Document:

Exhibit 10.5

 

FORM OF REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) to be effective immediately prior to the closing of the initial public offering of Premier, Inc., a newly formed Delaware corporation (“Premier”) (the “Effective Date”), is made by and among Premier and the Limited Partners (as such term is defined below) listed on Schedule I hereto from time to time party hereto.

 

WHEREAS, following a proposed reorganization of Premier Purchasing Partners, L.P., a California limited partnership (together with its successors and assigns, “Premier LP”) and its Related Entities and an initial public offering of Class A Common Stock (as such term is hereinafter defined) of Premier, Premier LP will adopt an Amended and Restated Limited Partnership Agreement pursuant to which Premier LP will (a) change its name to “Premier Healthcare Alliance, L.P.” and (b) issue Class A Common Units to its general partner and Class B Common Units (as such term is defined below) to its limited partners (the “Limited Partners”), collectively representing a 100% interest in Premier LP and concurrently therewith the Limited Partners will purchase for nominal consideration Class B Common Stock (as such term is defined below) in amounts corresponding to the number of Class B Common Units held by each Limited Partner;

 

WHEREAS, the Limited Partners are concurrently herewith entering into an Exchange Agreement (as such term is defined below) providing for the exchange, from time to time, subject to certain restrictions and requirements, of Class B Common Units (and surrender of the corresponding shares of Class B Common Stock) for, at the option of Premier (i) shares of Class A Common Stock, (ii) cash in an amount equal to the fair market value of the Class A Common Stock a Limited Partner would have received for such exchange or (iii) a combination of Class A Common Stock and cash; and

 

WHEREAS, Premier has agreed to provide certain registration rights under the Securities Act (as such term is defined below) with respect to shares of Class A Common Stock received pursuant to the Exchange Agreement or otherwise held by the Limited Partners.

 

NOW, THEREFORE, in consideration of the premises and of the mutual agreements, covenants and provisions herein contained, the parties hereto agree as follows:

 

1.  Defined Terms; Interpretation.

 

(a) Defined Terms. The following terms shall, for purposes of this Agreement, have the following meanings:

 

“Adverse Effect” has the meaning set forth in Section 2(b)(vi) of this Agreement.

 

“Agreement” has the meaning set forth in the Introduction of this Agreement.

 

 

“Applicable Quarterly Exchange Date” has the meaning set forth in Section 2(b)(ii).

 

“Board” means the Board of Directors of Premier.

 

“Business Day” means each day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York are authorized or required by law to close.

 

“CEO” means the Chief Executive Officer of Premier.

 

“Class A Common Stock” shall mean the shares of Class A common stock, par value $0.01 per share, of Premier and any securities into which such shares may hereinafter be reclassified.

 

“Class B Common Stock” shall mean the shares of Class B common stock, par value $0.000001 per share, of Premier and any securities into which such shares may hereinafter be reclassified.

 

“Class B Common Units” shall mean the Class B Common Units of Premier LP, and any securities into which such shares may hereinafter be reclassified.

 

“Company-Directed Offering” has the meaning set forth in Section 2(b)(i) of this Agreement.

 

“Company-Directed Offering Notice” has the meaning set forth in Section 2(b)(ii) of this Agreement.

 

“control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract (written or oral) or otherwise; and the terms “controlling,” “controlled by” and “under common control with” shall have meanings correlative to the foregoing.

 

“Demand Party” has the meaning set forth in Section  2(b)(ii) of this Agreement.

 

“Director” means a member of the Board.

 

“Effective Date” has the meaning set forth in the Introduction.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.

 

“Exchange Agreement” means the Exchange Agreement of even date herewith among Premier, Premier LP and the Limited Partners pursuant to which each Limited Partner has the right, under certain circumstances, to exchange its Class B Common Units and surrender its corresponding shares of Class B Common Stock for shares of Class A Common Stock, cash or a combination thereof.

 

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“Exchange Notice Date” has the meaning set forth in the Exchange Agreement.

 

“Exchange Year” means any of the First Exchange Year and each sequential 12-month period thereafter until the end of the Seventh Exchange Year.

 

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

 

“First Exchange Year” means the 12-month period beginning on the First Quarterly Exchange Date.

 

“First Quarterly Exchange Date” means the date that is the one-year anniversary of the last day of the calendar month in which Premier consummates the IPO.

 

“Fourth Exchange Year” means the fourth Exchange Year.

 

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

 

“Group” has the meaning set forth in Section 13(d)(3) and Rule 13d-5 of the Exchange Act.

 

“IPO” means an initial primary sale by Premier of shares of Class A Common Stock to the public in an offering pursuant to an effective registration statement (other than a registration statement on Form S-4 or S-8 or any similar or successor form) filed under the Securities Act, after which such shares of Class A Common Stock are listed on one or more nationally recognized exchanges or quoted on one or more automated quotation systems, including the NYSE or NASDAQ.

 

“Limited Partners” has the meaning set forth in the Recitals.

 

“Lock-up Period” has the meaning set forth in Section 2(j)(i) of this Agreement.

 

“Losses” has the meaning set forth in Section 2(h)(i) of this Agreement.

 

“LP Agreement” means the Amended and Restated Limited Partnership Agreement, to be entered into among Premier LP, Premier Services, LLC, as general partner, and each of the Limited Partners party thereto, as amended from time to time.

 

“NASDAQ” has the meaning set forth in Section 2(d)(vii) of this Agreement.

 

“Notice and Questionnaire” means a written notice, substantially in the form attached as Exhibit B (which may be amended by Premier to include all information required by law), delivered by a Limited Partner to Premier (i) notifying Premier of such Limited Partner’s desire

 

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to include Registrable Securities held thereby in a Shelf Registration Statement and (ii) containing all information about such Limited Partner to be included in such Shelf Registration Statement in accordance with applicable law, including Item 507 of Regulation S-K promulgated under the Securities Act.

 

“NYSE” has the meaning set forth in Section 2(d)(vii) of this Agreement.

 

“Officer” means a person designated as an officer of Premier by the Board or the CEO.

 

“Participation Notice” has the meaning set forth in Section 2(b)(ii) of this Agreement.

 

“Person” means any individual, corporation, limited liability company, partnership, trust, joint stock company, business trust, unincorporated association, joint venture, Governmental Authority or other entity or organization of any nature whatsoever or any Group of two or more of the foregoing.

 

“Premier” has the meaning set forth in the Introduction of this Agreement.

 

“Premier LP” has the meaning set forth in the Recitals.

 

“Quarterly Exchange Date” has the meaning given that term in the Exchange Agreement.

 

“Registrable Securities” mean the Shares. As to any particular Registrable Securities, such Shares shall cease to be Registrable Securities when (i) a registration statement with respect to the sale of such Shares shall have become effective under the Securities Act and such Shares shall have been disposed of in accordance with such registration statement, (ii) such Shares may be sold without restrictions (including volume and manner of sale restrictions) pursuant to Rule 144, (iii) such Shares are transferred and the subsequent disposition of such Shares do not require registration under the Securities Act or (iv) such Shares shall have ceased to be outstanding.

 

“Registration Expenses” means any and all reasonable expenses of Premier and Premier LP incident to performance of or compliance with Sections 2(a), 2(b), 2(c) and 2(d), including (i) all SEC and stock exchange or automated quotation system or FINRA registration, filing and listing fees incurred by Premier and Premier LP, (ii) all fees and expenses of complying with state securities or blue sky laws (including fees and disbursements of counsel for the underwriters in connection with blue sky qualifications of the Registrable Securities), (iii) all printing, word processing, duplication, messenger and delivery expenses incurred by Premier and Premier LP, (iv) all fees and expenses incurred by Premier and Premier LP in connection with the listing of the Registrable Securities on any stock exchange or automated quotation system pursuant to this Agreement, (v) the fees and disbursements of counsel for Premier, (vi) the reasonable fees and disbursements of Premier’s independent public accountants, including the expenses of any “cold comfort” letters required by or incident to the transactions contemplated by this Agreement and (vii) all reasonable expenses incurred in connection with any road shows.

 

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“Registration Indemnified Parties” has the meaning set forth in Section 2(h)(i) of this Agreement.

 

“Related Entity” means, with respect to any Person (i) any other Person that, directly or indirectly, controls or is controlled by or is under common control with such Person, (ii) any other Person that owns, beneficially, directly or indirectly, 10% or more of the outstanding capital stock, shares or equity interests of such Person or (iii) any officer, director, employee, shareholder, partner, member, manager or trustee of such Person or any Person controlling, controlled by or under common control with such Person (excluding trustees and persons serving in similar capacities who are not otherwise a Related Entity of such Person).

 

“Rule 144” means Rule 144 (or any successor provision), as the same may be amended from time to time, under the Securities Act.

 

“SEC” means the U.S. Securities and Exchange Commission or any other federal agency then administering the Securities Act or the Exchange Act and other federal securities law.

 

“Second Exchange Year” means the second Exchange Year.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.

 

“Seventh Exchange Year” means the seventh Exchange Year.

 

“Shares” means the shares of Class A Common Stock issued to any Limited Partner pursuant to the exercise by such Limited Partner of its exchange rights under the Exchange Agreement, including any shares of Class A Common Stock issued in connection with a stock split, distribution, reclassification, recapitalization or otherwise in respect of such shares and other shares of Class A Common Stock otherwise held by Limited Partners from time to time.

 

“Shelf Registration Statement” has the meaning set forth in Section 2(a)(i) of this Agreement.

 

“Third Exchange Year” means the third Exchange Year.

 

“Third Party Holder” has the meaning set forth in Section 2(c)(i) of this Agreement.

 

“Transfer” (including the term “Transferred”) means, directly or indirectly, to sell, transfer, give, exchange (including exchange under the Exchange Agreement), assign, pledge, encumber, hypothecate or otherwise dispose of, either voluntarily or involuntarily (including upon the foreclosure under any pledge or hypothecation permitted below that results in a change in title), any equity interests in Premier or any interest in any equity interests in Premier beneficially owned by a Person; provided, however, that a bona fide pledge of equity interests by any Limited Partner or its Related Entities shall not be deemed to be a Transfer hereunder.

 

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(b)  Other Definitional Provisions; Interpretation.

 

(i) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement will refer to this Agreement as a whole, including the Exhibits and Schedules attached hereto, and not to any particular provision of this Agreement. Articles, section and subsection references are to this Agreement unless otherwise specified.

 

(ii) The words “include” and “including” and words of similar import when used in this Agreement shall be deemed to be followed by the words “without limitation”.

 

(iii) The titles and headings in this Agreement are included for convenience of reference only and will not limit or otherwise affect the meaning or interpretation of this Agreement.

 

(iv) The meanings given to capitalized terms defined herein will be equally applicable to both the singular and plural forms of such terms.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.

 

(v) If any notice or action hereunder is due on a day which is not a Business Day, then such notice or action shall be due on the next succeeding Business Day.

 

2.  Registration Rights and Procedures.

 

(a)  Resale Shelf Registration Statement.

 

(i)    Right to Use a Shelf Registration Statement for Resales.  Premier shall use all reasonable efforts to cause to become effective a “shelf” registration statement (the “Shelf Registration Statement”) as soon as practicable after the one-year anniversary of the closing of the IPO on an appropriate form to allow Limited Partners, subject to applicable Lock-up Periods pursuant to Section 2(j) and the restrictions set forth in Section 3.4 of the LP Agreement, to sell on a continuous basis pursuant to Rule 415 under the Securities Act any Registrable Securities that the Limited Partners hold.

 

(ii)   Participation in Shelf Registration Statement.  Each Limited Partner that has delivered a duly completed and executed Notice and Questionnaire to Premier on or prior to the date 10 Business Days prior to the effectiveness of the Shelf Registration Statement shall be named as a selling securityholder at the time of such effectiveness in the Shelf Registration Statement and the related prospectus in such a manner as to permit such Limited Partner to deliver such prospectus to purchasers of Registrable Securities in accordance with applicable law. Subject to the terms and conditions hereof, after effectiveness of the Shelf Registration Statement, Premier shall file a supplement to such prospectus or amendment to the Shelf Registration Statement not less frequently than once a quarter as necessary to name as selling securityholders therein any Limited Partners that provide to Premier a duly completed and executed Notice and Questionnaire (and include all required information related thereto) and shall use reasonable efforts to cause any post-effective amendment to such Shelf Registration

 

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Statement filed for such purpose to be declared effective by the SEC as promptly as reasonably practicable after the filing thereof.

