09   Tax Matters      13  
Section 3.10   No Rights Agreement; Anti-Takeover Provisions      14  
Section 3.11   Brokers and Other Advisors      14   Section 3.12   Sale of
Securities      14   Section 3.13   Listing and Maintenance Requirements      14
  Section 3.14   No Other Company Representations or Warranties      14  
Article IV    Representations and Warranties of the Investor    Section 4.01  
Organization; Standing      15   Section 4.02   Authority; Noncontravention     
15   Section 4.03   Governmental Approvals      16   Section 4.04   Financing   
  16   Section 4.05   Ownership of Company Stock      16   Section 4.06  
Brokers and Other Advisors      16   Section 4.07   Non-Reliance on Company
Estimates, Projections, Forecasts, Forward-Looking Statements and Business Plans
     17   Section 4.08   Purchase for Investment      17   Section 4.09   HSR   
  18   Section 4.10   No Other Company Representations or Warranties      18  

 

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Article V    Additional Agreements    Section 5.01   Negative Covenants      18
  Section 5.02   Reasonable Best Efforts; Filings      19   Section 5.03  
Corporate Actions      20   Section 5.04   Public Disclosure      21  
Section 5.05   Confidentiality      21   Section 5.06   Nasdaq Listing of Shares
     22   Section 5.07   Standstill      22   Section 5.08   Transfer
Restrictions      24   Section 5.09   Legend      25   Section 5.10   Election
of Directors      25   Section 5.11   Voting      28   Section 5.12   Tax
Matters      29   Section 5.13   Information Rights      29   Section 5.14  
Participation Rights      30   Section 5.15   Mandatory Conversion      33  
Article VI    Conditions to Closing    Section 6.01   Conditions to the
Obligations of the Company and the Investor      33   Section 6.02   Conditions
to the Obligations of the Company      33   Section 6.03   Conditions to the
Obligations of the Investor      34   Article VII    Termination; Survival   
Section 7.01   Termination      34   Section 7.02   Effect of Termination     
35   Section 7.03   Survival      36   Article VIII    Miscellaneous   
Section 8.01   Amendments; Waivers      36   Section 8.02   Extension of Time,
Waiver, Etc.      36   Section 8.03   Assignment      36   Section 8.04  
Counterparts      36   Section 8.05   Entire Agreement; No Third-Party
Beneficiaries      37   Section 8.06   Governing Law; Jurisdiction      37  
Section 8.07   Specific Enforcement      37   Section 8.08   WAIVER OF JURY
TRIAL      38   Section 8.09   Notices      38   Section 8.10   Severability   
  39   Section 8.11   Expenses      39   Section 8.12   Interpretation      40  

 

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Section 8.13   Acknowledgment of Securities Laws      41   Section 8.14   Share
Ownership Limit      41   ANNEXES    Annex I   –         Form of Certificate of
Designations    Annex II   –         Form of Registration Rights Agreement   
Annex III   –         Form of Press Release   

 

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INVESTMENT AGREEMENT, dated as of April 30, 2020 (this “Agreement”), by and
between Covetrus, Inc., a Delaware corporation (the “Company”), and CD&R VFC
Holdings, L.P., a Cayman Islands exempted limited partnership (the “Investor”).

WHEREAS, the Company desires to issue, sell and deliver to the Investor, and the
Investor desires to purchase and acquire from the Company, pursuant to the terms
and conditions set forth in this Agreement, an aggregate of 250,000 shares of
the Company’s Series A Convertible Preferred Stock, par value $0.01 per share
(the “Series A Preferred Stock”), having the designation, preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions, as specified in the form of
Certificate of Designation, Preferences and Rights attached hereto as Annex I
(the “Certificate of Designations”);

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01    Definitions. (a) As used in this Agreement (including the
recitals hereto), the following terms shall have the following meanings:

“25% Beneficial Ownership Requirement” means that the Investor Parties continue
to beneficially own at all times shares of Common Stock, shares of Series A
Preferred Stock and/or shares of Common Stock that were issued upon conversion
of shares of Series A Preferred Stock that represent, on an as-converted basis,
at least 25% of the number of shares of Common Stock beneficially owned by the
Investor Parties, on an as-converted basis, as of the Closing.

“50% Beneficial Ownership Requirement” means that the Investor Parties continue
to beneficially own at all times shares of Common Stock, shares of Series A
Preferred Stock and/or shares of Common Stock that were issued upon conversion
of shares of Series A Preferred Stock that represent, on an as-converted basis,
at least 50% of the number of shares of Common Stock beneficially owned by the
Investor Parties, on an as-converted basis, as of the Closing.

“Advisor Board Seat Fall-Away” means the first day on which the 50% Beneficial
Ownership Requirement is not satisfied.

“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, controls, or is controlled by, or is under common control with, such
Person; provided, however, (i) that the Company and its Subsidiaries shall not
be deemed to be Affiliates of the Investor or any of its Affiliates and (ii)
“portfolio companies” (as such term is customarily used in the private equity
industry) in which any Person or any of its Affiliates has an investment shall
not be deemed an Affiliate of such Person so long as such portfolio company
(x) has not been directed by the Investor or any of its Affiliates or any
Investor Director or Advisor Director in carrying out any act prohibited by this
Agreement, (y) is not a member of a group (as such term is defined in
Section 13(d)(3) of the Exchange Act) with either the Investor or any of its
Affiliates with

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respect to any securities of the Company, and (z) has not received from the
Investor or any Affiliate of the Investor or any Investor Director or Advisor
Director, directly or indirectly, any Confidential Information. For this
purpose, “control” (including, with its correlative meanings, “controlled by”
and “under common control with”) shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of management or
policies of a Person, whether through the ownership of securities or partnership
or other ownership interests, by contract or otherwise.

“as-converted basis” means (i) with respect to the outstanding shares of Common
Stock as of any date, all outstanding shares of Common Stock calculated on a
basis in which all shares of Common Stock issuable upon conversion of the
outstanding shares of Series A Preferred Stock (at the Conversion Rate in effect
on such date as set forth in the Certificate of Designations) are assumed to be
outstanding as of such date and (ii) with respect to any outstanding shares of
Series A Preferred Stock as of any date, the number of shares of Common Stock
issuable upon conversion of such shares of Series A Preferred Stock on such date
(at the Conversion Rate in effect on such date as set forth in the Certificate
of Designations).

Any Person shall be deemed to “beneficially own”, to have “beneficial ownership”
of, or to be “beneficially owning” any securities (which securities shall also
be deemed “beneficially owned” by such Person) that such Person is deemed to
“beneficially own” within the meaning of Rules 13d-3 and 13d-5 under the
Exchange Act; provided that any Person shall be deemed to beneficially own any
securities that such Person has the right to acquire, whether or not such right
is exercisable immediately (including assuming conversion of all Series A
Preferred Stock, if any, owned by such Person to Common Stock).

“Board” means the Board of Directors of the Company.

“Business Day” means any day except a Saturday, a Sunday or other day on which
the SEC or banks in the City of New York are authorized or required by Law to be
closed.

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Common Stock” means the common stock, par value $0.01 per share, of the
Company.

“Company Charter” means the Company’s certificate of incorporation, as amended
to the date of this Agreement.

“Company Charter Documents” means the Company Charter and the company’s bylaws,
as amended to the date of this Agreement.

“Company Plan” means each plan, program, policy, agreement or other arrangement
covering current or former employees, directors or consultants, that is (i) an
employee welfare plan within the meaning of Section 3(1) of ERISA, (ii) an
employee pension benefit plan within the meaning of Section 3(2) of ERISA, other
than any plan which is a “multiemployer plan” (as defined in Section 4001(a)(3)
of ERISA), (iii) a stock option, stock purchase, stock appreciation right or
other stock-based agreement, program or plan, (iv) an individual employment,
consulting, severance, retention or other similar agreement or (v) a bonus,
incentive, deferred compensation, profit-sharing, retirement, post-retirement,
vacation, severance or termination pay,

 

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benefit or fringe-benefit plan, program, policy, agreement or other arrangement,
in each case that is sponsored, maintained or contributed to by the Company or
any of its Subsidiaries or to which the Company or any of its Subsidiaries
contributes or is obligated to contribute to or has or may have any liability,
other than any plan, program, policy, agreement or arrangement mandated by
applicable Law.

“Company PSU” means a restricted stock unit of the Company subject to both
time-based and performance-based vesting conditions.

“Company Restricted Share” means a share of Common Stock that is subject to
forfeiture conditions.

“Company RSU” means a restricted stock unit of the Company subject solely to
time-based vesting conditions.

“Company Stock Option” means an option to purchase shares of Common Stock.

“Company Stock Plans” means the 2019 Omnibus Incentive Compensation Plan and the
Employee Stock Purchase Plan, in each case, as amended from time to time.

“Conversion Rate” has the meaning set forth in the Certificate of Designations.

“COVID-19” means SARS-CoV-2 or COVID-19, and any evolutions thereof or related
or associated epidemics, pandemic or disease outbreaks.

“DGCL” means the Delaware General Corporation Law, as amended, supplemented or
restated from time to time.

“Equity Commitment Letter” means that certain Equity Commitment Letter by and
between Clayton, Dubilier & Rice Fund IX, L.P. and the Investor, dated as of the
date hereof, a copy of which has been delivered to the Company concurrently with
the execution of this Agreement.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

“Fraud” means actual common law fraud in the making of a representation,
warranty, or other statement committed by a Person making such representation,
warranty, or statement with the intent to deceive another Person, and to induce
any Person to enter into this Agreement or any Transaction Document and requires
(a) a false representation, warranty, or statement of material fact; (b) actual
knowledge or belief that such representation, warranty, or statement is false;
(c) an intention to induce such other Person to whom such representation,
warranty, or statement was made to act or refrain from acting in reliance upon
it; (d) causing that Person, in justifiable reliance upon such false
representation, warranty, or statement to take or refrain from taking action;
and (e) causing such Person or any party hereto to suffer damage by reason of
such reliance. For clarity, a claim for Fraud may only be made against such
Person committing such Fraud, it being understood that if a Representative of a
party hereto commits Fraud, then such party shall be deemed to have committed
such Fraud.

 

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“GAAP” means generally accepted accounting principles in the United States,
consistently applied.

“Governmental Authority” means any government, court, regulatory or
administrative agency, arbitrator (public or private), commission or authority
or other legislative, executive or judicial governmental entity (in each case
including any self-regulatory organization), whether federal, state or local,
domestic, foreign or multinational.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.

“Intellectual Property” means all intellectual property rights of any type in
any jurisdiction, including any trademarks, service marks, trade names, Internet
domain names, logos, slogans, patents, copyrights and copyrightable works,
rights in computer software (including source code and object code) data,
databases, and documentation thereof, trade secrets and confidential
information, and know-how, technology, and inventions (whether patentable or
not) (together with all goodwill associated therewith and including any
registrations or applications for registration of any of the foregoing).

“Investor Board Seat Fall-Away” means the first day on which the 25% Beneficial
Ownership Requirement is not satisfied.

“Investor Designee” means an individual designated in writing by the Investor to
be nominated by the Company for election to the Board pursuant to
Section 5.10(c) or elected to the Board pursuant to Sections 5.10(a) or 5.10(d),
as applicable, and following reasonable satisfaction by such individuals of
customary background checks and who reasonably qualifies as an “independent
director” under Nasdaq Rule 5605 (as amended, supplemented or replaced from time
to time); provided that (a) such individual shall be mutually agreed upon by the
Investor and the Company and (b) if such individual is designated to be an
Advisor Director, such individual shall be an “operating advisor” or “operating
partner” of Sponsor.

“Investor Director” means, as of the date hereof, Ravi Sachdev, and in the event
of his death, disability, resignation or removal as the Investor Director (other
than pursuant to Section 5.10(b)), the Investor Designee designated by the
Investor to replace him as a member of the Board.

“Investor Material Adverse Effect” means any effect, change, event or occurrence
that would prevent or materially delay, interfere with, hinder or impair (i) the
consummation by the Investor of any of the Transactions on a timely basis in
accordance with the terms of this Agreement or (ii) the compliance by the
Investor with its obligations under this Agreement.

“Investor Parties” means the Investor and each Affiliate of the Investor to whom
shares of Series A Preferred Stock or Common Stock are transferred pursuant to
Section 5.08(b)(i).

 

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“Knowledge” means, with respect to the Company, the actual knowledge, as of the
date of this Agreement, of the individuals listed on Section 1.01 of the Company
Disclosure Letter.

“Mandatory Conversion” has the meaning set forth in the Certificate of
Designations.

“Material Adverse Effect” means any effect, change, event or occurrence that,
individually or in the aggregate, has had or would reasonably be expected to
have a material adverse effect on the business, results of operations, assets or
financial condition of the Company and its Subsidiaries, taken as a whole;
provided, however, that none of the following, and no effect, change, event or
occurrence arising out of, or resulting from, the following, shall constitute or
be taken into account in determining whether a Material Adverse Effect has
occurred or would reasonably be expected to occur: any effect, change, event or
occurrence (A) generally affecting (1) the industry in which the Company and its
Subsidiaries operate or (2) the economy, credit or financial or capital markets,
in the United States or elsewhere in the world, including changes in interest or
exchange rates, or (B) to the extent arising out of, resulting from or
attributable to (1) changes or prospective changes in, or issuances of new, Law
or GAAP or accounting standards, or any changes or prospective changes in the
interpretation or enforcement of any of the foregoing, or any changes or
prospective changes in general legal, regulatory or political conditions,
including any Law directive, pronouncement or guideline issued by a Governmental
Authority, the Centers for Disease Control and Prevention, the World Health
Organization or industry group providing for business closures,
“sheltering-in-place” or other restrictions that relate to, or arise out of, an
epidemic, pandemic or disease outbreak (including the COVID-19 pandemic) or any
change in such law, regulation, statute, directive, pronouncement or guideline
or interpretation thereof following the date of this Agreement, (2) the
execution, announcement or performance of this Agreement or the consummation of
the Transactions, including the impact thereof on relationships, contractual or
otherwise, with customers, suppliers, distributors, partners, employees or
regulators, or any claims or litigation arising from allegations of breach of
fiduciary duty or violation of Law relating to this Agreement or the
Transactions, (3) acts of war (whether or not declared), sabotage or terrorism,
or any escalation or worsening of any such acts of war (whether or not
declared), sabotage or terrorism, (4) volcanoes, tsunamis, epidemics, pandemics
or disease outbreaks (including the COVID-19 pandemic), earthquakes, hurricanes,
tornados or other natural disasters, (5) any action taken by the Company or its
Subsidiaries that is required by this Agreement or with the Investor’s written
consent or at the Investor’s written request, or the failure to take any action
by the Company or its Subsidiaries if that action is prohibited by this
Agreement, (6) any change resulting or arising from the identity of, or any
facts or circumstances relating to, the Investor or any of its Affiliates,
(7) any change or prospective change in the Company’s credit ratings, (8) any
decline in the market price, or change in trading volume, of the capital stock
of the Company or (9) any failure to meet any internal or public projections,
forecasts, guidance, estimates, milestones, budgets or internal or published
financial or operating predictions of revenue, earnings, cash flow or cash
position (it being understood that the exceptions in clauses (7), (8) and
(9) shall not prevent or otherwise affect a determination that the underlying
cause of any such change, decline or failure referred to therein (if not
otherwise falling within any of the exceptions provided by clause (A) and
clauses (B)(1) through (9) hereof) is a Material Adverse Effect); provided
further, however, that any effect, change, event or occurrence referred to in
clause (A) or clauses (B)(1), (3) or (4) may be taken into account in
determining whether there has been, or would reasonably be expected to be, a
Material Adverse Effect to the extent

 

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such effect, change, event or occurrence has a materially disproportionate
adverse effect on the Company and its Subsidiaries, taken as a whole, as
compared to other participants in the industry in which the Company and its
Subsidiaries operate (in which case the incremental materially disproportionate
impact or impacts may be taken into account in determining whether there has
been a Material Adverse Effect).

“Nasdaq” means the NASDAQ Global Select Market.

“Person” means an individual, corporation, limited liability company,
partnership, joint venture, association, trust, unincorporated organization or
any other entity, including a Governmental Authority.

“Prohibited Transferee” means the list of competitors set forth on a letter
dated the date hereof from the Company to the Investor as a “Prohibited
Transferee” and the Persons that are known by the Investor to be Affiliates
thereof, which list shall be deemed automatically updated from time to time
following the date hereof to add additional Persons that the Company names as
competitors of the Company in its Annual Report on Form 10-K.

“Registrable Securities” has the meaning set forth in the Registration Rights
Agreement.

“Registration Rights Agreement” means that certain Registration Rights Agreement
to be entered into by the Company and the Investor on the Closing Date, the form
of which is set forth as Annex II hereto, as it may be amended, supplemented or
otherwise modified.

“Registration Statement” has the meaning set forth in the Registration Rights
Agreement.

“Representatives” means, with respect to any Person, its officers, directors,
principals, partners, managers, members, employees, consultants, agents,
financial advisors, investment bankers, attorneys, accountants, other advisors,
Affiliates and other representatives.

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“Sponsor” means Clayton, Dubilier & Rice, LLC.

“Subsidiary”, when used with respect to any Person, means any corporation,
limited liability company, partnership, association, trust or other entity of
which (x) securities or other ownership interests representing more than 50% of
the ordinary voting power (or, in the case of a partnership, more than 50% of
the general partnership interests) or (y) sufficient voting rights to elect at
least a majority of the board of directors or other governing body are, as of
such date, owned by such Person or one or more Subsidiaries of such Person or by
such Person and one or more Subsidiaries of such Person.

“Tax” means any and all United States federal, state, local or non-United States
taxes, fees, levies, duties, tariffs, imposts, and other similar charges
(together with any and all interest, penalties and additions to tax) imposed by
any Governmental Authority, including taxes or other

 

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charges on or with respect to income, franchises, windfall or other profits,
gross receipts, property, sales, use, capital stock, payroll, employment, social
security, workers’ compensation, unemployment compensation or net worth; taxes
or other charges in the nature of excise, withholding, ad valorem, stamp,
transfer, value added or gains taxes; license, registration and documentation
fees; and customs duties, tariffs and similar charges, together with any
interest or penalty, in addition to tax or additional amount imposed by any
Governmental Authority.

“Tax Return” means returns, reports, claims for refund, declarations of
estimated Taxes and information statements, including any schedule or attachment
thereto or any amendment thereof, with respect to Taxes filed or required to be
filed with any Governmental Authority, including consolidated, combined and
unitary tax returns.

“Transaction Documents” means this Agreement, the Certificate of Designations,
the Registration Rights Agreement, the Equity Commitment Letter and all other
documents, certificates or agreements executed in connection with the
transactions contemplated by this Agreement, the Certificate of Designations,
the Registration Rights Agreement and the Equity Commitment Letter.

“Transactions” means the Purchase and the other transactions contemplated by
this Agreement and the other Transaction Documents.

“Transfer” (or “Transferred”) by any Person means, directly or indirectly, to
sell, transfer, assign, pledge, encumber, hypothecate or otherwise dispose of or
transfer (by the operation of law or otherwise), either voluntarily or
involuntarily, or to enter into any contract, option or other arrangement,
agreement or understanding with respect to the sale, transfer, assignment,
pledge, encumbrance, hypothecation or other disposition or transfer (by the
operation of law or otherwise), of any shares of equity securities beneficially
owned by such Person or of any interest in any shares of equity securities
beneficially owned by such Person; provided, however, that, notwithstanding
anything to the contrary in this Agreement, a Transfer shall not include (i) the
conversion of one or more shares of Series A Preferred Stock into shares of
Common Stock pursuant to the Certificate of Designations, (ii) the redemption or
other acquisition of Common Stock or Series A Preferred Stock by the Company or
(iii) the direct or indirect transfer (by the operation of law or otherwise) of
any limited partnership interests or other equity interests in an Investor Party
(or any direct or indirect parent entity of such Investor Party) (provided that
if any transferor or transferee referred to in this clause (iii) ceases to be
controlled (directly or indirectly) by the Person (directly or indirectly)
controlling such Person immediately prior to such transfer, such event shall be
deemed to constitute a “Transfer”).

(b)    In addition to the terms defined in Section 1.01(a), the following terms
have the meanings assigned thereto in the Sections set forth below:

 

Term

   Section

2018 HSR Filing

   4.09

Acquired Shares

   2.01

Action

   3.07

Advisor Director

   5.10(a)

Agreement

   Preamble

 

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Term

   Section

Announcement

   5.04

Balance Sheet Date

   3.05(c)

Bankruptcy and Equity Exception

   3.03(a)

Capitalization Date

   3.02(a)

Certificate of Designations

   Recitals

Closing

   2.02(a)

Closing Date

   2.02(a)

Company

   Preamble

Company Disclosure Letter

   Article III

Company Preferred Stock

   3.02(a)

Company SEC Documents

   3.05(a)

Company Securities

   3.02(b)

Confidential Information

   5.05

Contract

   3.03(b)

Excluded Issuance

   5.14(a)

Filed SEC Documents

   Article III

Investor

   Preamble

IRS

   5.12(a)

Judgments

   3.07

Laws

   3.08

Permits

   3.08

Prohibited Stock

   5.08(a)

Proposed Securities

   5.14(b)(i)

Purchase

   2.01

Purchase Price

   2.01

Responsible Person Covenant

   5.12(a)

Restraints

   6.01

Series A Preferred Stock

   Recitals

Termination Date

   7.01(b)

ARTICLE II

PURCHASE AND SALE

Section 2.01    Purchase and Sale. On the terms of this Agreement and subject to
the satisfaction (or, to the extent permitted by applicable Law, waiver by the
party entitled to the benefit thereof) of the conditions set forth in Article
VI, at the Closing, the Investor shall purchase and acquire from the Company,
and the Company shall issue, sell and deliver to the Investor, 250,000 shares of
Series A Preferred Stock (the “Acquired Shares”), for a purchase price per
Acquired Share equal to $1,000 and an aggregate purchase price of $250,000,000
(such aggregate purchase price, the “Purchase Price”). The purchase and sale of
the Acquired Shares pursuant to this Section 2.01 is referred to as the
“Purchase”.

Section 2.02    Closing. (a) On the terms of this Agreement, the closing of the
Purchase (the “Closing”) shall occur at 10:00 a.m. (New York City time) on the
second (2nd) Business Day after all of the conditions to the Closing set forth
in Article VI of this Agreement have been

 

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satisfied or, to the extent permitted by applicable Law, waived by the party
entitled to the benefit thereof (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the satisfaction or
waiver of those conditions at such time) either (i) remotely via telephone or
video conference, (ii) at the offices of Kirkland & Ellis LLP, 601 Lexington
Avenue, New York, New York 10022, or (iii) at such other place, time or date as
shall be agreed between the Company and the Investor; provided, that the Closing
shall not occur prior to the date that is twelve (12) Business Days following
the date hereof unless mutually agreed to in writing by the parties hereto (the
date on which the Closing occurs, the “Closing Date”).

(b)    At the Closing:

(i)    the Company shall deliver to the Investor (1) the Acquired Shares, free
and clear of all liens, except restrictions imposed by the Certificate of
Designations, applicable securities Laws and Section 5.07 and (2) the
Registration Rights Agreement, duly executed by the Company; and

(ii)    the Investor shall (1) pay the Purchase Price to the Company, by wire
transfer in immediately available U.S. federal funds, to the account designated
by the Company in writing and (2) deliver to the Company the Registration Rights
Agreement, duly executed by the Investor.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Investor as of the date of this
Agreement and as of the Closing (except to the extent made only as of a
specified date, in which case such representation and warranty is made as of
such date) that, except as (A) set forth in the confidential disclosure letter
delivered by the Company to the Investor prior to the execution of this
Agreement (the “Company Disclosure Letter”) (it being understood that any
information, item or matter set forth on one section or subsection of the
Company Disclosure Letter shall be deemed disclosure with respect to, and shall
be deemed to apply to and qualify, the section or subsection of this Agreement
to which it corresponds in number and each other section or subsection of this
Agreement to the extent that it is reasonably apparent on its face that such
information, item or matter is relevant to such other section or subsection) or
(B) disclosed in any report, schedule, form, statement or other document
(including exhibits) filed with, or furnished to, the SEC (and remaining
publicly available) after February 7, 2019 and prior to the date hereof (the
“Filed SEC Documents”), other than any risk factor disclosures in any such Filed
SEC Document contained in the “Risk Factors” section thereof or any
forward-looking statements within the meaning of the Securities Act or the
Exchange Act thereof (it being acknowledged that nothing disclosed in the Filed
SEC Documents shall be deemed to qualify or modify the representations and
warranties set forth in Sections 3.02(a), 3.03, 3.10 and 3.11):

Section 3.01    Organization; Standing. (a) The Company is a corporation duly
organized and validly existing and in good standing under the Laws of the State
of Delaware and has all requisite corporate power and corporate authority
necessary to carry on its business as it is now being conducted, except (other
than with respect to the Company’s due organization and

 

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valid existence and good standing) as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
is duly licensed or qualified to do business and is in good standing (where such
concept is recognized under applicable Law) in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed, qualified
or in good standing would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. True and complete copies of the
Company Charter Documents are included in the Filed SEC Documents.

(b)    Each of the Company’s Subsidiaries is duly organized, validly existing
and in good standing (where such concept is recognized under applicable Law)
under the Laws of the jurisdiction of its organization, except where the failure
to be so organized, existing and in good standing would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. Each of
the Company’s Subsidiaries is duly licensed or qualified to do business and is
in good standing (where such concept is recognized under applicable Law) in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

Section 3.02    Capitalization. (a) The authorized capital stock of the Company
consists of 675,000,000 shares of Common Stock and 10,000,000 shares of
preferred stock, par value $0.01 per share (“Company Preferred Stock”). At the
close of business on March 31, 2020 (the “Capitalization Date”), (i) 111,854,439
shares of Common Stock were issued and outstanding (including 1,249,443 Company
Restricted Shares), (ii) 11,075,055 shares of Common Stock were reserved and
available for issuance pursuant to the Company Stock Plans, (iii) 853,157 shares
of Common Stock were subject to outstanding Company Stock Options,
(iv) 2,752,796 Company RSUs were outstanding pursuant to which a maximum of
2,752,796 shares of Common Stock could be issued, (v) 0 Company PSUs were
outstanding pursuant to which a maximum of 0 shares of Common Stock could be
issued (assuming maximum achievement of all applicable performance conditions),
(vi) 2,101,144 shares of Common Stock were reserved and available for purchase
under the Company’s Employee Stock Purchase Plan, and (vii) no shares of Company
Preferred Stock were issued or outstanding.

(b)    Except as described in this Section 3.02, as of the Capitalization Date,
there were (i) no outstanding shares of capital stock of, or other equity or
voting interests in, the Company, (ii) no outstanding securities of the Company
convertible into or exchangeable for shares of capital stock of, or other equity
or voting interests in, the Company, (iii) no outstanding options, warrants,
rights or other commitments or agreements to acquire from the Company, or that
obligate the Company to issue, any capital stock of, or other equity or voting
interests in, or any securities convertible into or exchangeable for shares of
capital stock of, or other equity or voting interests in, the Company other than
obligations under the Company Plans in the ordinary course of business, (iv) no
obligations of the Company to grant, extend or enter into any subscription,
warrant, right, convertible or exchangeable security or other similar agreement
or commitment relating to any capital stock of, or other equity or voting
interests in, the Company (the items in clauses (i), (ii), (iii) and (iv) being
referred to collectively as “Company Securities”)

 

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and (v) no other obligations by the Company or any of its Subsidiaries to make
any payments based on the price or value of any Company Securities. There are no
outstanding agreements of any kind which obligate the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any Company Securities
(other than pursuant to the cashless exercise of Company Stock Options or the
forfeiture or withholding of Taxes with respect to Company Stock Options,
Company Restricted Shares, Company RSUs or Company PSUs), or obligate the
Company to grant, extend or enter into any such agreements relating to any
Company Securities, including any agreements granting any preemptive rights,
subscription rights, anti-dilutive rights, rights of first refusal or similar
rights with respect to any Company Securities. None of the Company or any
Subsidiary of the Company is a party to any stockholders’ agreement, voting
trust agreement, registration rights agreement or other similar agreement or
understanding relating to any Company Securities or any other agreement relating
to the disposition, voting or dividends with respect to any Company Securities.
All outstanding shares of Common Stock have been duly authorized and validly
issued and are fully paid, nonassessable and were not issued in violation of the
Company Charter Documents. The Acquired Shares and the shares of Common Stock
issuable upon conversion of the Acquired Shares will be, when issued, duly
authorized and validly issued, fully paid and nonassessable and issued in
compliance with all applicable federal and state securities laws. The shares of
Common Stock issuable upon conversion of the Acquired Shares have been duly
reserved for such issuance.

Section 3.03    Authority; Noncontravention. (a) The Company has all necessary
corporate power and corporate authority to execute and deliver this Agreement
and the other Transaction Agreements and to perform its obligations hereunder
and thereunder and to consummate the Transactions. The execution, delivery and
performance by the Company of this Agreement and the other Transaction
Agreements, and the consummation by it of the Transactions, have been duly
authorized by the Board and no other corporate action on the part of the Company
is necessary to authorize the execution, delivery and performance by the Company
of this Agreement and the other Transaction Agreements and the consummation by
it of the Transactions. This Agreement has been, and at the Closing the other
Transaction Agreements to which the Company is party will be, duly executed and
delivered by the Company and, assuming due authorization, execution and delivery
hereof or thereof, as applicable, by the Investor, constitutes (or in the case
of such other Transaction Documents, at the Closing will constitute) a legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other similar Laws of general application affecting or relating to the
enforcement of creditors’ rights generally and (ii) is subject to general
principles of equity, whether considered in a proceeding at law or in equity
(the “Bankruptcy and Equity Exception”).

(b)    Neither the execution and delivery of this Agreement or the other
Transaction Agreements by the Company, nor the consummation by the Company of
the Transactions, nor performance or compliance by the Company with any of the
terms or provisions hereof or thereof, will (i) conflict with or violate any
provision of (A) the Company Charter Documents or (B) the similar organizational
documents of any of the Company’s Subsidiaries or (ii) assuming that the
authorizations, consents and approvals referred to in Section 3.04 are obtained
prior to the Closing Date and the filings referred to in Section 3.04 are made
and any waiting periods thereunder have terminated or expired prior to the
Closing Date,

 

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(x) violate any Law or Judgment applicable to the Company or any of its
Subsidiaries or (y) assuming that the consent referred to in Section 6.03(d) is
obtained, violate or constitute a default (or constitute an event which, with
notice or lapse of time or both, would violate or constitute a default) under
any of the terms or provisions of any loan or credit agreement, indenture,
debenture, note, bond, mortgage, deed of trust, lease, sublease, license,
contract or other agreement (each, a “Contract”) to which the Company or any of
its Subsidiaries is a party or accelerate the Company’s or, if applicable, any
of its Subsidiaries’ obligations under any such Contract, except, in the case of
clause (i)(B) and clause (ii), as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

Section 3.04    Governmental Approvals. Except for (a) the filing of the
Certificate of Designations with the Secretary of State of the State of
Delaware, (b) filings with the SEC under the Securities Act and Exchange Act,
(c) compliance with the rules and regulations of the Nasdaq and (d) compliance
with any applicable state securities or blue sky laws, no consent or approval
of, or filing, license, permit or authorization, declaration or registration
with, any Governmental Authority is necessary for the execution and delivery of
this Agreement and the other Transaction Agreements by the Company, the
performance by the Company of its obligations hereunder and thereunder and the
consummation by the Company of the Transactions, other than such other consents,
approvals, filings, licenses, permits or authorizations, declarations or
registrations that, if not obtained, made or given, would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 3.05    Company SEC Documents; Undisclosed Liabilities. (a) The Company
has filed with the SEC, on a timely basis, all required reports, schedules,
forms, statements and other documents required to be filed by the Company with
the SEC pursuant to the Exchange Act since February 7, 2019 (collectively, the
“Company SEC Documents”). As of their respective SEC filing dates, the Company
SEC Documents complied in all material respects with the requirements of the
Securities Act, the Exchange Act or the Sarbanes-Oxley Act of 2002 (and the
regulations promulgated thereunder), as the case may be, applicable to such
Company SEC Documents, and none of the Company SEC Documents as of such
respective dates (or, if amended prior to the date hereof, the date of the
filing of such amendment, with respect to the disclosures that are amended)
contained any untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.