 

(iii) Effective Period of Shelf Registrations.  Premier shall use reasonable efforts to keep a Shelf Registration Statement effective at all times (but subject to shelf registration limitations under Rule 415 of the Securities Act) from the first anniversary of the completion of the IPO until the end of the Seventh Exchange Year.

 

(iv) Expenses.  Premier will pay all Registration Expenses in connection with registrations pursuant to this Section 2(a), which Registration Expenses shall in no event be deemed to include brokerage commissions or transfer taxes, or, if applicable, underwriting commissions and discounts.

 

(b)  Company Initiated Annual Underwritten Offering.

 

(i)    Company-Directed Offering.  Subject to the terms and conditions of this Agreement, and subject to applicable vesting restrictions set forth in the LP Agreement applicable to Limited Partners, Premier will use all reasonable efforts to conduct a Premier-directed underwritten public offering (a “Company-Directed Offering”) for secondary resales under the Securities Act of Registrable Securities by the Limited Partners and, at Premier’s option, primary sales of newly issued or treasury shares of Class A Common Stock, in each of the First Exchange Year, the Second Exchange Year and the Third Exchange Year. Premier may, in its sole discretion, effect a Company-Directed Offering in the remaining Exchange Years.  All Company-Directed Offerings shall be conducted in accordance with the procedures set forth in this Section 2(b).

 

(ii)   Company-Directed Offering Process. Premier shall deliver a notice (the “Company-Directed Offering Notice”) to all Limited Partners 65 Business Days prior to the first Quarterly Exchange Date of each Exchange Year in which Premier will conduct a Company-Directed Offering (the “Applicable Quarterly Exchange Date”).  The Company-Directed Offering Notice shall state that Premier will effect a Company-Directed Offering and include the material terms of such Company-Directed Offering then known but such terms of Company-Directed Offering, including price, shall be at the sole discretion of Premier and the lead and managing underwriters of such Company-Directed Offering.  To participate in such Company-Directed Offering, addressees of a Company-Directed Offering Notice shall deliver to Premier a notice of intent to participate (a “Participation Notice”) in the Company-Directed Offering no later than 20 Business Days prior to such Applicable Quarterly Exchange Date (each such addressee a “Demand Party”).  Each Participation Notice shall specify the number of Registrable Securities proposed to be sold.  Premier shall use reasonable efforts to complete such Company-Directed Offering no later than 20 Business Days after the Applicable Quarterly Exchange Date.  Notwithstanding the terms and procedures of the Company-Directed Offering set forth in this Section 2(b), Premier reserves the right to modify the terms and procedures of a Company-Directed Offering in a manner providing a reasonable registration process for Premier consistent with the intent of this Agreement and not materially adverse to the Limited Partners as reasonably determined in good faith by the Board.

 

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(iii) Offering Minimum for Company-Directed Offering.  In no event shall Premier be required to effect a registration pursuant to this Section 2(b) unless, on the date that is 15 Business Days prior to the Applicable Quarterly Exchange Date related to such Company-Directed Offering, the aggregate number of Registrable Securities proposed to be sold constitutes or represents the equivalent of (on a one-for-one basis) at least 3.5% of the aggregate number of Class A Common Units and Class B Common Units outstanding (taking into account the effect of any unit splits or similar distributions in respect of the Class A Common Units or Class B Common Units); provided, that, notwithstanding the foregoing, Premier may still elect to effect such a Company-Directed Offering even if not required to do so.

 

(iv) Expenses.  Premier will pay all Registration Expenses in connection with registrations pursuant to this Section 2(b), which shall in no event be deemed to include underwriting commissions or discounts, brokerage commissions or transfer taxes.

 

(v) Effective Registration Statement.  Other than with respect to a shelf registration, a registration requested pursuant to this Section 2(b) will not be deemed to have been effected:

 

(1) unless a registration statement with respect thereto has become effective and remained effective in compliance with the provisions of the Securities Act until the earlier of (x) such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition thereof set forth in such registration statement or (y) 60 days after the effective date of such registration statement (or if such registration statement is not effective for any period within such 60 days, such 60-day period shall be extended by the number of days during which such registration statement is not effective); provided, however, that if the failure of any such registration statement to become or remain effective in compliance with this Section 2(b)(v)(1) is due solely to acts or omissions of a Demand Party, such registration requested pursuant to this Section 2(b) will be deemed to have been effected; or

 

(2) if, after it has become effective, the registration statement with respect thereto is subject to any stop order, injunction or other order or requirement of the SEC or other Governmental Authority prohibiting the sale of securities pursuant to such registration statement, other than by reason of an act or omission on the part of a Demand Party.

 

(vi)  Underwriters; Priority in Company-Directed Offerings.  In conjunction with Company-Directed Offerings, the underwriter or underwriters shall be selected by Premier in its reasonable discretion.  Other than in connection with a Company-Directed Offering, Premier shall have no obligation to cooperate with an underwritten offering of Class A Common Stock or other securities of Premier.  If the lead or managing underwriters in a Company-Directed Offering advise Premier in writing that, in such underwriters’ opinion, the number of securities to be included in such Company-Directed Offering would be likely to have an adverse effect on the price, timing or distribution of the securities to be offered in such Company-Directed Offering (an “Adverse Effect”), then Premier shall include in such Company-Directed

 

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Offering all securities that the lead or managing underwriters believe can be sold in such offering without having an Adverse Effect allocated first to Registrable Securities which the Limited Partners have requested to be included and second to shares of Class A Common Stock to be issued and sold by Premier in such offering and shares of Class A Common Stock which any other holders of Class A Common Stock have requested to be included.  If such lead or managing underwriters advise Premier that only a portion of the Registrable Securities or shares of Class A Common Stock requested to be included by the Limited Partners may be included in such registration without such Adverse Effect, Premier shall include such Registrable Securities and shares of Class A Common Stock from the Limited Partners on a pro rata basis based on the relative number of Registrable Securities requested by such holder to be so included in such Company-Directed Offering.

 

(vii) Postponement of Company-Directed Offerings.  If Limited Partners proposing to sell 50 percent or more of the shares of Class A Common Stock to be registered in a Company-Directed Offering deliver notice to Premier three Business Days prior to the Applicable Quarterly Exchange Date in conjunction with a Company-Directed Offering requesting delay of such Company-Directed Offering due to unfavorable market conditions, then Premier shall not be required to comply with its obligations under this Section 2(b) and such Company-Directed Offering shall be postponed until the next Quarterly Exchange Date and such postponed Company-Directed Offering shall then be conducted in a manner consistent with the process set forth in Section 2(b)(i) and Section 2(b)(ii).  The right to postpone a Company-Directed Offering pursuant to this Section 2(b)(vii) may only be exercised once in any Exchange Year.

 

(viii) Additional Rights.  Premier shall not grant to any other holders of shares of Class A Common Stock (or securities that are convertible, exchangeable or exercisable into shares of Class A Common Stock) any rights to request Premier to effect the registration under the Securities Act of any such shares on terms more favorable to such holders than the terms set forth in this Agreement and Premier shall not grant any such rights unless the holders of such shares agree to be subject to the lock-up agreement set forth in Section 2(j)(i).

 

(c)  Incidental Registrations.

 

(i) Right to Piggyback.  If Premier or any other Person that has demand registration rights (a “Third Party Holder”) proposes to register shares of Class A Common Stock under the Securities Act (other than a registration on Form S-4 or S-8, or any successor or other forms promulgated for similar purposes), Premier will, at each such time, give prompt written notice to the Limited Partners of its intention to so register such shares of Class A Common Stock and of the Limited Partners’ rights under this Agreement. Upon the written request of any Limited Partner made within 15 Business Days after the receipt of any such notice (which request shall specify the Registrable Securities intended to be disposed of by such Limited Partner), subject to applicable vesting restrictions set forth in the LP Agreement, Premier will use its reasonable efforts to effect the registration under the Securities Act of all Registrable Securities which Premier has been so requested to register by the Limited Partners; provided, however, that (A) if, at any time after giving written notice of its intention to register any

 

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securities and prior to the effective date of the registration statement filed in connection with such registration, Premier or such Third Party Holder shall determine for any reason not to proceed with the proposed registration of the securities to be sold thereby, Premier may, at its election, give written notice of such determination to each Limited Partner and thereupon shall be relieved of its obligation to register any Registrable Securities in connection with such terminated registration and (B) if such registration involves an underwritten offering, all Limited Partners requesting to be included in the registration of Premier or such Third Party Holder shall enter into an agreement with the underwriters to sell their Registrable Securities to the underwriters selected by Premier or such Third Party Holder on substantially the same terms and conditions as apply to Premier or such Third Party Holder, with such differences, including with respect to indemnification as may be customary or appropriate in combined primary and secondary offerings.  The registrations provided for in this Section 2(c) are in addition to, and not in lieu of, registrations made in accordance with Section 2(a) and 2(b).

 

(ii) Expenses.  Premier will pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 2(c), which in no event shall be deemed to include underwriting discounts or commissions, brokerage commissions or transfer taxes.

 

(iii) Priority in Incidental Registrations.  If a registration pursuant to this Section 2(c) involves an underwritten offering and the lead or managing underwriters advise Premier in writing that, in the opinion of such underwriters, the number of Registrable Securities and other shares of Class A Common Stock requested to be included in such registration would be likely to have an Adverse Effect on such offering, then Premier shall include in such registration: (a) first, the securities which Premier or the Third Party Holder proposes to sell and (b) second, the number of Registrable Securities which the Limited Partners have requested to be included in such registration and the number of shares of Class A Common Stock which any other holders of Class A Common Stock have requested to be included in the registration.  If such lead or managing underwriters advise Premier that only a portion of such Registrable Securities or shares of Class A Common Stock referenced in clause (b) may be included in such registration without such Adverse Effect, Premier shall include such Registrable Securities and shares of Class A Common Stock in such clause (b) on a pro rata basis based on the relative number of Registrable Securities or shares of Class A Common Stock then held by each such holder who has requested that securities owned by them be so included in a registration.

 

(d)  Registration Procedures.  If and whenever Premier is required to cause the registration of any Registrable Securities under the Securities Act as provided in this Agreement, Premier will, within the applicable time frames set forth herein or otherwise as expeditiously as reasonably practicable:

 

(i)  with respect to any registration under Section 2(b), prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its reasonable efforts to cause such registration statement to become effective within 60 days of the initial filing and remain effective for the periods specified in this Section 2; provided, however, that before filing a registration statement or related prospectus or amendments or supplements

 

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thereto, Premier will use reasonable efforts to furnish to the holders of Registrable Securities included in such registration statement, the counsel for the holders of the Registrable Securities being registered and the lead or managing underwriters, if any, copies of all such documents proposed to be filed.  The holders holding Registrable Securities shall have the right to request that Premier modify any information contained in such registration statement or related prospectus or amendments or supplements thereto pertaining to such holder and Premier shall use its reasonable efforts to comply with such request; provided, however, that Premier shall not have any obligation to so modify any information if Premier reasonably expects that so doing would cause such registration statement or related prospectus or amendments or supplements thereto, to contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading;

 

(ii) prepare and file with the SEC such amendments and supplements to any registration statement with respect to Registrable Securities and the related prospectus as Premier may determine to be necessary to keep such registration statement effective in accordance with Section 2(a) and 2(b) and to comply with the provisions of the Securities Act and the Exchange Act; provided, however, that before filing any such amendments or supplements in accordance with Section 2(d)(i) or this Section 2(d)(ii), Premier will use reasonable efforts to furnish to the holders of Registrable Securities included in such registration statement, the counsel for the holders of the Registrable Securities being registered and the lead or managing underwriters copies of all such documents proposed to be filed.  The holders holding Registrable Securities shall have the right to request that Premier modify any information contained in such amendments and supplements pertaining to such holder and Premier shall use its reasonable efforts to comply with such request; provided, however, that Premier shall not have any obligation to so modify any information if Premier reasonably expects that so doing would cause such registration statement or related prospectus or amendments or supplements thereto, to contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading;

 

(iii) furnish to each holder of Registrable Securities being registered such number of copies of the prospectus included in such registration statement (including each preliminary prospectus), in conformity with the requirements of the Securities Act, as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities by such holder;

 

(iv) use its reasonable efforts to register or qualify such Registrable Securities covered by such registration statement in such jurisdictions as each holder of Registrable Securities being so registered shall reasonably request, and do any and all other acts and things which may be reasonably necessary or advisable to enable such holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such holder, except that Premier shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction where, but for the requirements of this Section 2(d)(iv), it would not be obligated to be so qualified, to subject itself to taxation in any such jurisdiction or to consent to general service of process in any such jurisdiction;

 

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(v) notify each holder of any such Registrable Securities covered by a registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of Premier’s becoming aware that 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 in the light of the circumstances then existing, and at the request of any such holder, prepare and furnish to such holder a reasonable number of copies of an amended or supplemental prospectus as may be necessary so that, as thereafter delivered to the holders of such Registrable 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 in the light of the circumstances then existing;

 

(vi) otherwise use its reasonable efforts to comply with all applicable rules and regulations of the SEC and make available to its security holders, as soon as reasonably practicable (but not more than 18 months) after the effective date of the registration statement, an earnings statement which shall satisfy the provisions of Section 11(a) of the Securities Act;

 

(vii) use its reasonable efforts to cause all Registrable Securities covered by such registration statement to be (a) listed on each stock exchange or automated quotation system, if any, on which securities issued by Premier of the same class are then listed or, if no such securities issued by Premier are then so listed, on the New York Stock Exchange (the “NYSE”), Nasdaq Stock Market of the Nasdaq National Market (“NASDAQ”) or another nationally recognized stock exchange, if the securities qualify to be so listed or (b) on a nationally recognized automated quotation system, if the securities qualify to be so quoted;

 

(viii) enter into such customary agreements (including an underwriting agreement in customary form), which shall include customary indemnification provisions in favor of underwriters and other Persons in addition to or in substitution for the provisions of Section 2(h) hereof, and take such other customary actions as sellers of a majority of shares of such Registrable Securities or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities;

 

(ix) use reasonable efforts to obtain a “cold comfort” letter or letters from Premier’s independent public accountants in customary form and covering matters of the type customarily covered by “cold comfort” letters as the holders of a majority of shares of such Registrable Securities shall reasonably request;

 

(x) make available for inspection by any holder of such Registrable Securities covered by such registration statement, by any underwriter participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by any such holder or any such underwriter, any pertinent financial and other records, pertinent corporate documents and properties of Premier as reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with customary due diligence performed for a public offering of such Registrable Securities;

 

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(xi) promptly notify counsel for the holders of Registrable Securities included in such registration statement and the lead or managing underwriters (a) when the registration statement, or any post-effective amendment to the registration statement, shall have become effective, or any supplement to the prospectus or any amendment to the prospectus shall have been filed, (b) of the receipt of any comments from the SEC relating to such registration statement, (c) of any request of the SEC to amend the registration statement or amend or supplement the prospectus and (d) of the issuance by the SEC of any stop order suspending the effectiveness of the registration statement or of any order preventing or suspending the use of any prospectus, or of the suspension of the qualification of the registration statement for offering or sale in any jurisdiction, or of the institution or threatening of any proceedings for any of such purposes;

 

(xii) cooperate with the holders of Registrable Securities covered by the registration statement and the lead or managing underwriters if any, to facilitate the timely preparation and delivery of any certificates representing securities to be sold under the registration statement, and enable such securities to be in such denominations and registered in such names as the lead or managing underwriters or agent, if any, or such holders may request;

 

(xiii) use its reasonable efforts to obtain for delivery to the holders of Registrable Securities being registered and to the underwriter an opinion or opinions from counsel for Premier in customary form and in form, substance and scope reasonably satisfactory to such holders, underwriters or agents and their counsel; and

 

(xiv) cooperate with each holder of Registrable Securities being registered and each underwriter participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the NYSE, NASDAQ or any other stock exchange or automated quotation system and FINRA.

 

(e) Information Supplied.  Premier may require each holder of Registrable Securities being registered to furnish Premier with such information regarding such holder and pertinent to the disclosure requirements relating to the registration and the distribution of such securities as Premier may from time to time reasonably request in writing.  Premier shall not be required to include in any registration statement any Registrable Securities of any holder which does not provide such information.

 

(f)  Restrictions on Disposition.  Each Limited Partner agrees that, upon receipt of any notice from Premier of the happening of any event of the kind described in Section 2(d)(v), such Limited Partner will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Limited Partner’s receipt of any copies of the supplemented or amended prospectus contemplated by Section 2(d)(v), and, if so directed by Premier, such Limited Partner will deliver to Premier (at Premier’s expense) all copies, other than permanent file copies then in such Limited Partner’s possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.

 

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(g) Premier Transaction Delay Right.

 

(i) If, in conjunction with any registered offering of Registrable Securities under this Agreement, Premier shall furnish the holders with a certificate signed by an Officer of Premier (the “Transaction Delay Notice”) stating that Premier has pending or in process a material transaction or a material development which Premier has a bona fide business purpose in keeping confidential and that the filing of a registration statement or continued sales under a Shelf Registration Statement would require disclosure (or premature disclosure) of such material transaction or material development, then Premier (A) in the case of a Company-Directed Offering, shall not be required to comply with its obligations under Section 2(b) and such Company-Directed Offering shall be postponed until the next Quarterly Exchange Date and such postponed Company-Directed Offering shall be conducted in a manner consistent with the process set forth in Section 2(b)(i) and Section 2(b)(ii) and (B) in the case of Shelf Registration Statement, shall include in the Transaction Delay Notice that sales under such Shelf Registration Statement are suspended for a period of up to 90 days following the Transaction Delay Notice.

 

(ii)   Notwithstanding the foregoing provisions of Section 2(g)(i), the right to postpone a Company-Directed Offering pursuant to this Section may only be exercised once in any Exchange Year and, in the case of a Shelf Registration Statement, Premier shall be entitled to serve only one Transaction Delay Notice within any period of 365 consecutive days.

 

(h)  Indemnification.

 

(i) In the event of any registration of any securities of Premier under the Securities Act pursuant to this Section 2, Premier shall indemnify and hold harmless the holder of any Registrable Securities covered by such registration statement, its directors, officers and employees, each Person who participates as an underwriter in the offering or sale of such securities and each other Person, if any, who controls such holder or any such underwriter within the meaning of the Securities Act (collectively, the “Registration Indemnified Parties”), against any and all losses, claims, damages or liabilities, joint or several, actions or proceedings (whether commenced or threatened) in respect thereof and expenses (including reasonable attorney’s fees and reasonable expenses of investigation) to which such Registration Indemnified Party may become subject under the Securities Act (“Losses”), state law or otherwise, insofar as such Losses arise out of, relate to or are based upon (a) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such securities were registered under the Securities Act, any preliminary or final prospectus contained therein, or any amendment or supplement thereto, or (b) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in light of the circumstances under which they were made) not misleading; provided, that Premier shall not be liable to any Registration Indemnified Party in any such case to the extent, but only to the extent, that any such Losses or expenses arise out of, relate to or are based upon any untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement or amendment or supplement thereto or in any such preliminary or final prospectus in reliance upon and in conformity with written information furnished to Premier by or on behalf of such Registration Indemnified Party specifically for use

 

14

 

in the preparation thereof; and, provided, further, that Premier will not be liable in any such case to the extent, but only to the extent, that the foregoing indemnity with respect to any untrue statement contained in or omitted from a registration statement or the prospectus shall not inure to the benefit of any party (or any Person controlling such party) who is obligated to deliver a prospectus in transactions in a security as to which a registration statement has been filed pursuant to the Securities Act and from whom the Person asserting any such Losses purchased any of the Registrable Securities to the extent that it is finally judicially determined that Losses resulted from the fact that such party sold Registrable Securities to a Person to whom there was not sent or given, at or prior to the written confirmation of such sale, a copy of the registration statement or the prospectus, as amended or supplemented, and (x) Premier shall have previously and timely furnished sufficient copies of the registration statement or prospectus, as so amended or supplemented if required under the Securities Act, to such party in accordance with this Agreement and (y) the registration statement or prospectus, as so amended or supplemented, would have corrected such untrue statement or omission of a material fact. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any Registration Indemnified Party and shall survive the Transfer of securities by any holder.

 

(ii) Premier may require, as a condition to participating in the sale of any Registrable Securities in any registration statement filed in accordance with Sections 2(a) or 2(b) herein, that it shall have received an undertaking reasonably satisfactory to it from the selling holder of such Registrable Securities and any underwriter to indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 2(h)(i)) Premier and all other selling holders or any underwriter, as the case may be, with respect to any untrue statement or alleged untrue statement in or omission or alleged omission from such registration statement, any preliminary or final prospectus contained therein, or any amendment or supplement thereto, if such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to Premier by or on behalf of such selling holder or such underwriter specifically for inclusion in such registration statement, preliminary or final prospectus or amendment or supplement.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of Premier, any of the selling holders or any underwriter and shall survive the Transfer of securities by any holder.

 

(iii) Promptly after receipt by a Registration Indemnified Party hereunder of written notice of the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursuant to this Section 2(h), such Registration Indemnified Party will, if a claim in respect thereof is to be made against Premier, give written notice to Premier of the commencement of such action or proceeding; provided, however, that the failure of the Registration Indemnified Party to give notice as provided herein shall not relieve Premier of its obligations under this Section 2(h), except to the extent that Premier is materially prejudiced by such failure to give notice.  In case any such action or proceeding is brought against a Registration Indemnified Party, unless in such Registration Indemnified Party’s reasonable judgment (after consultation with legal counsel) a bona fide conflict of interest between such Registration Indemnified Party and Premier may exist in respect of such action or proceeding, Premier will be entitled to participate in and to assume the defense thereof (at its expense) with counsel reasonably satisfactory to such Registration Indemnified Party, and after

 

15

 

notice from Premier to such Registration Indemnified Party of its election so to assume the defense thereof, Premier will not be liable to such Registration Indemnified Party for any legal or other expenses subsequently incurred by the Registration Indemnified Party in connection with the defense thereof other than reasonable costs of investigation; provided, however, in the event Premier declines or fails to assume the defense of the action or proceeding or to employ counsel reasonably satisfactory to the Registration Indemnified Party or if a court of competent jurisdiction determines that Premier is not vigorously defending such action or proceeding, or if there is a bona fide conflict of interest between Premier and the Registration Indemnified Party, then such Registration Indemnified Party may employ counsel to represent or defend it in any such action or proceeding and Premier shall pay the reasonable fees and disbursements of such counsel or other representative as incurred; provided, further, however, that Premier shall not be required to pay the fees and disbursements of more than one counsel for all Registration Indemnified Parties in any jurisdiction in any single action or proceeding.  Premier will not settle any such action or proceeding or consent to the entry of any judgment without the prior written consent of the Registration Indemnified Party, unless such settlement or judgment (a) includes as an unconditional term thereof the giving by the claimant or plaintiff of a release to such Registration Indemnified Party from all liability in respect of such action or proceeding and (b) does not involve the imposition of equitable remedies.  No Registration Indemnified Party will settle any such action or proceeding or consent to the entry of any judgment without the prior written consent of Premier (such consent not to be unreasonably withheld).

 

(iv) (1) If the indemnification provided for in this Section 2(h) is unavailable to Premier or to a Registration Indemnified Party hereunder in respect of any Losses or expenses referred to herein, then Premier and the Registration Indemnified Parties, in lieu of such indemnification, shall contribute to the amount paid or payable by Premier or such Registration Indemnified Party as a result of such Losses or expenses in such proportion as is appropriate to reflect the relative fault of Premier and Registration Indemnified Party in connection with the actions or proceedings which resulted in such Losses or expenses, as well as any other relevant equitable considerations.  The relative fault of Premier and Registration Indemnified Party shall be determined by reference to, among other things, whether any action or proceeding 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 by, or relates to information supplied by, Premier or Registration Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action or proceeding.  The amount paid or payable by a party under this Section 2(h)(iv) as a result of the Losses and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any action or proceeding.

 

(2) The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 2(h)(iv) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in Section 2(h)(iv)(1).  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 similar fraudulent misrepresentation.