(b)    The consolidated financial statements of the Company (including all
related notes or schedules) included or incorporated by reference in the Company
SEC Documents complied as to form, as of their respective dates of filing with
the SEC, in all material respects with the published rules and regulations of
the SEC with respect thereto, have been prepared in all material respects in
accordance with GAAP (except, in the case of unaudited quarterly statements, as
permitted by Form 10-Q of the SEC or other rules and regulations of the SEC)
applied on a consistent basis during the periods involved (except (i) as may be
indicated in the notes thereto or (ii) as permitted by Regulation S-X) and
fairly present in all material respects the consolidated financial position of
the Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods shown
(subject, in the case of unaudited quarterly financial statements, to normal
year-end adjustments).

 

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(c)    Neither the Company nor any of its Subsidiaries has any liabilities of
any nature (whether accrued, absolute, contingent or otherwise) that would be
required under GAAP, as in effect on the date hereof, to be reflected on a
consolidated balance sheet of the Company (including the notes thereto) except
liabilities (i) reflected or reserved against in the balance sheet (or the notes
thereto) of the Company and its Subsidiaries as of December 31, 2019 (the
“Balance Sheet Date”) included in the Filed SEC Documents, (ii) incurred after
the Balance Sheet Date in the ordinary course of business, (iii) as expressly
contemplated by this Agreement or otherwise incurred in connection with the
Transactions, (iv) as relate to Taxes, (v) that have been discharged or paid
prior to the date of this Agreement or (vi) as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

Section 3.06    Absence of Certain Changes. Since December 31, 2019 through the
date of this Agreement there has not been any Material Adverse Effect.

Section 3.07    Legal Proceedings. Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, as of the
date of this Agreement, there is no (a) pending or, to the Knowledge of the
Company, threatened legal or administrative proceeding, suit, investigation,
arbitration or action (an “Action”) against the Company or any of its
Subsidiaries or (b) outstanding order, judgment, injunction, ruling, writ or
decree of any Governmental Authority (“Judgments”) imposed upon the Company or
any of its Subsidiaries, in each case, by or before any Governmental Authority.

Section 3.08    Compliance with Laws; Permits. The Company and each of its
Subsidiaries are, and since February 7, 2019 have been, in compliance with all
state or federal laws, common law, statutes, ordinances, codes, rules or
regulations (“Laws”) or Judgments, applicable to the Company or any of its
Subsidiaries, except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. The Company and each of its
Subsidiaries hold all licenses, franchises, permits, certificates, approvals and
authorizations from Governmental Authorities (“Permits”) necessary for the
lawful conduct of their respective businesses, except where the failure to hold
the same would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.

Section 3.09    Tax Matters. Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect: (a) the
Company and each of its Subsidiaries has prepared (or caused to be prepared) and
timely filed (taking into account valid extensions of time within which to file)
all Tax Returns required to be filed by any of them, and all such filed Tax
Returns (taking into account all amendments thereto) are true, complete and
accurate, (b) all Taxes owed by the Company and each of its Subsidiaries that
are due (whether or not shown on any Tax Return) have been timely paid, except
for Taxes that are being contested in good faith by appropriate proceedings and
that have been adequately reserved against in accordance with GAAP, (c) no
examination or audit of any Tax Return relating to any Taxes of the Company or
any of its Subsidiaries or with respect to any Taxes due from the Company or any
of its Subsidiaries by any Governmental Authority is currently in progress or
threatened in writing and (d) other than (1) as a result of the Company being a
member of a consolidated, combined or unitary group of which Henry Schein, Inc.
(or any of its Affiliates) was a member or (2) in connection with the Company’s
separation from Henry Schein, Inc. on February 7, 2019, and any related
transactions (including, without limitation, pursuant to the

 

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Contribution and Distribution Agreement, dated April 20, 2018, the Agreement and
Plan of Merger, dated April 20, 2018, the Tax Matters Agreement, dated
January 7, 2019, and the Transition Services Agreement, dated February 7, 2019),
none of the Company or any of its Subsidiaries has liabilities for any other
Person (other than the Company and its Subsidiaries under Treasury Regulations
Section 1.1502-6 (or any similar provision of state, local or foreign Law), as a
transferee or successor, or by contract.

Section 3.10    No Rights Agreement; Anti-Takeover Provisions. As of the date
hereof, the Company is not party to a stockholder rights agreement, “poison
pill” or similar anti-takeover agreement or plan.

Section 3.11    Brokers and Other Advisors. Except for Ardea Partners LP, the
fees and expenses of which will be paid by the Company, no broker, investment
banker, financial advisor or other Person is entitled to any broker’s, finder’s,
financial advisor’s or other similar fee or commission, or the reimbursement of
expenses in connection therewith, in connection with the Transactions based upon
arrangements made by or on behalf of the Company or any of its Subsidiaries.

Section 3.12    Sale of Securities. Assuming the accuracy of the representations
and warranties set forth in Section 4.08, the offer, sale and issuance of the
shares of Series A Preferred Stock pursuant to this Agreement is exempt from the
registration and prospectus delivery requirements of the Securities Act and the
rules and regulations thereunder. Without limiting the foregoing, neither the
Company nor, to the Knowledge of the Company, any other Person authorized by the
Company to act on its behalf, has engaged in a general solicitation or general
advertising (within the meaning of Regulation D of the Securities Act) of
investors with respect to offers or sales of Series A Preferred Stock, and
neither the Company nor, to the Knowledge of the Company, any Person acting on
its behalf has made any offers or sales of any security or solicited any offers
to buy any security, under circumstances that would cause the offering or
issuance of Series A Preferred Stock under this Agreement to be integrated with
prior offerings by the Company for purposes of the Securities Act that would
result in none of Regulation D or any other applicable exemption from
registration under the Securities Act to be available, nor will the Company take
any action or steps that would cause the offering or issuance of Series A
Preferred Stock under this Agreement to be integrated with other offerings by
the Company.

Section 3.13    Listing and Maintenance Requirements. The Common Stock is
registered pursuant to Section 12(b) of the Exchange Act and listed on the
Nasdaq, and the Company has taken no action designed to, or which to the
Knowledge of the Company is reasonably likely to have the effect of, terminating
the registration of the Common Stock under the Exchange Act or delisting the
Common Stock from the Nasdaq, nor has the Company received any notification that
the SEC or the Nasdaq is contemplating terminating such registration or listing.

Section 3.14    No Other Company Representations or Warranties. Except for the
representations and warranties made by the Company in this Article III, neither
the Company nor any other Person acting on its behalf makes any other express or
implied representation or warranty with respect to the Series A Preferred Stock,
the Common Stock, the Company or any of its Subsidiaries or their respective
businesses, operations, properties, assets, liabilities,

 

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condition (financial or otherwise) or prospects, notwithstanding the delivery or
disclosure to the Investor or any of its Representatives of any documentation,
forecasts or other information with respect to any one or more of the foregoing,
and the Investor acknowledges the foregoing. In particular, and without limiting
the generality of the foregoing, except for the representations and warranties
made by the Company in this Article III, neither the Company nor any other
Person makes or has made any express or implied representation or warranty to
the Investor or any of its Representatives with respect to (a) any financial
projection, forecast, estimate, budget or prospect information relating to the
Company, any of its Subsidiaries or their respective businesses or (b) any oral
or written information presented to the Investor or any of its Representatives
in the course of its due diligence investigation of the Company, the negotiation
of this Agreement or the course of the Transactions or any other transactions or
potential transactions involving the Company and the Investor.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

The Investor represents and warrants to the Company, as of the date hereof and
as of the Closing Date (except to the extent made only as of a specified date,
in which case such representation and warranty is made as of such date):

Section 4.01    Organization; Standing. The Investor is a Cayman Islands
exempted limited partnership duly organized, validly existing and in good
standing under the Laws of the Cayman Islands and has all requisite power and
authority necessary to carry on its business as it is now being conducted and is
duly licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not, individually or in the
aggregate, reasonably be expected to have an Investor Material Adverse Effect.

Section 4.02    Authority; Noncontravention. (a) The Investor has all necessary
power and authority to execute and deliver this Agreement and the other
Transaction Agreements, to perform its obligations hereunder and thereunder and
to consummate the Transactions. The execution, delivery and performance by the
Investor of this Agreement and the other Transaction Agreements and the
consummation by the Investor of the Transactions have been duly authorized and
approved by all necessary action on the part of the Investor, and no further
action, approval or authorization by any of its stockholders, partners, members
or other equity owners, as the case may be, is necessary to authorize the
execution, delivery and performance by the Investor of this Agreement and the
other Transaction Agreements and the consummation by the Investor of the
Transactions. This Agreement has been, and at the Closing the other Transaction
Agreements will be, duly executed and delivered by the Investor and, assuming
due authorization, execution and delivery hereof or thereof, as applicable, by
the Company, constitutes (or in the case of the other Transaction Agreements, at
the Closing will constitute) a legal, valid and binding obligation of the
Investor, enforceable against it in accordance with its terms, subject to the
Bankruptcy and Equity Exception.

 

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(b)    Neither the execution and delivery of this Agreement or the other
Transaction Agreements by the Investor, nor the consummation by the Investor of
the Transactions, nor performance or compliance by the Investor with any of the
terms or provisions hereof or thereof, will (i) conflict with or violate any
provision of the certificate or articles of incorporation, bylaws or other
comparable charter or organizational documents of the Investor or (ii) assuming
that the authorizations, consents and approvals referred to in Section 4.03 are
obtained prior to the Closing Date and the filings referred to in Section 4.03
are made and any waiting periods with respect to such filings have terminated or
expired prior to the Closing Date, (x) violate any Law or Judgment applicable to
the Investor or any of its Subsidiaries or (y) violate or constitute a default
(or constitute an event which, with notice or lapse of time or both, would
violate or constitute a default) under any of the terms, conditions or
provisions of any Contract to which the Investor or any of its Subsidiaries is a
party or accelerate the Investor’s or any of its Subsidiaries’, if applicable,
obligations under any such Contract, except, in the case of clause (ii), as
would not, individually or in the aggregate, reasonably be expected to have an
Investor Material Adverse Effect.

Section 4.03    Governmental Approvals. Except for the filing by the Company of
the Certificate of Designations with the Delaware Secretary of State, no consent
or approval of, or filing, license, permit or authorization, declaration or
registration with, any Governmental Authority is necessary for the execution and
delivery of this Agreement and the other Transaction Agreements by the Investor,
the performance by the Investor of its obligations hereunder and thereunder and
the consummation by the Investor of the Transactions, other than such other
consents, approvals, filings, licenses, permits, authorizations, declarations or
registrations that, if not obtained, made or given, would not, individually or
in the aggregate, reasonably be expected to have an Investor Material Adverse
Effect.

Section 4.04    Financing. The Investor has delivered to the Company a true and
complete copy of the Equity Commitment Letter, pursuant to which Clayton,
Dubilier & Rice Fund IX, L.P. has committed, subject only to the terms and
conditions thereof, to invest the amounts set forth therein. As of the date of
this Agreement, the Equity Commitment Letter is in full force and effect and
constitutes the enforceable, legal, valid and binding obligations of each of the
parties thereto. At the Closing, assuming receipt of the funds under the Equity
Commitment Letter, the Investor will have available funds necessary to
consummate the Purchase and pay the Purchase Price and to pay any fees and
expenses of or payable by the Investor, on the terms and conditions contemplated
by this Agreement. The Equity Commitment Letter provides that the Company is a
third-party beneficiary thereof, in accordance with and subject to the terms and
conditions set forth therein, and is entitled to enforce such agreement. As of
the date of this Agreement, the Investor is not aware of any reason why the
funds sufficient to pay the Purchase Price will not be available on the Closing
Date. The Equity Commitment Letter will not be amended, modified or altered at
any time through the Closing.

Section 4.05    Ownership of Company Stock. Other than 11,066,478 shares of
Common Stock owned by the Investor, neither the Investor nor any of its
Affiliates owns any capital stock or other securities of the Company.

Section 4.06    Brokers and Other Advisors. No broker, investment banker,
financial advisor or other Person is entitled to any broker’s, finder’s,
financial advisor’s or other similar

 

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fee or commission, or the reimbursement of expenses in connection therewith, in
connection with the Transactions based upon arrangements made by or on behalf of
the Investor or any of its Subsidiaries, except for Persons, if any, whose fees
and expenses will be paid by the Investor.

Section 4.07    Non-Reliance on Company Estimates, Projections, Forecasts,
Forward-Looking Statements and Business Plans. In connection with the due
diligence investigation of the Company by the Investor and its Representatives,
the Investor and its Representatives have received and may continue to receive
from the Company and its Representatives certain estimates, projections,
forecasts and other forward-looking information, as well as certain business
plan information, regarding the Company and its Subsidiaries and their
respective businesses and operations. The Investor hereby acknowledges that
there are uncertainties inherent in attempting to make such estimates,
projections, forecasts and other forward-looking statements, as well as in such
business plans, with which the Investor is familiar, that the Investor is making
its own evaluation of the adequacy and accuracy of all estimates, projections,
forecasts and other forward-looking information, as well as such business plans,
so furnished to the Investor (including the reasonableness of the assumptions
underlying such estimates, projections, forecasts, forward-looking information
or business plans), and that except for the representations and warranties made
by the Company in Article III of this Agreement, the Investor will have no claim
against the Company or any of its Subsidiaries, or any of their respective
Representatives, with respect thereto, except with respect to Fraud.

Section 4.08    Purchase for Investment. The Investor acknowledges that the
Series A Preferred Stock and the Common Stock issuable upon the conversion of
the Series A Preferred Stock have not been registered under the Securities Act
or under any state or other applicable securities Laws. The Investor
(a) acknowledges that it is acquiring the Series A Preferred Stock and the
Common Stock issuable upon the conversion of the Series A Preferred Stock
pursuant to an exemption from registration under the Securities Act solely for
investment with no intention to distribute any of the foregoing to any Person,
(b) will not sell, transfer, or otherwise dispose of any of the Series A
Preferred Stock or the Common Stock issuable upon the conversion of the Series A
Preferred Stock, except in compliance with this Agreement and the registration
requirements or exemption provisions of the Securities Act and any other
applicable securities Laws, (c) has such knowledge and experience in financial
and business matters and in investments of this type that it is capable of
evaluating the merits and risks of its investment in the Series A Preferred
Stock and the Common Stock issuable upon the conversion of the Series A
Preferred Stock and of making an informed investment decision, (d) is an
“accredited investor” (as that term is defined by Rule 501 of the Securities
Act) and (e)(1) has been furnished with or has had access to all the information
that it considers necessary or appropriate to make an informed investment
decision with respect to the Series A Preferred Stock and the Common Stock
issuable upon the conversion of the Series A Preferred Stock, (2) has had an
opportunity to discuss with the Company and its Representatives the intended
business and financial affairs of the Company and to obtain information
necessary to verify any information furnished to it or to which it had access
and (3) can bear the economic risk of (i) an investment in the Series A
Preferred Stock and the Common Stock issuable upon the conversion of the Series
A Preferred Stock indefinitely and (ii) a total loss in respect of such
investment. The Investor has such knowledge and experience in business and
financial matters so as to enable it to understand and evaluate the risks of,
and form an investment decision with respect to its investment in, the Series A
Preferred Stock and the Common Stock issuable upon the conversion of the Series
A Preferred Stock and to protect its own interest in connection with such
investment.

 

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Section 4.09    HSR. Investor, or its ultimate parent entity as that term is
defined in 16 C.F.R. 801.1(a)(3), filed a premerger notification and report form
pursuant to the HSR Act to hold Company voting securities valued in accordance
with 16 C.F.R. § 801.10(a) in excess of $168.8 million (the “2018 HSR Filing”),
and the waiting period for that 2018 HSR Filing expired on June 11, 2018.
Investor represents that it acquired Company voting securities valued in
accordance with 16 C.F.R. § 801.10(a) in excess of $168.8 million within one
year of June 11, 2018. Investor has determined in accordance with 16 C.F.R. §
801.13(a) that the value of the Company’s voting securities to be held as a
result of the Transactions will not exceed $940.1 million.

Section 4.10    No Other Company Representations or Warranties. Except for the
representations and warranties expressly set forth in Article III, the Investor
hereby acknowledges that neither the Company nor any of its Subsidiaries, nor
any other Person, (a) has made or is making any other express or implied
representation or warranty with respect to the Company or any of its
Subsidiaries or their respective businesses, operations, assets, liabilities,
condition (financial or otherwise) or prospects, including with respect to any
information provided or made available to the Investor or any of its
Representatives or any information developed by the Investor or any of its
Representatives or (b) will have or be subject to any liability or
indemnification obligation to the Investor resulting from the delivery,
dissemination or any other distribution to the Investor or any of its
Representatives, or the use by the Investor or any of its Representatives, of
any information, documents, estimates, projections, forecasts or other
forward-looking information, business plans or other material developed by or
provided or made available to the Investor or any of its Representatives,
including in due diligence materials, “data rooms” or management presentations
(formal or informal), in anticipation or contemplation of any of the
Transactions or any other transactions or potential transactions involving the
Company and the Investor. The Investor, on behalf of itself and on behalf of its
Affiliates, expressly waives any such claim relating to the foregoing matters,
except with respect to Fraud. The Investor hereby acknowledges (for itself and
on behalf of its Affiliates and Representatives) that it has conducted, to its
satisfaction, its own independent investigation of the business, operations,
assets and financial condition of the Company and its Subsidiaries and, in
making its determination to proceed with the Transactions, the Investor and its
Affiliates and Representatives have relied on the results of their own
independent investigation.

ARTICLE V

ADDITIONAL AGREEMENTS

Section 5.01    Negative Covenants. Except as required by applicable Law,
Judgment or to comply with any notice from a Governmental Authority, as
expressly contemplated, required or permitted by this Agreement or as described
in Section 5.01 of the Company Disclosure Letter, during the period from the
date of this Agreement until the Closing Date (or such earlier date on which
this Agreement may be terminated pursuant to Section 7.01), unless the Investor
otherwise consents in writing (such consent not to be unreasonably withheld,
delayed or conditioned), the Company shall not, and shall not permit any of its
Subsidiaries to:

 

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(a)    other than the authorization and issuance of the Series A Preferred Stock
to the Investor and the consummation of the other Transactions, issue, sell or
grant any shares of its capital stock or other equity or voting interests, or
any securities or rights convertible into, exchangeable or exercisable for, or
evidencing the right to subscribe for any shares of its capital stock or other
equity or voting interests, or any rights, warrants or options to purchase any
shares of its capital stock or other equity or voting interests; provided that
the Company may issue or grant shares of Common Stock or other securities in the
ordinary course of business under Company Plans in effect on the date of this
Agreement or pursuant to equity awards or obligations outstanding on the date of
this Agreement or granted after the date of this Agreement not in violation of
this Agreement;

(b)    redeem, purchase or otherwise acquire any of its outstanding shares of
capital stock or other equity or voting interests, or any rights, warrants or
options to acquire any shares of its capital stock or other equity or voting
interests (other than pursuant to the cashless exercise of Company Stock Options
or the forfeiture or withholding of Taxes with respect to Company Stock Options,
Company Restricted Shares, Company RSUs or Company PSUs);

(c)    establish a record date for, declare, set aside for payment or pay any
dividend on, or make any other distribution in respect of, any shares of its
capital stock or other equity or voting interests;

(d)    split, combine, subdivide or reclassify any shares of its capital stock
or other equity or voting interests;

(e)    amend the Company Charter Documents in a manner that would affect the
Investor in an adverse manner either as a holder of Series A Preferred Stock or
with respect to the rights of the Investor under this Agreement; or

(f)    agree or commit to do any of the foregoing.

Section 5.02    Reasonable Best Efforts; Filings. (a) Subject to the terms and
conditions of this Agreement, each of the Company and the Investor shall
cooperate with each other and use (and shall cause its Subsidiaries to use) its
reasonable best efforts (unless, with respect to any action, another standard of
performance is expressly provided for herein) to promptly (i) take, or cause to
be taken, all actions, and do, or cause to be done, and assist and cooperate
with each other in doing, all things necessary, proper or advisable to cause the
conditions to Closing to be satisfied as promptly as reasonably practicable and
to consummate and make effective, in the most expeditious manner reasonably
practicable, the Transactions, including preparing and filing promptly and fully
all documentation to effect all necessary filings, notices, petitions,
statements, registrations, submissions of information, applications and other
documents, (ii) obtain all approvals, consents, registrations, waivers, permits,
authorizations, orders and other confirmations from any Governmental Authority
or third party necessary, proper or advisable to consummate the Transactions,
(iii) execute and deliver any additional instruments necessary to consummate the
Transactions and (iv) defend or contest in good faith any Action brought by a
third party that could otherwise prevent or impede, interfere with, hinder or
delay in any material respect the consummation of the Transactions.

 

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(b)    Each of the Company and the Investor shall use its reasonable best
efforts (i) to cooperate in all respects with the other party in connection with
any filing or submission with a Governmental Authority in connection with the
Transactions and in connection with any investigation or other inquiry by or
before a Governmental Authority relating to the Transactions, including any
proceeding initiated by a private person, (ii) to keep the other party informed
in all material respects and on a reasonably timely basis of any material
communication received by the Company or the Investor, as the case may be, from
or given by the Company or the Investor, as the case may be, to any other
Governmental Authority and of any material communication received or given in
connection with any proceeding by a private Person, in each case regarding the
Transactions, (iii) subject to applicable Laws relating to the exchange of
information, and to the extent reasonably practicable, to consult with the other
party with respect to information relating to such party and its respective
Subsidiaries, as the case may be, that appears in any filing made with, or
written materials submitted to, any third Person or any Governmental Authority
in connection with the Transactions, and (iv) to the extent permitted by any
applicable Governmental Authority or other Person, give the other party the
opportunity to attend and participate in such meetings and conferences.

(c)    Notwithstanding anything to the contrary in this Agreement, nothing in
this Section 5.02 or elsewhere in this Agreement shall require the Company to
take any action with respect to any part of its business, including selling,
divesting, conveying, holding separate, or otherwise limiting its freedom of
action with respect to any assets, rights, products, licenses, businesses,
operations, or interest therein, of any part of its business. The parties agree
that all obligations of other parties related to regulatory approvals shall be
governed exclusively by this Section 5.02.

Section 5.03    Corporate Actions. (a) At any time that any Series A Preferred
Stock is outstanding, the Company shall:

(i)    from time to time take all lawful action within its control to cause the
authorized capital stock of the Company to include a sufficient number of
authorized but unissued shares of Common Stock to satisfy the conversion
requirements of all shares of the Series A Preferred Stock then outstanding; and

(ii)    not effect any voluntary deregistration under the Exchange Act or any
voluntary delisting of the Common Stock from Nasdaq other than in connection
with a Change of Control (as defined in the Certificate of Designations)
pursuant to which the Company agrees to satisfy, or will otherwise cause the
satisfaction, in full of its obligations under Section 9(a) of the Certificate
of Designations or is otherwise consistent with the terms set forth in
Section 9(i) of the Certificate of Designations.

(b)    Prior to or upon the Closing, the Company shall file with the Secretary
of State of the State of Delaware the Certificate of Designations in the form
attached hereto as Annex I.

(c)    If any occurrence since the date of this Agreement until the Closing
would have resulted in an adjustment to the Conversion Rate pursuant to the
Certificate of Designations

 

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if the Series A Preferred Stock had been issued and outstanding since the date
of this Agreement, the Company shall adjust the Conversion Rate, effective as of
the Closing, in the same manner as would have been required by the Certificate
of Designations if the Series A Preferred Stock had been issued and outstanding
since the date of this Agreement.

(d)    At any time that any Series A Preferred Stock is outstanding, the Company
shall not adopt any stockholder rights agreement, “poison pill” or similar
anti-takeover agreement or plan that is applicable to the Investor Parties
unless the Company has excluded the Investor Parties from the definition of
“acquiring person” (or such similar term) as such term is defined in such
anti-takeover agreement to the extent of the Investor Parties’ beneficial
ownership of Preferred Stock or Common Stock owned as of the date any such
agreement or plan is adopted by the Company.

Section 5.04    Public Disclosure. The Investor and the Company shall consult
with each other before issuing, and shall give each other the opportunity to
review and comment upon, any press release or other public statements (other
than any filings with the SEC required by Section 13 or Section 16 under the
Exchange Act) with respect to the Transaction Documents or the Transactions, and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable Law, Judgment,
court process or the rules and regulations of any national securities exchange
or national securities quotation system. The Investor and the Company agree that
the initial press release to be issued with respect to the Transactions
following execution of this Agreement shall be in the form attached hereto as
Annex III (the “Announcement”). Notwithstanding the forgoing, this Section 5.04
shall not apply to any press release or other public statement made by the
Company or the Investor (a) which is consistent with the Announcement and does
not contain any information relating to the Transactions that has not been
previously announced or made public in accordance with the terms of this
Agreement or (b) is made in the ordinary course of business and does not relate
specifically to the signing of the Transaction Documents or the Transactions.
Notwithstanding anything to the contrary in this Agreement, in no event shall
this Section 5.04 limit disclosure by the Investor and its Affiliates of
ordinary course communications consisting of non-confidential information
regarding this Agreement and the Transactions to its existing or prospective
general and limited partners, equityholders, members, managers and investors of
any Affiliates of such Person, including non-confidential disclosing information
about the Transactions on their websites in the ordinary course of business
consistent with past practice.

Section 5.05    Confidentiality. The Investor will, and will cause its
Affiliates and its and their respective Representatives to, keep confidential
any information (including oral, written and electronic information) concerning
the Company, its Subsidiaries or its Affiliates that may be furnished to the
Investor, its Affiliates or their respective Representatives by or on behalf of
the Company or any of its Representatives pursuant to this Agreement
(collectively referred to as the “Confidential Information”) and to use the
Confidential Information solely for the purposes of monitoring, administering or
managing the Investor’s investment in the Company made pursuant to this
Agreement; provided that the Confidential Information shall not include
information that (i) was or becomes available to the public other than as a
result of a disclosure by the Investor, any of its Affiliates or any of their
respective Representatives in violation of this Section 5.05, (ii) was or
becomes available to the Investor, any of its Affiliates or any of their
respective Representatives from a source other than the Company or its
Representatives,

 

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provided that such source is believed by the Investor not to be disclosing such
information in violation of an obligation of confidentiality (whether by
agreement or otherwise) to the Company, (iii) at the time of disclosure is
already in the possession of the Investor, any of its Affiliates or any of their
respective Representatives, provided that such information is believed by the
Investor not to be subject to an obligation of confidentiality (whether by
agreement or otherwise) to the Company or (iv) was independently developed by
the Investor, any of its Affiliates or any of their respective Representatives
without reference to, incorporation of, or other use of any Confidential
Information. The Investor agrees, on behalf of itself and its Affiliates and its
and their respective Representatives, that Confidential Information may be
disclosed solely (i) to the respective Representatives of the Investor and its
Affiliates to the extent necessary to obtain their services in connection with
the Investor’s investment in the Company, (ii) to any Affiliate, partner,
member, limited partner, prospective partner or related investment fund of the
Investor and its Affiliates and their respective directors, officers, employees,
consultants, financing sources and representatives, in each case in the ordinary
course of business (provided that the recipients of such confidential
information are directed to abide by the confidentiality and non-disclosure
obligations contained herein) or (iii) in the event that the Investor, any of
its Affiliates or any of its or their respective Representatives are requested
or required by applicable Law, Judgment, stock exchange rule or other applicable
judicial or governmental process (including by deposition, interrogatory,
request for documents, subpoena, civil investigative demand or similar process)
to disclose any Confidential Information, in each of which instances described
in this clause (iii) the Investor, its Affiliates and its and their respective
Representatives, as the case may be, shall provide notice to the Company
sufficiently in advance of any such disclosure so that the Company will have a
reasonable opportunity to timely seek to limit, condition or quash such
disclosure.

Section 5.06    Nasdaq Listing of Shares. To the extent the Company has not done
so prior to the date of this Agreement, the Company shall promptly apply to
cause the shares of Common Stock issuable upon the conversion of the Series A
Preferred Stock issued to the Investor pursuant to this Agreement and pursuant
to the Certificate of Designations to be approved for listing on the Nasdaq,
subject to official notice of issuance. From time to time following the Closing
Date, the Company shall apply to cause the number of shares of Common Stock
issuable upon conversion of the then outstanding shares of Series A Preferred
Stock to be approved for listing on the Nasdaq.

Section 5.07    Standstill. The Investor agrees that until the later of
(i) twelve (12) months after the Investor Board Seat Fall-Away and no Investor
Director or Advisor Director is serving on the Board and (ii) the three-year
anniversary of the Closing Date, without the prior written approval of the
Board, the Investor will not, directly or indirectly, and will cause its
Affiliates not to:

(a)    acquire, offer or seek to acquire, agree to acquire or make a proposal to
acquire, by purchase or otherwise, any securities or direct or indirect rights
to acquire any securities of the Company or any of its Affiliates, any
securities convertible into or exchangeable for any such securities, any options
or other derivative securities or contracts or instruments in any way related to
the price of shares of Common Stock or any assets or property of the Company or
any Subsidiary of the Company;

 

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(b)    make or in any way encourage or participate in any “solicitation” of
“proxies” (whether or not relating to the election or removal of directors), as
such terms are used in the rules of the SEC, to vote, or seek to advise or
influence any Person with respect to voting of, any voting securities of the
Company or any of its Subsidiaries, or call or seek to call a meeting of the
Company’s stockholders or initiate any stockholder proposal for action by the
Company’s stockholders, or seek election to or to place a representative on the
Board or seek the removal of any director from the Board;

(c)    make any public announcement with respect to, or offer, seek, propose or
indicate an interest in (in each case with or without conditions), any merger,
consolidation, business combination, tender or exchange offer, recapitalization,
reorganization or purchase of a material portion of the assets, properties or
securities of the Company or any Subsidiary of the Company, or any other
extraordinary transaction involving the Company or any Subsidiary of the Company
or any of their respective securities, or enter into any discussions,
negotiations, arrangements, understandings or agreements (whether written or
oral) with any other Person regarding any of the foregoing;

(d)    otherwise act, alone or in concert with others, to seek to control or
influence, in any manner, the management, board of directors or policies of the
Company or any of its Subsidiaries;

(e)     make any proposal or statement of inquiry or disclose any intention,
plan or arrangement inconsistent with any of the foregoing;

(f)    advise, assist, encourage or direct any Person to do, or to advise,
assist, encourage or direct any other Person to do, any of the foregoing;

(g)    take any action that would, in effect, require the Company to make a
public announcement regarding the possibility of a transaction or any of the
events described in this Section 5.07;

(h)    enter into any discussions, negotiations, arrangements or understandings
with any third party (including, without limitation, security holders of the
Company) with respect to any of the foregoing, including, without limitation,
forming, joining or in any way participating in a “group” (as defined in
Section 13(d)(3) of the Exchange Act) with any third party with respect to any
securities of the Company or otherwise in connection with any of the foregoing;

(i)    request the Company or any of its Representatives, directly or
indirectly, to amend or waive any provision of this Section 5.07, provided that
this clause shall not prohibit the Investor Parties from making a confidential
request to the Company seeking an amendment or waiver of the provisions of this
Section 5.07, which the Company may accept or reject in its sole discretion, so
long as any such request is made in a manner that does not require public
disclosure thereof by any Person; or

(j)    contest the validity of this Section 5.07 or make, initiate, take or
participate in any demand, Action (legal or otherwise) or proposal to amend,
waive or terminate any provision of this Section 5.07;

 

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provided, however, that nothing in this Section 5.07 will limit (1) the Investor
Parties’ ability to vote (subject to Section 5.11), Transfer (subject to
Section 5.08), convert (subject to Section 6 (Right of the Holders to Convert)
of the Certificate of Designations) or otherwise exercise rights under its
Common Stock or Series A Preferred Stock or (2) the ability of any Investor
Director or Advisor Director to act in his or her capacity as a member of the
Board including, but not limited to, his or her ability to vote or otherwise
exercise his or her fiduciary duties.