 

16

 

(v) The obligations of the parties under this Section 2(h) shall be in addition to any liability which any party may otherwise have to any other party and shall survive until the expiration of the applicable statutes of limitations (including any waivers or extensions thereof) with respect to any such registrations made hereunder.

 

(i)  Required Reports.  Premier covenants that it will timely file the reports required to be filed by it under the Securities Act and the Exchange Act, and it will take such further action as any Limited Partner may reasonably request, all to the extent required from time to time to enable such Limited Partner to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144.

 

(j)  Lock-Up Agreements.

 

(i) If any registration under this Agreement shall be in connection with an underwritten public offering (including each Company-Directed Offering), each holder of Registrable Securities and each holder of  Class B Common Units agrees that (A) during a period of 60 days beginning on the date of effectiveness of the registration statement or (B) in the case of a Company Directed Offering, from the Exchange Notice Date until the earlier of (I) the delivery of notice by Premier announcing the abandonment of the Company-Directed Offering (whether due to failure to obtain sufficient participation pursuant to Section 2(b)(iii), postponement by Limited Partners under Section 2(b)(vii) or a Transaction Delay Notice pursuant to Section 2(g)) or (II) 60 days after completion of the Company-Directed Offering (each of (A) and (B), the “Lock-up Period”), such holder will not (other than as part of such underwritten public offering), (w) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, or otherwise dispose of or transfer any shares of Class A Common Stock or any securities convertible into or exchangeable or exercisable for shares of Class A Common Stock, whether now owned or hereafter acquired by such holder or with respect to which the holder has or hereafter acquires the power of disposition, or file, or cause to be filed, any registration statement under the Securities Act, with respect to any of the foregoing (collectively, the “Lock-Up Securities”) or (x) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Lock-Up Securities, whether any such swap or transaction is to be settled by delivery of Class A Common Stock or other securities, in cash or otherwise.  If (y) Premier issues an earnings release or discloses other material information or a material event relating to Premier occurs during the last 17 days of the Lock-up Period or (z) prior to the expiration of the Lock-up Period, Premier announces that it will release earnings results during the 16-day period beginning upon the expiration of such period, then to the extent necessary for a lead, managing or co-managing underwriter of a registered offering required hereunder to comply with FINRA Rule 2711(f)(4), the Lock-up Period will be extended until 18 days after the earnings release or disclosure of other material information or the occurrence of the material event, as the case may be.  Premier shall use reasonable efforts to obtain the agreement of the Directors and Officers and all holders of more than 1% of the then-outstanding shares of Class A Common Stock to adhere to the Lock-up Period specified in this Subsection 2(j)(i).

 

17

 

(ii) If any registration under this Agreement shall be in connection with an underwritten public offering (including each Company-Directed Offering), Premier agrees (A) during the period of 60 days beginning on the date of effectiveness of the registration statement for such offering, not to (x) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, or otherwise dispose of or transfer any Lock-up Securities or file, or cause to be filed, any registration statement under the Securities Act, with respect to any Lock-up Securities, or (y) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Lock-Up Securities, whether any such swap or transaction is to be settled by delivery of Class A Common Stock or other securities, in cash or otherwise, except as part of such registration or in connection with any employee benefit or similar plan, any dividend reinvestment plan, or a business acquisition or combination and (B) to use reasonable efforts to cause each Director, Officer and holder of greater than 1% (on a fully-diluted basis) of the then-outstanding shares of Class A Common Stock, or any securities convertible into or exchangeable or exercisable for such Class A Common Stock, which are or may be purchased from Premier at any time after the date of this Agreement (other than in a registered offering) to agree to the same restraints during the Lock-up Period (except as part of such underwritten offering, if otherwise permitted).

 

(k)  Mergers, Recapitalizations, Exchanges or Other Transactions Affecting Registrable Securities.  The provisions of this Agreement shall apply to the full extent set forth herein with respect to the Registrable Securities, to any and all securities or units of Premier LP or Premier or any successor or assign of any such Person (whether by merger, amalgamation, consolidation, sale of assets or otherwise) that may be issued in respect of, in exchange for, or in substitution of such Registrable Securities, by reason of any dividend, split, issuance, reverse split, combination, recapitalization, reclassification, merger, amalgamation, consolidation or otherwise.

 

(l)  Termination of Rights.  Except for indemnification rights provided in Section 2(h), the rights granted to a Limited Partner in this Agreement shall terminate and forthwith become null and void in full on the earliest date that such Limited Partner no longer beneficially owns any Registrable Securities.

 

3.  Miscellaneous.

 

(a)  Agreement to Cooperate; Further Assurances.  In case at any time any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors and each Limited Partner and their respective Related Entities shall execute such further documents and shall take such further action as shall be reasonably necessary to carry out the purposes of this Agreement, in each case to the extent not inconsistent with applicable law.

 

(b)  Amendments.  Except as otherwise expressly provided in this Agreement, amendments to this Agreement shall require approval of Premier and Limited Partners holding a majority of the outstanding Class B Common Units; provided, however, that each Limited Partner hereby constitutes and appoints Premier, irrevocably as its true and lawful agent and

 

18

 

attorney-in-fact, in its name, place and stead to execute and deliver amendments to this Agreement as reasonably required from time to time and consistent with the intent of this Agreement as determined in the good faith reasonable judgment of Premier.

 

(c)  Injunctive Relief.  Premier and each Limited Partner acknowledge and agree that a violation of any of the terms of this Agreement may cause the other Limited Partners and Premier, as the case may be, irreparable injury for which an adequate remedy at law is not available.  Accordingly, it is agreed that each of the Limited Partners and Premier will be entitled to seek an injunction, restraining order or other equitable relief to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction, in addition to any other remedy to which they may be entitled at law or, equity.  Nothing stated herein shall limit any other remedies provided under this Agreement or available to the parties at law or in equity.

 

(d)  Assignment; Successors.  This Agreement shall be binding upon and inure to the benefit of the respective legatees, legal representatives, successors and assigns of the Limited Partners; provided, however, that a Limited Partner may not assign this Agreement or any of his rights or obligations hereunder, and any purported assignment in breach hereof by a Limited Partner shall be void; and provided further that no assignment of this Agreement by Premier or to a successor of Premier (by operation of law or otherwise) shall be valid unless such assignment is made to a Person which succeeds to the business of such Person substantially as an entirety.

 

(e)  Successors and Assigns; Certain Transferees Bound Hereby.  Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by each of Premier and its successors and assigns, and by the Limited Partners and their respective successors and assigns so long as they hold shares of Class A Common Stock or Class B Common Units.

 

(f)  Notices.  Any written notice required or permitted to be delivered pursuant to this Agreement shall be in writing and shall be deemed delivered (i) upon delivery if delivered in person, (ii) upon transmission if sent by facsimile, with receipt confirmed by the recipient thereof, (iii) one Business Day after deposit with a nationally recognized overnight courier service; provided, that confirmation of such overnight delivery is received by the sender thereof or (iv) upon transmission if sent by e-mail, with receipt confirmed by the recipient thereof.  Notices to Premier or any Limited Partner shall be delivered to their respective addresses as set forth in the Exchange Agreement.  Any party hereto may change its address for notices by giving written notice of such party’s new address to the other parties hereto in accordance with the Exchange Agreement.

 

(g)  Integration.  This Agreement contains the exclusive, entire and final understanding of the parties with respect to the subject matter hereof.  There are no agreements, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein.  Except as expressly set forth herein, this Agreement supersedes all other prior agreements, discussions, negotiations, communications and understandings between the parties with respect to such subject matter hereof.  No party has

 

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relied on any statement, representation, warranty, or promise not expressly contained in this Agreement in connection with this transaction.

 

(h)  Severability.  If one or more of the provisions, paragraphs, words, clauses, phrases or sentences contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, then such provision, paragraph, word, clause, phrase or sentence shall be deemed restated to reflect the original intention of the parties as nearly as possible in accordance with applicable law and the remainder of this Agreement. The legality and enforceability of any such provision, paragraph, word, clause, phrase or sentence in every other respect and of the remaining provisions, paragraphs, words, clauses, phrases or sentences hereof will not be in any way impaired, it being intended that all obligations, rights, powers and privileges of Premier and the Limited Partners will be enforceable to the fullest extent permitted by law.  Upon such determination of invalidity, illegality or unenforceability, Premier and the Limited Partners shall negotiate in good faith to amend this Agreement to effect the original intent of the Limited Partners.

 

(i)  Counterparts.  This Agreement may be executed in one or more counterparts and by different parties on separate counterparts, each of which will be deemed an original, but all of which will constitute one and the same instrument.  The parties agree that this Agreement shall be legally binding upon the electronic transmission, including by facsimile or email, by each party of a signed signature page hereof to the other party.

 

(j)  Governing Law; Submission to Jurisdiction.

 

(i) This Agreement is to be construed in accordance with and governed by the internal laws of the State of Delaware without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Delaware to the rights and duties of the parties.

 

(ii) Each party hereto agrees that any legal action or other legal proceeding relating to this Agreement or the enforcement of any provision of this Agreement shall be brought or otherwise commenced exclusively in any state or federal court located in Delaware.

 

(k)  Additional Parties.  Additional Persons who acquire Class B Common Units may become parties to this Agreement by executing a joinder hereto substantially in the form attached hereto as Exhibit A.  By virtue of the execution of a joinder to this Agreement, such Person shall be deemed a Limited Partner hereunder and thereupon Schedule I attached hereto shall be automatically amended without further action on the part of any of the parties hereto to reflect that such party is to be considered a Limited Partner hereunder.

 

(l)  Void Date.  If the Effective Date does not occur prior to March 31, 2014, this Agreement shall be null and void and of no further effect.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the undersigned have executed this Registration Rights Agreement as of the dates set forth below.

 

	
Date:                              , 2013
    	
PREMIER, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name: 
    	
Craig McKasson
    
	
 
    	
Title: 
    	
Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 Date:                              , 2013
    	
LIMITED   PARTNERS
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 Name:
    	
 
    
	
 
    	
 Title:
    	
 
    
				

 

21

 

Schedule I

 

Limited Partners

 

 

EXHIBIT A

 

JOINDER TO REGISTRATION RIGHTS AGREEMENT

 

Pursuant to Section 3(k) of the Registration Rights Agreement (the “Registration Rights Agreement”) among Premier, Inc., a Delaware corporation (“Premier”) and the entities listed on Schedule I thereto as amended from time to time (the “Limited Partners”), certain individuals or entities who acquire shares of Class B Common Units (the “Class B Common Units”) of Premier may execute this joinder to the Registration Rights Agreement.  The undersigned is, on the date hereof, acquiring Class B Common Units, and hereby agrees to be a party to and be bound as an “Limited Partner” under the Registration Rights Agreement and hereby authorizes this joinder to the Registration Rights Agreement as of the date hereof.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
AGREED   AND ACCEPTED:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[                                              ]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
						

 

 

EXHIBIT B

 

PREMIER, INC. 
 FORM OF NOTICE AND QUESTIONNAIRE

 

The undersigned beneficial holder of shares of Class A Common Stock and/or Class B Common Units understands that Premier has filed or intends to file with the SEC one or more registration statements for the registration and resale of the Registrable Securities in accordance with the terms of the Registration Rights Agreement (the “Registration Rights Agreement”), among Premier and the Limited Partners party thereto.  A copy of the Registration Rights Agreement is available from Premier upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.

 

Each beneficial owner of Registrable Securities is entitled to the benefits of the Registration Rights Agreement. In order to sell or otherwise dispose of any Registrable Securities pursuant to the Shelf Registration Statement, a beneficial owner of Registrable Securities generally will be required to be named as a selling security holder in the related prospectus, deliver a prospectus to purchasers of Registrable Securities and be bound by those provisions of the Registration Rights Agreement applicable to such beneficial owner (including certain indemnification provisions as described below). To be included in the Shelf Registration Statement, this Notice and Questionnaire must be completed, executed and delivered to Premier at the address set forth herein on or prior to the tenth business day before the effectiveness of the Shelf Registration Statement. We will give notice of the filing and effectiveness of the initial Shelf Registration Statement by issuing a press release and by mailing a notice to the holders at their addresses set forth in the register of the registrar.

 

Beneficial owners that do not complete this Notice and Questionnaire and deliver it to Premier as provided below will not be named as selling security holders in the prospectus and therefore will not be permitted to sell any Registrable Securities pursuant to the Shelf Registration Statement. Beneficial owners are encouraged to complete and deliver this Notice and Questionnaire prior to the effectiveness of the initial Shelf Registration Statement so that such beneficial owners may be named as selling security holders in the related prospectus at the time of effectiveness. Upon receipt of a completed Notice and Questionnaire from a beneficial owner following the effectiveness of the initial Shelf Registration Statement, in accordance with the Registration Rights Agreement, Premier will file such amendments to the initial Shelf Registration Statement or additional shelf registration statements or supplements to the related prospectus as are necessary to permit such holder to deliver such prospectus to purchasers of Registrable Securities.

 

 

Certain legal consequences arise from being named as selling security holders in the Shelf Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling security holder in the Shelf Registration Statement and the related prospectus.

  NOTICE

 

The undersigned beneficial owner (the “Selling Security Holder”) of Registrable Securities hereby elects to include in the prospectus forming a part of the Shelf Registration Statement the Registrable Securities beneficially owned by it and listed below in Item 3 (unless otherwise specified under Item 3). The undersigned, by signing and returning this Notice and Questionnaire, understands that it will be bound by the terms and conditions of this Notice and Questionnaire and the Registration Rights Agreement.

 

Pursuant to the Registration Rights Agreement, the undersigned has agreed to indemnify and hold harmless Premier and its directors, officers and each person, if any, who controls Premier within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against certain losses arising in connection with statements concerning the undersigned made in the Shelf Registration Statement or the related prospectus in reliance upon the information provided in this Notice and Questionnaire.

 

The undersigned hereby provides the following information to Premier and represents and warrants to Premier that such information is accurate and complete:

 

QUESTIONNAIRE

 

1.              (a)                                                         Full Legal Name of Selling Security Holder:

 

(b)                                                        Full Legal Name of registered holder (if not the same as (a) above) through which Registrable Securities listed in Item (3) below are held:

 

(c)                                                         Full Legal Name of DTC Participant (if applicable and if not the same as (b) above) through which Registrable Securities listed in Item (3) below are held:

 

(d)                                                        List below the individual or individuals who exercise voting and/or dispositive powers with respect to the Registrable Securities listed in Item (3) below:

 

B-2

 

2.                                      Address for Notices to Selling Security Holder:

 

Street Address:

 

Telephone:

 

Fax:

 

E-mail address:

 

Contact Person:

 

3.                                      Beneficial Ownership of Registrable Securities:

 

Type of Registrable Securities beneficially owned, and number of shares of Class A Common Stock and/or Class B Common Units, as the case may be, beneficially owned:

 

4.                                      Beneficial Ownership of Securities of Premier Owned by the Selling Security  Holder:

 

Except as set forth below in this Item (4), the undersigned is not the beneficial or registered owner of any securities of Premier, other than the Registrable Securities listed above in Item (3).

 

Type and amount of other securities beneficially owned by the Selling Security Holder:

 

5.                                      Relationship with Premier

 

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (5% or more) has held any position or office or has had any other material relationship with Premier (or its predecessors or affiliates) during the past three years.

 

State any exceptions here:

 

B-3

 

6.                                      Plan of Distribution

 

Except as set forth below, the undersigned (including its donees or pledgees) intends to distribute the Registrable Securities listed above in Item (3) pursuant to the Shelf Registration Statement only as follows and will not be offering any of such Registrable Securities pursuant to an agreement, arrangement or understanding entered into with a broker or dealer prior to the effective date of the Shelf Registration Statement. Such Registrable Securities may be sold from time to time directly by the undersigned or, alternatively, through underwriters or broker-dealers or agents. If the Registrable Securities are sold through underwriters or broker-dealers, the Selling Security Holder will be responsible for underwriting discounts or commissions or agent’s commissions. Such Registrable Securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Such sales may be effected in transactions (which may involve crosses or block transactions)

 

·                                          on any national securities exchange or quotation service on which the Registrable Securities may be listed or quoted at the time of sale;

 

·                                          in the over-the-counter market;

 

·                                          in transactions otherwise than on such exchanges or services or in the over-the-counter market; or

 

·                                          through the writing of options.

 

In connection with sales of the Registrable Securities or otherwise, the undersigned may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Registrable Securities and deliver Registrable Securities to close out such short positions, or loan or pledge Registrable Securities to broker-dealers that in turn may sell such securities.

 

State any exceptions here:

 

Note: In no event may such method(s) of distribution take the form of an underwritten offering of the Registrable Securities without the prior written agreement of Premier.

 

B-4

 

ACKNOWLEDGEMENTS

 

The undersigned acknowledges that it understands its obligation to comply with the provisions of the Securities Exchange Act of 1934, as amended, and the rules thereunder relating to stock manipulation, particularly Regulation M thereunder (or any successor rules or regulations), in connection with any offering of Registrable Securities pursuant to the Registration Rights Agreement. The undersigned agrees that neither it nor any person acting on its behalf will engage in any transaction in violation of such provisions.

 

The Selling Security Holder hereby acknowledges its obligations under the Registration Rights Agreement to indemnify and hold harmless certain persons set forth therein. Pursuant to the Registration Rights Agreement, Premier has agreed under certain circumstances to indemnify the Selling Security Holders against certain liabilities.

 

In accordance with the undersigned’s obligation under the Registration Rights Agreement to provide such information as may be required by law for inclusion in the Shelf Registration Statement, the undersigned agrees to promptly notify Premier of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Shelf Registration Statement remains effective. All notices hereunder and pursuant to the Registration Rights Agreement shall be made in writing at the address set forth below.

 

In the event that the undersigned transfers all or any portion of the Registrable Securities listed in Item 3 above after the date on which such information is provided to Premier, the undersigned agrees to notify the transferee(s) at the time of transfer of its rights and obligations under this Notice and Questionnaire and the Registration Rights Agreement.

 

By signing this Notice and Questionnaire, the undersigned consents to the disclosure of the information contained herein in its answers to Items (1) through (6) above and the inclusion of such information in the Shelf Registration Statement and the related prospectus. The undersigned understands that such information will be relied upon by Premier in connection with the preparation or amendment of the Shelf Registration Statement and the related prospectus.

 

Once this Notice and Questionnaire is executed by the Selling Security Holder and received by Premier, the terms of this Notice and Questionnaire and the representations and warranties contained herein shall be binding on, shall insure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives and assigns of Premier and the Selling Security Holder with respect to the Registrable Securities beneficially owned by such Selling Security Holder and listed in Item 3 above.

 

 

This Notice and Questionnaire shall be governed by, and construed in accordance with, the laws of the State of Delaware.

 

IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

 

	
 
    	
Beneficial   Owner
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Dated:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
							

 

Please return the completed and executed Notice and Questionnaire to:

 

Premier, Inc.  
 13034 Ballantyne Corporate Place

Charlotte, North Carolina  28277

Attention:  Chief Financial Officer and General Counsel

Tel: (704) 357-0022
 Fax: (704) 816-6307Exhibit 10.6

 

PREMIER, INC. 
 2013 EQUITY INCENTIVE PLAN

 

1.             Establishment, Purpose and Duration.  Premier, Inc. (referred to below as the “Company”) hereby establishes an incentive compensation plan to be known as the 2013 Equity Incentive Plan (hereinafter referred to as the “Plan”), as set forth in this document.  The Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Shares, Restricted Stock Units, Performance Share Awards, Other Stock-Based Awards and Cash-Based Awards.  The Plan shall become effective upon being approved by the Company’s shareholders (the “Effective Date”).  The purpose of the Plan is to attract and retain Employees, Non-Employee Directors, and Consultants and to provide additional incentives for these persons consistent with the long-term success of the Company’s business.  Unless sooner terminated as provided herein, the Plan shall terminate ten (10) years from the Effective Date.  After the Plan is terminated, no further Awards may be granted but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and the Plan’s terms and conditions.

 

2.             Definitions.  As used in the Plan, the following terms shall be defined as set forth below:

 

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

 

2.2          “Affiliate” means any corporation or any other entity (including, but not limited to, a partnership) that is affiliated with the Company through stock ownership or otherwise.

 

2.3          “Award” or “Awards” means, individually or collectively, except where referring to a particular category of grant under the Plan, a grant under the Plan of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Shares, Restricted Stock Units, Performance Share Awards, Cash-Based Awards, or Other Stock-Based Awards, in each case subject to the terms of the Plan.

 

2.4          “Award Agreement” means an agreement, certificate, resolution or other form of writing or other evidence approved by the Committee which sets forth the terms and conditions of an Award.  An Award Agreement may be in an electronic medium, may be limited to a notation on the Company’s books and records and, if approved by the Committee, need not be signed by a representative of the Company or a Participant.

 

2.5          “Base Price” means the price to be used as the basis for determining the Spread upon the exercise of a Stock Appreciation Right.

 

2.6          “Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Act.

 

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

 

 

2.8          “Cash-Based Award” means an Award granted to a Participant as described in Section 11.

 

2.9          “Change in Control” shall have the meaning given to it in Section 13.3.

 

2.10        “Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

2.11        “Committee” means the committee of the Board described in Section 4.

 

2.12        “Company” means Premier, Inc. or its successor.

 

2.13        “Consultant” means any natural person, including an advisor, engaged by the Company or any Affiliate to render bona fide services to such entity (other than in connection with the offer or sale of securities in a capital-raising transaction or to promote or maintain a market for the Company’s securities).

 

2.14        “Covered Employee” shall have the meaning given to it under Section 14.1.

 

2.15        “Deferred Stock Unit” means an Award that is vested on the Grant Date that entitles the recipient to receive Shares after a designated period of time.  Deferred Stock Units shall be subject to such restrictions and conditions as set forth in the Award Agreement, which shall be consistent with the provisions for Restricted Stock Units set forth in Section 8 below except for the requirement to have a Restricted Period or Performance Goals.

 

2.16        “Effective Date” shall have the meaning set forth in Section 1 above.

 

2.17        “Employee” means any person designated as an employee of the Company, any of its Affiliates, and/or any of its or their Subsidiaries on the payroll records thereof.

 

2.18        “Executive Officer” means an “executive officer” of the Company as defined by Rule 3b-7 under the Act. To the extent that the Board takes action to designate the persons who are the “executive officers” of the Company, the persons so designated (and no others) shall be deemed to be the “executive officers” of the Company for all purposes of the Plan.

 

2.19        “Fair Market Value” means a price that is based on the opening, closing, actual, high, low, or average selling prices of a Share reported on the NASDAQ Capital Market or other established stock exchange (or exchanges) on the applicable date, the preceding trading day, the next succeeding trading day, an average of trading days or on any other basis consistent with the requirements of the stock rights exemption under Section 409A of the Code using actual transactions involving Shares, as determined by the Committee in its discretion.  In the event Shares are not publicly determined at the time a determination of their value is

 

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required to be made hereunder, the determination of their Fair Market Value shall be made by the Committee in such manner as it deems appropriate.  Such definition(s) of Fair Market Value shall be specified in each Award Agreement and may differ depending on whether Fair Market Value is in reference to the grant, exercise, vesting, settlement, or payout of an Award; provided, however, that upon a broker-assisted exercise of an Option, the Fair Market Value shall be the price at which the Shares are sold by the broker.

 

2.20        “Family Member” means a Participant’s spouse, parents, children and grandchildren.

 

2.21        “Grant Date” means the date specified by the Committee on which a grant of an Award shall become effective, which shall not be earlier than the date on which the Committee takes action with respect thereto.

 

2.22        “Incentive Stock Option” means any Option that is intended to qualify as an “incentive stock option” under Section 422 of the Code or any successor provision.

 

2.23        “Non-employee Director” means a member of the Board who is not an Employee.

 

2.24        “Nonqualified Stock Option” means an Option that is not intended to qualify as an Incentive Stock Option.

 

2.25        “Option” means any option to purchase Shares granted under Section 5.

 

2.26        “Option Price” means the purchase price payable upon the exercise of an Option.

 

2.27        “Other Stock-Based Award” means an equity-based or equity-related Award not otherwise described by the terms of this Plan granted under Section 10.

 

2.28        “Participant” means an Employee, Non-Employee Director or a Consultant who is selected by the Committee to receive benefits under the Plan, provided that only Employees shall be eligible to receive grants of Incentive Stock Options.