Section 5.08    Transfer Restrictions. (a) Except as otherwise permitted in this
Agreement, until the twenty-four (24)-month anniversary of the Closing Date, the
Investor Parties will not (i) Transfer (x) any shares of Common Stock
beneficially owned by the Investor Parties as of the Closing or (y) any Series A
Preferred Stock or any Common Stock issued upon conversion of the Series A
Preferred Stock (the capital stock referred to in the foregoing clauses (x) and
(y), the “Prohibited Stock”) or (ii) make any short sale of, grant any option
for the purchase of, or enter into any hedging or similar transaction with the
same economic effect as a short sale of or the purpose of which is to offset the
loss which results from a decline in the market price of, any shares of
Prohibited Stock, or otherwise establish or increase, directly or indirectly, a
put equivalent position, as defined in Rule 16a-1(h) under the Exchange Act,
with respect to any of the Prohibited Stock or any other capital stock of the
Company.

(b)    Notwithstanding Section 5.08(a), the Investor Parties shall be permitted
to Transfer any portion or all of their Prohibited Stock at any time under the
following circumstances:

(i)    Transfers to any Affiliates of the Investor, but only if the transferee
agrees in writing prior to such Transfer for the express benefit of the Company
(in form and substance reasonably satisfactory to the Company and with a copy
thereof to be furnished to the Company) to be bound by the terms of this
Agreement and if the transferee and the transferor agree for the express benefit
of the Company that the transferee shall Transfer the Prohibited Stock so
Transferred back to the transferor at or before such time as the transferee
ceases to be an Affiliate of the transferor;

(ii)    Transfers pursuant to a merger, tender offer or exchange offer or other
business combination acquisition of all or substantially all of the assets or
similar transaction or any change of control transaction involving the Company
or any Subsidiary that, in each case, is approved by the Board;

(iii)    Transfers pursuant to a tender offer or exchange offer by a third party
that is approved by the Board and is for more than fifty percent (50%) of the
voting power of all of the Company’s then-outstanding common equity; and

(iv)    Transfers that have been approved in writing by the Board.

(c)    Notwithstanding Sections 5.08(a) and (b), the Investor Parties will not
at any time, directly or indirectly Transfer any Prohibited Stock to a
Prohibited Transferee or to a Person or “group” (as defined in Section 13(d)(3)
of the Exchange Act) that, after giving effect to a proposed Transfer, would
beneficially own, on an as-converted basis, greater than 5% of the

 

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then outstanding Common Stock. Notwithstanding Section 5.08(a) the Investor
Parties will not, at any time, directly or indirectly, Transfer, on any day, an
aggregate number of shares of Prohibited Stock that, on an as-converted basis,
would be in excess of 10% of the average daily trading volume of the Common
Stock for the preceding three (3) months on the Nasdaq.    Notwithstanding the
foregoing, nothing in this Section 5.08(c) shall restrict any Transfer into the
public market pursuant to a bona-fide, broadly distributed underwritten public
offering made pursuant to the Registration Rights Agreement.

(d)    Notwithstanding Sections 5.08(a) and (b), the Investor Parties will not
at any time, directly or indirectly, tender any shares of Prohibited Stock into
any “tender offer” (as defined in Regulation 14D under the Exchange Act) to
acquire the equity securities of the Company that has not been approved (at the
time of commencement) by the Board.

(e)    Any attempted Transfer in violation of this Section 5.08 shall be null
and void ab initio.

Section 5.09    Legend. (a) All certificates or other instruments representing
the Series A Preferred Stock or Common Stock issued upon conversion of the
Series A Preferred Stock will bear a legend substantially to the following
effect:

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION
STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR
SUCH LAWS.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER AND OTHER
RESTRICTIONS SET FORTH IN AN INVESTMENT AGREEMENT, DATED AS OF APRIL 30, 2020,
COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE ISSUER.

(b)    Upon request of the applicable Investor Party, upon receipt by the
Company of an opinion of counsel reasonably satisfactory to the Company to the
effect that such legend is no longer required under the Securities Act and
applicable state securities laws, the Company shall promptly cause the first
paragraph of the legend to be removed from any certificate for any Prohibited
Stock to be Transferred in accordance with the terms of this Agreement and the
second paragraph of the legend shall be removed upon the expiration of such
transfer and other restrictions set forth in this Agreement (and, for the
avoidance of doubt, immediately prior to any termination of this Agreement).

Section 5.10    Election of Directors. (a) Effective as of the Closing, the
Board will increase the size of the Board, as and if necessary, and elect to the
Board an individual mutually agreed upon by the Investor and the Company, which
individual shall be an “operating advisor” or “operating partner” of Sponsor
(the “Advisor Director”).

 

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(b)    Upon the occurrence of the Advisor Board Seat Fall-Away, the Advisor
Director shall immediately resign, and the Investor Parties shall cause the
Advisor Director immediately to resign, from the Board effective as of the date
of the Advisor Board Seat Fall-Away, and the Investor Parties shall no longer
have any rights under this Section 5.10 with respect to the Advisor Director,
including, for the avoidance of doubt, any designation and/or nomination rights
with respect to the Advisor Director under Section 5.10(c). Upon the occurrence
of the Investor Board Seat Fall-Away, the Investor Director shall immediately
resign, and the Investor Parties shall cause the Investor Director immediately
to resign, from the Board effective as of the date of the Investor Board Seat
Fall-Away, and the Investor Parties shall no longer have any rights under this
Section 5.10, including, for the avoidance of doubt, any designation and/or
nomination rights under Section 5.10(c)

(c)    Until the occurrence of the Advisor Board Seat Fall-Away, at any annual
meeting of the Company’s stockholders at which the term of the Advisor Director
shall expire, the Investor shall have the right to designate, in accordance with
the Company Charter Documents and the DGCL, one Advisor Director. Until the
occurrence of the Investor Board Seat Fall-Away, at any annual meeting of the
Company’s stockholders at which the term of the Investor Director shall expire,
the Investor shall have the right to designate, in accordance with the Company
Charter Documents and the DGCL, one Investor Director. The Company shall include
the Investor Designees designated by the Investor in accordance with this
Section 5.10(c) in the Company’s slate of nominees for the applicable annual
meeting of the Company’s stockholders and shall recommend that the Company’s
stockholders vote in favor of such Investor Designees and shall support the
Investor Designees in a manner substantially no less favorable than the manner
in which the Company supports its other non-executive nominees in the aggregate.

(d)    In the event of the death, disability, resignation or removal of the
Investor Director or the Advisor Director as a member of the Board (in each case
other than resignation pursuant to Section 5.10(b)), the Investor may designate
an Investor Designee to replace such Investor Director or such Advisor Director,
as applicable, and, subject to Section 5.10(e), the Company shall cause such
Investor Designee to fill such resulting vacancy.

(e)    The Company’s obligations to have any Investor Designee elected to the
Board or nominate any Investor Designee for election as a director at any
meeting of the Company’s stockholders pursuant to this Section 5.10, as
applicable, shall in each case be subject to (A) such Investor Designee’s
satisfaction of all requirements regarding service as a director of the Company
under applicable Law and stock exchange rules regarding service as a director of
the Company and all other criteria and qualifications for service as a director
applicable to all directors of the Company and (B) such Investor Designee
meeting all independence requirements under the listing rules of the Nasdaq and
otherwise being reasonably acceptable to the Company. The Investor Parties will
cause each Investor Designee to make himself or herself reasonably available for
interviews and to consent to such reference and background checks or other
investigations as the Board may reasonably request to determine the Investor’s
Nominee’s eligibility and qualification to serve as a director of the Company.
No

 

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Investor Designee shall be eligible to serve on the Board if he or she has been
involved in any of the events enumerated under Item 2(d) or (2) of Schedule 13D
under the Exchange Act or Item 401(f) of Regulation S-K under the Securities Act
or is subject to any Judgment prohibiting service as a director of any public
company. As a condition to any Investor Designee’s election to the Board or
nomination for election as a director of the Company at any meeting of the
Company’s stockholders, the Investor Parties and the Investor Designee must
provide to the Company:

(i)    all information requested by the Company that is required to be or is
customarily disclosed for directors, candidates for directors and their
respective Affiliates and Representatives in a proxy statement or other filings
in accordance with applicable Law, any stock exchange rules or listing standards
or the Company Charter Documents or corporate governance guidelines, in each
case, relating to such Investor Designee’s election as a director of the Company
or the Company’s operations in the ordinary course of business;

(ii)    all information requested by the Company in connection with assessing
eligibility, independence and other criteria applicable to directors or
satisfying compliance and legal or regulatory obligations, in each case,
relating to such Investor Designee’s nomination or election, as applicable, as a
director of the Company or the Company’s operations in the ordinary course of
business;

(iii)    an undertaking in writing by such Investor Designee:

(A)    to be subject to, bound by and duly comply with applicable Law, the
Company Charter Documents, the policies, procedures, processes, codes, rules,
standards and guidelines applicable to all Board members or members of any
committee of which such Investor Designee may be a member, including the
Company’s Code of Conduct, insider trading policy and all other Company policies
and guidelines applicable generally to directors serving on the Board with
respect to trading in the Company’s securities;

(B)    to keep confidential all information about the Company and its Affiliates
of which he or she becomes aware in his or her capacity as a member of the
Board; and

(C)    to recuse himself or herself from any deliberations or discussion of the
Board or any committee thereof (i) regarding any Transaction Agreement, the
Transactions or any matters relating thereto or any transactions with or matters
relating to the Investor or any Investor Affiliate or (ii) that, in the Board’s
sole judgment, would reasonably be likely to (A) result in a conflict of
interest, (B) adversely affect the attorney-client privilege between the Company
and its counsel, or (C) result in a violation of applicable Law.

 

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(f)    The Company shall be permitted to withhold any information and to exclude
the Investor Director and the Advisor Director from any meeting or portion
thereof with respect to information and meetings involving items to which
Section 5.10(e)(iii)(C) is applicable.

(g)    The Company shall indemnify the Investor Director and the Advisor
Director and provide the Investor Director and the Advisor Director with
director and officer insurance to the same extent as it indemnifies and provides
such insurance to other members of the Board, pursuant to the Company Charter
Documents, the DGCL or otherwise.

Section 5.11    Voting. Until the Investor Board Seat Fall-Away:

(a)    at each meeting of the stockholders of the Company and at every
postponement or adjournment thereof, the Investor shall, and shall cause the
Investor Parties to, take such action as may be required so that all of the
shares of Series A Preferred Stock or Common Stock beneficially owned, directly
or indirectly, by the Investor Parties and entitled to vote are voted (i) other
than in respect of an Investor Director, Advisor Director or Investor Designee,
in favor of each director nominated and recommended by the Board (or a duly
authorized committee thereof) for election at any such meeting, (ii) against any
stockholder nominations for directors that are not approved and recommended by
the Board (or a duly authorized committee thereof) for election at any such
meeting, (iii) in favor of the Company’s proposal for ratification of the
appointment of the Company’s independent registered public accounting firm and
(iv) in favor of the Company’s “say-on-pay” and “say-on-frequency” proposals and
any proposal by the Company relating to compensation as recommended by the
Board; provided that no Investor Party shall be under any obligation to vote in
the same manner as recommended by the Board or in any other manner, other than
in its sole discretion, with respect to any other matter, including the approval
(or non-approval) or adoption (or non-adoption) of, or other proposal directly
related to, any merger or other business combination transaction involving the
Company, the sale of all or substantially all of the assets of the Company and
its Subsidiaries or any other change of control transaction involving the
Company; provided, further, (i) that in the event that any proposal submitted by
a stockholder is subject to a vote of the Company’s stockholders, the applicable
Investor Parties shall not, and shall cause their controlled Affiliates not to,
publicly comment on such proposal or otherwise discuss such proposal with any
stockholder other than the Investor Parties and (ii) if the applicable Investor
Parties intend to cause any Common Stock, Preferred Stock or shares of Common
Stock that were issued upon conversion of shares of Preferred Stock beneficially
owned, directly or indirectly, by the applicable Investor Parties to be voted in
a manner that is not in accordance with the Board’s recommendation with respect
to such stockholder proposal, the applicable Investor Parties shall not
(x) disclose such intention to any Person other than the Company, the Board or
the other Investor Parties or (y) permit any such Common Stock, Preferred Stock
or shares of Common Stock that were issued upon conversion of shares of
Preferred Stock to be voted, in the case of each of (x) and (y), until the time
of the relevant meeting of the Company’s stockholders; and

(b)    the Investor shall, and shall (to the extent necessary to comply with
this Section 5.11) cause the Investor Parties to, be present, in person or by
proxy, at all meetings of the stockholders of the Company so that all shares of
Series A Preferred Stock or Common Stock

 

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beneficially owned by the Investor or the Investor Parties may be counted for
the purposes of determining the presence of a quorum and voted in accordance
with Section 5.11(a) at such meetings (including at any adjournments or
postponements thereof).

Section 5.12    Tax Matters. (a) The Company and any applicable withholding
agent shall be entitled to deduct and withhold from any amounts otherwise
payable with respect to the Series A Preferred Stock or Common Stock or other
securities issued upon conversion of the Series A Preferred Stock to the extent
required by applicable Law. Any amounts that are so withheld shall be timely
paid over to the appropriate tax authority and shall be treated for all purposes
of the applicable Transaction Documents and Company Charter Documents as having
been paid to the Person in respect of which such deduction and withholding was
made. On the date hereof and whenever a lapse in time or change in circumstances
renders any such documentation expired, obsolete or inaccurate in any respect
(and at such other times as may be requested in writing by the Company), the
Investor (or any transferee) shall deliver to the Company or its paying agent a
duly executed, valid, accurate and properly completed Internal Revenue Service
(“IRS”) Form W-9 or an appropriate IRS Form W-8 indicating that the Investor is
a withholding foreign partnership, as applicable, along with any other
documentation requested by the Company in writing reasonably necessary to comply
with its Tax reporting obligations under applicable Law. For so long as Investor
(or any transferee) holds any shares of Series A Preferred Stock, Investor (or
such transferee) shall be a “United States person” as defined in
Section 7701(a)(30) of the Code or a “withholding foreign partnership” for
purposes of Section 1441 of the Code and Treasury Regulations Section 1.1441
5(c)(2), and shall provide the Company, promptly upon written request therefor,
with any documentation reasonably necessary for the Company to verify such
status (the “Responsible Person Covenant”).

(b)    The Company shall pay any and all documentary, stamp and similar issue or
transfer Tax due on (x) the issue of the Series A Preferred Stock and (y) the
issue of shares of Common Stock upon conversion of the Series A Preferred Stock.
However, in the case of conversion of Series A Preferred Stock, the Company
shall not be required to pay any Tax or duty that may be payable in respect of
any transfer involved in the issue and delivery of shares of Common Stock or
Series A Preferred Stock in a name other than that of the holder of the shares
to be converted, and no such issue or delivery shall be made unless and until
the person requesting such issue has paid to the Company the amount of any such
Tax or duty, or has established to the satisfaction of the Company that such Tax
or duty has been paid.

(c)    Subject to compliance with the Responsible Person Covenant and absent a
change in law, change in IRS practice, or contrary determination (as defined in
Section 1313(a) of the Code), the Investor Parties and the Company agree (i) not
to treat the Series A Preferred Stock (based on its terms as set forth in the
Certificate of Designations) as “preferred stock” within the meaning of
Section 305 of the Code and Treasury Regulation Section 1.305-5 and (ii) to not
take a reporting position that the holders of Series A Preferred Stock are
required to include as dividend income any amounts in respect of the Series A
Preferred Stock unless and until dividends on the Series A Preferred Stock are
paid in cash or other property, in each case, for United States federal income
Tax and withholding Tax purposes.

Section 5.13    Information Rights. Following the Closing and prior to the
Investor Board Seat Fall-Away, in order to facilitate the Investor’s compliance
with legal and regulatory

 

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requirements applicable to the beneficial ownership by the Investor and its
Affiliates of equity securities of the Company and oversight of the Investor’s
investment in the Company, the Company agrees to provide the Investor with the
following:

(a)    reasonable access, to the extent reasonably requested by the Investor, to
the offices and the properties of the Company and its Subsidiaries, including
its and their books and records, and to discuss its and their affairs, finances
and accounts with its and their officers, all upon reasonable notice and at such
reasonable times and as often as the Investor may reasonably request, provided
that any investigation pursuant to this Section 5.13 shall be conducted in a
manner as not to interfere unreasonably with the conduct of the business of the
Company and its Subsidiaries; and

(b)    copies of all material, substantive materials provided to the Board at
substantially the same time as provided to the directors of the Company;

provided that the Company shall not be obligated to provide such access or
materials if the Company determines, in its reasonable judgment, that doing so
would (i) violate or prejudice the rights of its and its Subsidiaries’
customers, (ii) result in the disclosure of trade secrets or competitively
sensitive information to third parties, (iii) violate applicable Law, an
applicable Judgment or a Contract or obligation of confidentiality owing to a
third party, (iv) jeopardize the protection of an attorney-client privilege,
attorney work product protection or other legal privilege (provided, however,
that the Company shall use reasonable efforts to provide alternative, redacted
or substitute documents or information in a manner that would not result in the
loss of the ability to assert attorney-client privilege, attorney work-product
protection or other legal privileges), (v) be adverse to the interests of the
Company or any of its Subsidiaries in any pending or threatened Action or
(vi) expose the Company or its Subsidiaries to risk of liability for disclosure
of sensitive or personal information; provided that the parties shall use their
commercially reasonable efforts to disclose such information in a manner that
would not violate the foregoing. In addition, notwithstanding anything to the
contrary contained herein, neither the Company nor any of its Subsidiaries will
be required to provide any information or material that relate to, contain or
reflect any analyses, studies, notes, memoranda and other information related to
or prepared in connection with any Transaction Document, the Transactions or any
matters relating thereto or any transactions with or matters relating to the
Investor or any of Investor’s Affiliates.

Section 5.14    Participation Rights.

(a)    For the purposes of this Section 5.14, “Excluded Issuance” shall mean
(i) the issuance of any shares of equity securities that is subject to
Section 10 (Anti-Dilution Adjustments) of the Certificate of Designations,
(ii) the issuance of shares of any equity securities (including upon exercise of
options) to directors, officers, employees, consultants or other agents of the
Company as approved by the Board, (iii) the issuance of shares of any equity
securities pursuant to an employee stock option plan, management incentive plan,
restricted stock plan, stock purchase plan or stock, ownership plan or similar
benefit plan, program or agreement, (iv) the issuance of shares of equity
securities as consideration in any “business combination” (as defined in the
rules and regulations promulgated by the SEC) or as consideration in bona fide
acquisitions of securities or substantially all of the assets of another

 

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Person, business unit, division or business, (v) securities issued pursuant to
the conversion, exercise or exchange of Series A Preferred Stock issued to the
Investor, (vi) shares of a Subsidiary of the Company issued to the Company or a
wholly owned Subsidiary of the Company, (vii) securities of a joint venture
(provided that no Affiliate (other than any Subsidiary of the Company) of the
Company acquires any interest in such securities in connection with such
issuance) or (viii) the issuance of bonds, debentures, notes or similar debt
securities convertible into Common Stock into the public market pursuant to a
bona-fide, broadly distributed underwritten public offering, if the conversion
or exercise price is at least the greater of (x) the then applicable Conversion
Price (as defined in the Certificate of Designations) and (y) the Current Market
Price (as defined in the Certificate of Designations) as of the date the Company
would have been required to give the Investor notice of such issuance if it were
not an Excluded Issuance.

(b)    Until the occurrence of the Investor Board Seat Fall-Away, if the Company
proposes to issue equity securities of any kind (the term “equity securities”
shall include for these purposes Common Stock and any warrants, options or other
rights to acquire, or any securities that are exercisable for, exchangeable for
or convertible into, Common Stock or any other class of capital stock of the
Company), other than in an Excluded Issuance, then the Company shall:

(i)    give written notice to the Investor (no less than five (5) Business Days
prior to the closing of such issuance (or, in the case of a registered public
offering, at least two (2) Business Days prior to the commencement of such
registered public offering) or, if the Company reasonably expects such issuance
to be completed in less than five (5) Business Days, such shorter period, which
shall be as long as commercially practicable setting forth in reasonable detail
(A) the designation and all of the terms and provisions of the securities
proposed to be issued (the “Proposed Securities”), including, to the extent
applicable, the voting powers, preferences and relative participating, optional
or other special rights, and the qualification, limitations or restrictions
thereof and interest rate and maturity; (B) the price and other terms of the
proposed sale of such securities; and (C) the amount of such securities proposed
to be issued; and

(ii)    offer to issue and sell to the Investor Parties, on such terms as the
Proposed Securities are issued and upon full payment by the Investor Parties, a
portion of the Proposed Securities equal to a percentage determined by dividing
(A) the number of shares of Common Stock the Investor Parties beneficially own
(on an as-converted basis) by (B) the total number of shares of Common Stock
then outstanding (on an as-converted basis); provided, however, that the Company
shall not be required to offer to issue or sell to the Investor Parties (or to
any of them) a number of the Proposed Securities that would require the Company
to obtain stockholder approval in respect of the issuance of any Proposed
Securities under the listing rules of the Nasdaq or any other securities
exchange or any other applicable Law.

(c)    The Investor will have the option, on behalf of the applicable Investor
Parties, exercisable by written notice to the Company, to accept the Company’s
offer and commit

 

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to purchase any or all of the equity securities offered to be sold by the
Company to the Investor Parties, which notice must be given within five (5) days
after receipt of such notice from the Company (or such shorter period if the
notice by the Company was sent in accordance with the preceding paragraph less
than five (5) Business Days prior to the proposed issuance date, and in no event
less than one (1) Business Day) (the failure of the Investor to respond within
such time period shall be deemed a waiver of the Investor Parties’ rights under
this Section 5.14 with respect to the applicable issuance of equity securities).
If the Company offers two (2) or more securities in units to the other
participants in the offering, the Investor Parties must purchase such units as a
whole and will not be given the opportunity to purchase only one (1) of the
securities making up such unit. The closing of the exercise of such subscription
right shall take place simultaneously with the closing of the sale of the
Proposed Securities giving rise to such subscription right; provided, however,
that (x) if such closing is prior to the tenth (10th) Business Day following the
date on which the Investor has notified the Company that the Investor Parties
have elected to exercise their subscription right, then each Investor Party
shall purchase the new equity securities within ten (10) Business Days following
delivery of notice of exercise by the Investor and (y) the closing of any
purchase by any such Investor Party may be extended beyond the closing of the
sale of the Proposed Securities giving rise to such preemptive right to the
extent necessary to obtain required approvals from any Governmental Authority.
Upon the expiration of the offering period described above, the Company will be
free to sell such Proposed Securities that the Investor Parties have not elected
to purchase during the ninety (90) days following such expiration on terms and
conditions no more favorable to the purchasers thereof than those offered to the
Investor Parties in the notice delivered in accordance with Section 5.14(b). Any
Proposed Securities offered or sold by the Company after such ninety (90)-day
period must be reoffered to issue or sell to the Investor Parties pursuant to
this Section 5.14; provided, however, that the Company shall not be required to
reoffer to the Investor Parties (or to any of them) a number of the Proposed
Securities that would require the Company to obtain stockholder approval in
respect of the issuance of any Proposed Securities under the listing rules of
the Nasdaq or any other securities exchange or any applicable Law.

(d)    The election by any Investor Party not to exercise its subscription
rights under this Section 5.14 in any one instance shall not affect their right
as to any subsequent proposed issuance.

(e)    Notwithstanding anything in this Section 5.14 to the contrary, the
Company will not be deemed to have breached this Section 5.14 if not later than
thirty (30) Business Days following the issuance of any Proposed Securities in
contravention of this Section 5.14, the Company or the transferee of such
Proposed Securities offers to sell a portion of such equity securities or
additional equity securities of the type(s) in question to each Investor Party
so that, taking into account such previously-issued Proposed Securities and any
such additional Proposed Securities, each Investor Party will have had the right
to purchase or subscribe for Proposed Securities in a manner consistent with the
allocation and other terms and upon same economic and other terms provided for
in Section 5.14(b) and Section 5.14(c).

(f)    In the case of an issuance subject to this Section 5.14 for consideration
in whole or in part other than cash, including securities acquired in exchange
therefor (other than securities by their terms so exchangeable), the
consideration other than cash shall be deemed to be the fair value thereof as
determined in good faith by the Board.

 

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(g)    In the event that the Investor Parties are not entitled to acquire any
Proposed Securities pursuant to this Section 5.14 because such issuance would
require the Company to obtain stockholder approval in respect of the issuance of
such Proposed Securities under the listing rules of the Nasdaq or any other
securities exchange or applicable Law, the Company shall, upon the Investor’s
reasonable request delivered to the Company in writing within seven (7) Business
Days following its receipt of the written notice of such issuance to the
Investor pursuant to Section 5.14(b), at the Investor’s election, (i) waive the
restrictions set forth in Section 5.07 solely to the extent necessary to permit
any Investor Party to acquire a number of Proposed Securities equivalent to the
amount of Proposed Securities that such Investor Party would have been entitled
to purchase had it been entitled to acquire such Proposed Securities pursuant
to Sections 5.14(a)-(c) and (ii) consider and discuss in good faith
modifications proposed by the Investor Parties to the terms and conditions of
such portion of the Proposed Securities that would otherwise be issued to the
Investor Parties such that the Company would not be required to obtain
stockholder approval in respect of the issuance of such Proposed Securities as
so modified.

Section 5.15    Mandatory Conversion. The Company will not effect a Mandatory
Conversion unless the Company irrevocably waives the transfer restrictions set
forth in Section 5.08(a) on the Common Stock issued upon such Mandatory
Conversion.

ARTICLE VI

CONDITIONS TO CLOSING

Section 6.01    Conditions to the Obligations of the Company and the Investor.
The respective obligations of each of the Company and the Investor to effect the
Closing shall be subject to the satisfaction (or waiver, if permissible under
applicable Law) on or prior to the Closing Date of the following condition: no
Judgment enacted, promulgated, issued, entered, amended or enforced by any
Governmental Authority or any applicable Law (collectively, “Restraints”) shall
be in effect enjoining or otherwise prohibiting consummation of the
Transactions.

Section 6.02    Conditions to the Obligations of the Company. The obligations of
the Company to effect the Closing shall be further subject to the satisfaction
(or waiver, if permissible under applicable Law) on or prior to the Closing Date
of the following conditions:

(a)    the representations and warranties of the Investor set forth in this
Agreement shall be true and correct as of the date of this Agreement and as of
the Closing Date with the same effect as though made on and as of such date
(except to the extent expressly made as of an earlier date, in which case as of
such earlier date), except where the failure to be true and correct would not,
individually or in the aggregate, reasonably be expected to have an Investor
Material Adverse Effect;

(b)    the Investor shall have complied with or performed in all material
respects its obligations required to be complied with or performed by it
pursuant to this Agreement at or prior to the Closing; and

 

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(c)    the Company shall have received a certificate, signed on behalf of the
Investor by an executive officer thereof, certifying that the conditions set
forth in Section 6.02(a) and Section 6.02(b) have been satisfied.

Section 6.03    Conditions to the Obligations of the Investor. The obligations
of the Investor to effect the Closing shall be further subject to the
satisfaction (or waiver, if permissible under applicable Law) on or prior to the
Closing Date of the following conditions:

(a)    the representations and warranties of the Company (i) set forth in
Sections 3.01(a), 3.02(a), 3.03(a), 3.10, 3.11 and 3.12 shall be true and
correct (disregarding all qualifications or limitations as to “materiality,”
“Material Adverse Effect” and words of similar import set forth therein) in all
material respects as of the date hereof and as of the Closing Date with the same
effect as though made on and as of such date (except to the extent expressly
made as of an earlier date, in which case as of such earlier date), and (ii) set
forth in this Agreement, other than in Sections 3.01(a), 3.02(a), 3.03(a), 3.10,
3.11 and 3.12 shall be true and correct (disregarding all qualifications or
limitations as to “materiality”, “Material Adverse Effect” and words of similar
import set forth therein) as of the date hereof and as of the Closing Date with
the same effect as though made on and as of such date (except to the extent
expressly made as of an earlier date, in which case as of such earlier date),
except, in the case of this clause (ii), where the failure to be true and
correct has not had and would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect;

(b)    the Company shall have complied with or performed in all material
respects its obligations required to be complied with or performed by it
pursuant to this Agreement at or prior to the Closing;

(c)    the Investor shall have received a certificate, signed on behalf of the
Company by an executive officer thereof, certifying that the conditions set
forth in Section 6.03(a) and Section 6.03(b) have been satisfied;

(d)    the Company shall have delivered to the Investor a copy of the
Certificate of Designations that has been filed with the Secretary of State of
the State of Delaware;

(e)    to the extent that the initial Investor Designee designated to be an
Advisor Director has been designated at least five Business Days prior to the
Closing, the Board shall have taken all actions necessary and appropriate to
cause to be elected to the Board, effective immediately upon the Closing, the
Advisor Director; and

(f)    any shares of Common Stock issuable upon conversion of the Series A
Preferred Stock (other than any shares that may be issued in respect of accrued
dividends) at the Conversion Rate specified in the Certificate of Designations
as in effect on the date hereof shall have been approved for listing on the
Nasdaq, subject to official notice of issuance.

ARTICLE VII

TERMINATION; SURVIVAL

Section 7.01    Termination. This Agreement may be terminated and the
Transactions abandoned at any time prior to the Closing:

 

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(a)    by the mutual written consent of the Company and the Investor;

(b)    by either the Company or the Investor upon written notice to the other,
if the Closing has not occurred on or prior to July 31, 2020 (the “Termination
Date”); provided that the right to terminate this Agreement under this
Section 7.01(b) shall not be available to any party if the breach by such party
of its representations and warranties set forth in this Agreement or the failure
of such party to perform any of its obligations under this Agreement has been a
principal cause of or resulted in the events specified in this Section 7.01(b);

(c)    by either the Company or the Investor if any Restraint enjoining or
otherwise prohibiting consummation of the Transactions shall be in effect and
shall have become final and nonappealable; provided that the party seeking to
terminate this Agreement pursuant to this Section 7.01(c) shall have used the
required efforts to cause the conditions to Closing to be satisfied in
accordance with Section 5.02;

(d)    by the Investor if the Company shall have breached any of its
representations or warranties or failed to perform any of its covenants or
agreements set forth in this Agreement, which breach or failure to perform
(i) would give rise to the failure of a condition set forth in Section 6.03(a)
or Section 6.03(b) and (ii) is incapable of being cured prior to the Termination
Date, or if capable of being cured, shall not have been cured within thirty
(30) calendar days (but in no event later than the Termination Date) following
receipt by the Company of written notice of such breach or failure to perform
from the Investor stating the Investor’s intention to terminate this Agreement
pursuant to this Section 7.01(d) and the basis for such termination; provided
that the Investor shall not have the right to terminate this Agreement pursuant
to this Section 7.01(d) if the Investor is then in material breach of any of its
representations, warranties, covenants or agreements hereunder; or

(e)    by the Company if the Investor shall have breached any of its
representations or warranties or failed to perform any of its covenants or
agreements set forth in this Agreement, which breach or failure to perform
(i) would give rise to the failure of a condition set forth in Section 6.02(a)
or Section 6.02(b) and (ii) is incapable of being cured prior to the Termination
Date, or if capable of being cured, shall not have been cured within thirty
(30) calendar days (but in no event later than the Termination Date) following
receipt by the Investor of written notice of such breach or failure to perform
from the Company stating the Company’s intention to terminate this Agreement
pursuant to this Section 7.01(e) and the basis for such termination; provided
that the Company shall not have the right to terminate this Agreement pursuant
to this Section 7.01(e) if the Company is then in material breach of any of its
representations, warranties, covenants or agreements hereunder.

Section 7.02    Effect of Termination. In the event of the termination of this
Agreement as provided in Section 7.01, written notice thereof shall be given to
the other party, specifying the provision hereof pursuant to which such
termination is made, and this Agreement shall forthwith become null and void
(other than Article I, Section 5.05, this Section 7.02 and Article VIII, all of
which shall survive termination of this Agreement), and there shall be no
liability on the part of the Investor or the Company or their respective
directors, officers and Affiliates, except that no such termination shall
relieve any party from liability for damages to another party resulting from a
knowing or intentional breach of this Agreement or from Fraud.

 

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Section 7.03    Survival. Except in the case of Fraud, the representations and
warranties of the parties set forth in this Agreement and in any document
delivered in connection herewith shall not survive the Closing. All of the
covenants or other agreements of the parties contained in this Agreement shall
survive until fully performed or fulfilled, unless and to the extent that
non-compliance with such covenants or agreements is waived in writing by the
party entitled to such performance.

ARTICLE VIII

MISCELLANEOUS

Section 8.01    Amendments; Waivers. Subject to compliance with applicable Law,
this Agreement may be amended or supplemented in any and all respects by written
agreement of the parties hereto.

Section 8.02    Extension of Time, Waiver, Etc.. The Company and the Investor
may, subject to applicable Law, (a) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto, (b) extend the time for the performance of
any of the obligations or acts of the other party or (c) waive compliance by the
other party with any of the agreements contained herein applicable to such party
or, except as otherwise provided herein, waive any of such party’s conditions.
Notwithstanding the foregoing, no failure or delay by the Company or the
Investor in exercising any right hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right hereunder. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party.

Section 8.03    Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part, by
operation of Law or otherwise, by any of the parties hereto without the prior
written consent of the other party hereto; provided, however, that (a) the
Investor or any Investor Party may assign its rights, interests and obligations
under this Agreement, in whole or in part, to one or more Investor Parties and
(b) in the event of such assignment, the assignee shall agree in writing to be
bound by the provisions of this Agreement, including the rights, interests and
obligations so assigned; provided that no such assignment will relieve the
Investor of its obligations hereunder prior to or at the Closing; provided,
further, that no Investor Party shall assign any of its obligations hereunder
with the primary intent of avoiding, circumventing or eliminating such Investor
Party’s obligations hereunder.

Section 8.04    Counterparts. This Agreement and any other Transaction Documents
may be executed in one or more counterparts (including by facsimile and
electronic mail), each of which shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement, and shall
become effective when one or more counterparts have been signed by each of the
parties hereto (including by electronic signature) and delivered to the other
parties hereto (including electronically, e.g., in PDF format).

 

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Section 8.05    Entire Agreement; No Third-Party Beneficiaries. This Agreement,
including the Company Disclosure Letter, together with the other Transaction
Documents, constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, among the parties and
their Affiliates, or any of them, with respect to the subject matter hereof and
thereof. No provision of this Agreement shall confer upon any Person other than
the parties hereto and their permitted assigns any rights or remedies hereunder.

Section 8.06    Governing Law; Jurisdiction. (a) This Agreement and all matters,
claims or Actions (whether at law, in equity, in Contract, in tort or otherwise)
based upon, arising out of or relating to this Agreement, execution or
performance of this Agreement, shall be governed by, and construed in accordance
with, the laws of the State of Delaware applicable to contracts executed in and
to be performed entirely within that State, regardless of the laws that might
otherwise govern under any applicable conflict of Laws principles.

(b)    All Actions arising out of or relating to this Agreement shall be heard
and determined in the Chancery Court of the State of Delaware (or, if the
Chancery Court of the State of Delaware declines to accept jurisdiction over any
Action, any state or federal court within the State of Delaware) and the parties
hereto hereby irrevocably submit to the exclusive jurisdiction and venue of such
courts in any such Action and irrevocably waive the defense of an inconvenient
forum or lack of jurisdiction to the maintenance of any such Action. The
consents to jurisdiction and venue set forth in this Section 8.06 shall not
constitute general consents to service of process in the State of Delaware and
shall have no effect for any purpose except as provided in this paragraph and
shall not be deemed to confer rights on any Person other than the parties
hereto. Each party hereto agrees that service of process upon such party in any
Action arising out of or relating to this Agreement shall be effective if notice
is given by overnight courier at the address set forth in Section 8.09 of this
Agreement. The parties hereto agree that a final judgment in any such Action
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by applicable Law; provided, however,
that nothing in the foregoing shall restrict any party’s rights to seek any
post-judgment relief regarding, or any appeal from, a final trial court
judgment.

Section 8.07    Specific Enforcement. The parties hereto agree that irreparable
damage for which monetary relief, even if available, would not be an adequate
remedy, would occur in the event that any provision of this Agreement is not
performed in accordance with its specific terms or is otherwise breached,
including if the parties hereto fail to take any action required of them
hereunder to cause the Closing to occur, and that time is of the essence. The
parties acknowledge and agree that (a) the parties shall be entitled to an
injunction or injunctions, specific performance or other equitable relief to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof (including, for the avoidance of doubt, the right of the
Company to cause the Purchase to be consummated on the terms and subject to the
conditions set forth in this Agreement and the right of the Company to
specifically enforce the obligation of Investor to cause the Commitments (as
defined in the Equity Commitment Letter)) in the courts described in
Section 8.06 without proof of damages or otherwise, this being in addition to
any other remedy to which they are entitled under this Agreement and (b) the
right of specific enforcement is an integral part of the Transactions and
without that right, neither the Company nor the Investor would have entered into
this Agreement. The parties hereto agree not to assert that a remedy of specific
enforcement is unenforceable, invalid, contrary to Law or

 

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inequitable for any reason, and agree not to assert that a remedy of monetary
damages would provide an adequate remedy or that the parties otherwise have an
adequate remedy at law. The parties hereto acknowledge and agree that any party
seeking an injunction or injunctions to prevent breaches of this Agreement and
to enforce specifically the terms and provisions of this Agreement in accordance
with this Section 8.07 shall not be required to provide any bond or other
security in connection with any such order or injunction.

Section 8.08    WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVER, (C) IT MAKES SUCH WAIVER VOLUNTARILY AND (D) IT HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVER AND CERTIFICATIONS IN THIS SECTION 8.08.

Section 8.09    Notices. All notices, requests and other communications to any
party hereunder shall be in writing and shall be deemed given if delivered
personally, by facsimile (which is confirmed), emailed (which is confirmed) or
sent by overnight courier (providing proof of delivery) to the parties at the
following addresses:

(a)    If to the Company, to it at:

Covetrus, Inc.

7 Custom House Street

Portland, ME 04101

Attention:    Anthony Providenti

Email: [Redacted]

with a copy (which shall not constitute notice) to:

 

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Kirkland & Ellis LLP

601 Lexington Avenue

New York, NY 10022

Attention:    David Feirstein, P.C.

                    Ross Leff, P.C.

Facsimile:   212-446-9000

Email:         [Redacted]

                     [Redacted]

(b)    If to the Investor or any Investor Party, to the Investor at:

Clayton, Dubilier & Rice, LLC

375 Park Avenue, 18th Floor

New York, NY 10152

Attention:     Ravi Sachdev

                      Sarah Kim

Email:           [Redacted]

                       [Redacted]

with a copy (which shall not constitute notice) to:

Debevoise & Plimpton LLP

919 Third Avenue

New York, NY 10022

Attention: Paul S. Bird

Facsimile: 212-521-7435

Email: [Redacted]

or such other address, email address or facsimile number as such party may
hereafter specify by like notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of actual
receipt by the recipient thereof if received prior to 5:00 p.m. local time in
the place of receipt and such day is a Business Day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to have
been received until the next succeeding Business Day in the place of receipt.

Section 8.10    Severability. If any term, condition or other provision of this
Agreement is determined by a court of competent jurisdiction to be invalid,
illegal or incapable of being enforced by any rule of Law or public policy, all
other terms, provisions and conditions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term,
condition or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible to the
fullest extent permitted by applicable Law.

Section 8.11    Expenses. Except as otherwise expressly provided herein, all
costs and expenses, including fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with this Agreement and the
Transactions shall be paid by the party incurring such costs and expenses,
whether or not the Closing shall have occurred; provided that

 

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the Company shall, at or following the Closing, reimburse the Investor for its
reasonable and documented out-of-pocket fees, costs and expenses incurred in
connection with Transaction, including fees of counsel and any other advisors,
up to a maximum aggregate amount of $650,000.

Section 8.12    Interpretation. (a) When a reference is made in this Agreement
to an Article, a Section, Exhibit or Schedule, such reference shall be to an
Article of, a Section of, or an Exhibit or Schedule to, this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words “include”,
“includes” or “including” are used in this Agreement, they shall be deemed to be
followed by the words “without limitation”. The words “hereof”, “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. The words “date hereof” when used in this Agreement shall refer to
the date of this Agreement. The terms “or”, “any” and “either” are not
exclusive. The word “extent” in the phrase “to the extent” shall mean the degree
to which a subject or other thing extends, and such phrase shall not mean simply
“if”. The word “will” shall be construed to have the same meaning and effect as
the word “shall”. The words “made available to the Investor” and words of
similar import refer to documents (A) posted to the Finsight DealVRD for Project
Sandpiper by or on behalf of the Company or (B) delivered in Person or
electronically to the Investor or its respective Representatives. All accounting
terms used and not defined herein shall have the respective meanings given to
them under GAAP. All terms defined in this Agreement shall have the defined
meanings when used in any document made or delivered pursuant hereto unless
otherwise defined therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such term. In the
event that the Common Stock is listed on a national securities exchange other
than the Nasdaq, all references herein to the Nasdaq shall be deemed to be
references to such other national securities exchange. Any agreement, instrument
or statute defined or referred to herein or in any agreement or instrument that
is referred to herein means such agreement, instrument or statute as from time
to time amended, modified or supplemented, including (in the case of agreements
or instruments) by waiver or consent and (in the case of statutes) by succession
of comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. Unless otherwise specifically indicated, all
references to “dollars” or “$” shall refer to the lawful money of the United
States. References to a Person are also to its permitted assigns and successors.
When calculating the period of time between which, within which or following
which any act is to be done or step taken pursuant to this Agreement, the date
that is the reference date in calculating such period shall be excluded (and
unless if otherwise required by Law, if the last day of such period is not a
Business Day, the period in question shall end on the next succeeding Business
Day).

(b)    The parties hereto have participated jointly in the negotiation and
drafting of this Agreement and, in the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as jointly drafted
by the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party hereto by virtue of the authorship of any provision of
this Agreement.

 

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Section 8.13    Acknowledgment of Securities Laws. The Investor hereby
acknowledges that it is aware, and that it will advise its Affiliates and
Representatives who are provided material non-public information concerning the
Company or its securities, that the United States securities laws prohibit any
Person who has received from an issuer material, non-public information from
purchasing or selling securities of such issuer or from communication of such
information to any other Person under circumstances in which it is reasonably
foreseeable that such Person is likely to purchase or sell such securities.

Section 8.14    Share Ownership Limit. After giving effect to the waiver
delivered by the Board in connection with the Transaction, the Investor, in its
capacity as the Grandfathered Holder 3 (as defined in the Company Charter) and
on behalf of all other Persons constituting the Grandfathered Holder 3,
represents to the Company and agrees it is, has, and will continue to comply
with the restrictions on holders of Capital Stock (as defined in the Company
Charter) of the Company, including, but not limited to the restrictions on
Transfer (solely for purposes of this Section 8.14, as defined in the Company
Charter) and Acquisition (as defined in the Company Charter) set forth in
Article Fifth of the Company Charter. The Investor, in its capacity as the
Grandfathered Holder 3 and on behalf of all other Persons constituting the
Grandfathered Holder 3, further agrees that any action taken by the
Grandfathered Holder 3 (or otherwise) that is contrary to the restrictions
contained in the Company Charter as modified by the waiver delivered to the
Board in connetion with the Transaction will result in such Capital Stock being
automatically transferred to a Trust (as defined in the Company Charter) in
accordance with the provisions of the Company Charter.

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.

 

COVETRUS, INC. By:  

/s/ Ben Wolin

  Name: Ben Wolin   Title: CEO CD&R VFC HOLDINGS, L.P.

By: CD&R Investment Associates IX, Ltd.,

its general partner

By:  

/s/ Theresa A. Gore

  Name: Theresa A. Gore  

Title: Chief Financial Officer, Treasurer

          & Secretary

[Signature Page to Investment Agreement]

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ANNEX I

FORM OF CERTIFICATE OF DESIGNATIONS

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PRIVILEGED AND CONFIDENTIAL

[FORM OF]

CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS

OF

SERIES A CONVERTIBLE PREFERRED STOCK

PAR VALUE $0.01

OF

COVETRUS, INC.

On [●], 2020, the Board of Directors of Covetrus, Inc., a Delaware corporation
(the “Company”), adopted the following resolution designating and creating, out
of the authorized and unissued shares of preferred stock of the Company, 250,000
authorized shares of a series of preferred stock of the Company titled the
“Series A Convertible Preferred Stock”:

RESOLVED that, pursuant to the Certificate of Incorporation, the By-Laws and
applicable law, a series of preferred stock of the Company titled the “Series A
Convertible Preferred Stock,” and having a par value of $0.01 per share and an
initial number of authorized shares equal to 250,000, is hereby designated and
created out of the authorized and unissued shares of preferred stock of the
Company, which series has the rights, designations, preferences, voting powers
and other provisions set forth below.

SECTION 1.    Classification and Number of Shares. The shares of such series of
Preferred Stock shall be classified as “Series A Convertible Preferred Stock”
(the “Series A Preferred Stock”). The number of authorized shares constituting
the Series A Preferred Stock shall be 250,000. That number from time to time may
be increased or decreased (but not below the number of shares of Series A
Preferred Stock then outstanding) by (a) further resolution duly adopted by the
Board and (b) the filing of a certificate of increase or decrease with the
Secretary of State of the State of Delaware. The Company shall not have the
authority to issue fractional shares of Series A Preferred Stock.

SECTION 2.    Ranking. The Series A Preferred Stock will rank, with respect to
dividend rights and rights on the distribution of assets on any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Company:

(a)    on a parity basis with each other class or series of Capital Stock of the
Company now existing or hereafter authorized, classified or reclassified, the
terms of which expressly provide that such class or series ranks on a parity
basis with the Series A Preferred Stock as to dividend rights and rights on the
distribution of assets on any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Company (such Capital Stock, “Parity
Stock”);

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(b)    junior to each other class or series of Capital Stock of the Company now
existing or hereafter authorized, classified or reclassified, the terms of which
expressly provide that such class or series ranks senior to the Series A
Preferred Stock as to dividend rights and rights on the distribution of assets
on any voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Company (such Capital Stock, “Senior Stock”); and

(c)    senior to the Common Stock and each other class or series of Capital
Stock of the Company now existing or hereafter authorized, classified or
reclassified, other than Parity Stock and Senior Stock (such Capital Stock,
“Junior Stock”).

SECTION 3.    Definitions. As used herein with respect to Series A Preferred
Stock:

“Accrued Dividends” means, as of any date, with respect to any share of Series A
Preferred Stock, all dividends that have accrued on such share pursuant to
Section 4(c), whether or not declared, but that have not, as of such date, been
paid.

“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, controls, or is controlled by, or is under common control with, such
Person; provided, however, (a) that the Company and its Subsidiaries shall not
be deemed to be Affiliates of the Investor or any of its Affiliates and
(b) portfolio companies in which any Person or any of its Affiliates has an
investment shall not be deemed an Affiliate of such Person. For this purpose,
“control” (including, with its correlative meanings, “controlled by” and “under
common control with”) shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of management or policies of a Person,
whether through the ownership of securities or partnership or other ownership
interests, by contract or otherwise.

“Base Amount” means, with respect to any share of Series A Preferred Stock, as
of any date of determination, the sum of (a) the Liquidation Preference and
(b) the Base Amount Accrued Dividends with respect to such share as of such
date.

“Base Amount Accrued Dividends” means, with respect to any share of Series A
Preferred Stock, as of any date of determination, (a) if a Preferred Dividend
Payment Date has occurred since the issuance of such share, the Accrued
Dividends with respect to such share as of the Preferred Dividend Payment Date
immediately preceding such date of determination (taking into account the
payment of Dividends, if any, on such Preferred Dividend Payment Date) or (b) if
no Preferred Dividend Payment Date has occurred since the issuance of such
share, zero.

Any Person shall be deemed to “beneficially own,” to have “beneficial ownership”
of, or to be “beneficially owning” any securities (which securities shall also
be deemed “beneficially owned” by such Person) that such Person together with
such Person’s Affiliates is deemed to “beneficially own” within the meaning of
Rules 13d-3 and 13d-5 under the Exchange Act; provided, however, that any Person
shall be deemed to beneficially own any securities that such Person has the
right to acquire, whether or not such right is exercisable within sixty
(60) days or thereafter (including assuming conversion of all Series A Preferred
Stock, if any, owned by such Person into Common Stock).

“Board” means the Board of Directors of the Company or any committee thereof
duly authorized to act on behalf of such Board of Directors for the purposes in
question.

 

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“Business Day” means any weekday that is not a day on which banking institutions
in New York, New York are authorized or required by law, regulation or executive
order to be closed.

“By-Laws” means the Amended and Restated By-Laws of the Company, as may be
amended from time to time.

“Capital Stock” means, with respect to any Person, any and all shares of,
interests in, rights to purchase, warrants to purchase, options for,
participations in or other equivalents of or interests in (however designated)
stock issued by such Person.

“Cash Dividend” has the meaning set forth in Section 4(d).

“Certificate of Designations” means this Certificate of Designation, Preferences
and Rights, as may be amended from time to time.

“Certificate of Incorporation” means the Amended and Restated Certificate of
Incorporation of the Company, as may be amended from time to time.

“Change of Control” means the occurrence, directly or indirectly, of one of the
following, whether in a single transaction or a series of transactions:

(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act), is or becomes the “beneficial owner” (as defined in Rules
13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of a majority
of the total voting power of the Voting Stock of the Company, other than as a
result of any such transaction in which (i) the holders of securities that
represented 100% of the Voting Stock of the Company immediately prior to such
transaction are substantially the same as the holders of securities that
represent a majority of the total voting power of all classes of Voting Stock of
the surviving Person or any parent entity that wholly owns such surviving Person
immediately after such transaction and (ii) the holders of securities that
represented 100% of the Voting Stock of the Company immediately prior to such
transaction own, directly or indirectly, Voting Stock of the surviving Person or
any parent entity that wholly owns such surviving Person in substantially the
same proportion to each other as immediately prior to such transaction; or

(b) the merger or consolidation of the Company with or into another Person or
the merger of another Person with or into the Company, or the sale, lease or
transfer of all or substantially all of the assets of the Company (determined on
a consolidated basis) to another Person, or any recapitalization,
reclassification or other transaction in which all or substantially all of the
Common Stock is exchanged for or converted into cash, securities or other
property, other than (i) a transaction following which holders of securities
that represented 100% of the Voting Stock of the Company immediately prior to
such transaction own, directly or indirectly (in substantially the same
proportion to each other as immediately prior to such transaction, other than
changes in proportionality as a result of any cash/stock election provided under
the terms of the definitive agreement regarding such transaction), at least a
majority of the voting power of the Voting Stock of the surviving Person in such
merger or consolidation transaction immediately after such transaction or (ii) a
sale, lease or transfer to a Subsidiary or a Person that becomes a Subsidiary of
the Company.

 

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“Change of Control Effective Date” has the meaning set forth in Section 9(c).

“Change of Control Purchase Date” means, with respect to each share of Series A
Preferred Stock, the date on which the Company makes the payment in full of the
Change of Control Purchase Price for such share to the Holder thereof.

“Change of Control Purchase Price” has the meaning set forth in Section 9.

“Change of Control Put” has the meaning set forth in Section 9.

“close of business” means 5:00 p.m. (New York City time).

“Closing Price” of the Common Stock on any date of determination means the
closing sale price or, if no closing sale price is reported, the last reported
sale price of the shares of the Common Stock on the NASDAQ on such date. If the
Common Stock is not traded on the NASDAQ on any date of determination, the
Closing Price of the Common Stock on such date of determination means the
closing sale price as reported in the composite transactions for the principal
United States securities exchange or automated quotation system on which the
Common Stock is so listed or quoted, or, if no closing sale price is reported,
the last reported sale price on the principal United States securities exchange
or automated quotation system on which the Common Stock is so listed or quoted,
or if the Common Stock is not so listed or quoted on a United States securities
exchange or automated quotation system, the last quoted bid price for the Common
Stock in the over-the-counter market as reported by OTC Markets Group Inc. or
any similar organization, or, if that bid price is not available, the market
price of the Common Stock on that date as determined by an Independent Financial
Advisor retained by the Company for such purpose.

“Common Stock” means the common stock, $0.01 par value per share, of the
Company.

“Common Stock Dividend Record Date” has the meaning set forth in Section 4(e).

“Company” has the meaning set forth in the recitals above.

“Consolidated EBITDA” means, with respect to any period of four (4) consecutive
fiscal quarters, the Adjusted EBITDA of the Company and its consolidated
Subsidiaries for such period as reported in the Company’s Annual Report on Form
10-K or based upon the financial metrics included in the Company’s Quarterly
Reports on Form 10-Q, in each case, in a manner consistent with how such metric
was calculated in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2019.

“Consolidated Net Total Leverage” means, as of any fiscal quarter- or year-end,
(a) the aggregate principal amount of all Funded Debt (as defined in the Credit
Agreement) of the Company and its consolidated Subsidiaries on such date, minus
(b) Unrestricted Cash (as defined in the Credit Agreement) on such date, in each
case determined on a consolidated basis in accordance with GAAP.

 

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“Consolidated Net Total Leverage Ratio” mean, as of any fiscal quarter- or
year-end, the ratio of (a) Consolidated Net Total Leverage on such day to
(b) Consolidated EBITDA of the Company and its consolidated Subsidiaries with
respect to the twelve (12) months immediately preceding such date.

“Constituent Person” has the meaning set forth in Section 11(a)(iii).

“Conversion Date” has the meaning set forth in Section 8.

“Conversion Notice” has the meaning set forth in Section 8(a)(i).

“Conversion Price” means, for each share of Series A Preferred Stock, a dollar
amount equal to $1,000 divided by the Conversion Rate.

“Conversion Rate” means, for each share of Series A Preferred Stock, 90 and
10/111 (a fraction) shares of Common Stock, subject to adjustment as set forth
herein.

“Credit Agreement” means the Credit Agreement, dated as of February 7, 2019, by
and among Vet Intermediate Holdco II, LLC, JP Morgan Chase Bank, N.A., and the
several banks and other financial institutions from time to time party thereto,
as amended by the First Amendment thereto, dated as of February 27, 2020.

“Current Market Price” per share of Common Stock, as of any date of
determination, means the arithmetic average of the VWAP per share of Common
Stock for each of the ten (10) consecutive full Trading Days ending on, and
including, the Trading Day immediately preceding such day, appropriately
adjusted to take into account the occurrence during such period of any event
described in Section 10.

“Default Event” means the occurrence, without cure of any of, (a) the Company’s
failure to pay any Participating Dividends when required pursuant to, and in
accordance with, Section 4(b); (b) the Company’s failure to comply with its
obligations to effect the conversion of shares of Series A Preferred Stock
(including to reserve and keep available for issuance the requisite number of
shares of Common Stock pursuant to Section 6(b)) in compliance with Section 6;
(c) the Company’s failure to comply with its obligations to repurchase shares of
Series A Preferred Stock in compliance with Section 9; (d) the Company’s
violation of any restrictions set forth in Section 4(f) relating to payment of
dividends or distributions to the holders of Common Stock or other Capital
Stock; (e) the Company’s taking any action described in Section 12(b) without
the prior affirmative vote or written consent of the Holders representing at
least a majority of the then-issued and outstanding shares of Series A Preferred
Stock, voting as a separate class; and (f) the Company’s failure to maintain the
listing of the Common Stock on the NASDAQ (or its successor) or another U.S.
national securities exchange or automated inter-dealer quotation system (or its
successor).

“Distributed Property” has the meaning set forth in Section 10(a)(iii).

“Distribution Transaction” means any dividend or other distribution of equity
securities of a Subsidiary of the Company to holders of Common Stock in which
such Person ceases to be a Subsidiary of the Company by reason of such dividend
or distribution of equity

 

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securities, whether by means of a spin-off, split-off, redemption,
reclassification, exchange, stock dividend, share distribution, rights offering
or similar transaction.

“Dividend Rate” means 7.5% per annum.

“Dividend Record Date” has the meaning set forth in Section 4(e).

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exchange Property” has the meaning set forth in Section 11(a).

“Exchange Property Unit” has the meaning set forth in Section 11(a).

“Fair Market Value” means, with respect to any security or other property, the
fair market value of such security or other property as reasonably determined by
a majority of the Board acting in good faith, (a) after consultation with an
Independent Financial Advisor, as to any security or other property with a Fair
Market Value of less than $50,000,000, or (b) otherwise using an Independent
Financial Advisor to provide a valuation opinion.

“Holder” means a Person in whose name any Series A Preferred Stock is registered
in the Register.

“Implied Quarterly Dividend Amount” means, with respect to any share of Series A
Preferred Stock, as of any date, the product of (a) the Base Amount of such
share on the first day of the applicable Preferred Dividend Payment Period (or
in the case of the first Dividend Payment Period for such share, as of the
Issuance Date of such share) multiplied by (b) one-fourth of the Dividend Rate
applicable on such date.

“Indebtedness” means (a) all obligations of the Company or any of its
Subsidiaries for borrowed money or with respect to deposits or advances of any
kind; (b) all obligations of the Company or any of its Subsidiaries evidenced by
bonds, debentures, notes or similar instruments; (c) all letters of credit and
letters of guaranty in respect of which the Company or any of its Subsidiaries
is an account party; (d) all securitization or similar facilities of the Company
or any of its Subsidiaries; and (e) all guarantees by the Company or any of its
Subsidiaries of any of the foregoing.

“Indebtedness Agreement” means any agreement, document or instrument governing
or evidencing any Indebtedness of the Company or its Subsidiaries.

“Independent Financial Advisor” means an accounting, appraisal, investment
banking firm or consultant of nationally recognized standing; provided, however,
that such firm or consultant shall not be an Affiliate of the Company and shall
be reasonably acceptable to the Holders of at least a majority of the shares of
Series A Preferred Stock outstanding at such time.

“Initial Dividend Payment Date” has the meaning set forth in the definition of
“Preferred Dividend Payment Date.”

 

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“Investment Agreement” means that certain Investment Agreement between the
Company and the Investor dated as of April 30, 2020, as it may be amended,
supplemented or otherwise modified from time to time, with respect to certain
terms and conditions concerning, among other things, the rights of and
restrictions on the Holders.

“Investor” means CD&R VFC Holdings, L.P.

“Investor Parties” means Investor and its Affiliates.

“Issuance Date” means, with respect to any share of Series A Preferred Stock,
the date of issuance of such share.

“Junior Stock” has the meaning set forth in Section 2(c).

“Liquidation Preference” means, with respect to any share of Series A Preferred
Stock, as of any date, $1,000 per share.

“Mandatory Conversion” has the meaning set forth in Section 7.

“Mandatory Conversion Date” has the meaning set forth in Section 7.

“Mandatory Conversion Threshold Price Percentage” has the following meaning with
respect to any Mandatory Conversion: (a) if the Mandatory Conversion Date for
such Mandatory Conversion is before the date that is two (2) years following the
Original Issuance Date, two hundred percent (200%); (b) if the Mandatory
Conversion Date for such Mandatory Conversion is on or after the date that is
two (2) years following the Original Issuance Date but before the date that is
two (2) years and six (6) months following the Original Issuance Date, one
hundred and ninety-five percent (195%); (c) if the Mandatory Conversion Date for
such Mandatory Conversion is on or after the date that is two (2) years and six
(6) months following the Original Issuance Date but before the date that is
three (3) years following the Original Issuance Date, one hundred and ninety
percent (190%); (d) if the Mandatory Conversion Date for such Mandatory
Conversion is on or after the date that is three (3) years following the
Original Issuance Date but before the date that is three (3) years and six
(6) months following the Original Issuance Date, one hundred and eighty-five
percent (185%); (d) if the Mandatory Conversion Date for such Mandatory
Conversion is on or after the date that is three (3) years and six (6) months
following the Original Issuance Date but before the date that is four (4) years
following the Original Issuance Date, one hundred and eighty percent (180%); and
(e) if such Mandatory Conversion Date is on or after the date that is four
(4) years following the Original Issuance Date, one hundred and seventy-five
percent (175%).

“Market Disruption Event” means, with respect to any date, the occurrence or
existence, during the one-half hour period ending at the scheduled close of
trading on such date on the principal U.S. national or regional securities
exchange or other market on which the Common Stock is listed for trading or
trades (or for purposes of determining the VWAP per share of Common Stock, any
period or periods aggregating one half-hour or longer during the regular trading
session on the relevant day), of any material suspension or limitation imposed
on trading (by reason of movements in price exceeding limits permitted by the
relevant exchange or otherwise) in the Common Stock or in any options contracts
or futures contracts relating to the Common Stock.

 

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“NASDAQ” means the NASDAQ Global Select Market (or its successor).

“Notice of Mandatory Conversion” has the meaning set forth in Section 7(b).

“Optional Conversion” has the meaning set forth in Section 6(a).

“Original Issuance Date” means the date of closing pursuant to the Investment
Agreement.

“Ownership Limitation” has the meaning set forth in Section 8(f).

“Parity Stock” has the meaning set forth in Section 2(a).

“Person” means any individual, corporation, estate, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or any other entity.

“Preferred Dividend” has the meaning set forth in Section 4(c).

“Preferred Dividend Payment Date” means March 31, June 30, September 30 and
December 31 of each year (each, a “Quarterly Date”), commencing on the first
Quarterly Date immediately following the Original Issuance Date (the “Initial
Dividend Payment Date”); provided, however, that if any such Quarterly Date is
not a Business Day, then the applicable Dividend shall be payable on the next
Business Day immediately following such Quarterly Date, without any interest.

“Preferred Dividend Payment Period” means (a) in respect of any share of Series
A Preferred Stock issued on the Original Issuance Date, the period from and
including the Original Issuance Date to but excluding the Initial Dividend
Payment Date and, subsequent to the Initial Dividend Payment Date, the period
from and including any Preferred Dividend Payment Date to but excluding the next
Preferred Dividend Payment Date, and (b) for any share of Series A Preferred
Stock issued subsequent to the Original Issuance Date, the period from and
including the Issuance Date of such share to but excluding the next Preferred
Dividend Payment Date and, subsequently, in each case the period from and
including any Preferred Dividend Payment Date to but excluding the next
Preferred Dividend Payment Date.

“Preferred Stock” means the preferred stock, $0.01 par value per share, of the
Company.

“Quarterly Date” has the meaning set forth in the definition of “Preferred
Dividend Payment Date.”

“Record Date” means, with respect to any dividend, distribution or other
transaction or event in which the holders of the Common Stock have the right to
receive any cash, securities or other property or in which the Common Stock is
exchanged for or converted

 

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into any combination of cash, securities or other property, the date fixed for
determination of holders of the Common Stock entitled to receive such cash,
securities or other property (whether such date is fixed by the Board or by
statute, contract or otherwise).

“Register” means the securities register maintained in respect of the Series A
Preferred Stock by the Company, or, to the extent the Company has engaged a
transfer agent, such transfer agent.

“Reorganization Event” has the meaning set forth in Section 11(a)(iii).

“Required Number of Shares” has the meaning set forth in Section 9(h).

“Requisite Stockholder Approval” means the stockholder approval contemplated by
Rule 5635 of the NASDAQ listing rules with respect to the issuance of shares of
Common Stock upon conversion of the Series A Preferred Stock in excess of the
limitations imposed by such rule; provided, however, that the Requisite
Stockholder Approval will be deemed to be obtained if, due to any amendment or
binding change in the interpretation of the applicable NASDAQ listing rules,
such stockholder approval is no longer required for the Company to settle all
conversions of the Series A Preferred Stock in shares of Common Stock without
regard to Section 8(f).