 

2.29        “Performance-Based Awards” means Restricted Shares, Restricted Stock Units, Performance Share Awards, Other Stock-Based Awards or Cash-Based Awards granted to a Covered Employee that are designated by the Committee as being intended to qualify as “performance-based compensation” under Section 162(m) of the Code.

 

2.30        “Performance Criteria” means the criteria that the Committee selects for purposes of establishing the Performance Goal or Performance Goals for a Participant with respect to the Performance Cycle for a Performance-Based Award.  The Performance Criteria may be described in terms of Company wide

 

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objectives or objectives that are related to the performance of the individual Covered Employee or an organizational level specified by the Committee, including, but not limited to, a Subsidiary or Affiliate or a unit, division or group of the Company, a Subsidiary or Affiliate.  Performance Criteria may be measured on an absolute or relative basis, including but not limited to performance as measured against a group of peer companies or by a financial market index.

 

2.31        “Performance Cycle” means one or more periods of time, which may be of varying and overlapping durations, as the Committee may select, over which the attainment of one or more Performance Criteria will be measured for the purpose of determining a grantee’s right to and the payment of a Restricted Share Award, Restricted Stock Unit, Performance Share Award, Other Stock-Based Award or Cash-Based Award.  A Performance Cycle shall not be less than 12 months.

 

2.32        “Performance Goals” means, with respect to a Restricted Share Award, a Restricted Stock Unit Award, a Performance Share Award or a Cash-Based Award, the specific goal or goals established in writing by the Committee for the Performance Cycle applicable to such Award.  Performance Goals with respect to a Performance-Based Award granted to a Covered Employee shall only be based upon one or more Performance Criteria as permitted under Section 14.

 

2.33        “Performance Share Award” means an Award denominated in either Shares or share units granted pursuant to Section 9.

 

2.34        “Plan” shall have the meaning set forth in Section 1 above.

 

2.35        “Restricted Period” means a period of time established under Section 8 with respect to Restricted Stock Units.

 

2.36        “Restricted Shares” means Shares granted under Section 7 subject to a substantial risk of forfeiture.

 

2.37        “Restricted Stock Units” means an Award pursuant to Section 8 of the right to receive Shares at the end of a specified period.

 

2.38        “Share Authorization” means the maximum number of Shares available for grant under the Plan, as described in Section 3.

 

2.39        “Shares” means the Class A common stock of the Company.

 

2.40        “Spread” means, in the case of a Stock Appreciation Right, the amount by which the Fair Market Value on the date when any such right is exercised exceeds the Base Price specified in such right.

 

2.41        “Stock Appreciation Right” means a right granted under Section 6.

 

2.42        “Subsidiary” means any corporation or other entity, whether domestic or foreign, in which the Company has or obtains, directly or indirectly, a

 

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proprietary interest of more than twenty percent (20%) by reason of stock ownership or otherwise.

 

2.43        “Substitute Award” means any Award granted or issued to a Participant in assumption or substitution of either outstanding awards or the right or obligation to make future awards by an entity acquired by the Company, an Affiliate or a Subsidiary or with which the Company, an Affiliate or a Subsidiary combines.

 

2.44        “Unrestricted Shares” means a grant of Shares free of any Restricted Period, Performance Goals or any substantial risk of forfeiture.  Unrestricted Shares may be granted in respect of past services or other valid consideration, or in lieu of cash compensation due to an Employee.

 

3.             Shares Available Under the Plan.

 

3.1          Number of Shares Reserved for Awards.

 

(a)           Subject to adjustments as provided in Section 12, the Share Authorization shall be: [insert: applicable number] Shares of which [insert: same number] shall be eligible to be issued as Incentive Stock Options.

 

(b)           Any Awards other than Options and Stock Appreciation Rights that vest on the basis of the Participant’s continued employment with or provision of service to the Company shall not provide for vesting which is any more rapid than annual pro rata vesting over a three (3) year period and any Awards other than Options and Stock Appreciation Rights which vest upon the attainment of Performance Goals shall provide for a Performance Cycle of at least twelve (12) months.

 

3.2     Share Usage.

 

(a)           Any Shares related to Awards that terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such Shares, are settled in cash in lieu of Shares, or are exchanged with the Committee’s permission, prior to the issuance of Shares, for Awards not involving Shares, shall be available again for grant under the Plan.  In addition, Restricted Shares that are forfeited shall again be available for grant under the Plan.

 

(b)           Awards that are to be settled by the issuance of Shares shall only be counted against the Share Authorization to the extent Shares are actually issued upon settling the Award.  Any Shares withheld to satisfy tax withholding obligations on an Award, Shares tendered to pay the exercise price of an Option under the Plan and Shares repurchased on the open market with the proceeds of an Option exercise shall again be available for grant under the Plan.

 

(c)           Substitute Awards shall not be counted against the Shares available for granting Awards under the Plan.

 

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4.             Plan Administration.

 

4.1          Board Committee Administration.  The Plan shall be administered by the Compensation Committee appointed by the Board from among its members, provided that the full Board may at any time act as the Committee.  The interpretation and construction by the Committee of any provision of the Plan or of any Award Agreement and any determination by the Committee pursuant to any provision of the Plan or any such agreement, notification or document shall be final and conclusive.  No member of the Committee shall be liable to any person for any such action taken or determination made in good faith.

 

4.2          Terms and Conditions of Awards.  The Committee shall have final discretion, responsibility, and authority to:

 

(a)           grant Awards;

 

(b)           determine the Participants to whom and the times at which Awards shall be granted;

 

(c)           determine the type and number of Awards to be granted, the number of Shares to which an Award may relate, and the applicable terms, conditions, and restrictions, including the length of time for which any restriction shall remain in effect;

 

(d)           establish and administer Performance Goals and Performance Cycles relating to any Award;

 

(e)           determine the rights of Participants with respect to an Award upon termination of employment or service as a director;

 

(f)            determine whether, to what extent, and under what circumstances an Award may be settled, cancelled, forfeited, exchanged, or surrendered;

 

(g)           accelerate the vesting of an Award;

 

(h)           interpret the terms and provisions of Award Agreements;

 

(i)            provide for forfeiture of outstanding Awards and recapture of realized gains and other realized value in such events as determined by the Committee; and

 

(j)            make all other determinations deemed necessary or advisable for the administration of the Plan.

 

The Committee may solicit recommendations from the Company’s Chief Executive Officer with respect to the grant of Awards under the Plan.  The Committee (or, as permitted under Section 4.3, the Company’s Chief Executive Officer) shall determine the terms and conditions of each Award at the time of grant.  No Participant or any other person shall have any claim to be granted an

 

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Award under the Plan at any time, and the Company is not obligated to extend uniform treatment to Participants under the Plan.  The terms and conditions of Awards need not be the same with respect to each Participant.

 

4.3          Committee Delegation.  The Committee may delegate to the Company’s Chief Executive Officer the authority to grant Awards to Participants who are not Non-Employee Directors or Executive Officers and to interpret and administer Awards for such Non-Employee Directors and Executive Officers.  Any such delegation shall be subject to the limitations of Section 157(c) of the Delaware General Corporation Law.  The Committee may also delegate the authority to grant Awards to any subcommittee(s) consisting of members of the Board.

 

4.4          Awards to Non-employee Directors.  Notwithstanding any other provision of the Plan to the contrary, all Awards to Non-employee Directors must be authorized by the Board.

 

4.5          Employee’s Service as Non-Employee Director or Consultant.  An Employee who receives an Award, terminates employment, and immediately thereafter begins performing service as a Non-Employee Director or Consultant shall have such service treated as service as an Employee for purposes of the Award.  The previous sentence shall not apply when (a) the Award is an Incentive Stock Option or (b) prohibited by law.

 

5.             Options.  The Committee may authorize grants to Participants of Options to purchase Shares upon such terms and conditions as the Committee may determine in accordance with the following provisions:

 

5.1          Number of Shares.  Each grant shall specify the number of Shares to which it pertains.

 

5.2          Option Price.  Each grant shall specify an Option Price per Share, which shall be equal to or greater than the Fair Market Value per Share on the Grant Date, except in the case of Substitute Awards or as provided in Section 12.

 

5.3          Consideration.  Each grant shall specify the form of consideration to be paid in satisfaction of the Option Price and the manner of payment of such consideration, which may include in the Committee’s sole discretion: (a) cash in the form of currency or check or other cash equivalent acceptable to the Company, (b) nonforfeitable, unrestricted Shares owned by the Participant which have a value at the time of exercise that is equal to the Option Price, (c) a reduction in Shares issuable upon exercise which have a value at the time of exercise that is equal to the Option Price (a “net exercise”), (d) to the extent permitted by applicable law, the proceeds of sale from a broker-assisted cashless exercise, (e) any other legal consideration that the Committee may deem appropriate on such basis as the Committee may determine in accordance with the Plan or (f) any combination of the foregoing.  For the avoidance of doubt, Participants who receive Options to purchase Shares shall have no legal right to own or receive Shares withheld from delivery

 

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upon exercise pursuant to Section 5.3(c), and otherwise shall have no rights in respect of such Shares whether as a shareholder or otherwise.

 

5.4          Vesting.  Any grant may specify (a) a waiting period or periods before Options shall become exercisable, and (b) permissible dates or periods on or during which Options shall be exercisable, and any grant may provide for the earlier exercise of such rights in the event of a termination of employment.  Vesting may be further conditioned upon the attainment of Performance Goals established by the Committee.

 

5.5          Provisions Governing ISOs.  Options granted under the Plan may be Incentive Stock Options, Nonqualified Stock Options or a combination of the foregoing, provided that only Nonqualified Stock Options may be granted to Non-Employee Directors.  Each grant shall specify whether (or the extent to which) the Option is an Incentive Stock Option or a Nonqualified Stock Option.  Notwithstanding any such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Options designated as Incentive Stock Options are exercisable for the first time by an Participant during any calendar year (under all plans of the Company) exceeds $100,000, such Options shall be treated as Nonqualified Stock Options.  Options failing to qualify as Incentive Stock Options for any reason will be treated as Nonqualified Stock Options, rather than being forfeited.

 

5.6          Exercise Period.

 

(a)           Subject to Section 18.9, no Option granted under the Plan may be exercised more than ten years from the Grant Date.

 

(b)           If the Fair Market Value exceeds the Option Price on the last day that an Option may be exercised under an Award Agreement, the affected Participant shall be deemed to have exercised the vested portion of such Option in a net exercise under Section 5.3(c) above without the requirement of any further action.

 

5.7          Award Agreement.  Each grant shall be evidenced by an Award Agreement containing such terms and provisions as the Committee may determine consistent with the Plan.

 

5.8          Options — Stock Rights Exemption.  Options granted under the Plan are intended to qualify as “stock rights” within the meaning of Treas. Reg. Section 1.409A-1(b)(5).

 

6.             Stock Appreciation Rights.  The Committee may authorize grants to Participants of Stock Appreciation Rights.  A Stock Appreciation Right is the right of the Participant to receive from the Company an amount, which shall be determined by the Committee and shall be expressed as a percentage (not exceeding 100 percent) of the Spread at the time of the exercise of such right.  Any grant of Stock Appreciation Rights under the Plan shall be upon such terms and conditions as the Committee may determine in accordance with the following provisions:

 

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6.1          Payment in Cash or Shares.  Any grant may specify that the amount payable upon the exercise of a Stock Appreciation Right will be paid by the Company in cash, Shares or any combination thereof or may grant to the Participant or reserve to the Committee the right to elect among those alternatives.

 

6.2          Vesting.  Any grant may specify (a) a waiting period or periods before Stock Appreciation Rights shall become exercisable and (b) permissible dates or periods on or during which Stock Appreciation Rights shall be exercisable, and any grant may provide for the earlier exercise of such rights in the event of a termination of employment.  Vesting may be further conditioned upon the attainment of Performance Goals established by the Committee.

 

6.3          Exercise Period.  Subject to Section 18.9, no Stock Appreciation Right granted under the Plan may be exercised more than ten years from the Grant Date.  If a Spread exists on the last day that a Stock Appreciation Right may be exercised under an Award Agreement, the affected Participant shall be deemed to have exercised the vested portion of such Stock Appreciation Right without the requirement of any further action.

 

6.4          Award Agreement.  Each grant shall be evidenced by an Award Agreement containing such terms and provisions as the Committee may determine consistent with the Plan.

 

6.5          Stock Appreciation Rights — Stock Rights Exemption.  Stock Appreciation Rights granted under the Plan are intended to qualify as “stock rights” within the meaning of Treas. Reg. Section 1.409A-1(b)(5).

 

7.             Restricted Shares.  The Committee may authorize grants to Participants of Restricted Shares upon such terms and conditions as the Committee may determine in accordance with the following provisions:

 

7.1          Transfer of Shares.  Each grant shall constitute an immediate transfer of the ownership of Shares to the Participant in consideration of the performance of services, subject to the substantial risk of forfeiture and restrictions on transfer hereinafter referred to.

 

7.2          Consideration.  To the extent permitted by Delaware law, each grant may be made without additional consideration from the Participant or in consideration of a payment by the Participant that is less than the Fair Market Value on the Grant Date.

 

7.3          Substantial Risk of Forfeiture.  Each grant shall provide that the Restricted Shares covered thereby shall be subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code for a period to be determined by the Committee on the Grant Date, and any grant or sale may provide for the earlier termination of such risk of forfeiture in the event of a termination of employment.

 

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7.4          Dividend, Voting and Other Ownership Rights.  Unless otherwise determined by the Committee, an award of Restricted Shares shall entitle the Participant to dividend, voting and other ownership rights (except for any rights to a liquidating distribution) during the period for which such substantial risk of forfeiture is to continue.  Any grant shall require that any or all dividends or other distributions paid on the Restricted Shares during the period of such restrictions be accumulated or reinvested in additional Shares, which shall be subject to the same restrictions as the underlying Award or such other restrictions as the Committee may determine.

 

7.5          Restrictions on Transfer.  Each grant shall provide that, during the period for which such substantial risk of forfeiture is to continue, the transferability of the Restricted Shares shall be prohibited or restricted in the manner and to the extent prescribed by the Committee on the Grant Date.

 

7.6          Performance-Based Restricted Shares.  Any grant or the vesting thereof may be further conditioned upon the attainment of Performance Goals established by the Committee in accordance with the applicable provisions of Section 9 regarding Performance Share Awards and, if any such Award is intended to be a Performance-Based Award, in accordance with the provisions of Section 14.

 

7.7          Award Agreement; Certificates.  Each grant shall be evidenced by an Award Agreement containing such terms and provisions as the Committee may determine consistent with the Plan.  Unless otherwise directed by the Committee, all certificates representing Restricted Shares, together with a stock power that shall be endorsed in blank by the Participant with respect to such Shares, shall be held in custody by the Company until all restrictions thereon lapse.

 

8.             Restricted Stock Units.  The Committee may authorize grants of Restricted Stock Units to Participants upon such terms and conditions as the Committee may determine in accordance with the following provisions:

 

8.1          Restricted Period.  Each grant shall provide that the Restricted Stock Units covered thereby shall be subject to a Restricted Period, which shall be fixed by the Committee on the Grant Date, and any grant or sale may provide for the earlier termination of such period in the event of a termination of employment.

 

8.2          Dividend Equivalents and Other Ownership Rights.  During the Restricted Period, the Participant shall not have any right to transfer any rights under the subject Award and shall not have any rights of ownership in the Shares underlying the Restricted Stock Units, including the right to vote such Shares, but the Committee may on or after the Grant Date authorize the payment of dividend equivalents on such shares in cash or additional Shares on a current, deferred or contingent basis with respect to any or all dividends or other distributions paid by the Company.  Notwithstanding the foregoing, any dividend equivalents with respect to dividends paid in stock shall be subject to the same restrictions as the underlying Award.

 

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8.3          Performance-Based Restricted Share Units.  Any grant or the vesting thereof may be further conditioned upon the attainment of Performance Goals established by the Committee in accordance with the applicable provisions of Section 9 regarding Performance Share Awards and, if any such Award is intended to be a Performance-Based Award, in accordance with the provisions of Section 14.

 

8.4          Award Agreement.  Each grant shall be evidenced by an Award Agreement containing such terms and provisions as the Committee may determine consistent with the Plan.

 

9.             Performance Share Awards.  The Committee shall determine whether and to whom Performance Share Awards shall be granted and such terms, limitations and conditions as it deems appropriate in its sole discretion in accordance with the following provisions:

 

9.1          Number of Performance Share Awards.  Each grant shall specify the number of Shares or share units to which it pertains, which may be subject to adjustment to reflect changes in compensation or other factors.

 

9.2          Performance Cycle.  The Performance Cycle with respect to each Performance Share Award shall be determined by the Committee and set forth in the Award Agreement and may be subject to earlier termination in the event of a termination of employment.

 

9.3          Performance Goals.  Each grant shall specify the Performance Goals that are to be achieved by the Participant and a formula for determining the amount of any payment to be made if the Performance Goals are achieved.

 

9.4          Payment of Performance Share Awards.  Each grant shall specify the time and manner of payment of Performance Share Awards that shall have been earned.

 

9.5          Dividend Equivalents.  Under no circumstances may dividend equivalents be granted for any Performance Share Award.

 

9.6          Adjustments.  If the Committee determines after the Performance Goals have been established that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which it conducts its business, or other events or circumstances render the Performance Goals unsuitable, the Committee shall have sole discretion to modify such Performance Goals, in whole or in part, as the Committee deems appropriate and equitable.  The Committee shall also have the right in its sole discretion to increase or decrease the amount payable at a given level of performance to take into account additional factors that the Committee may deem relevant to the assessment of individual or corporate performance for the Performance Cycle.  The provisions of this Section 9.6 shall not apply with respect to Performance-Based Awards and any adjustments with respect to such Awards shall be made solely to the extent permitted under Section 14.4.

 

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9.7          Award Agreement.  Each grant shall be evidenced by an Award Agreement containing such terms and provisions as the Committee may determine consistent with the Plan.

 

9.8          Performance-Based Awards.  Notwithstanding anything to the contrary in this Section 9, Performance Share Awards granted to Covered Employees that are intended to be Performance-Based Awards shall only be granted, administered and paid in compliance with all the requirements for Performance-Based Awards set forth in Section 14 below.

 

10.          Other Equity Awards.  The Committee may grant other types of equity-based or equity-related Awards not otherwise described by the terms of the Plan (including the grant or offer for sale of unrestricted Shares and grant of Deferred Stock Units) in such amounts and subject to such terms and conditions, as the Committee shall determine.  Such Awards may involve the transfer of actual Shares to Participants, or payment in cash or otherwise of amounts based on the value of Shares and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.

 

11.          Cash-Based Awards.  The Committee may, in its sole discretion, grant Cash-Based Awards to Executive Officers and key employees in such amounts and upon such terms, and subject to such conditions, as the Committee shall determine at the time of grant.  The Committee shall determine the maximum duration of the Cash-Based Award, the amount of cash to which the Cash-Based Award pertains, the conditions upon which the Cash-Based Award shall become vested or payable, and such other provisions as the Committee shall determine. Each Cash-Based Award shall specify a cash-denominated payment amount, formula or payment ranges as determined by the Committee.  Payment, if any, with respect to a Cash-Based Award shall be made in accordance with the terms of the Award and shall be made in cash.  Notwithstanding anything to the contrary in this Section 11, all Cash-Based Awards that are Performance-Based Awards shall only be granted, administered and paid in compliance with all the requirements for Executive Officer Awards set forth in Section 14 below.

 

12.          Adjustments.  The Committee shall make or provide for such adjustments in the (a) limitations specified in Section 3, (b) number of Shares covered by outstanding Awards, (c) Option Price or Base Price applicable to outstanding Options and Stock Appreciation Rights and (d) kind of shares available for grant and covered by outstanding Awards (including shares of another issuer), as the Committee in its sole discretion may in good faith determine to be equitably required in order to prevent dilution or enlargement of the rights of Participants that otherwise would result from (x) any stock dividend, stock split, reverse stock split, combination or exchange of Shares, recapitalization, extraordinary cash dividend, or other change in the capital structure of the Company, (y) any merger, consolidation, spin—off, spin—out, split—off, split—up, reorganization, partial or complete liquidation or other distribution of assets (other than a normal cash dividend), issuance of rights or warrants to purchase securities or (z) any other corporate transaction or event having an effect similar to any of the foregoing.  In addition, in the event of any such transaction or event, the Committee may provide in substitution for any or all outstanding Awards under the Plan such alternative consideration as it may in good faith determine to be equitable under the circumstances and may require in connection therewith the cancellation or surrender of all Awards so replaced.  In the case of Substitute Awards, the Committee may make such adjustments, not inconsistent with the terms of the Plan, in the terms

 

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of Awards as it shall deem appropriate in order to achieve reasonable comparability or other equitable relationship between the assumed awards and the Awards granted under the Plan as so adjusted.

 

13.          Change in Control.

 

13.1        General Rule.  Except as otherwise provided in an Award Agreement, in the event of a Change in Control, the Committee may, but shall not be obligated to do any one or more of the following, in each case without Participant consent: (a) accelerate, vest or cause the restrictions to lapse with respect to, all or any portion of an Award, (b) cancel Awards for a cash payment equal to their fair value (as determined in the sole discretion of the Committee) which, in the case of Options and Stock Appreciation Rights, shall be deemed to be equal to the excess, if any, of the consideration to be paid in connection with the Change in Control to holders of the same number of Shares subject to such Options or Stock Appreciation Rights (or, if no consideration is paid in any such transaction, the Fair Market Value of the Shares subject to such Options or Stock Appreciation Rights) over the aggregate Option Price (in the case of Options) or Base Price (in the case of Stock Appreciation Rights), (c) provide for the issuance of replacement awards that will substantially preserve the otherwise applicable terms of any affected Awards previously granted hereunder as determined by the Committee in its sole discretion, (d) terminate Options without providing accelerated vesting or (e) take any other action with respect to the Awards the Committee deems appropriate.  For avoidance of doubt, the treatment of Awards upon a Change in Control may vary among Participants and Types of Awards in the Committee’s sole discretion.

 

13.2        Settlement of Awards Subject to Performance Goals Upon a Change in Control.  Awards subject to satisfying a Performance Goal or Goals shall be settled upon a Change in Control.  The settlement amount shall be determined by the Committee in its sole discretion based upon the extent to which the Performance Goals for any such Awards have been achieved after evaluating actual performance from the start of the Performance Cycle until the date of the Change in Control and the level of performance anticipated with respect to such Performance Goals as of the date of the Change in Control.

 

13.3        Change in Control. shall mean the earliest to occur of the following events, provided that such event is not also a Management Buyout (as defined below):

 

(a)           Any Person (as defined below) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 35% or more of the combined voting power of the Company’s then outstanding voting securities generally entitled to vote in the election of directors of the Company, provided, however, that for avoidance of doubt, the shareholders owning the Company’s Class B common stock shall be treated as the Beneficial Owner with voting control for purposes of this definition, and not any Persons voting the shares subject to a voting trust or other similar arrangement, and further provided that no Change in Control will be deemed to have occurred as a result

 

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of a change in ownership percentage resulting solely from an acquisition of securities by the Company or a transaction described in clause (i) of paragraph (b) below;

 

(b)           There is consummated a Merger of the Company with any other business entity other than (i) a Merger which would result in the securities of the Company generally entitled to vote in the election of directors of the Company outstanding immediately prior to such Merger continuing to represent (either by remaining outstanding or by being converted into such securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding such securities under an employee benefit plan of the Company or any Subsidiary at least 50% of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such Merger, generally entitled to vote in the election of directors of the Company or such surviving entity or any parent thereof and, in the case of such surviving entity or any parent thereof, of a class registered under Section 12 of the Act, or (ii) a Merger effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes a Beneficial Owner, directly or indirectly, of securities of the Company’s then outstanding voting securities of the Company generally entitled to vote in the election of directors of the Company;

 

(c)           The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity where the outstanding securities generally entitled to vote in the election of directors of the Company immediately prior to the transaction continue to represent (either by remaining outstanding or by being converted into such securities of the surviving entity or any parent thereof) 50% or more of the combined voting power of the outstanding voting securities of any such entity generally entitled to vote in such entity’s election of directors immediately after such sale and of a class registered under Section 12 of the Act.