“Satisfaction of Indebtedness Obligations” means, in connection with any Change
of Control, (i) the payment in full in cash of all principal, interest, fees and
all other amounts due or payable in respect of any Indebtedness of the Company
or any of its Subsidiaries (including in respect of any penalty or premium) that
is required to be prepaid, repaid, redeemed, repurchased or otherwise retired as
a result of or in connection with such Change of Control or in order for the
Series A Preferred Stock not to constitute or be deemed as “indebtedness”,
“disqualified stock”, “disqualified capital stock”, “disqualified equity
interests”, or similar instruments, however denominated, under the terms of any
Indebtedness Agreement, (ii) the cancellation or termination, or if permitted by
the terms of such Indebtedness, cash collateralization, of any letters of credit
or letters of guaranty that are required to be cancelled or terminated or cash
collateralized as a result of or in connection with such Change of Control or in
order for the Series A Preferred Stock not to constitute or be deemed as
“indebtedness”, “disqualified stock”, “disqualified capital stock”,
“disqualified equity interests”, or similar instruments, however denominated,
under the terms of any Indebtedness Agreement, (iii) compliance with any
requirement to effect an offer to purchase any bonds, debentures, notes or other
instruments of Indebtedness as a result of or in connection with such Change of
Control or in order for the Series A Preferred Stock not to constitute or be
deemed as “indebtedness”, “disqualified stock”, “disqualified capital stock”,
“disqualified equity interests”, or similar instruments, however denominated,
under the terms of any Indebtedness Agreement, and the purchase of any such
instruments tendered in such offer and the payment in full of any other amounts
due or payable in connection with such purchase and (iv) the termination of any
lending commitments required to be terminated as a result of or in connection
with such Change of Control or in order for the Series A Preferred Stock not to
constitute or be deemed as “indebtedness”, “disqualified stock”, “disqualified
capital stock”, “disqualified equity interests”, or similar instruments, however
denominated, under the terms of any Indebtedness Agreement.

 

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“Senior Stock” has the meaning set forth in Section 2(b).

“Series A Preferred Stock” has the meaning set forth in Section 1.

“Specified Contract Terms” means the covenants, terms and provisions of any
indenture, credit agreement or any other agreement, document or instrument
evidencing, governing the rights of the holders of or otherwise relating to any
Indebtedness of the Company or any of its Subsidiaries.

“Stockholder Voting Power” means the aggregate number of shares of Voting Stock
of the Company, with the calculation of such aggregate number of shares of
Voting Stock being conclusively made for all purposes under this Certificate of
Designations and the Certificate of Incorporation, absent manifest error, by the
Company based on the Company’s review of the Register, the Company’s other books
and records, each Holder’s public filings pursuant to Section 13 or Section 16
of the Exchange Act and any other written evidence satisfactory to the Company
regarding any Holder’s beneficial ownership of any securities of the Company.

A “Subsidiary” of any Person means any corporation, limited liability company,
partnership, association, trust or other entity of which securities or other
ownership interests representing more than 50% of the ordinary voting power (or,
in the case of a partnership, more than 50% of the general partnership
interests) are owned by such Person or one or more Subsidiaries of such Person
or by such Person and one or more Subsidiaries of such Person.

“Trading Day” means a day on which the NASDAQ is open for the transaction of
business and on which there has not occurred a Market Disruption Event.

“Trading Period” has the meaning set forth in Section 7(a).

“Treasury Rate” shall mean the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519) which
has become publicly available at least five (5) Business Days prior to the
Change of Control Purchase Date (or, if such statistical release is no longer
published, any publicly available source of similar market data)) most nearly
equal to the Average Assumed Dividend Period; provided, however, that if such
Average Assumed Dividend Period is not equal to the constant maturity of a
United States Treasury security for which a weekly average yield is given, the
Company shall obtain the Treasury Rate by linear interpolation (calculated to
the nearest one-twelfth of a year) from the weekly average yields of United
States Treasury securities for which such yields are given, except that if the
Average Assumed Dividend Period is less than one year, the weekly average yield
on actually traded United States Treasury securities adjusted to a constant
maturity of one year shall be used; and, provided, further, that the Treasury
Rate shall not in any event be less than zero. For purposes of this definition,
“Average Assumed Dividend Period” shall mean the average number of months
(weighted based on the amount of the assumed dividends) from the Change of
Control Purchase Date to the applicable Preferred Dividend Payment Date for each
dividend assumed to be paid for purposes of the calculation.

“Trigger Event” has the meaning set forth in Section 10(a)(v).

 

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“Voting Stock” means (a) with respect to the Company, the Common Stock, the
Series A Preferred Stock and any other Capital Stock of the Company having the
right to vote generally in any election of directors of the Board and (b) with
respect to any other Person, all Capital Stock of such Person having the right
to vote generally in any election of directors of the board of directors of such
Person or other similar governing body.

“VWAP” per share of Common Stock on any Trading Day means the per share
volume-weighted average price as displayed under the heading Bloomberg VWAP on
Bloomberg (or, if Bloomberg ceases to publish such price, any successor service
reasonably chosen by the Company) page “CVET <equity> AQR” (or its equivalent
successor if such page is not available) in respect of the period from the open
of trading on the relevant Trading Day until the close of trading on such
Trading Day (or if such volume-weighted average price is unavailable, the market
price of one (1) share of Common Stock on such Trading Day determined, using a
volume-weighted average method, by an Independent Financial Advisor retained by
the Company for such purpose).

SECTION 4.    Dividends. (a) Holders shall be entitled to receive dividends of
the type and in the amount determined as set forth in this Section 4.

(b)    Participating Dividends. Holders shall be entitled to participate equally
and ratably with the holders of shares of Common Stock in all cash dividends
paid on the shares of Common Stock as if immediately prior to each Common Stock
Dividend Record Date, all shares of Series A Preferred Stock then outstanding
were converted into shares of Common Stock (without regard to Section 8(f)).
Dividends payable pursuant to this Section 4(b) (the “Participating Dividends”)
shall be payable on the same date that such dividends are payable to holders of
shares of Common Stock, and no dividends shall be payable to holders of shares
of Common Stock, unless the full dividends contemplated by this Section 4(b) are
paid substantially at the same time to Holders.

(c)    Preferred Dividends. In addition to the Participating Dividends,
dividends on each share of Series A Preferred Stock (the “Preferred Dividends”)
(i) shall accrue and accumulate on a daily basis from and including the Issuance
Date of such share, whether or not declared and whether or not the Company has
funds legally available to make payment thereof, at a rate per annum equal to
the Dividend Rate as further specified below and compound quarterly on each
Preferred Dividend Payment Date (to the extent not paid on such Preferred
Dividend Payment Date) and (ii) shall, subject to the terms of Section 4(d), be
payable quarterly in arrears, if, as and when authorized by the Board and
declared by the Company, only out of funds legally available therefor, on each
Preferred Dividend Payment Date, commencing on the first Preferred Dividend
Payment Date following the Issuance Date of such share. The amount of Preferred
Dividends accruing with respect to any share of Series A Preferred Stock for any
day shall be determined by dividing (x) the Implied Quarterly Dividend Amount as
of such day by (y) the actual number of days in the Preferred Dividend Payment
Period in which such day falls; provided, however, that if during any Preferred
Dividend Payment Period any Accrued Dividends in respect of one (1) or more
prior Preferred Dividend Payment Periods are paid, then after the date of such
payment the amount of Preferred Dividends accruing with respect to any share of
Series A Preferred Stock for any day shall be determined by dividing (x) the
Implied Quarterly Dividend Amount (recalculated to take into account such
payment of Accrued

 

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Dividends) by (y) the actual number of days in such Preferred Dividend Payment
Period. The amount of Preferred Dividends accrued with respect to any share of
Series A Preferred Stock for any Preferred Dividend Payment Period shall equal
the sum of the daily Preferred Dividend amounts accrued in accordance with the
prior sentence of this Section 4(b) with respect to such share during such
Preferred Dividend Payment Period. For the avoidance of doubt, for any share of
Series A Preferred Stock with an Issuance Date that is not a Preferred Dividend
Payment Date, the amount of Preferred Dividends accrued with respect to the
initial Dividend Payment Period for such share shall equal the product of
(A) the daily accrual determined as specified in the prior sentence, assuming a
full Preferred Dividend Payment Period in accordance with the definition of such
term, and (B) the number of days from and including such Issuance Date to but
excluding the next Preferred Dividend Payment Date.

(d)    Payment of Preferred Dividends. Preferred Dividends may be paid only if,
as and when authorized by the Board and declared by the Company. Preferred
Dividends that have accrued in a Preferred Dividend Payment Period may, at the
option of the Company in its sole discretion and to the extent permitted by
applicable law, be paid fully or partially in cash on the Preferred Dividend
Payment Date immediately following such Preferred Dividend Payment Period (any
Preferred Dividend or portion of a Preferred Dividend paid in such manner, a
“Cash Dividend”); provided, however, that (A) Cash Dividend payments shall be
aggregated per Holder and shall be made to the nearest cent (with $.005 being
rounded upward) and (B) Cash Dividends in respect of Accrued Dividends in
respect of any Preferred Dividend Payment Periods may be paid after the
Preferred Dividend Payment Date immediately following such Preferred Dividend
Payment Period solely with the consent of the Holders representing at least a
majority of the then-issued and outstanding shares of Series A Preferred Stock.
Notwithstanding the foregoing or anything to the contrary in this Certificate of
Designations, except as contemplated by clause (B) of the immediately preceding
proviso, no Cash Dividends may be paid in respect of Accrued Dividends that have
become Base Amount Accrued Dividends and the value associated with such Accrued
Dividends shall be delivered to Holders through payment or conversion as
contemplated by this Certificate of Designations (including in accordance with
Section 5, Section 6, Section 7 and Section 9).

(e)    Record Date. Each Participating Dividend or Preferred Dividend shall be
paid pro rata to the Holders of shares of Preferred Stock entitled thereto. Each
Participating Dividend or Preferred Dividend shall be payable to the Holders of
Preferred Stock as they appear on the Register at the close of business on the
record date designated by the Board for such dividends (each such date, a
“Dividend Record Date”) which (i) with respect to Participating Dividends, shall
be the same day as the record date for the payment of dividends to the holders
of shares of Common Stock (the “Common Stock Dividend Record Date”); and
(ii) with respect to Preferred Dividends (including Accrued Dividends that were
not declared and paid on the Preferred Dividend Payment Date immediately
following the Preferred Dividend Payment Period in which they accrued), shall be
not more than thirty (30) days nor less than ten (10) days preceding the
applicable Preferred Dividend Payment Date.

(f)    Other Dividends and Repurchases. Without the consent of the Holders
representing at least a majority of the then-issued and outstanding shares of
Series A Preferred Stock, the Company shall not (i) declare, pay or set aside
for payment any dividends or distributions upon any Junior Stock or
(ii) repurchase, redeem or otherwise acquire any Junior

 

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Stock (other than repurchases of shares of Common Stock from employees,
officers, directors, consultants or contractors of the Company in the ordinary
course of business or sellers of acquired businesses that received Common Stock
as consideration) for any consideration or pay any moneys or make available for
a sinking fund for the redemption of any shares of such Junior Stock, unless, in
each case, (A) immediately before and after the taking of such action, the fair
value of the Company’s assets would exceed the sum of its debts (including for
this purpose the aggregate Liquidation Preference and the aggregate Accrued
Dividends of the Series A Preferred Stock); (B) immediately after the taking of
such action, the Company, in its good faith judgment, would be able to pay all
of its debts (including the aggregate Liquidation Preference and the aggregate
Accrued Dividends of the Series A Preferred Stock) as they are reasonably
expected to come due; (C) such action is otherwise in compliance with applicable
Law; and (D) no Default Event has occurred and is ongoing. Notwithstanding
anything to the contrary herein, for so long as any shares of Series A Preferred
Stock remain outstanding, if dividends are not declared and paid in full upon
the shares of Series A Preferred Stock and any Parity Stock, all dividends
declared upon shares of Series A Preferred Stock and any Parity Stock will be
declared on a proportional basis so that the amount of dividends declared per
share will bear to each other the same ratio that all accrued and unpaid
dividends as of the end of the most recent Preferred Dividend Payment Period per
share of Series A Preferred Stock and accrued and unpaid dividends as of the end
of the most recent dividend period per share of any Parity Stock bear to each
other.

(g)    Conversion Following a Record Date. If the Conversion Date for any shares
of Series A Preferred Stock is prior to the close of business on a Dividend
Record Date, the Holder of such shares will not be entitled to any dividend in
respect of such Dividend Record Date, other than through the inclusion of
Accrued Dividends as of the Conversion Date in the calculation under
Section 6(a) or Section 7, as applicable. If the Conversion Date for any shares
of Series A Preferred Stock is after the close of business on a Dividend Record
Date but prior to the corresponding payment date for such dividend, the Holder
of such shares as of such Dividend Record Date shall be entitled to receive such
dividend, notwithstanding the conversion of such shares prior to the applicable
dividend payment date; provided, however, that the amount of such dividend shall
not be included for the purpose of determining the amount of Accrued Dividends
under Section 6(a) or Section 7, as applicable, with respect to such Conversion
Date.

SECTION 5.    Liquidation Rights. (a) Liquidation. In the event of any voluntary
or involuntary liquidation, dissolution or winding up of the affairs of the
Company, the Holders shall be entitled, out of assets legally available
therefor, before any distribution or payment out of the assets of the Company
may be made to or set aside for the holders of any Junior Stock and subject to
the rights of the holders of any Senior Stock or Parity Stock and the rights of
the Company’s existing and future creditors, to receive in full a liquidating
distribution in cash and in the amount per share of Series A Preferred Stock
equal to the greater of (i) the sum of (A) the Liquidation Preference plus
(B) the Accrued Dividends with respect to such share of Series A Preferred Stock
as of the date of such voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company and (ii) the amount such Holders would
have received had such Holders, immediately prior to such voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Company, converted such shares of Series A Preferred Stock into Common Stock
pursuant to Section 6 (without regard to Section 8(f)). Holders shall not be
entitled to any further payments in the event of any such voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the Company
other than what is expressly provided for in this Section 5 and will have no
right or claim to any of the Company’s remaining assets.

 

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(b)    Partial Payment. If in connection with any distribution described in
Section 5(a) above, the assets of the Company or proceeds therefrom are not
sufficient to pay in full the aggregate liquidating distributions required to be
paid pursuant to Section 5(a) above to all Holders and the liquidating
distributions payable all holders of any Parity Stock, the amounts distributed
to the Holders and to the holders of all such Parity Stock shall be paid pro
rata in accordance with the respective aggregate liquidating distributions to
which they would otherwise be entitled if all amounts payable thereon were paid
in full.

(c)    Merger, Consolidation and Sale of Assets Not Liquidation. For purposes of
this Section 5, the sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of the
property and assets of the Company shall not be deemed a voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Company, nor shall the merger, consolidation, statutory exchange or any other
business combination transaction of the Company into or with any other Person or
the merger, consolidation, statutory exchange or any other business combination
transaction of any other Person into or with the Company be deemed to be a
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Company.

SECTION 6.    Right of the Holders to Convert.

(a)    Subject to the terms of Section 8(f), each Holder shall have the right,
at such Holder’s option, subject to the conversion procedures set forth in
Section 8, to convert (an “Optional Conversion”) each share of such Holder’s
Series A Preferred Stock at any time into (i) the number of shares of Common
Stock equal to the quotient of (A) the sum of the Liquidation Preference and the
Accrued Dividends with respect to such share of Series A Preferred Stock as of
the applicable Conversion Date divided by (B) the Conversion Price as of the
applicable Conversion Date plus (ii) cash in lieu of fractional shares as set
out in Section 8(e). The right of Optional Conversion may be exercised as to all
or any portion of such Holder’s Series A Preferred Stock from time to time;
provided, however, that, in each case, no right of Optional Conversion may be
exercised by a Holder in respect of fewer than 5,000 shares of Series A
Preferred Stock (unless such conversion relates to all shares of Series A
Preferred Stock held by such Holder).

(b)    The Company shall at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for issuance upon the conversion of
the Series A Preferred Stock, such number of shares of Common Stock as shall
from time to time be issuable upon the conversion of all the shares of Series A
Preferred Stock then outstanding (without regard to Section 8(f)). Any shares of
Common Stock issued upon conversion of Series A Preferred Stock shall be duly
authorized, validly issued, fully paid and nonassessable and will not be subject
to preemptive rights or subscription rights of any other stockholder of the
Company.

SECTION 7.    Mandatory Conversion by the Company. (a) If either (i) (x) the
Consolidated EBITDA of the Company and its consolidated Subsidiaries exceeds
$300 million for two consecutive twelve (12) month periods (ending on a fiscal
quarter- or year-end) and (y)

 

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the Company’s Consolidated Net Total Leverage Ratio as of the last day of such
two consecutive twelve (12) month periods does not exceed 4:00:1:00 or (ii) the
VWAP per share of Common Stock exceeds the product of (x) the Mandatory
Conversion Threshold Price Percentage and (y) the Conversion Price on each of at
least twenty (20) Trading Days (whether or not consecutive) in a period of
thirty (30) consecutive Trading Days (the “Trading Period”), the Company may
elect to convert (a “Mandatory Conversion”) all, but not less than all (subject
to Section 8(f)), of the outstanding shares of Series A Preferred Stock into
shares of Common Stock (the date selected by the Company for any Mandatory
Conversion pursuant to this Section 7, the “Mandatory Conversion Date”);
provided, however, that the Company may not require a Mandatory Conversion if
such Mandatory Conversion is prohibited by the Investment Agreement. In the case
of a Mandatory Conversion, subject to Section 8(f), each share of Series A
Preferred Stock then outstanding shall be converted into (A) the number of
shares of Common Stock equal to the quotient of (1) the sum of the Liquidation
Preference and the Accrued Dividends with respect to such share of Series A
Preferred Stock as of the Mandatory Conversion Date divided by (2) the
Conversion Price of such share in effect as of the Mandatory Conversion Date
plus (B) cash in lieu of fractional shares as set out in Section 8(e).

(b)    Notice of Mandatory Conversion. If the Company elects to effect a
Mandatory Conversion, the Company shall, no later than ten (10) Business Days
following the filing of the Company’s relevant Annual Report on Form 10-K or
Quarterly Report on From 10-Q or the completion of the Trading Period, as
applicable, provide notice of a Mandatory Conversion to each Holder (such
notice, a “Notice of Mandatory Conversion”). For the avoidance of doubt,
delivery of a Notice of Mandatory Conversion does not limit a Holder’s right to
convert on a Conversion Date prior to the Mandatory Conversion Date. The
Mandatory Conversion Date selected by the Company shall be no less than five
(5) Business Days and no more than twenty (20) Business Days after the date on
which the Company provides the Notice of Mandatory Conversion to the Holders.
The Notice of Mandatory Conversion shall state, as appropriate:

(i)    the Mandatory Conversion Date selected by the Company; and

(ii)    the Conversion Rate as in effect on the Mandatory Conversion Date, the
amount of Accrued Dividends on each share of Series A Preferred Stock held by
such Holder as of the Mandatory Conversion Date, the number of shares of Common
Stock to be issued to such Holder upon conversion of each share of Series A
Preferred Stock held by such Holder (including in respect of the Accrued
Dividends thereon) and, if applicable, the cash in lieu of fractional shares to
be paid thereon.

SECTION 8.    Conversion Procedures and Effect of Conversion. (a) Conversion
Procedure. A Holder must do each of the following in order to receive shares of
Common Stock upon conversion of shares of Series A Preferred Stock pursuant to
this Section 8:

(i)    in the case of an Optional Conversion, complete and manually sign the
conversion notice in the form attached hereto as Exhibit I (the “Conversion
Notice”), and deliver such notice to the Company; provided, however, that a
Conversion Notice may be conditional on the completion of a Change of Control or
other corporate transaction as such Holder may specify;

 

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(ii)    deliver to the Company the certificate or certificates (if any)
representing the shares of Series A Preferred Stock to be converted;

(iii)    if required, furnish appropriate endorsements and transfer documents;
and

(iv)    if required, pay any stock transfer, documentary, stamp or similar taxes
not payable by the Company pursuant to Section 18.

The foregoing clauses (ii), (iii) and (iv) shall be conditions to the issuance
of shares of Common Stock to the Holders in the event of a Mandatory Conversion
pursuant to Section 7 (but, for the avoidance of doubt, not the Mandatory
Conversion of the shares of Series A Preferred Stock on the Mandatory Conversion
Date).

The “Conversion Date” means (A) with respect to an Optional Conversion pursuant
to Section 6(a), the date on which such Holder complies with the procedures in
this Section 8 (including the satisfaction of any conditions to conversion set
forth in the Conversion Notice) and (B) with respect to Mandatory Conversion
pursuant to Section 7, the Mandatory Conversion Date.

(b)    Effect of Conversion. Effective immediately prior to the close of
business on the Conversion Date applicable to any shares of Series A Preferred
Stock, subject to Section 8(f), Preferred Dividends and Participating Dividends
shall no longer accrue or be declared on any such shares of Series A Preferred
Stock, and on conversion, such shares of Series A Preferred Stock shall cease to
be outstanding.

(c)    Record Holder of Underlying Securities as of Conversion Date. The Person
or Persons entitled to receive the Common Stock and, to the extent applicable,
cash on a Conversion Date shall be treated for all purposes as the record
holder(s) of such shares of Common Stock and, to the extent applicable, cash as
of the close of business on such Conversion Date. As promptly as practicable on
or after the Conversion Date and compliance by the applicable Holder with the
relevant procedures contained in Section 8 (and in any event no later than three
(3) Trading Days thereafter), the Company shall issue the number of whole shares
of Common Stock issuable upon conversion (and deliver payment of cash in lieu of
fractional shares as set out in Section 8(e)). Such delivery of shares of Common
Stock, securities or other property shall be made, at the option of the Company,
in certificated form or by book-entry. Any such certificate or certificates
shall be delivered by the Company to the appropriate Holder on a book-entry
basis or by mailing certificates evidencing the shares to the Holders at their
respective addresses as set forth in the Conversion Notice (in the case of an
Optional Conversion) or in the records of the Company (in the case of a
Mandatory Conversion). In the event that a Holder shall not by written notice
designate the name in which shares of Common Stock (and payments of cash in lieu
of fractional shares) to be delivered upon conversion of shares of Series A
Preferred Stock should be registered or paid, or the manner in which such shares
and cash should be delivered, the Company shall be entitled to register and
deliver such shares, and make such payment, in the name of the Holder and in the
manner shown on the records of the Company.

 

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(d)    No Adjustment. No adjustment to shares of Series A Preferred Stock being
converted on a Conversion Date or to the shares of Common Stock deliverable to
the Holders upon the conversion thereof shall be made in respect of dividends or
other distributions payable to holders of the Common Stock as of any date prior
to the close of business on such Conversion Date (it being understood that the
foregoing shall not limit any Holder’s right to receive Participating Dividends
payable prior to such time or the operation of Section 10(a) in respect of
events occurring prior to such time). Until the Conversion Date with respect to
any share of Series A Preferred Stock has occurred, such share of Series A
Preferred Stock will remain outstanding and will be entitled to all of the
powers, designations, preferences and other rights provided herein.

(e)    Fractional Shares. No fractional shares of Common Stock will be delivered
to the Holders upon conversion. In lieu of fractional shares otherwise issuable,
the Holders will be entitled to receive, at the Company’s sole discretion,
either (i) an amount in cash equal to the fraction of a share of Common Stock
multiplied by the Closing Price of the Common Stock on the Trading Day
immediately preceding the applicable Conversion Date or (ii) one (1) additional
whole share of Common Stock. To determine whether the number of shares of Common
Stock to be delivered to a Holder upon the conversion of such Holder’s shares of
Series A Preferred Stock will include a fractional share, such determination
shall be based on the aggregate number of shares of Series A Preferred Stock of
such Holder that are being converted on any single Conversion Date.

(f)    Limitation on Conversion Right.

(i)    Notwithstanding anything to the contrary in this Certificate of
Designations, unless and until the Requisite Stockholder Approval is obtained,
no shares of Common Stock will be issued or delivered upon any proposed
conversion of any Series A Preferred Stock of any Holder, and no Convertible
Preferred Stock of any Holder will be convertible, in each case to the extent,
and only to the extent, that such issuance, delivery, conversion or
convertibility would result in such Holder or a “person” or “group” (within the
meaning of Section 13(d)(3) of the Exchange Act) beneficially owning in excess
of nineteen and ninety-nine-one-hundredths percent (19.99%) of the
then-outstanding Stockholder Voting Power (the restrictions set forth in this
sentence, the “Ownership Limitation”). For these purposes, beneficial ownership
and calculations of percentage ownership will be determined in accordance with
Rule 13d-3 under the Exchange Act. The Company is not required to obtain, or to
try to obtain, the Requisite Stockholder Approval.

(ii)    Any purported conversion (and delivery of shares of Common Stock upon
conversion of the Series A Preferred Stock) will be void and have no effect to
the extent, but only to the extent, that such conversion and delivery would
result in any Holder becoming the beneficial owner of shares of Common Stock
outstanding at such time in excess of the Ownership Limitation. For the
avoidance of doubt, a Holder may effect an Optional Conversion, and the Company
may, upon exercise of its Mandatory Conversion Right, force conversion of, a
portion of such Holder’s Convertible Preferred Stock up to the Ownership
Limitation, in each case subject to the other requirements of this Certificate
of Designations applicable to such Optional Conversion or Mandatory Conversion,
as applicable.

 

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(iii)    Except as otherwise provided herein, if any consideration otherwise due
upon the proposed conversion of any Series A Preferred Stock pursuant to an
Optional Conversion or Mandatory Conversion is not delivered as a result of the
Ownership Limitation, then the Company’s obligation to deliver such
consideration will not be extinguished, and the Company will deliver such
consideration (and the relevant shares of Series A Preferred Stock shall be
deemed converted) as soon as reasonably practicable after the Holder of such
Series A Preferred Stock provides written evidence satisfactory to the Company
that such delivery will not contravene the Ownership Limitation. A Holder will
provide such evidence as soon as reasonably practicable after its beneficial
ownership is such that additional shares of Common Stock issuable upon
conversion of Convertible Preferred Stock may be delivered without contravening
the Ownership Limitation. For the avoidance of doubt, until consideration due
upon the conversion of any Series A Preferred Stock is delivered, such Series A
Preferred Stock shall be deemed not to have converted, Preferred Dividends shall
continue to accrue thereon and consideration ultimately paid out in respect
thereof shall take into account such accrued Preferred Dividends (to the extent
not previously paid as Cash Dividends).

SECTION 9.    Change of Control. (a) Repurchase at the Option of the Holder. In
the event of a Change of Control, each Holder of outstanding shares of Series A
Preferred Stock shall have the option to require the Company to purchase (a
“Change of Control Put”), any or all of its shares of Series A Preferred Stock
at a purchase price per share of Series A Preferred Stock, payable in cash,
equal to 101% of the sum of (i) the Liquidation Preference of such share of
Series A Preferred Stock plus (ii) the Accrued Dividends in respect of such
share of Series A Preferred Stock, in each case as of the applicable Change of
Control Purchase Date (the “Change of Control Purchase Price”); provided,
however, in each case (but, for purposes of clarity, not in the event where such
holder actually converts its shares of Series A Preferred Stock into Common
Stock), the Company shall only be required to pay the Change of Control Purchase
Price (i) after the Satisfaction of Indebtedness Obligations and (ii) to the
extent such purchase can be made out of funds legally available therefor.

(b)    Initial Change of Control Notice. On or before the twentieth (20th)
Business Day prior to the date on which the Company anticipates consummating a
Change of Control (or, if later, promptly after the Company discovers that a
Change of Control may occur), a written notice shall be sent by or on behalf of
the Company to the Holders as they appear in the records of the Company, which
notice shall set forth a description of the anticipated Change of Control and
contain the date on which the Change of Control is anticipated to be effected
(or, if applicable, the date on which a Schedule TO or other schedule, form or
report disclosing a Change of Control was filed).

(c)    Final Change of Control Notice. Within ten (10) days following the
effective date of the Change of Control (the “Change of Control Effective Date”)
(or, if later, promptly after the Company discovers that the Change of Control
has occurred), the Company shall deliver to each Holder a written notice setting
forth:

(i)    the date, which shall be no earlier than the twentieth (20th) Business
Day after the Change of Control Effective Date (or, if later, the date of
delivery of such notice), by which the Change of Control Put must be exercised;

 

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(ii)    the amount of cash or other consideration payable per share of Series A
Preferred Stock, if such Holder elects to exercise a Change of Control Put;

(iii)    a description of the payments and other actions required to be made or
taken in order to effect the Satisfaction of Indebtedness Obligations;

(iv)    the purchase date for such shares (which shall be no later than sixty
(60) days from the date such notice is delivered); and

(v)    the instructions a Holder must follow to exercise its Change of Control
Put in connection with such Change of Control.

(d)    Change of Control Put Procedure. To exercise a Change of Control Put, a
Holder must, no later than 5:00 p.m., New York City time, on the date specified
in the written notice referred to in Section 9(c)(i) by which such option must
be exercised, notify the Company in writing of the number of shares of Series A
Preferred Stock as to which such Change of Control Put is being exercised.

(e)    Delivery upon Change of Control Put. Upon a Change of Control Put, after
Satisfaction of Indebtedness Obligations and subject to Section 9(h), the
Company (or its successor) shall deliver or cause to be delivered to the Holder
by mail or wire transfer the Change of Control Purchase Price of such Holder’s
shares of Series A Preferred Stock. Subject to the payment of the Change of
Control Purchase Price with respect to such Holder’s shares of Series A
Preferred Stock, from and after the Change of Control Effective Date, the
dividend, voting and other powers, designations, preferences and rights provided
herein with respect to such repurchased shares of Preferred Stock shall cease.

(f)    Partial Exercise of Change of Control Put. In the event that a Change of
Control Put is effected with respect to shares of Series A Preferred Stock
representing less than all the shares of Series A Preferred Stock held by a
Holder, promptly following such Change of Control Put, the Company shall reflect
in the Register the remaining shares of Series A Preferred Stock held by such
Holder.

(g)    Redemption by the Company. In the case of a Change of Control (provided,
however, that for purposes of this Section 9(g), the references to “a majority”
in the definition of Change of Control shall be deemed to be references to
“80%”), any shares of Series A Preferred Stock as to which a Change of Control
Put was not exercised may be redeemed, at the option of the Company (or its
successor or the acquiring or surviving Person in such Change of Control), at
any time upon not less than fifteen (15) nor more than sixty (60) days’ notice,
at a redemption price per share, payable in cash, equal to (i) the Liquidation
Preference as of the date of redemption plus (ii) Accrued Dividends as of the
date of redemption, plus (iii) if the applicable redemption date is prior to the
fifth anniversary of the Issuance Date, the amount equal to the net present
value (computed using a discount rate equal to the Treasury Rate) of the sum of
all Accrued Dividends that would otherwise be payable on such shares of Series A
Preferred Stock on and after the applicable Change of Control Purchase Date to
and including the fifth anniversary of the Issuance Date and assuming such
Accrued Dividends were paid in cash. Unless the Company (or its successor or the
acquiring or surviving Person in such Change of

 

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Control) defaults in making the redemption payment on the applicable redemption
date, on and after the redemption date, (A) Accrued Dividends shall cease to
accrue on the shares of Series A Preferred Stock so called for redemption;
(B) all shares of Series A Preferred Stock called for redemption shall no longer
be deemed outstanding; and (C) all rights with respect to such shares of Series
A Preferred Stock shall on such redemption date cease and terminate, except only
for the right of the Holders thereof to receive the amount payable in such
redemption.

(h)    Insufficient Funds; Specified Contract Terms. If, on the Change of
Control Effective Date, the Company (A) shall not have sufficient funds legally
available to purchase all shares of Series A Preferred Stock that Holders have
requested to be purchased under Section 9 (the “Required Number of Shares”) or
(B) will be in violation of Specified Contract Terms if it purchases the
Required Number of Shares, the Company (i) shall purchase, on a pro rata basis,
a number of shares of Series A Preferred Stock with an aggregate Change of
Control Purchase Price equal to the lesser of (1) the amount available for the
purchase of shares of Series A Preferred Stock with such legally available funds
and (2) the largest amount that can be used for such purchase not prohibited by
Specified Contract Terms; and (ii) except to the extent a Holder withdraws its
exercise of the Change of Control Put with respect to unpurchased shares, shall
purchase any remaining shares, on a pro rata basis, as soon as practicable after
the Company is able to make such purchase out of legally available funds and
without violation of Specified Contract Terms. The inability of the Company (or
its successor) to make a purchase payment for any reason shall not relieve the
Company (or its successor) from its obligation to effect any required purchase
when, as and if permitted by applicable law and Specified Contract
Terms.    Notwithstanding anything to the contrary herein, if the Company does
not have legally available funds that are available to purchase all shares of
Series A Preferred Stock that Holders have elected to be purchased, or is
prohibited by Specified Contract Terms from doing so, or otherwise fails to
comply with any provisions of Section 9, the Change of Control Put Price after
the date on which the Change of Control Put is otherwise to occur in accordance
with this Section 9 (disregarding this Section 9(h) and the proviso to
Section 9(a)) shall be increased by the amount of any Accrued Dividends accruing
between the date on which the Change of Control Put is otherwise to occur and
the date of such purchase.    Notwithstanding anything to the contrary herein,
in the event a Holder exercises a Change of Control Put pursuant to this
Section 9 at a time when the Company is restricted or prohibited (contractually
or otherwise) from redeeming some or all of the Series A Preferred Stock subject
to the Change of Control Put, the Company will use its reasonable best efforts
to obtain the requisite consents to remove or obtain an exception or waiver to
such restrictions or prohibition. Nothing herein shall limit a Holder’s right to
pursue any other remedies available to it hereunder, at law or in equity,
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to comply with its
obligations under this Section 9.

(i)    Change of Control Agreements. The Company shall not enter into any
agreement for, or otherwise willingly engage in, a transaction constituting a
Change of Control, unless (i) such agreement provides for or does not interfere
with or prevent (as applicable) the exercise by the Holders of their Change of
Control Put in a manner that is consistent with and gives effect to this
Section 9, and (ii) the acquiring or surviving Person in such Change of Control
represents or covenants, in form and substance reasonably satisfactory to the
Board acting in good faith, that at the closing of such Change of Control, to
the effect that such Person shall have sufficient funds (which may include,
without limitation, cash and cash equivalents on the Company’s balance

 

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sheet, the proceeds of any debt or equity financing, available lines of credit
or uncalled capital commitments) to consummate such Change of Control and effect
the Satisfaction of Indebtedness Obligations and the payment of the Change of
Control Put Price in respect of all shares of Series A Preferred Stock that have
not been converted into Common Stock prior to the Change of Control Effective
Date pursuant to Section 6 or Section 7, as applicable.

(j)    Conversion Right. Notwithstanding anything to the contrary herein,
(i) prior to the expiry of the exercise period for the Change of Control Put,
any redemption pursuant to Section 9(g) or any Change of Control, each Holder
shall be entitled to exercise an Optional Conversion in respect of any and all
of its Series A Preferred Stock, (ii) in the event that a Holder is notified of
the pending Change of Control later than twenty (20) Business Days prior to its
consummation (or after its consummation), such Holder shall be entitled to elect
to receive the proceeds of such Change of Control as if such Holder had
converted any or all of its Series A Preferred Stock immediately prior to such
consummation, and (iii) in the event that Section 8(f) would operate to limit
the number of shares of Common Stock that a Holder may receive upon exercise of
its Optional Conversion right in connection with a Change of Control, such
Holder shall be entitled to exercise its Optional Conversion right to receive
the proceeds of the Change of Control on its Series A Preferred Stock as
converted to Common Stock without regard to Section 8(f).

SECTION 10.    Anti-Dilution Adjustments. (a) Adjustments. The Conversion Rate
will be subject to adjustment, without duplication, upon the occurrence of the
following events, except that the Company shall not make any adjustment to the
Conversion Rate if Holders of the Series A Preferred Stock participate, at the
same time and upon the same terms as holders of Common Stock and solely as a
result of holding shares of Series A Preferred Stock, in any transaction
described in this Section 10, without having to convert their Series A Preferred
Stock, as if they held a number of shares of Common Stock equal to the
Conversion Rate multiplied by the number of shares of Series A Preferred Stock
held by such Holders:

(i)    The issuance of Common Stock as a dividend or distribution to all or
substantially all holders of Common Stock, or a subdivision or combination
(including, without limitation, a stock split or a reverse stock split) of
Common Stock or a reclassification of Common Stock into a greater or lesser
number of shares of Common Stock, in which event the Conversion Rate shall be
adjusted based on the following formula:

CR1 = CR0 x (OS1 / OS0)

where,

CR0    =    the Conversion Rate in effect immediately prior to (i) the close of
business on (i) the Record Date for such dividend or distribution or (ii) the
effective date of such subdivision, combination or reclassification;

CR1    =    the new Conversion Rate in effect immediately after (i) the close of
business on (i) the Record Date for such dividend or distribution or (ii) the
effective date of such subdivision, combination or reclassification;

OS0    =    the number of shares of Common Stock outstanding immediately prior
to the close of business on (i) the Record Date for such dividend or
distribution or (ii) the effective date of such subdivision, combination or
reclassification; and

 

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OS1    = the number of shares of Common Stock that would be outstanding
immediately after, and solely as a result of, the completion of such dividend,
distribution, subdivision, combination or reclassification.

Any adjustment made pursuant to this clause (i) shall be effective immediately
after the close of business on (i) the Record Date for such dividend or
distribution or (ii) the effective date of such subdivision, combination or
reclassification. If any such dividend, distribution, subdivision, combination
or reclassification is announced or declared but does not occur, the Conversion
Rate shall be readjusted, effective as of the date the Board announces that such
dividend, distribution, subdivision, combination or reclassification shall not
occur to the Conversion Rate that would then be in effect if such dividend,
distribution, subdivision, combination or reclassification had not been
declared.

(ii)    The dividend, distribution or other issuance to all or substantially all
holders of Common Stock of rights (other than rights, options or warrants
distributed in connection with a stockholder rights plan (in which event the
provisions of Section 10(a)(v) shall apply)), options or warrants entitling them
to subscribe for or purchase shares of Common Stock for a period expiring
forty-five (45) days or less from the date of issuance thereof, at a price per
share that is less than the Current Market Price as of the Record Date for such
issuance, in which event the Conversion Rate will be increased based on the
following formula:

CR1 = CR0 x [(OS0+X)] / (OS0+Y)

where,

CR0 = the Conversion Rate in effect immediately prior to the close of business
on the Record Date for such dividend, distribution or other issuance;

CR1 = the new Conversion Rate in effect immediately after the close of business
on the Record Date for such dividend, distribution or other issuance;

OS0 = the number of shares of Common Stock outstanding immediately prior to the
close of business on the Record Date for such dividend, distribution or other
issuance;

X = the total number of shares of Common Stock issuable pursuant to such rights,
options or warrants; and

Y = the number of shares of Common Stock equal to the aggregate price payable to
exercise such rights, options or warrants divided by the Current Market Price as
of the Record Date for such dividend, distribution or other issuance.

For purposes of this clause (ii), in determining whether any rights, options or
warrants entitle the holders to purchase the Common Stock at a price per share
that is less

 

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than the Current Market Price as of the Record Date for such dividend,
distribution or issuance, there shall be taken into account any consideration
the Company receives for such rights, options or warrants, and any amount
payable on exercise thereof, with the value of such consideration, if other than
cash, to be the Fair Market Value thereof.

Any adjustment made pursuant to this clause (ii) shall become effective
immediately following the close of business on the Record Date for such
dividend, distribution or other issuance. In the event that such rights, options
or warrants are not so issued, the Conversion Rate shall be readjusted,
effective as of the date the Board publicly announced its decision not to issue
such rights, options or warrants to the Conversion Rate that would then be in
effect if such dividend, distribution or issuance had not been declared. To the
extent that such rights, options or warrants are not exercised prior to their
expiration or shares of Common Stock are otherwise not delivered pursuant to
such rights, options or warrants upon the exercise of such rights, options or
warrants, the Conversion Rate shall be readjusted to the Conversion Rate that
would then be in effect had the adjustments made upon the dividend, distribution
or other issuance of such rights, options or warrants been made on the basis of
the delivery of only the number of shares of Common Stock actually delivered.

(iii)    The Company shall, by dividend or otherwise, distribute to all or
substantially all holders of its Common Stock (other than for cash in lieu of
fractional shares), shares of any class of its Capital Stock, evidences of its
indebtedness, assets, other property or securities, but excluding (A) dividends
or distributions referred to in Section 10(a)(i) or Section 10(a)(ii) hereof;
(B) Distribution Transactions as to which Section 10(a)(iv) shall apply;
(C) dividends or distributions paid exclusively in cash; and (D) rights, options
or warrants distributed in connection with a stockholder rights plan as to which
Section 10(a)(v) shall apply (any of such shares of its Capital Stock,
indebtedness, assets or property that are not so excluded are hereinafter called
the “Distributed Property”), then, in each such case the Conversion Rate shall
be adjusted based on the following formula:

CR1 = CR0 x [SP0 / (SP0 - FMV)]

where,

CR0    =    the Conversion Rate in effect immediately prior to the close of
business on the Record Date for such dividend or distribution;

CR1    =    the new Conversion Rate in effect immediately after the close of
business on the Record Date for such dividend or distribution;

SP0    =    the Current Market Price as of the Record Date for such dividend or
distribution; and

FMV    =    the Fair Market Value of the portion of Distributed Property
distributed with respect to each outstanding share of Common Stock on the Record
Date for such dividend or distribution; provided, however, that, if FMV is equal
or greater than SP0, then in lieu of the foregoing adjustment, the Company shall
distribute to each holder of Series A Preferred Stock on the date the applicable
Distributed Property is distributed to holders of Common Stock, but

 

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without requiring such holder to convert its shares of Series A Preferred Stock,
in respect of each share of Series A Preferred Stock held by such holder, the
amount of Distributed Property such holder would have received had such holder
owned a number of shares of Common Stock equal to the Conversion Rate on the
Record Date for such dividend or distribution

Any adjustment made pursuant to this clause (iii) shall be effective immediately
after the close of business on the Record Date for such dividend or
distribution. If any such dividend or distribution is declared but does not
occur, the Conversion Rate shall be readjusted, effective as of the date the
Board announces that such dividend or distribution shall not occur to the
Conversion Rate that would then be in effect if such dividend or distribution
had not been declared.

(iv)    The Company effects a Distribution Transaction, in which case the
Conversion Rate in effect immediately prior to the effective date of the
Distribution Transaction shall be increased based on the following formula:

CR1 = CR0 x [(FMV + MP0) / MP0]

where,

CR0    =    the Conversion Rate in effect immediately prior to the close of
business on the effective date of the Distribution Transaction;

CR1    =    the new Conversion Rate in effect immediately after the close of
business on the effective date of the Distribution Transaction;

FMV    =    the arithmetic average of the volume-weighted average prices for a
share of the capital stock or other interest distributed to holders of Common
Stock on the principal United States securities exchange or automated quotation
system on which such capital stock or other interest trades, as reported by
Bloomberg (or, if Bloomberg ceases to publish such price, any successor service
chosen by the Company) in respect of the period from the open of trading on the
relevant Trading Day until the close of trading on such Trading Day (or if such
volume-weighted average price is unavailable, the market price of one (1) share
of such capital stock or other interest on such Trading Day determined, using a
volume-weighted average method, by an Independent Financial Advisor retained for
such purpose by the Company), for each of the ten (10) consecutive full Trading
Days commencing with, and including, the effective date of the Distribution
Transaction; and

MP0    =    the arithmetic average of the VWAP per share of Common Stock for
each of the ten (10) consecutive full Trading Days commencing on, and including,
the effective date of the Distribution Transaction

Such adjustment shall become effective immediately following the close of
business on the effective date of the Distribution Transaction. If an adjustment
to the Conversion Rate is required under this Section 10(a)(iv), delivery of any
additional shares of Common Stock that

 

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may be deliverable upon conversion as a result of an adjustment required under
this Section 10(a)(iv) shall be delayed only to the extent necessary in order to
complete the calculations provided for in this Section 10(a)(iv).

(v)    If the Company has a stockholder rights plan in effect with respect to
the Common Stock on any Conversion Date, upon conversion of any shares of the
Series A Preferred Stock, Holders of such shares will receive, in addition to
the applicable number of shares of Common Stock, the rights under such rights
plan relating to such Common Stock, unless, prior to such Conversion Date, the
rights have (i) become exercisable or (ii) separated from the shares of Common
Stock (the first of such events to occur, a “Trigger Event”), in which case, the
Conversion Rate will be adjusted, effective automatically at the time of such
Trigger Event, as if the Company had made a distribution of such rights to all
holders of the Company Common Stock as described in Section 10(a)(ii) (without
giving effect to the forty-five (45)-day limit on the exercisability of rights,
options or warrants ordinarily subject to such Section 10(a)(ii)), subject to
appropriate readjustment in the event of the expiration, termination or
redemption of such rights prior to the exercise, deemed exercise or exchange
thereof. Notwithstanding the foregoing, to the extent any such stockholder
rights are exchanged by the Company for shares of Common Stock or other property
or securities, the Conversion Rate shall be appropriately readjusted as if such
stockholder rights had not been issued, but the Company had instead issued such
shares of Common Stock or other property or securities as a dividend or
distribution of shares of Common Stock pursuant to Section 10(a)(i) or
Section 10(a)(iii), as applicable.

To the extent that such rights are not exercised prior to their expiration,
termination or redemption, the Conversion Rate shall be readjusted to the
Conversion Rate that would then be in effect had the adjustments made upon the
occurrence of the Trigger Event been made on the basis of the issuance of, and
the receipt of the exercise price with respect to, only the number of shares of
Common Stock actually issued pursuant to such rights.

Notwithstanding anything to the contrary in this Section 10(a)(v), no adjustment
shall be required to be made to the Conversion Rate with respect to any Holder
which is, or is an “affiliate” or “associate” of, an “acquiring person” under
such stockholder rights plan or with respect to any direct or indirect
transferee of such Holder who receives Series A Preferred Stock in such transfer
after the time such Holder becomes, or its affiliate or associate becomes, such
an “acquiring person.”

(b)    Calculation of Adjustments. All adjustments to the Conversion Rate shall
be calculated by the Company to the nearest 1/10,000th of one (1) share of
Common Stock (or if there is not a nearest 1/10,000th of a share, to the next
lower 1/10,000th of a share). No adjustment to the Conversion Rate will be
required, unless such adjustment would require an increase or decrease of at
least one percent (1%) of the Conversion Rate; provided, however, that any such
adjustment that is not required to be made will be carried forward and taken
into account in any subsequent adjustment; provided, further, that any such
adjustment of less than one percent (1%) that has not been made will be made
upon any Conversion Date.

(c)    When No Adjustment Required. (i) Except as otherwise provided in this
Section 10, the Conversion Rate will not be adjusted for the issuance of Common
Stock or any securities convertible into or exchangeable for Common Stock or
carrying the right to purchase any of the foregoing, or for the repurchase of
Common Stock.

 

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(ii)    Except as otherwise provided in this Section 10, the Conversion Rate
will not be adjusted as a result of the issuance of, the distribution of
separate certificates representing, the exercise or redemption of, or the
termination or invalidation of, rights pursuant to any stockholder rights plans.

(iii)    No adjustment to the Conversion Rate will be made:

(A)    upon the issuance of any shares of Common Stock pursuant to any present
or future plan providing for the reinvestment of dividends or interest payable
on securities of the Company and the investment of additional optional amounts
in Common Stock under any plan in which purchases are made at market prices on
the date or dates of purchase, without discount, and whether or not the Company
bears the ordinary costs of administration and operation of the plan, including
brokerage commissions;

(B)    upon the issuance of any shares of Common Stock or options or rights to
purchase such shares pursuant to any present or future employee, director or
consultant benefit plan or program of or assumed by the Company or any of its
Subsidiaries or of any employee agreements or arrangements or programs;

(C)    upon the issuance of any shares of Common Stock pursuant to any option,
warrant, right, or exercisable, exchangeable or convertible security;

(D)    for dividends or distributions declared or paid to holders of Common
Stock in which Holders participate pursuant to Section 4(b); or

(E)    for a change solely in the par value of the Common Stock.

(d)    Successive Adjustments. After an adjustment to the Conversion Rate under
this Section 10, any subsequent event requiring an adjustment under this
Section 10 shall cause an adjustment to each such Conversion Rate as so
adjusted.

(e)    Multiple Adjustments. For the avoidance of doubt, if an event occurs that
would trigger an adjustment to the Conversion Rate pursuant to this Section 10
under more than one subsection hereof, such event, to the extent fully taken
into account in a single adjustment, shall not result in multiple adjustments
hereunder; provided, however, that if more than one subsection of this
Section 10 is applicable to a single event, the subsection shall be applied that
produces the largest adjustment.

(f)    Tax Adjustments. The Company may, but shall not be required to, make such
increases in the Conversion Rate, in addition to those required by this
Section 10, as the Board considers to be advisable in order to avoid or diminish
any income tax to any holders of shares of Common Stock resulting from any
dividend or distribution of stock or issuance of rights or warrants to purchase
or subscribe for stock or from any event treated as such for income tax purposes
or for any other reason.

 

26

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(g)    Notice of Adjustments. Whenever the Conversion Rate is adjusted as
provided under this Section 10, the Company shall as soon as reasonably
practicable following the occurrence of an event that requires such adjustment
(or if the Company is not aware of such occurrence, as soon as reasonably
practicable after becoming so aware) or the date the Company makes an adjustment
pursuant to Section 10(f):

(i)    compute the adjusted applicable Conversion Rate in accordance with this
Section 10; and

(ii)    (A) in the event that the Company shall give notice or make a public
announcement to the holders of Common Stock of any action of the type described
in Section 10 (but only if the action of the type described in Section 10 would
result in an adjustment to the Conversion Price or a change in the type of
securities or property to be delivered upon conversion of the Series A Preferred
Stock), the Company shall, at the time of such notice or announcement, and in
the case of any action that would require the fixing of a record date, at least
ten (10) days prior to such record date, give notice to each Holder by mail,
first-class postage prepaid, at the address appearing in the Register, which
notice shall specify the record date, if any, with respect to any such action,
the approximate date on which such action is to take place and the facts with
respect to such action as shall be reasonably necessary to indicate the effect
on the Conversion Price and the number, kind or class of shares or other
securities or property, which shall be deliverable upon conversion or redemption
of the Series A Preferred Stock or (B) in the event that the Company does not
give notice or make a public announcement as set forth in subclause (A) of this
clause (ii), the Company shall, as soon as practicable following the occurrence
of an event that requires an adjustment to the Conversion Price pursuant to one
or more provisions of Section 10 (or if the Company is not aware of such
occurrence, as soon as practicable after becoming so aware), provide, or cause
to be provided, a written notice to the Holders of the occurrence of such event,
in the same manner and with the same detail as the notice set forth in subclause
(A) of this clause (ii); and

(iii)    whenever the Conversion Price shall be adjusted pursuant to one or more
provisions of Section 10, the Company shall, as soon as practicable following
the determination of the revised Conversion Price, (A) file at the principal
office of the Company, a statement showing in reasonable detail the facts
requiring such adjustment, the Conversion Price that shall be in effect after
such adjustment and the method by which the adjustment to the Conversion Price
was determined and (B) cause a copy of such statement to be sent in the manner
set forth in subclause (A) of clause (ii) to each Holder.

SECTION 11.    Adjustment for Reorganization Events.

(a)    Reorganization Events. In the event of:

(i)    any reclassification, statutory exchange, merger, consolidation or other
similar business combination of the Company with or into another Person, in each
case, pursuant to which at least a majority of the Common Stock is changed or
converted into, or exchanged for, cash, securities or other property of the
Company or another Person;

 

27

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(ii)    any sale, transfer, lease or conveyance to another Person of all or
substantially all the property and assets of the Company, in each case pursuant
to which the Common Stock is converted into cash, securities or other property;
or

(iii)    any statutory exchange of securities of the Company with another Person
(other than in connection with a merger or acquisition) or reclassification,
recapitalization or reorganization of the Common Stock into other securities;

(each of which is referred to as a “Reorganization Event” and the cash,
securities or other property into which the Common Stock is changed, converted
or exchanged, the “Exchange Property” and the amount and kind of Exchange
Property that a holder of one (1) share of Common Stock would be entitled to
receive on account of such Reorganization Event (without giving effect to any
arrangement not to issue or deliver a fractional portion of any security or
other property), an “Exchange Property Unit”), then, notwithstanding anything to
the contrary in this Certificate of Designations, from and after the effective
time of such Reorganization Event, without the consent of the Holders, each
share of Series A Preferred Stock will remain outstanding (unless converted in
accordance with Section 11(d)) and (I) the consideration due upon conversion of
any Series A Preferred Stock will be determined in the same manner as if each
reference to any number of shares of Common Stock in Section 10 or in this
Section 11, or in any related definitions, were instead a reference to the same
number of Exchange Property Units; (II) for purposes of Sections 6 and 7, each
reference to any number of shares of Common Stock in such Sections (or in any
related definitions) will instead be deemed to be a reference to the same number
of Reference Property Units (and the terms of any conversion shall be based upon
the Liquidation Value and Accrued Dividends at the time of such subsequent
conversion); (III) for purposes of the definition of “Change of Control” and
related concepts, the term “Common Stock” will be deemed to mean the common
equity (including depositary receipts representing common equity), if any,
forming part of such Exchange Property; and (IV) other references to “Common
Stock” shall refer to the Exchange Property with appropriate adjustment to
preserve, to the greatest extent possible (so long as there is no detrimental
effect to the Company), the economic and other rights in respect of the Series A
Preferred Stock granted by this Certificate of Designations and the Investment
Agreement; provided, however, that the foregoing shall not apply if such Holder
is a Person with which the Company consolidated or into which the Company merged
or which merged into the Company or to which such sale or transfer was made, as
the case may be (any such Person, a “Constituent Person”), or an Affiliate of a
Constituent Person, to the extent such Reorganization Event provides for
different treatment of Common Stock held by such Persons. If the kind or amount
of securities, cash and other property receivable upon such Reorganization Event
is not the same for each share of Common Stock held immediately prior to such
Reorganization Event by a Person (other than a Constituent Person or an
Affiliate thereof), then for the purpose of this Section 11(a), the kind and
amount of securities, cash and other property receivable upon conversion
following such Reorganization Event will be deemed to be the weighted average of
the types and amounts of consideration received by the holders of Common Stock.

(b)    Successive Reorganization Events. The above provisions of this Section 11
shall similarly apply to successive Reorganization Events.

 

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(c)    Reorganization Event Notice. The Company (or any successor) shall, no
less than twenty (20) Business Days prior to the anticipated effective date of
any Reorganization Event, provide written notice to the Holders of such
occurrence of such event and of the kind and amount of the cash, securities or
other property that constitutes the Exchange Property. Failure to deliver such
notice shall not affect the operation of this Section 11.

(d)    Reorganization Event Agreements. The Company shall not enter into any
agreement for a transaction constituting a Reorganization Event, unless (i) such
agreement provides for or does not interfere with or prevent (as applicable)
conversion of the Series A Preferred Stock into the Exchange Property in a
manner that is consistent with and gives effect to this Section 11, and (ii) to
the extent that the Company is not the surviving corporation in such
Reorganization Event or will be dissolved in connection with such Reorganization
Event, proper provision shall be made in the agreements governing such
Reorganization Event for the conversion of the Series A Preferred Stock into
stock of the Person surviving such Reorganization Event or such other continuing
entity in such Reorganization Event.

(e)    Change of Control. For the sake of clarity, if a Reorganization Event
constitutes a Change of Control, then Section 9 shall take precedence over this
Section 11 to the extent there is any inconsistency between such sections.

SECTION 12.    Voting Rights.

(a)    General. The Holders of shares of Series A Preferred Stock shall be
entitled to vote with the holders of the Common Stock on all matters submitted
to a vote of stockholders of the Company, except as otherwise provided herein or
as required by applicable law, voting together with the holders of Common Stock
as a single class. For such purposes, each Holder shall be entitled to a number
of votes in respect of the shares of Series A Preferred Stock owned of record by
it equal to the number of shares of Common Stock into which such shares of
Series A Preferred Stock could be converted (taking into account the limitations
in Section 8(f), applied ratably with respect to each outstanding share of
Series A Preferred Stock) as of the record date for the determination of
stockholders entitled to vote on such matters or, if no such record date is
established, as of the date such vote is taken or any written consent of
stockholders is solicited; provided, however, that the Investor Parties that
hold shares of Series A Preferred Stock shall not be entitled to any voting
rights in respect of such shares of Series A Preferred Stock, at any
stockholders’ meeting or in any written consent of stockholders, in each case to
the extent, and only to the extent, that such Investor Parties would have the
right to a number of votes in respect of such Investor Parties’ shares of Common
Stock, Preferred Stock or other Capital Stock of the Company in excess of
nineteen and ninety-nine-one-hundredths percent (19.99%) of the then-outstanding
Stockholder Voting Power. For the avoidance of doubt, the Holders of shares of
Series A Preferred Stock shall not be entitled to any voting rights in each case
to the extent, and only to the extent, that the issuance, delivery, conversion
or convertibility of such Series A Preferred Stock would result in such Holder
or a “person” or “group” (within the meaning of Section 13(d)(3) of the Exchange
Act) beneficially owning in excess of the Ownership Limitation prior to the
Requisite Stockholder Approval. The Holders of shares of Series A Preferred
Stock shall be entitled to notice of any stockholders’ meeting in accordance
with the Certificate of Incorporation and the By-Laws as if they were holders of
record of Common Stock for such meeting.

 

29

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(b)    Adverse Changes. So long as any shares of Series A Preferred Stock are
outstanding, in addition to any other vote required by applicable law, the
Company may not take any of the following actions (including by means of merger,
consolidation, reorganization, recapitalization or otherwise) without the prior
affirmative vote or written consent from the Holders of at least a majority of
the then-issued and outstanding shares of Series A Preferred, voting as a
separate class:

(i)    amend, alter, repeal or otherwise modify (whether by merger,
consolidation or otherwise) any provision of the Certificate of Incorporation
(including this Certificate of Designations) in a manner that would adversely
affect the powers, preferences, rights or privileges of the Series A Preferred
Stock;

(ii)    authorize, create, increase the authorized amount of, or issue any class
or series of Senior Stock or Parity Stock or any security convertible into, or
exchangeable or exercisable for any of the foregoing, or reclassify any security
into, any Senior Stock or Parity Stock (provided, however, that the
authorization, creation, increase in the authorized amount of, or issuance of
any class or series of Junior Stock or any security convertible into, or
exchangeable or exercisable for any of the foregoing, or reclassification of any
security into, Junior Stock will not require the vote or consent of any
Holders); and

(iii)    increase or decrease the authorized number of shares of Series A
Preferred Stock (except for the cancellation and retirement of shares set forth
in Section 14 or issue additional shares of Series A Preferred Stock.

(c)    Each Holder of Series A Preferred Stock will have one (1) vote per share
on any matter on which Holders of Series A Preferred Stock are entitled to vote
separately as a class, whether at a meeting or by written consent.

(d)    The vote or consent of the Holders of a majority of the shares of Series
A Preferred Stock outstanding at such time, voting together as a single class,
given in person or by proxy, either in writing without a meeting or by vote at
any meeting called for the purpose, will be sufficient to waive or amend the
provisions of Section 9(i), and any amendment or waiver of any of the provisions
of Section 9(i) approved by such percentage of the Holders shall be binding on
all of the Holders.

(e)    For the avoidance of doubt and notwithstanding anything to the contrary
in the Certificate of Incorporation or By-Laws, the Holders shall have the
exclusive consent and voting rights set forth in Section 12(b) and may take
action or consent to any action with respect to such rights without a meeting by
delivering a consent in writing or by electronic transmission of the Holders of
the Series A Preferred Stock entitled to cast not less than the minimum number
of votes that would be necessary to authorize, take or consent to such action at
a meeting of stockholders.

SECTION 13.    Transfer Agent. The Company may appoint a transfer agent and
remove its transfer agent in accordance with the agreement between the Company
and such transfer agent; provided, however, that the Company shall appoint a
successor transfer agent of recognized standing who shall accept such
appointment prior to the effectiveness of such

 

30

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removal. Upon any such removal or appointment, the Company shall send notice
thereof by first-class mail, postage prepaid, to the Holders. When a Holder
requests to register the transfer of shares of Series A Preferred Stock, the
Company or the Company’s transfer agent, as applicable, shall register the
transfer as requested if its reasonable requirements for such transaction are
met.

SECTION 14.    Status of Shares. Shares of Series A Preferred Stock that have
been issued and reacquired in any manner, whether by redemption, repurchase or
otherwise or upon any conversion of shares of Series A Preferred Stock to Common
Stock, shall thereupon be retired and shall have the status of authorized and
unissued shares of preferred stock of the Company undesignated as to series, and
may be redesignated as any series of preferred stock of the Company and
reissued.

SECTION 15.    Term. Except as expressly provided in this Certificate of
Designations, the shares of Series A Preferred Stock shall not be redeemable or
otherwise mature and the term of the Series A Preferred Stock shall be
perpetual.

SECTION 16.    Creation of Capital Stock. Subject to Section 12(b)(ii), the
Board, without the vote of the Holders, may authorize and issue additional
shares of Capital Stock of the Company.

SECTION 17.    No Sinking Fund. Shares of Series A Preferred Stock shall not be
subject to or entitled to the operation of a retirement or sinking fund.

SECTION 18.    Taxes. (a) Transfer Taxes. The Company shall pay any and all
stock transfer, documentary, stamp and similar taxes that may be payable in
respect of any issuance or delivery of shares of Series A Preferred Stock or
shares of Common Stock or other securities issued on account of Series A
Preferred Stock pursuant hereto or certificates representing such shares or
securities. The Company shall not, however, be required to pay any such tax that
may be payable in respect of any transfer involved in the issuance or delivery
of shares of Series A Preferred Stock, shares of Common Stock or other
securities in a name other than the name in which the shares of Series A
Preferred Stock with respect to which such shares or other securities are issued
or delivered were registered, or in respect of any payment to any Person other
than a payment to the registered holder thereof, and shall not be required to
make any such issuance, delivery or payment, unless and until the Person
otherwise entitled to such issuance, delivery or payment has paid to the Company
the amount of any such tax or has established, to the satisfaction of the
Company, that such tax has been paid or is not payable.

(b)    Withholding. All payments and distributions (or deemed distributions) on
the shares of Series A Preferred Stock (and on the shares of Common Stock
received upon their conversion) shall be subject to withholding and backup
withholding of taxes to the extent required by law, subject to applicable
exemptions, and amounts withheld, if any, shall be treated as received by the
Holders.

SECTION 19.    Notices. All notices referred to herein shall be in writing and,
unless otherwise specified herein, all notices hereunder shall be deemed to have
been given upon the earlier of receipt thereof or three (3) Business Days after
the mailing thereof if sent by registered or certified mail (unless first-class
mail shall be specifically permitted for such notice under the

 

31

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terms of this Certificate of Designations) with postage prepaid, addressed,
(i) if to the Company, to its office at [●] (Attention: General Counsel), or to
any transfer or other agent of the Company designated to receive such notice as
permitted by this Certificate of Designations; (ii) if to any Holder, to such
Holder at the address of such Holder as listed in the Register; or (iii) to such
other address as the Company or any such Holder, as the case may be, shall have
designated by notice similarly given.

SECTION 20.    Facts Ascertainable. When the terms of this Certificate of
Designations refer to a specific agreement or other document to determine the
meaning or operation of a provision hereof, the Secretary of the Company shall
maintain a copy of such agreement or document at the principal executive offices
of the Company and a copy thereof shall be provided free of charge to any Holder
who makes a request therefor. The Secretary of the Company shall also maintain a
written record of the Issuance Date, the number of shares of Series A Preferred
Stock issued to a Holder and the date of each such issuance, and shall furnish
such written record free of charge to any Holder who makes a request therefor.

SECTION 21.    Waiver. Notwithstanding any provision in this Certificate of
Designations to the contrary, any provision contained herein and any right of
the Holders of Series A Preferred Stock granted hereunder may be waived as to
all shares of Series A Preferred Stock (and the Holders thereof) upon the
written consent of the Holders of a majority of the shares of Series A Preferred
Stock then outstanding.

SECTION 22.    Severability. If any term of the Series A Preferred Stock set
forth herein is invalid, unlawful or incapable of being enforced by reason of
any rule of law or public policy, all other terms set forth herein, which can be
given effect without the invalid, unlawful or unenforceable term will,
nevertheless, remain in full force and effect, and no term herein set forth will
be deemed dependent upon any other such term, unless so expressed herein.

SECTION 23.    No Other Rights. Except as expressly provided in any agreement
between a Holder and the Company, the Series A Convertible Preferred Stock will
have no rights, preferences or voting powers, except as provided in this
Certificate of Designations or the Certificate of Incorporation or as provided
by applicable law.

[Signature Page Follows]

 

32

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This Certificate of Designations has been approved by the Board in the manner
and by the vote required by law.

The undersigned acknowledges this Certificate of Designations to be the
corporate act of the Company and, as to all matters or facts required to be
verified under oath, the undersigned acknowledges that, to the best of his or
her knowledge, information and belief, these matters and facts are true in all
material respects and that this statement is made under the penalties for
perjury.

IN WITNESS WHEREOF, the Company has caused this Certificate of Designations to
be signed in its name and on its behalf by its                      and attested
to by its                      on this                      day of [●], 2020.

 

ATTEST:                   COVETRUS, INC.                
                                                       By:
                                                     Name:             Name:   
Title:      Title:   

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Exhibit I

COVETRUS, INC.

CONVERSION NOTICE

Reference is made to the Certificate of Designation, Preferences and Rights of
the Series A Convertible Preferred Stock of Covetrus, Inc. (the “Certificate of
Designations”). In accordance with and pursuant to the Certificate of
Designations, the undersigned hereby elects to convert the number of shares of
Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A
Preferred Stock”), of Covetrus, Inc., a Delaware corporation (the “Company”),
indicated below into shares of Common Stock, par value $0.01 per share, of the
Company (the “Common Stock”), [as of the date specified below][[upon/immediately
prior to], and subject to the occurrence of, [●]].

Date of Conversion (if applicable): ___________________________________________

Number of shares of Series A Preferred Stock to be converted:
_____________________

Share certificate no(s). of Series A Preferred Stock to be converted:
_________________

Tax ID Number (if applicable): ______________________________________________

Please confirm the following information:

Conversion Price: ________________________________________________________

Number of shares of Common Stock to be issued: _______________________________

Please issue the shares of Common Stock into which the shares of Series A
Preferred Stock are being converted in the following name and to the following
address:

Issue to: _________________________________________

Address: _________________________________________

Telephone Number: ________________________________

Email: __________________________________________

Authorization: ____________________________________

By: _____________________________________________

Title: ____________________________________________

Dated: ___________________________________________

Account Number (if electronic book entry transfer):
_____________________________

Transaction Code Number (if electronic book entry transfer):
______________________

Payment Instructions for cash payment in lieu of fractional shares:

--------------------------------------------------------------------------------

[NOTE TO HOLDER — THIS FORM MUST BE SENT CONCURRENTLY TO TRANSFER AGENT (IF
ANY).]

--------------------------------------------------------------------------------

ACKNOWLEDGMENT

The Company hereby acknowledges the attached Conversion Notice and hereby
directs [Transfer Agent] to issue the above indicated number of shares of Common
Stock in accordance with the Irrevocable Transfer Agent Instructions dated
[    ] from the Company and acknowledged and agreed to by [    ].

 

Covetrus, Inc. By:  

 

Name:   Title:  

--------------------------------------------------------------------------------

ANNEX II

FORM OF REGISTRATION RIGHTS AGREEMENT

--------------------------------------------------------------------------------

ANNEX II

REGISTRATION RIGHTS AGREEMENT

by and among

COVETRUS, INC.

and

THE INVESTOR LISTED ON THE SIGNATURE PAGES HERETO

Dated as of [●], 2020

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TABLE OF CONTENTS

 

         Page   ARTICLE I    Resale Shelf Registration   

Section 1.1

 

Shelf Registration Statement

     1  

Section 1.2

 

Effectiveness Period

     2  

Section 1.3

 

Subsequent Shelf Registration Statement

     2  

Section 1.4

 

Supplements and Amendments

     2  

Section 1.5

 

Subsequent Holder Notice

     2  

Section 1.6

 

Underwritten Offering

     3  

Section 1.7

 

Take-Down Notice

     3  

Section 1.8

 

Piggyback Rights

     3   ARTICLE II    Additional Provisions Regarding Registration Rights   

Section 2.1

 

Registration Procedures

     4  

Section 2.2

 

Suspension

     8  

Section 2.3

 

Expenses of Registration

     8  

Section 2.4

 

Information by Holders

     8  

Section 2.5

 

Rule 144 Reporting

     9  

Section 2.6

 

Holdback Agreement

     9   ARTICLE III    Indemnification   

Section 3.1

 

Indemnification by Company

     9  

Section 3.2

 

Indemnification by Holders

     10  

Section 3.3

 

Notification

     10  

Section 3.4

 

Contribution

     11   ARTICLE IV    Transfer and Termination of Registration Rights   

Section 4.1

 

Transfer of Registration Rights

     11  

Section 4.2

 

Termination of Registration Rights

     12   ARTICLE V    Miscellaneous   

Section 5.1

 

Amendments and Waivers

     12  

Section 5.2

 

Extension of Time, Waiver, Etc.

     12  

Section 5.3

 

Assignment

     12  

Section 5.4

 

Counterparts

     12  

 

i

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Section 5.5

 

Entire Agreement; No Third Party Beneficiary

     12  

Section 5.6

 

Governing Law; Jurisdiction

     12  

Section 5.7

 

Specific Enforcement

     13  

Section 5.8

 

Waiver of Jury Trial

     13  

Section 5.9

 

Notices

     13  

Section 5.10

 

Severability

     14  

Section 5.11

 

Further Assurances

     14  

Section 5.12

 

Expenses

     14  

Section 5.13

 

Interpretation

     14  

Section 5.14

 

No Inconsistent Agreements; Most Favored Nations

     14  

 

ii

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REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of [•],
2020, by and between Covetrus, Inc., a Delaware corporation (the “Company”), and
CD&R VFC Holdings, L.P. (together with its respective successors and assigns,
the “Purchaser”). Capitalized terms used but not defined elsewhere herein are
defined in Exhibit A. The Purchaser and any other party that may become a party
hereto pursuant to Section 4.1 are referred to collectively as the “Investors”
and individually each as an “Investor”.

WHEREAS, the Company and the Purchaser are parties to that certain Investment
Agreement, dated as of April 30, 2020 (as amended from time to time, the
“Investment Agreement”), pursuant to which the Company is selling to the
Purchaser, and the Purchaser is purchasing from the Company, an aggregate of
250,000 shares of 7.5% Series A Convertible Preferred Stock (the “Preferred
Stock”), which is convertible into shares of Common Stock;

WHEREAS, as a condition to the obligations of the Company and the Purchaser
under the Investment Agreement, the Company and the Purchaser are entering into
this Agreement for the purpose of granting certain registration and other rights
to the Investors.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement hereby agree as follows:

ARTICLE I

Resale Shelf Registration

Section 1.1    Shelf Registration Statement.

(a)    Subject to the other applicable provisions of this Agreement, beginning
on the date that is 24 months after the date of this Agreement, one or more
Holders (each, a “Demanding Holder”) with Registrable Securities shall have the
right, by delivering written notice to the Company (a “Demand Notice”), to
require the Company to, pursuant to the terms of this Agreement, register under
and in accordance with the provisions of the Securities Act the number of
Registrable Securities owned by such Holders and requested by such Demand Notice
to be so registered (a “Demand Registration”). Upon receipt of such Demand
Notice, the Company will notify all Holders (other than the Demanding Holders)
in writing and such Holders shall have the right to request that the Company
include all or a portion of such Holder’s Registrable Securities in such Demand
Registration by written notice delivered to the Company within five (5) calendar
days after such notice is given by the Company.

(b)     Following receipt of a Demand Notice, the Company shall use its
commercially reasonable efforts to prepare and file as soon as reasonably
practicable an Initial Shelf Registration Statement on Form S-3 covering the
Registrable Securities for resale by the Holders so requesting in accordance
with Section 1.1(a) (except if the Company is not then eligible to register for
resale the Registrable Securities on a Registration Statement on Form S-3, then
such registration shall be on another appropriate form and shall provide for the
registration of such Registrable Securities for resale by the Holders in
accordance with any reasonable method of distribution elected by the Holders of
a Majority of the Registrable Securities covered thereby), and shall use its
commercially reasonable efforts to cause such Initial Shelf Registration
Statement to be declared effective by the SEC as promptly as is reasonably
practicable after the filing thereof (it being agreed that the Initial Shelf
Registration Statement shall be an automatic shelf Registration Statement that
shall become effective upon filing with the SEC pursuant to Rule 462(e) if Rule
462(e) is available to the Company).

(c)     Each Holder shall be limited to three Demand Registrations under
this Section 1.1 in any twelve-month period, and the Company shall not be
obligated to file more than one Registration Statement within 120 days after the
effective date of any Registration Statement filed by the Company; provided,
however, that any Demand Registration shall not count towards this limit if the
Registration Statement that is the subject of the Demand Registration (x) has
not been declared effective by the SEC or (y) is not maintained effective for
the period required pursuant to Section 1.2 (unless such Registration Statement
again becomes effective or a Subsequent Registration

 

1

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Statement becomes effective, in either case, in compliance with Section 1.3), it
being understood that the occurrence of an event described in clause (x) or (y)
shall not have any effect on the Company’s obligation to pay Registration
Expenses pursuant to Section 2.3; and provided further, that the Company shall
not be required to effectuate a Demand Registration if an effective Registration
Statement covering such shares is on file.

Section 1.2    Effectiveness Period. Once declared effective, the Company shall,
subject to the other applicable provisions of this Agreement, use its
commercially reasonable efforts to cause the Initial Shelf Registration
Statement to be continuously effective and usable until such time as there are
no longer any Registrable Securities (the “Effectiveness Period”).

Section 1.3    Subsequent Shelf Registration Statement. If any Initial Shelf
Registration Statement ceases to be effective under the Securities Act for any
reason at any time during the Effectiveness Period, the Company shall use its
commercially reasonable efforts to as promptly as is reasonably practicable
cause such Initial Shelf Registration Statement to again become effective under
the Securities Act (including obtaining the prompt withdrawal of any order
suspending the effectiveness of such Initial Shelf Registration Statement), and
shall use its commercially reasonable efforts to as promptly as is reasonably
practicable amend such Initial Shelf Registration Statement in a manner
reasonably expected to result in the withdrawal of any order suspending the
effectiveness of such Initial Shelf Registration Statement, or file an
additional Shelf Registration Statement (a “Subsequent Shelf Registration
Statement”) for an offering to be made on a delayed or continuous basis pursuant
to Rule 415 of the Securities Act registering the resale from time to time by
the Holders thereof of all securities that are Registrable Securities as of the
time of such filing. If a Subsequent Shelf Registration Statement is filed, the
Company shall use its commercially reasonable efforts to (a) cause such
Subsequent Shelf Registration Statement to become effective under the Securities
Act as promptly as is reasonably practicable after the filing thereof and
(b) keep such Subsequent Shelf Registration Statement continuously effective and
usable until the end of the Effectiveness Period. Any such Subsequent Shelf
Registration Statement shall be a Registration Statement on Form S-3 to the
extent that the Company is eligible to use such form (it being agreed that the
Subsequent Shelf Registration Statement shall be an automatic shelf Registration
Statement that shall become effective upon filing with the SEC pursuant to Rule
462(e) if Rule 462(e) is available to the Company). Otherwise, such Subsequent
Shelf Registration Statement shall be on another appropriate form and shall
provide for the registration of such Registrable Securities for resale by the
Holders in accordance with any reasonable method of distribution elected by the
Holders of a Majority of the Registrable Securities covered thereby.

Section 1.4    Supplements and Amendments. The Company shall supplement and
amend any Shelf Registration Statement if required by the Securities Act or the
rules, regulations or instructions applicable to the registration form used by
the Company for such Shelf Registration Statement.

Section 1.5    Subsequent Holder Notice. If a Person entitled to the benefits of
this Agreement becomes a Holder of Registrable Securities after a Shelf
Registration Statement becomes effective under the Securities Act, the Company
shall, as promptly as is reasonably practicable following delivery of written
notice to the Company of such Person becoming a Holder and requesting for its
name to be included as a selling securityholder in the prospectus related to the
Shelf Registration Statement (a “Subsequent Holder Notice”):

(a)    if required and permitted by applicable law, file with the SEC a
supplement to the related prospectus or a post-effective amendment to the Shelf
Registration Statement so that such Holder is named as a selling securityholder
in the Shelf Registration Statement and the related prospectus in such a manner
as to permit such Holder to deliver a prospectus to purchasers of the
Registrable Securities in accordance with applicable law; provided, however,
that the Company shall not be required to file more than one post-effective
amendment or a supplement to the related prospectus for such purpose in any
30-day period;

(b)    if, pursuant to Section 1.5(a), the Company shall have filed a
post-effective amendment to the Shelf Registration Statement that is not
automatically effective, use its commercially reasonable efforts to cause such
post-effective amendment to become effective under the Securities Act as
promptly as is reasonably practicable; and

(c)    notify such Holder as promptly as is reasonably practicable after the
effectiveness under the Securities Act of any post-effective amendment filed
pursuant to Section 1.5(a).

 

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Section 1.6    Underwritten Offering.

(a)    Subject to any applicable restrictions on transfer in the Investment
Agreement or otherwise, one or more Holders (each, a “Requesting Holder”) that
have been specified in any Shelf Registration Statement filed with the SEC in
accordance with Section 1.1 or Section 1.3, may, after such Shelf Registration
Statement becomes effective, deliver a written notice to the Company (the
“Underwritten Offering Notice”) stating that the sale of some or all of the
Registrable Securities subject to the Shelf Registration Statement, is intended
to be conducted through an underwritten offering (an “Underwritten Offering”);
provided, however, that the Holders of Registrable Securities may not, without
the Company’s prior written consent, (i) launch an Underwritten Offering the
anticipated gross proceeds of which shall be less than $50,000,000 (without
regard to any underwriting discount or commission), unless the Holders are
proposing to sell all of their remaining Registrable Securities and the
anticipated gross proceeds from such sale will be more than $25,000,000 (without
regard to any underwriting discount or commission), (ii) launch more than three
Underwritten Offerings at the request of the Holders within any three-hundred
sixty-five (365) day-period, (iii) launch an Underwritten Offering at the
request of the Holders within 90 days following a prior offering in which
Holders sold Registrable Securities or had the opportunity to sell Registrable
Securities pursuant to this Section 1.6 or Section 1.8, or (iv) launch an
Underwritten Offering within the period commencing nine (9) days prior to and
ending two (2) trading days following the Company’s earnings release date for
any fiscal quarter or year. As soon as reasonably practicable following receipt
by the Company of any Underwritten Offering Notice, the Company shall deliver
the Piggyback Notice specified in Section 1.8(a) to all Holders (other than the
Requesting Holders).

(b)    In the event of an Underwritten Offering, the Requesting Holders shall
select the managing underwriter(s) to administer the Underwritten Offering;
provided that the choice of such managing underwriter(s) shall be subject to the
consent of the Company, which is not to be unreasonably withheld. In making the
determination to consent to such Holder’s choice of managing underwriter(s), the
Company may take into account its business and strategic interests. The Company
and the Holders of Registrable Securities participating in the Underwritten
Offering will enter into an underwriting agreement in customary form with the
managing underwriter or underwriters selected for such offering.

(c)    The Company may include in any Underwritten Offering pursuant to this
Section 1.6 any securities that are not Registrable Securities. If the managing
underwriter or underwriters advise the Company and the Holders participating in
any Underwritten Offering in writing that in its or their good faith opinion the
number of Registrable Securities (and, if permitted hereunder, other securities
requested to be included in such offering) exceeds the number of securities
which can be sold in such offering in light of market conditions or is such so
as to adversely affect the success of such offering, the Company will include in
such offering only such number of securities that can be sold without adversely
affecting the marketability of the offering, which securities will be so
included in the following order of priority: (i) first, the Registrable
Securities of the Holders that have requested to participate in such
Underwritten Offering, allocated pro rata among such Holders on the basis of the
Holders’ then-current ownership of Registrable Securities, and (ii) second, any
other securities of the Company that have been requested to be so included.

Section 1.7    Take-Down Notice. Subject to the other applicable provisions of
this Agreement, including the limitations in Section 1.6 regarding Underwritten
Offerings, at any time that any Shelf Registration Statement is effective, if a
Holder delivers a notice to the Company (a “Take- Down Notice”) stating that it
intends to effect a sale or distribution of all or part of its Registrable
Securities included by it on any Shelf Registration Statement (a “Shelf
Offering”) and stating the number of the Registrable Securities to be included
in such Shelf Offering, then the Company shall amend, subject to the other
applicable provisions of this Agreement or supplement the Shelf Registration
Statement as may be necessary in order to enable such Registrable Securities to
be sold and distributed pursuant to the Shelf Offering.

Section 1.8    Piggyback Rights.

(a)    If the Company proposes to: (a) file a Registration Statement (other than
a Registration Statement filed pursuant to Section 1.1 and Section 1.3) or
(b) conduct a registered public offering, in either case, with respect to an
offering of Common Stock, whether or not for sale for its own account (other
than, in the case of (a) or (b) above, on Form S-4, Form S-8 or any successor
forms thereto, filed to effectuate an exchange offer or any employee

 

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benefit or dividend reinvestment plan or filed with respect to debt securities
only), then the Company shall give prompt written notice of such filing, which
notice shall be given, to the extent reasonably practicable, no later than five
(5) Business Days prior to the filing date (the “Piggyback Notice”) to the
Holders (other than any Requesting Holders, if applicable). The Piggyback Notice
shall offer such Holders (other than any Requesting Holders, if applicable) the
opportunity to include (or cause to be included) in such Registration Statement
or in such underwritten public offering, as the case may be, the number of
shares of Registrable Securities as each such Holder may request (each, a
“Piggyback Transaction”). Subject to Section 1.8(b), the Company shall include
in each Piggyback Transaction all Registrable Securities with respect to which
the Company has received written requests for inclusion therein (each, a
“Piggyback Request”) within five (5) Business Days after the date of the
Piggyback Notice but in any event not later than one (1) Business Day prior to
the filing date of a Registration Statement related to the Piggyback
Transaction. The Company shall not be required to maintain the effectiveness of
such Registration Statement (if other than a Registration Statement filed
pursuant to Section 1.1 or Section 1.3) beyond the earlier of (x) 180 days after
the effective date thereof and (y) consummation of the distribution by the
Holders of the Registrable Securities included in such Registration Statement.

(b)    If any of the securities to be registered pursuant to any public offering
giving rise to the rights under this Section 1.8 are to be sold in an
underwritten public offering, the Company shall use commercially reasonable
efforts to cause the managing underwriter or underwriters of a proposed
underwritten offering to permit Holders of Registrable Securities who have
timely submitted a Piggyback Request in connection with such offering to include
in such offering all Registrable Securities included in each Holder’s Piggyback
Request on the same terms and subject to the same conditions as any other shares
of capital stock, if any, of the Company included in the offering.
Notwithstanding the foregoing, if the managing underwriter or underwriters of
such underwritten offering advise the Company in writing that in its or their
good faith opinion the number of securities exceeds the number of securities
which can be sold in such offering in light of market conditions or is such so
as to adversely affect the success of such offering, the Company will include in
such offering only such number of securities that can be sold without adversely
affecting the marketability of the offering, which securities will be so
included in the following order of priority: (i) first, the securities proposed
to be sold by the Company for its own account if such underwritten offering was
initially proposed by the Company; (ii) second, the Registrable Securities of
the Holders that have requested to participate in such underwritten offering,
allocated pro rata among such Holders on the basis of the Holders’ then-current
ownership of Registrable Securities; (iii) third, any other securities of the
Company that have been requested to be included in such offering; provided that
Holders may, prior to the time at which the offering price or underwriter’s
discount is determined with the managing underwriter or underwriters, withdraw
their request to be included in such underwritten public offering pursuant to
this Section 1.8.

ARTICLE II

Additional Provisions Regarding Registration Rights

Section 2.1    Registration Procedures. Subject to the other applicable
provisions of this Agreement, in the case of each registration of Registrable
Securities effected by the Company pursuant to Article I, the Company will:

(a)    prepare and promptly file with the SEC a Registration Statement with
respect to such securities and use commercially reasonable efforts to cause such
Registration Statement to become and remain effective for the period of the
distribution contemplated thereby, in accordance with the applicable provisions
of this Agreement;

(b)    prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to such Registration Statement and the prospectus
used in connection with such Registration Statement as may be necessary to keep
such Registration Statement effective for the period specified in paragraph
(a) above and comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such Registration Statement in
accordance with the method of distribution set forth in such Registration
Statement for such period;

(c)    furnish to any selling Holder copies of the Registration Statement and
the prospectus included therein (including each preliminary prospectus) proposed
to be filed and provide such selling Holder a reasonable opportunity to review
and comment on such Registration Statement;

 

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(d)    if requested by the managing underwriter or underwriters, if any,
promptly include in any prospectus supplement or post-effective amendment such
information as the managing underwriter or underwriters may reasonably request
in order to permit the intended method of distribution of such securities and
make all required filings of such prospectus supplement or post-effective
amendment as soon as reasonably practicable after the Company has received such
request; provided, however, that the Company shall not be required to take any
actions under this Section 2.1(d) that are not, in the opinion of counsel for
the Company, in compliance with applicable law;

(e)    in the event that the Registrable Securities are being offered in an
Underwritten Offering, furnish to the Holders and to the underwriters of the
securities being registered such reasonable number of copies of the Registration
Statement, preliminary prospectus and final prospectus as such underwriters may
reasonably request in order to facilitate the public offering or other
disposition of such securities;

(f)    as promptly as reasonably practicable notify the selling Holders at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act or of the Company’s discovery of the occurrence of any event as a
result of which the prospectus included in such Registration Statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or incomplete in the light of the circumstances then
existing, and, subject to Section 2.2, at the request of any selling Holder,
prepare as promptly as is reasonably practicable and furnish to such selling
Holder a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing;

(g)    use commercially reasonable efforts to register and qualify (or exempt
from such registration or qualification) the securities covered by such
Registration Statement under such other securities or “blue sky” laws of such
jurisdictions within the United States as shall be reasonably requested in
writing by any selling Holder; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (i) qualify to do
business in any jurisdictions where it would not otherwise be required to
qualify but for this subsection or (ii) take any action that would subject it to
general service of process in any such jurisdictions;

(h)    in the event that the Registrable Securities are being offered in an
Underwritten Offering, enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in underwritten
offerings) and take all such other actions reasonably requested by the
Requesting Holder or the Holders of a Majority of the Registrable Securities
being sold in connection therewith (including those reasonably requested by the
managing underwriters, if any) to expedite or facilitate the disposition of such
Registrable Securities, and in such connection, (i) the underwriting agreement
shall contain indemnification provisions and procedures substantially to the
effect set forth in Section 3 hereof with respect to all parties to be
indemnified pursuant to said Section except as otherwise agreed by the Holders
and (ii) deliver such other documents and certificates as may be reasonably
requested by the managing underwriters;

(i)    in connection with an Underwritten Offering with anticipated gross
proceeds from such sale of more than $75,000,000 (without regard to any
underwriting discount or commission), cause its officers to use their
commercially reasonable efforts to support the marketing of the Registrable
Securities covered by such offering (including participation in “road shows” or
other similar marketing efforts);

(j)    use commercially reasonable efforts to furnish, on the date that such
Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, (i) an opinion dated such date
of the legal counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, (ii) a
“negative assurances letter”, dated such date of the legal counsel representing
the Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering and (iii) a
letter dated such date from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, such letter to be in customary form and covering matters of
the type customarily covered in “cold comfort” letters in connection with
underwritten offerings;

 

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(k)    in the event that the Registrable Securities covered by such Registration
Statement are shares of Common Stock, use commercially reasonable efforts to
list the Common Stock covered by such Registration Statement with any securities
exchange on which the Common Stock is then listed;

(l)    provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such Registration Statement;

(m)    in connection with a customary due diligence review, make available for
inspection by any underwriter participating in any such disposition of
Registrable Securities, if any, and any counsel or accountants retained by the
underwriter (collectively, the “Offering Persons”), at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of the Company and its
subsidiaries, and cause the officers, directors and employees of the Company and
its subsidiaries to supply all information and participate in customary due
diligence sessions in each case reasonably requested by any such representative,
underwriter, counsel or accountant in connection with such Registration
Statement; provided, however, that any information that is not generally
publicly available at the time of delivery of such information shall be kept
confidential by such Offering Persons unless (i) disclosure of such information
is required by court or administrative order or in connection with an audit or
examination by, or a blanket document request from, a regulatory or
self-regulatory authority, bank examiner or auditor, (ii) disclosure of such
information, in the reasonable judgment of the Offering Persons, is required by
law or applicable legal process (including in connection with the offer and sale
of securities pursuant to the rules and regulations of the SEC), (iii) such
information is or becomes generally available to the public other than as a
result of a non-permitted disclosure or failure to safeguard by such Offering
Persons in violation of this Agreement or (iv) such information (A) was known to
such Offering Persons (prior to its disclosure by the Company) from a source
other than the Company when such source, to the knowledge of the Offering
Persons, was not bound by any contractual, legal or fiduciary obligation of
confidentiality to the Company with respect to such information, (B) becomes
available to the Offering Persons from a source other than the Company when such
source, to the knowledge of the Offering Persons, is not bound by any
contractual, legal or fiduciary obligation of confidentiality to the Company
with respect to such information or (C) was developed independently by the
Offering Persons or their respective representatives without the use of, or
reliance on, information provided by the Company. In the case of a proposed
disclosure pursuant to (i) or (ii) above, such Person shall be required to give
the Company written notice of the proposed disclosure prior to such disclosure
(except in the case of (ii) above when a proposed disclosure was or is to be
made in connection with a Registration Statement or prospectus under this
Agreement and except in the case of clause (i) above when a proposed disclosure
is in connection with a routine audit or examination by, or a blanket document
request from, a regulatory or self-regulatory authority, bank examiner or
auditor);

(n)    cooperate with the selling Holders and each underwriter or agent
participating in the disposition of Registrable Securities and their respective
counsel in connection with any filings required to be made with FINRA, including
the use of commercially reasonable efforts to obtain FINRA’s pre-clearance or
pre-approval of the Registration Statement and applicable prospectus upon filing
with the SEC;

(o)    as promptly as is reasonably practicable notify the selling Holders
(i) when the prospectus or any prospectus supplement or post-effective amendment
has been filed and, with respect to such Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the SEC or other federal or state governmental authority for
amendments or supplements to such Registration Statement or related prospectus
or to amend or to supplement such prospectus or for additional information,
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of such Registration Statement or the initiation of any proceedings for such
purpose, (iv) if at any time the Company has reason to believe that the
representations and warranties of the Company contained in any agreement
contemplated by Section 2.1(h) above relating to any applicable offering cease
to be true and correct or (v) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction,
or the initiation or threatening of any proceeding for such purpose;

(p)    cooperate with the selling Holders of Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and delivery
of certificates (not bearing any legends) representing Registrable Securities to
be sold after receiving written representations from each Holder of such
Registrable Securities that the Registrable Securities represented by the
certificates so delivered by such Holder will be transferred in accordance

 

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with the Registration Statement, and enable such Registrable Securities to be in
such denominations and registered in such names as the managing underwriters, if
any, or Holders may request; and

(q)    cooperate with the Holders of Registrable Securities subject to the
Registration Statement and with the underwriter(s) or agent participating in the
distribution, if any, to facilitate any Charitable Gifting Event and to prepare
and file with the SEC such amendments and supplements to such Registration
Statement and the Prospectus used in connection therewith as may be necessary to
permit any such recipient Charitable Organization to sell in the underwritten
offering if it so elects.

The Holders agree that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 2.1(f), 2.1(o)(ii) or
2.1(o)(iii), such Holders shall discontinue disposition of any Registrable
Securities covered by such Registration Statement or the related prospectus
until receipt of the copies of the supplemented or amended prospectus, which
supplement or amendment shall, subject to the other applicable provisions of
this Agreement, be prepared and furnished as soon as reasonably practicable, or
until the Holders are advised in writing by the Company that the use of the
applicable prospectus may be resumed, and have received copies of any amended or
supplemented prospectus or any additional or supplemental filings which are
incorporated, or deemed to be incorporated, by reference in such prospectus
(such period during which disposition is discontinued being an “Interruption
Period”) and, if requested by the Company, the Holders shall use commercially
reasonable efforts to return to the Company all copies then in their possession,
of the prospectus covering such Registrable Securities at the time of receipt of
such request. As soon as practicable after the Company has determined that the
use of the applicable prospectus may be resumed, the Company will notify the
Holders thereof. In the event the Company invokes an Interruption Period
hereunder and in the reasonable discretion of the Company the need for the
Company to continue the Interruption Period ceases for any reason, the Company
shall, as soon as reasonably practicable, provide written notice to the Holders
that such Interruption Period is no longer applicable.

 

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Section 2.2    Suspension. (a) The Company shall be entitled, on one
(1) occasion in any one-hundred eighty (180) day period, for a period of time
not to exceed seventy five (75) days in the aggregate in any twelve (12) month
period, to (x) defer any registration of Registrable Securities and shall have
the right not to file and not to cause the effectiveness of any registration
covering any Registrable Securities, (y) suspend the use of any prospectus and
Registration Statement covering any Registrable Securities and (z) require the
Holders of Registrable Securities to suspend any offerings or sales of
Registrable Securities pursuant to a Registration Statement, if the Company
delivers to the Holders affected thereby a certificate signed by an executive
officer certifying that such registration and offering would (i) require the
Company to make an Adverse Disclosure or (ii) materially interfere with any bona
fide material financing, acquisition, disposition or other similar transaction
involving the Company or any of its subsidiaries then under consideration. Such
certificate shall contain an approximation of the anticipated length of such
suspension. The Holders shall keep the information contained in such certificate
confidential subject to the same terms set forth in Section 2.1(m). If the
Company defers any registration of Registrable Securities in response to a
Underwritten Offering Notice or requires the Holders to suspend any Underwritten
Offering, the selling Holders shall be entitled to withdraw such Underwritten
Offering Notice and if they do so, such request shall not be treated for any
purpose as the delivery of an Underwritten Offering Notice pursuant to
Section 1.6.

Section 2.3    Expenses of Registration. All Registration Expenses incurred in
connection with any registration pursuant to Article I shall be borne by the
Company. All Selling Expenses relating to securities registered on behalf of the
Holders shall be borne by the Holders of the Registrable Securities included in
such registration.

Section 2.4    Information by Holders. The Holder or Holders of Registrable
Securities included in any registration shall, and the Purchaser shall cause
such Holder or Holders to, furnish to the Company such information regarding
such Holder or Holders and their Affiliates, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders and their
Affiliates as the Company or its representatives may reasonably request and as
shall be required in connection with any registration, qualification or
compliance referred to in this Agreement. It is understood and agreed that the
obligations of the Company under Article I are conditioned on the timely
provisions of the foregoing information by such Holder or Holders and, without
limitation of the foregoing, will be conditioned on compliance by such Holder or
Holders with the following:

(a)    such Holder or Holders will, and will cause their respective Affiliates
to, cooperate with the Company in connection with the preparation of the
applicable Registration Statement and prospectus and, for so long as the Company
is obligated to keep such Registration Statement effective, such Holder or
Holders will and will cause their respective Affiliates to, provide to the
Company, in writing and in a timely manner, for use in such Registration
Statement (and expressly identified in writing as such), all information
regarding themselves and their respective Affiliates and such other information
as may be required by applicable law to enable the Company to prepare or amend
such Registration Statement, any related prospectus and any other documents
related to such offering covering the applicable Registrable Securities owned by
such Holder or Holders and to maintain the currency and effectiveness thereof;

(b)    during such time as such Holder or Holders and their respective
Affiliates may be engaged in a distribution of the Registrable Securities, such
Holder or Holders will, and they will cause their Affiliates to, comply with all
laws applicable to such distribution, including Regulation M promulgated under
the Exchange Act, and, to the extent required by such laws, will, and will cause
their Affiliates to, among other things (i) not engage in any stabilization
activity in connection with the securities of the Company in contravention of
such laws; (ii) distribute the Registrable Securities acquired by them solely in
the manner described in the applicable Registration Statement and (iii) if
required by applicable law, cause to be furnished to each agent or broker-dealer
to or through whom such Registrable Securities may be offered, or to the offeree
if an offer is made directly by such Holder or Holders or their respective
Affiliates, such copies of the applicable prospectus (as amended and
supplemented to such date) and documents incorporated by reference therein as
may be required by such agent, broker-dealer or offeree;

(c)    such Holder or Holders shall, and they shall cause their respective
Affiliates to, (i) permit the Company and its representatives to examine such
documents and records and will supply in a timely manner any information as they
may be reasonably requested to provide in connection with the offering or other
distribution of Registrable Securities by such Holder or Holders and
(ii) execute, deliver and perform under any agreements and

 

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instruments reasonably requested by the Company or its representatives to
effectuate such registered offering, including opinions of counsel and
questionnaires; and

(d)    on receipt of any notice from the Company of the occurrence of any of the
events specified in Section 2.1(f) or clauses (ii) or (iii) of Section 2.1(o),
or that otherwise requires the suspension by such Holder or Holders and their
respective Affiliates of the offering, sale or distribution of any of the
Registrable Securities owned by such Holder or Holders, such Holders shall, and
they shall cause their respective Affiliates to, cease offering, selling or
distributing the Registrable Securities owned by such Holder or Holders until
the offering, sale and distribution of the Registrable Securities owned by such
Holder or Holders may recommence in accordance with the terms hereof and
applicable law.

Section 2.5    Rule 144 Reporting. With a view to making available the benefits
of Rule 144 to the Holders, the Company agrees that, for so long as a Holder
owns Registrable Securities, the Company will use its commercially reasonable
efforts to:

(a)    make and keep public information available, as those terms are understood
and defined in Rule 144, at all times after the date of this Agreement; and

(b)    so long as a Holder owns any Restricted Securities, furnish to the Holder
upon written request a written statement by the Company as to its compliance
with the reporting requirements of the Exchange Act.

Section 2.6    Holdback Agreement. If during the Effectiveness Period, the
Company shall file a Registration Statement (other than in connection with the
registration of securities issuable pursuant to an employee stock option, stock
purchase or similar plan or pursuant to a merger, exchange offer or a
transaction of the type specified in Rule 145(a) under the Securities Act) with
respect to an underwritten public offering of Common Stock or securities
convertible into, or exchangeable or exercisable for, such securities or
otherwise informs the Holders that it intends to conduct such an offering
utilizing an effective Registration Statement or pursuant to an underwritten
Rule 144A and/or Regulation S offering and provides each Holder the opportunity
to participate in such offering in accordance with and to the extent required by
Section 1.8, each Holder shall, if requested by the managing underwriter or
underwriters, enter into a customary “lock-up” agreement relating to the sale,
offering or distribution of Registrable Securities, in the form reasonably
requested by the managing underwriter or underwriters, covering the period
commencing on the date of the prospectus pursuant to which such offering may be
made and continuing until 90 days from the date of such prospectus (or such
shorter period as may be agreed to by the managing underwriter(s) for such
offering).

ARTICLE III

Indemnification

Section 3.1    Indemnification by Company. To the extent permitted by applicable
law, the Company will, with respect to any Registrable Securities covered by a
Registration Statement or prospectus, or as to which registration, qualification
or compliance under applicable “blue sky” laws has been effected pursuant to
this Agreement, indemnify and hold harmless each Holder, each Holder’s current
and former officers, directors, partners, members, managers, shareholders,
accountants, attorneys, agents and employees, and each Person controlling such
Holder within the meaning of Section 15 of the Securities Act and such Holder’s
current and former officers, directors, partners, members, managers,
shareholders, accountants, attorneys, agents and employees, and each underwriter
thereof, if any, and each Person who controls any such underwriter within the
meaning of Section 15 of the Securities Act (collectively, the “Company
Indemnified Parties”), from and against any and all expenses, claims, losses,
damages, costs (including costs of preparation and reasonable attorney’s fees
and any legal or other fees or expenses actually incurred by such party in
connection with any investigation or proceeding), judgments, fines, penalties,
charges, amounts paid in settlement and other liabilities, joint or several, (or
actions in respect thereof) (collectively, “Losses”) to the extent arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any Registration Statement, prospectus, preliminary
prospectus, offering circular, “issuer free writing prospectus” (as such term is
defined in Rule 433 under the Securities Act) or other document, in each case
related to such Registration Statement, or any amendment or supplement thereto,
or based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, or any
violation by the Company of

 

9

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the Securities Act, the Exchange Act, any state securities law or any rules or
regulations thereunder applicable to the Company and (without limiting the
preceding portions of this Section 3.1), the Company will reimburse each of the
Company Indemnified Parties for any reasonable and documented out-of-pocket
legal expenses and any other reasonable and documented out-of-pocket expenses
actually incurred in connection with investigating, defending or, subject to the
last sentence of this Section 3.1, settling any such Losses or action, as such
expenses are incurred; provided that the Company’s indemnification obligations
shall not apply to amounts paid in settlement of any Losses or action if such
settlement is effected without the prior written consent of the Company (which
consent shall not be unreasonably withheld or delayed), nor shall the Company be
liable to a Holder in any such case for any such Losses or action to the extent
that it arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission in the Registration Statement,
prospectus or “issuer free writing prospectus”, in each case related to such
Registration Statement, or any amendment thereof or supplement thereto, which
occurs in reliance upon and in conformity with written information regarding
such Holder furnished to the Company by such Holder or its authorized
representatives expressly for use therein.

Section 3.2    Indemnification by Holders. To the extent permitted by applicable
law, each Holder will, if Registrable Securities held by such Holder are
included in the securities as to which registration or qualification or
compliance under applicable “blue sky” laws is being effected, indemnify,
severally and not jointly with any other Holders of Registrable Securities, the
Company, each of its representatives, each Person who controls the Company or
such underwriter within the meaning of Section 15 of the Securities Act
(collectively, the “Holder Indemnified Parties”), against all Losses (or actions
in respect thereof) to the extent arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
Registration Statement, prospectus, preliminary prospectus, offering circular or
“issuer free writing prospectus”, in each case related to such Registration
Statement, or any amendment or supplement thereto, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, and will reimburse each of the Holder
Indemnified Parties for any reasonable and documented out-of-pocket legal
expenses and any other reasonable and documented out-of-pocket expenses actually
incurred in connection with investigating, defending or, subject to the last
sentence of this Section 3.2, settling any such Losses or action, as such
expenses are incurred, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such Registration Statement, prospectus, offering circular
or “issuer free writing prospectus” in reliance upon and in conformity with
written information regarding such Holder furnished to the Company by such
Holder or its authorized representatives expressly for use therein; provided,
however, that in no event shall any indemnity under this Section 3.2 payable by
any Holder exceed an amount equal to the net proceeds received by such Holder in
respect of the Registrable Securities sold pursuant to the Registration
Statement. The indemnity agreement contained in this Section 3.2 shall not apply
to amounts paid in settlement of any loss, claim, damage, liability or action if
such settlement is effected without the prior written consent of the applicable
Holder (which consent shall not be unreasonably withheld or delayed).

Section 3.3    Notification. If any Person shall be entitled to indemnification
under this Article III (each, an “Indemnified Party”), such Indemnified Party
shall give prompt notice to the party required to provide indemnification (each,
an “Indemnifying Party”) of any claim or of the commencement of any proceeding
as to which indemnity is sought. The Indemnifying Party shall have the right,
exercisable by giving written notice to the Indemnified Party as promptly as
reasonably practicable after the receipt of written notice from such Indemnified
Party of such claim or proceeding, to, unless in the Indemnified Party’s
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, assume, at the
Indemnifying Party’s expense, the defense of any such claim or litigation, with
counsel reasonably satisfactory to the Indemnified Party and, after notice from
the Indemnifying Party to such Indemnified Party of its election to assume the
defense thereof, the Indemnifying Party will not (so long as it shall continue
to have the right to defend, contest, litigate and settle the matter in question
in accordance with this paragraph) be liable to such Indemnified Party hereunder
for any legal expenses and other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof; provided, however,
that an Indemnified Party shall have the right to employ separate counsel in any
such claim or litigation, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party, unless (i) the Indemnifying Party agrees
to pay such fees and expenses or (ii) the Indemnifying Party shall have failed
within a reasonable period of time to assume, or in the event of a conflict of
interest cannot assume, such defense or shall have failed to employ counsel
reasonably satisfactory to such Indemnified Party. The failure of any
Indemnified Party to give notice as provided herein shall relieve an
Indemnifying Party of its obligations under this

 

10

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Article III only to the extent that the failure to give such notice is
materially prejudicial or harmful to such Indemnifying Party’s ability to defend
such action. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the prior written consent of each Indemnified
Party (which consent shall not be unreasonably withheld or delayed), consent to
entry of any judgment or enter into any settlement which does not (x) include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release, in form and substance reasonably satisfactory to
the Indemnified Party, from all liability in respect to such claim or litigation
or (y) involve the imposition of equitable remedies or the imposition of any
obligations on the Indemnified Party or adversely affects such Indemnified Party
other than as a result of financial obligations for which such Indemnified Party
would be entitled to indemnification hereunder. The indemnity agreements
contained in this Article III shall not apply to amounts paid in settlement of
any claim, loss, damage, liability or action if such settlement is effected
without the prior written consent of the Indemnifying Party, which consent shall
not be unreasonably withheld or delayed. The indemnification set forth in this
Article III shall be in addition to any other indemnification rights or
agreements that an Indemnified Party may have. An Indemnifying Party who is not
entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel (together with
one local counsel, if appropriate) for all parties indemnified by such
Indemnifying Party with respect to such claim, unless in the reasonable judgment
of any Indemnified Party a conflict of interest may exist between such
Indemnified Party and any other Indemnified Parties with respect to such claim.

Section 3.4    Contribution. If the indemnification provided for in this Article
III is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party, other than pursuant to its terms, with respect to any Losses
or action referred to therein, then, subject to the limitations contained in
this Article III, the Indemnifying Party, in lieu of indemnifying such
Indemnified Party hereunder, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such Losses or action in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party, on
the one hand, and the Indemnified Party, on the other, in connection with the
actions, statements or omissions that resulted in such Losses or action, as well
as any other relevant equitable considerations. The relative fault of the
Indemnifying Party, on the one hand, and the Indemnified Party, on the other
hand, shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
made (or omitted) by, or relates to information supplied by such Indemnifying
Party or such Indemnified Party, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent any such action,
statement or omission. The Company and the Holders agree that it would not be
just and equitable if contribution pursuant to this Section 3.4 was determined
solely upon pro rata allocation or by any other method of allocation which does
not take account of the equitable considerations referred to in the immediately
preceding sentence of this Section 3.4. Notwithstanding the foregoing, the
amount any Holder will be obligated to contribute pursuant to this Section 3.4
will be limited to an amount equal to the net proceeds received by such Holder
in respect of the Registrable Securities sold pursuant to the Registration
Statement which gives rise to such obligation to contribute. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.

ARTICLE IV

Transfer and Termination of Registration Rights

Section 4.1    Transfer of Registration Rights. Any rights granted to a Holder
under this Agreement may be transferred or assigned to any Investor in
connection with a Transfer (as defined in the Investment Agreement) of Preferred
Stock or Common Stock issued upon conversion of the Preferred Stock, in each,
purchased pursuant to the Investment Agreement, to such Person in a Transfer
permitted by and made pursuant to Section 5.08(b)(i) of the Investment
Agreement, except that any rights granted to CD&R VFC Holdings, L.P. under this
Agreement in respect of shares of Common Stock held directly by it as of the
date of this Agreement (and acquired otherwise than in connection with the
Investment Agreement) may be transferred or assigned to any Investor at any time
in connection with the sale of all such shares it owns at the time of such sale
to any Person to whom a Transfer could be made under Section 5.08(b)(i) of the
Investment Agreement; provided, however, that in the case of any transfer or
assignment made in accordance with this Section 4.1, (i) prior written notice of
such transfer and assignment of rights is given to the Company and (ii) such
Investor agrees in writing to be bound by, and subject to, this Agreement as a
“Holder” pursuant to a written instrument in form and substance reasonably
acceptable to the Company.

 

11

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Section 4.2    Termination of Registration Rights. The rights of any particular
Holder to cause the Company to register securities under Article I shall
terminate with respect to such Holder upon the date upon which such Holder no
longer holds any Registrable Securities.

ARTICLE V

Miscellaneous

Section 5.1    Amendments and Waivers. Subject to compliance with applicable
law, this Agreement may be amended or supplemented in any and all respects by
written agreement of the Company and holders of a Majority of the Registrable
Securities then outstanding.

Section 5.2    Extension of Time, Waiver, Etc.. The parties hereto may, subject
to applicable law, (a) extend the time for the performance of any of the
obligations or acts of the other party or (b) waive compliance by the other
party with any of the agreements contained herein applicable to such party or,
except as otherwise provided herein, waive any of such party’s conditions.
Notwithstanding the foregoing, no failure or delay by the parties hereto in
exercising any right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right hereunder. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.

Section 5.3    Assignment. Except as provided in Section 4.1, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned, in whole or in part, by operation of law or otherwise, by any of the
parties hereto without the prior written consent of the other party hereto.

Section 5.4    Counterparts. This Agreement may be executed in one or more
counterparts (including by facsimile or electronic mail), each of which shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement, and shall become effective when one or more counterparts
have been signed by each of the parties hereto and delivered to the other
parties hereto.

Section 5.5    Entire Agreement; No Third Party Beneficiary. This Agreement,
together with the Investment Agreement, constitutes the entire agreement, and
supersedes all other prior agreements and understandings, both written and oral,
among the parties and their Affiliates, or any of them, with respect to the
subject matter hereof. No provision of this Agreement shall confer upon any
Person other than the parties hereto and their permitted assigns any rights or
remedies hereunder.

Section 5.6    Governing Law; Jurisdiction.

(a)    This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware applicable to contracts executed in and to be
performed entirely within that State, regardless of the laws that might
otherwise govern under any applicable conflict of laws principles.

(b)    All legal or administrative proceedings, suits, investigations,
arbitrations or actions (“Actions”) arising out of or relating to this Agreement
shall be heard and determined in the Chancery Court of the State of Delaware
(or, if the Chancery Court of the State of Delaware declines to accept
jurisdiction over any Action, any state or federal court within the State of
Delaware) and the parties hereto hereby irrevocably submit to the exclusive
jurisdiction and venue of such courts in any such Action and irrevocably waive
the defense of an inconvenient forum or lack of jurisdiction to the maintenance
of any such Action. The consents to jurisdiction and venue set forth in this
Section 5.6 shall not constitute general consents to service of process in the
State of Delaware and shall have no effect for any purpose except as provided in
this paragraph and shall not be deemed to confer rights on any Person other than
the parties hereto. Each party hereto agrees that service of process upon such
party in any Action arising out of or relating to this Agreement shall be
effective if notice is given by overnight courier at the address set forth in
Section 5.9 of this Agreement. The parties hereto agree that a final judgment in
any such Action shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by applicable law;
provided, however, that nothing in the foregoing shall restrict any party’s
rights to seek any post-judgment relief regarding, or any appeal from, a final
trial court judgment.

 

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Section 5.7    Specific Enforcement. The parties acknowledge and agree that
(a) the parties shall be entitled to an injunction or injunctions, specific
performance or other equitable relief to enforce specifically the terms and
provisions hereof in the courts described in Section 5.6 without proof of
damages or otherwise, this being in addition to any other remedy to which they
are entitled under this Agreement and (b) the right of specific enforcement is
an integral part of this Agreement and without that right, neither the Company
nor the Purchaser would have entered into this Agreement. The parties hereto
agree not to assert that a remedy of specific enforcement is unenforceable,
invalid, contrary to law or inequitable for any reason, and agree not to assert
that a remedy of monetary damages would provide an adequate remedy or that the
parties otherwise have an adequate remedy at law. The parties hereto acknowledge
and agree that any party seeking an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in accordance with this Section 5.7 shall not be required to
provide any bond or other security in connection with any such order or
injunction.

Section 5.8    Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVER, (C) IT MAKES SUCH WAIVER VOLUNTARILY AND (D) IT HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVER AND CERTIFICATIONS IN THIS SECTION 5.8.

Section 5.9    Notices. All notices, requests and other communications to any
party hereunder shall be in writing and shall be deemed given if delivered
personally, by facsimile (which is confirmed), emailed (which is confirmed,
including automated return receipt) or sent by overnight courier (providing
proof of delivery) to the parties at the following addresses:

(a)    If to the Company, to it at:

Covetrus, Inc.

7 Custom House Street

Portland, ME 04101

Attention: General Counsel

Email: [Redacted]

Facsimile: [●]

with a copy (which shall not constitute notice) to:

 

 

Kirkland & Ellis LLP

601 Lexington Avenue

 

New York, NY 10022

        

 

Attention:

   David Feirstein, P.C.      Ross M. Leff, Esq.  

Facsimile:

   212-446-9000  

Email:

   [Redacted]      [Redacted]

(b)    If to the Purchaser, to:

 

13

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c/o Clayton, Dubilier & Rice, LLC

375 Park Avenue

  

New York, NY 10152

  

Attention:

   Ravi Sachdev       Sarah Kim   

Email:

   [Redacted]       [Redacted]

with a copy (which shall not constitute notice) to:

Debevoise & Plimpton LLP

919 Third Avenue

New York, New York 10022

Attention: Paul Bird; Peter Loughran

Email: [Redacted]

or such other address, email address or facsimile number as such party may
hereafter specify by like notice to the other parties hereto.

If to any other Holder of Registrable Securities, to the e-mail or physical
address of such other Holder as shown in the stock record book of the
Company. Each Holder shall provide the Company with an updated e-mail address or
physical address if such address changes by notice to the Company. The e-mail
address or physical address shown on the stock record books of the Company shall
be presumed to be current for purposes of giving any notice under this
Agreement.

All such notices, requests and other communications shall be deemed received on
the date of actual receipt by the recipient thereof if received prior to 5:00
p.m. local time in the place of receipt and such day is a Business Day in the
place of receipt. Otherwise, any such notice, request or communication shall be
deemed not to have been received until the next succeeding Business Day in the
place of receipt.

Section 5.10    Severability. If any term, condition or other provision of this
Agreement is determined by a court of competent jurisdiction to be invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other terms, provisions and conditions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term,
condition or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible to the
fullest extent permitted by applicable law.

Section 5.11    Further Assurances. At any time or from time to time after the
date hereof, the parties agree to cooperate with each other, and at the request
of any other party, to execute and deliver any further instruments or documents
and to take all such further action as the other party may reasonably request in
order to evidence or effectuate the consummation of the transactions
contemplated hereby and to otherwise carry out the intent of the parties
hereunder.

Section 5.12    Expenses. Except as provided in Section 2.3, all costs and
expenses, including fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.

Section 5.13    Interpretation. The rules of interpretation set forth in
Section 8.12 of the Investment Agreement shall apply to this Agreement, mutatis
mutandis.

Section 5.14    No Inconsistent Agreements; Most Favored Nations. The Company
shall not hereafter enter into any agreement with respect to its securities that
is inconsistent with or violates the rights granted to the Holders of
Registrable Securities in this Agreement. In the event that the Company desires
to enter into any agreement with any Person, including any holder or prospective
holder of any securities of the Company, giving or granting any registration (or
related) rights the terms of which are more favorable than or senior to the
registration or

 

14

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other rights granted to the Holders of Registrable Securities hereunder, then
(i) the Company shall provide prior written notice thereof to the Holders of
Registrable Securities and (ii) upon execution by the Company of such other
agreement, the terms and conditions of this Agreement shall be, without any
further action by the Holders or the Company, automatically amended and modified
in an economically and legally equivalent manner such that the Holders shall
receive the benefit of the more favorable terms and/or conditions (as the case
may be) set forth in such other agreement, provided that upon written notice to
the Company at any time, any Holder may elect not to accept the benefit of any
such amended or modified term or condition, in which event the term or condition
contained in this Agreement shall apply to such Holder as it was in effect
immediately prior to such amendment or modification as if such amendment or
modification never occurred with respect to such Holder.

[Signature pages follow]

 

15

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as of the date first above written.

 

COMPANY:

COVETRUS, INC.

By:

 

 

 

Name: [•]

 

Title: [•]

SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT

--------------------------------------------------------------------------------

CD&R VFC HOLDINGS, L.P.

[By: [●], its [●]]

By:

 

 

 

Name: [●]

 

Title: [●]

SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT

--------------------------------------------------------------------------------

EXHIBIT A

DEFINED TERMS

1. The following capitalized terms have the meanings indicated:

“Adverse Disclosure” means public disclosure of material non-public information
that, in the good faith judgment of the Company: (i) would be required to be
made in any Registration Statement filed with the SEC by the Company so that
such Registration Statement would not be materially misleading; (ii) would not
be required to be made at such time but for the filing, effectiveness or
continued use of such Registration Statement; and (iii) the Company has a bona
fide business purpose for not disclosing publicly.

“Affiliates” shall have the meaning given to such term in the Investment
Agreement.

“Business Day” means any day except a Saturday, a Sunday or other day on which
the SEC or banks in the City of New York are authorized or required by law to be
closed.

“Charitable Gifting Event” means any transfer by a Holder of Registrable
Securities, or any subsequent transfer by such Holder’s members, partners or
other employees, in connection with a bona fide gift to any Charitable
Organization made in connection with sales of Registrable Securities by a Holder
pursuant to an effective registration statement.

“Charitable Organization” means a charitable organization as described by
Section 501(c)(3) of the Internal Revenue Code of 1986, as in effect from time
to time.

“Common Stock” means all shares currently or hereafter existing of the Company’s
common stock, par value $0.01 per share.

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

“FINRA” means the Financial Industry Regulatory Authority, Inc.

“Holder” means any Investor holding Registrable Securities.

“Initial Shelf Registration Statement” means a Registration Statement of the
Company filed with the SEC for an offering to be made on a continuous or delayed
basis pursuant to Rule 415 under the Securities Act covering Registrable
Securities.

“Majority” means, with respect to Registrable Securities, a mathematical
majority of the sum of (a) shares of Common Stock constituting Registrable
Securities outstanding as of such date or covered by a Registration Statement
(as applicable), and (b) shares of Common Stock issuable upon conversion of any
shares of Preferred Stock constituting Registrable Securities outstanding as of
such date or covered by a Registration Statement (as applicable).

“Person” means any individual, corporation, limited liability company,
partnership, joint venture, association, trust, unincorporated organization or
any other entity, including a governmental authority.

“register”, “registered” and “registration” refer to a registration effected by
preparing and filing a Registration Statement in compliance with the Securities
Act, and the declaration or ordering of the effectiveness of such Registration
Statement or the automatic effectiveness of such Registration Statement, as
applicable.

“Registrable Securities” means, as of any date of determination, (a) any shares
of Common Stock hereafter acquired by any Investor pursuant to the conversion of
the Preferred Stock issued pursuant to the Investment Agreement (whether or not
subsequently transferred to any Investor), and any other securities issued or
issuable with

 

A-1

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respect to any such shares of Common Stock or Preferred Stock by way of share
split, share dividend, distribution, recapitalization, merger, exchange,
replacement or similar event or otherwise, and (b) shares of Common Stock held
directly by CD&R VFC Holdings, L.P. as of the date of this Agreement. As to any
particular Registrable Securities, once issued, such securities shall cease to
be Registrable Securities when (i) such securities are sold or otherwise
transferred pursuant to an effective Registration Statement under the Securities
Act, (ii) such securities shall have ceased to be outstanding, (iii) such
securities have been transferred in a transaction in which the Holder’s rights
under this Agreement are not assigned to the transferee of the securities,
(iv) such securities are resold in a broker’s transaction under Rule 144 of the
Securities Act, or (v) such securities are eligible to be resold in a broker’s
transaction under Rule 144 without regard to Rule 144’s volume and manner of
sale restrictions and the Holder holds less than 5% of the Company’s
then-outstanding shares of Common Stock and has no representative on the
Company’s board of directors.

“Registration Expenses” means all (a) expenses incurred by the Company in
complying with Article I, including all registration, qualification, listing and
filing fees, printing expenses, escrow fees, and fees and disbursements of
counsel for the Company, blue sky fees and expenses and (b) reasonable,
documented out-of-pocket fees and expenses up to $100,000 per Underwritten
Offering of one outside legal counsel (together with appropriate local counsel)
to the Holders retained in connection with registrations or Underwritten
Offerings contemplated hereby; provided, however, that Registration Expenses
shall not be deemed to include any Selling Expenses.

“Registration Statement” means any Registration Statement of the Company under
the Securities Act which permits the public offering of any of the Registrable
Securities pursuant to the provisions of this Agreement, including any
prospectus, prospectus supplement, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference or deemed to be incorporated by reference
therein.

“Rule 144” means Rule 144 promulgated under the Securities Act and any successor
provision.

“Rule 462(e)” means Rule 462(e) promulgated under the Securities Act and any
successor provision.

“Selling Expenses” means all underwriting discounts, selling commissions and
stock transfer taxes applicable to the securities registered by the Holders, and
the fees and expenses of any counsel to the Holders (other than such fees and
expenses expressly included in Registration Expenses).

“SEC” means the U.S. Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, and any successor
statute thereto, and the rules and regulations of the SEC promulgated
thereunder.

“Shelf Registration Statement” means the Initial Shelf Registration Statement or
a Subsequent Shelf Registration Statement, as applicable.

2. The following terms are defined in the Sections of the Agreement indicated:

INDEX OF TERMS

 

Term

  

Section

Actions

  

Section 5.6(b)

Agreement

  

Preamble

Company

  

Preamble

Company Indemnified Parties

  

Section 3.1

Demanding Holders

  

Section 1.1(a)

Demand Notice

  

Section 1.1(a)

Demand Registration

  

Section 1.1(a)

Effectiveness Period

  

Section 1.2

 

A-2

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Holder Indemnified Parties

  

Section 3.2

Indemnified Party

  

Section 3.3

Indemnifying Party

  

Section 3.3

Initial Shelf Registration Statement

  

Section 1.1

Interruption Period

  

Section 2.1(o)

Investment Agreement

  

Recitals

Investor

  

Preamble

Investors

  

Preamble

Losses

  

Section 3.1

Offering Persons

  

Section 2.1(m)

Piggyback Notice

  

Section 1.8(a)

Piggyback Transaction

  

Section 1.8(a)

Piggyback Request

  

Section 1.8(a)

Preferred Stock

  

Recitals

Purchaser

  

Preamble

Requesting Holders

  

Section 1.6(a)

Subsequent Holder Notice

  

Section 1.5

Subsequent Shelf Registration Statement

  

Section 1.3

Underwritten Offering

  

Section 1.6(a)

Underwritten Offering Notice

  

Section 1.6(a)

 

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ANNEX III

FORM OF PRESS RELEASE

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LOGO [g908979g0501023630088.jpg]

Covetrus Announces a $250 Million Convertible Preferred Equity Investment by
Clayton, Dubilier & Rice

Strengthened financial profile provides additional resources to execute
Covetrus’ strategic growth objectives while navigating COVID-19 pandemic

PORTLAND, Maine (April 30, 2020) — Covetrus (NASDAQ: CVET), a global leader in
animal-health technology and services, announced today a $250 million investment
from Clayton, Dubilier & Rice (CD&R), a leading private investment firm that has
been a significant shareholder of the Company since its formation in 2019 and
formerly of its predecessor company, Vets First Choice, since 2015. This
additional capital significantly strengthens the Company’s financial profile and
enables management to execute against strategic growth objectives.

“We are pleased to expand our relationship with CD&R as we look to best position
our business and fortify our balance sheet during this period of uncertainty,”
said Ben Wolin, Covetrus president and chief executive officer. “We are
confident in our strategic plan and the long-term prospects for the
animal-health market and believe this investment will position us to further
deliver on our growth initiatives and our commitments to our employees,
customers, supplier partners and shareholders.”

The $250 million in proceeds from the perpetual convertible preferred equity
investment will be used to repay a portion of the Company’s revolver borrowings,
provide additional short-term liquidity, and support general corporate purposes.

“Covetrus plays an integral role in the attractive global animal-health market
in which veterinary care remains an essential service, and we are excited to
deepen our partnership with this management team as they execute their strategic
plan for the Company,” said Ravi Sachdev, partner at Clayton, Dubilier & Rice.
“We believe Covetrus has the customer relationships, technology capabilities and
financial resources to not only navigate COVID-19 but also to deliver strong
performance through the eventual market recovery and create long-term
shareholder value.”

CD&R will purchase $250 million of perpetual convertible preferred stock that
carries a 7.50% dividend, which will be payable in cash or in-kind, at Covetrus’
option. The preferred stock will be convertible into shares of Covetrus common
stock at a conversion price of $11.10 per share, representing a premium of 40%
to Covetrus’ thirty-trading day volume-weighted average price (VWAP) and 11% to
the five-trading day VWAP. The Company’s stock price has increased by 43% since
release of preliminary first quarter 2020 results and provision of a business
and operational update regarding the COVID-19 pandemic on April 22, 2020. On an
as-converted basis, together with CD&R’s existing common shares of Covetrus,
CD&R will now own approximately 25% of pro forma common shares outstanding.
However, the terms

 

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of the preferred stock limit CD&R’s voting interest to 19.99% of the
then-outstanding voting interests in the Company. Under the terms of the
transaction agreements, CD&R will have the right to appoint two designees to the
Covetrus board of directors.

Covetrus will file a Form 8-K with the Securities and Exchange Commission
containing additional information regarding the terms of the perpetual
convertible preferred stock.

Ardea Partners LP acted as lead financial advisor, Goldman Sachs & Co. LLC acted
as an advisor, and Kirkland & Ellis LLP acted as legal advisor to Covetrus. CD&R
was advised by Debevoise & Plimpton LLP.

About Covetrus

Covetrus is a global animal-health technology and services company dedicated to
empowering veterinary practice partners to drive improved health and financial
outcomes. We’re bringing together products, services, and technology into a
single platform that connects our customers to the solutions and insights they
need to work best. Our passion for the well-being of animals and those who care
for them drives us to advance the world of veterinary medicine. Covetrus is
headquartered in Portland, Maine, with more than 5,500 employees, serving over
100,000 customers around the globe. Learn more at covetrus.com.

About CD&R

Clayton, Dubilier & Rice is a private investment firm with a strategy predicated
on building stronger, more profitable businesses. Since inception, CD&R has
managed the investment of $30 billion in 90 businesses representing a broad
range of industries with an aggregate transaction value of approximately
$140 billion. The Firm has offices in New York and London. For more information,
please visit www.cdr-inc.com.

 

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Forward-Looking Statements

This press release contains certain statements that are forward-looking within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, and that involve
risks and uncertainties, including statements concerning the completion, timing
and size of the offering, the anticipated use of proceeds from the offering and
other matters, such as the offering’s impact on our future financial profile. We
may, in some cases use terms such as “predicts,” “believes,” “potential,”
“continue,” “anticipates,” “estimates,” “expects,” “plans,” “intends,” “may,”
“could,” “might,” “likely,” “will,” “should” or other words that convey
uncertainty of the future events or outcomes to identify these forward-looking
statements. Such statements are subject to numerous risks and uncertainties, and
actual results could differ materially from those anticipated due to a number of
factors including, but not limited to, the risk that the offering may be delayed
or may not occur due to market or other conditions; the satisfaction of
customary closing conditions related to the offering; the effect of the COVID-19
pandemic on our business and the success of any measures we have taken or may
take in the future in response thereto; risks associated with our management
transition; the ability to successfully integrate operations and employees; the
ability to realize anticipated benefits and synergies of the transactions that
created Covetrus; the potential impact of the consummation of the transactions
on relationships, including with employees, customers and competitors; the
ability to retain key personnel; the ability to achieve performance targets;
changes in financial markets, interest rates and foreign currency exchange
rates; changes in our market; the impact of litigation; the impact of Brexit;
and those additional risks and factors discussed under the heading “Risk
Factors” in our Annual Report on Form 10-K filed on March 3, 2020 and in our
other SEC filings. Our forward-looking statements are based on current beliefs
and expectations of our management team and, except as required by law, we
undertake no obligations to make any revisions to the forward-looking statements
contained in this release or to update them to reflect events or circumstances
occurring after the date of this release, whether as a result of new
information, future developments or otherwise. Investors are cautioned not to
place undue reliance on these forward-looking statements.

 

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CONTACT

Nicholas Jansen | Investor Relations

nicholas.jansen@covetrus.com | (207) 550-8106

Kiní Schoop | Public Relations

kini.schoop@covetrus.com | (207) 550-8018

 

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