 

(d)           As used in this Section 13:

 

i.           “Management Buyout” means any event or transaction which would otherwise constitute a Change in Control (a “Transaction”) if, in connection with the Transaction, the Participant, Family Members and/or the Participant’s Affiliates participate, directly or beneficially, as an equity investor in, or have the option or right to acquire, whether vested or not vested, equity interests of, the acquiring entity or any of its Affiliates (as defined in Rule 12b-2 under the Act) (the “Acquiror”) having a percentage interest therein greater than 1%.  For purposes of the preceding sentence, a party shall not be deemed to have participated as an equity investor in the Acquiror by virtue of (i) obtaining Beneficial Ownership of any equity interest in the Acquiror as a result of the grant to the party of an incentive compensation award under one or more

 

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incentive plans of the Acquiror (including, but not limited to, the conversion in connection with the Transaction of incentive compensation awards of the Company into incentive compensation awards of the Acquiror), on terms and conditions substantially equivalent to those applicable to other employees of the Company at a comparable level as such party immediately before the Transaction, after taking into account normal differences attributable to job responsibilities, title and the like, (ii) obtaining beneficial interest of any equity interest in the Acquiror on terms and conditions substantially equivalent to those obtained in the Transaction by all other shareholders of the Company or (iii) the party’s interests in any tax-qualified defined benefit or defined contribution pension or retirement plan in which such party or any Family Member is a participant or beneficiary.

 

ii.          “Merger” means a merger, share exchange, consolidation or similar business consolidation under applicable law.

 

iii.         “Participant’s Affiliates” at any time consist of any entity in which the Participant and/or members of the Participant’s Family Members then own, directly or beneficially, or have the option or right to acquire, whether or not vested, greater than 10% of such entity’s equity interests, and all then current directors and Executive Officers of the Company who are members of any group that also includes the Participant, a Family Member and/or any such entity in which the members have agreed to act together for the purpose of participating in the Transaction.

 

iv.         “Person” shall have the meaning given in Section 3(a)(9) of the Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its Subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions and with substantially the same voting rights as their ownership and voting rights with respect to the Company.

 

14.          Requirements for Performance-Based Awards.

 

14.1        In General.  Any Executive Officer or other key employee providing services to the Company and/or its Subsidiaries and Affiliates and who is selected by the Committee (hereinafter referred to as a “Covered Employee”) may be granted one or more Performance-Based Awards in the form of a Restricted Stock Award, Restricted Stock Units, Performance Share Awards, Other Equity Awards and/or Cash-Based Awards payable upon the attainment of Performance Goals that are established by the Committee and relate to one or more of the Performance Criteria, in each case on a specified date or dates or over any period or periods determined by the Committee, as permitted under this Section 14.  For the avoidance of doubt, a Covered Employee may receive as Performance-Based Awards a Cash-Based

 

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Award subject to Performance Cycle that is twelve months and a Cash-Based Award subject to a Performance Cycle that is more than twelve months in the same calendar year.  The Committee shall define in an objective fashion the manner of calculating the Performance Criteria it selects to use for any Performance Cycle.  Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company performance or the performance of a division, business unit, or an individual.  Each Performance-Based Award shall also comply with the provisions set forth below.

 

14.2        Grant Procedure. With respect to each Performance-Based Award, the Committee shall select, within the first 90 days of a Performance Cycle, the Performance Criteria for such grant and the Performance Goals with respect to each Performance Criterion (including a threshold level of performance below which no amount will become payable with respect to such Award).  Each Performance-Based Award will specify the amount payable, or the formula for determining the amount payable, upon achievement of the various applicable performance targets.  The Performance Criteria established by the Committee may be (but need not be) different for each Performance Cycle and different Performance Goals may be applicable to Performance-Based Awards to different Covered Employees.  The Committee shall designate whether an Award granted to an Executive Officer or key employee is intended to be a Performance-Based Award at the time of grant.

 

14.3        Permissible Performance Criteria.  Only one or a combination of the following may be used as Performance Criteria for a Performance-Based Award: growth in net sales or revenue, return measures (including, but not limited to, return on invested capital, assets, capital, equity and sales), gross profit margin; operating expense ratios; operating expense targets; productivity ratios; operating income, gross or operating margins; earnings before or after taxes, interest, depreciation and/or amortization, net earnings or net income (before or after taxes); earnings per share; cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment), working capital targets, funds from operations or similar measure, capital expenditures, share price (including, but not limited to, growth measures and total stockholder return), appreciation in the fair market value or book value of the common stock, economic value added (net operating profit after tax minus the sum of capital multiplied by the cost of the capital), debt to equity ratio / debt levels, quantitative measures of customer satisfaction, market share, acquisitions or strategic transactions, quantitative measures of employee satisfaction / engagement, employee retention / attrition, safety, budget achievement, expense reduction or cost savings, productivity improvements and inventory control / efficiency.

 

14.4        Permitted Adjustments.  The Committee, in its discretion, may measure performance against Performance Goals under a Performance-Based Award by taking one or more of the following actions: (a) excluding each of following items: (i) any unusual or extraordinary corporate item, transaction or development restructuring and/or other nonrecurring and/or extraordinary charges (as reported in the Corporation’s financial statements for the Performance Cycle), (ii) exchange rate

 

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effects, as applicable, for non-U.S. dollar denominated operating earnings, (iii) the effects to any statutory adjustments to corporate tax rates, (iv) the impact of discontinued operations, (v) losses from discontinued operations, (vi) restatements and other unplanned special charges such as acquisitions, acquisition expenses (including, without limitation, expenses relating to goodwill and other intangible assets), (vi) divestitures, (vii) stock offerings, (viii) stock repurchases, (ix) strategic loan loss provisions and (b) not adjusting for changes in accounting principles.  Any such action with respect to a Performance-Based Award must be taken by the Committee within the first ninety (90) days applicable to the Performance Cycle or such later time as may be permitted under Section 162(m) of the Code or as would not cause any deduction arising from such Award to be disallowed under Section 162(m) of the Code.

 

14.5        Certification of Performance Goals and Payment.  Following the completion of a Performance Cycle, the Committee shall meet to review and certify in writing whether, and to what extent, the Performance Goals for the Performance Cycle have been achieved and, if so, to also calculate and certify in writing the amount of the Performance-Based Awards earned for the Performance Cycle.  The Committee shall then determine the actual size of each Covered Employee’s Performance-Based Award, and, in doing so with respect to a Cash-Based Award, may reduce or eliminate the amount of such Award if, in its sole judgment, such reduction or elimination is appropriate.

 

14.6        Interpretation.  All Performance-Based Awards and the provisions hereunder applicable to such Awards shall be interpreted consistent with the requirements of Section 162(m).

 

14.7        Transition Period.  Notwithstanding this Section 14, no restrictions imposed to qualify payments under the Plan as “qualified performance-based compensation” within the meaning of Treas. Reg. §1.162-27(e) shall apply until the expiration of the “reliance period” described in Treas. Reg. §1.162-27(f)(2).

 

15.          Withholding.

 

15.1        Tax Withholding.  The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, the minimum statutory amount to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Plan prior to making any payments hereunder.

 

15.2        Share Withholding.  With respect to withholding required upon the exercise of Options or Stock Appreciation Rights, upon the lapse of restrictions on Restricted Shares and Restricted Stock Units, or upon the achievement of performance goals related to Performance Share Awards, or any other taxable event arising as a result of an Award granted hereunder, Participants may elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that could

 

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be imposed on the transaction. All such elections shall be irrevocable, made in writing or electronically, and signed or acknowledged electronically by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

 

16.          Certain Terminations of Employment, Hardship and Approved Leaves of Absence.  Notwithstanding any other provision of the Plan to the contrary, in the event of a Participant’s termination of employment (including by reason of death, disability or retirement) or in the event of hardship or other special circumstances, the Committee may in its sole discretion take any action that it deems to be equitable under the circumstances or in the best interests of the Company, including, without limitation, waiving or modifying any limitation or requirement with respect to any Award under the Plan.  The Committee shall have the discretion to determine whether and to what extent the vesting of Awards shall be tolled during any leave of absence, paid or unpaid; provided however, that in the event of military leave, vesting shall toll during any unpaid portion of such leave, provided that, upon a Participant’s returning from military leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and Reemployment Rights Act), he or she shall be given vesting credit with respect to the Award to the same extent as would have applied had the Participant continued to provide services to the Company throughout the leave on the same terms as he or she was providing services immediately prior to such leave.  Any actions taken by the Committee shall be taken consistent with the requirements of Section 409A of the Code and, with respect to Performance-Based Awards, Section 162(m) of the Code.

 

17.          Authorization of Sub-Plans.  The Committee may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable blue sky, securities, and/or tax laws of various jurisdictions.  The Committee shall establish such sub-plans by adopting supplements to the Plan containing (a) such limitations as the Committee deems necessary or desirable, and (b) such additional terms and conditions not otherwise inconsistent with the Plan as the Committee shall deem necessary or desirable.  All sub-plans adopted by the Committee shall be deemed to be part of the Plan, but each sub-plan shall apply only to Participants within the affected jurisdiction and the Company shall not be required to provide copies of any sub-plans to Participants in any jurisdiction which is not the subject of such sub-plan.

 

18.          Amendments and Other Matters.

 

18.1        Plan Amendments.  The Board may amend, suspend or terminate the Plan or the Committee’s authority to grant Awards under the Plan at any time.  Notwithstanding the foregoing, no amendments shall be effective without approval of the Company’s stockholders if (a) stockholder approval of the amendment is then required pursuant to the Code, the rules of the primary stock exchange or stock market on which the Shares are then traded, applicable U.S. state corporate laws or regulations, applicable U.S. federal laws or regulations, and the applicable laws of any foreign country or jurisdiction where Awards are, or shall be, granted under the Plan, or (b) such amendment would (i) modify Section 18.4, (ii) materially increase benefits accruing to Participants, (iii) increase the aggregate number of Shares issued or issuable under the Plan, (iv) increase any limitation set forth on the number of Shares which may be issued or the aggregate value of Awards or the per-person

 

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limits under Section 3 except as provided in Section 12, (v) modify the eligibility requirements for Participants in the Plan, or (vi) reduce the minimum Option Price and Base Price as set forth in Sections 5 and 6, respectively.  Notwithstanding any other provision of the Plan to the contrary, except as provided in Section 18.8, no termination, suspension or amendment of the Plan may adversely affect any outstanding Award without the consent of the affected Participant.

 

18.2        Award Deferrals.  The Committee may permit Participants to elect to defer the issuance of Shares or the settlement of Awards in cash under the Plan pursuant to such rules, procedures or programs as it may establish for purposes of the Plan.  However, any Award deferrals which the Committee permits must comply with the provisions of Section 22 and the requirements of Section 409A of the Code.

 

18.3        Conditional Awards.  The Committee may condition the grant of any award or combination of Awards under the Plan on the surrender or deferral by the Participant of his or her right to receive a cash bonus or other compensation otherwise payable by the Company or any Affiliate to the Participant, provided that any such grant must comply with the provisions of Section 22 and the requirements of Section 409A of the Code.

 

18.4        Repricing Prohibited.  The terms of outstanding Awards may not be amended to reduce the Option Price of outstanding Options or Base Price of outstanding Stock Appreciation Rights or cancel outstanding Options or Stock Appreciation Rights in exchange for cash, other Awards or Options or Stock Appreciation Rights with an Option Price or Base Price that is less than the Option Price or Base Price of the original Options or Stock Appreciation Rights without stockholder approval, provided that nothing herein shall prevent the Committee from taking any action provided for in Section 12 above.

 

18.5        No Employment Rights.  Nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the Company, its Affiliates, and/or its Subsidiaries to terminate any Participant’s employment or service on the Board or to the Company at any time or for any reason not prohibited by law, nor confer upon any Participant any right to continue his employment or service as a director for any specified period of time.  Neither an Award nor any benefits arising under the Plan shall constitute an employment contract with the Company, its Affiliates, and/or its Subsidiaries and, accordingly, subject to Section 18.1, the Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Committee without giving rise to any liability on the part of the Company, its Affiliates, and/or its Subsidiaries.

 

18.6        Tax Qualification.  To the extent that any provision of the Plan would prevent any Award that was intended to qualify under particular provisions of the Code from so qualifying, such provision of the Plan shall be null and void with respect to such Award, provided that such provision shall remain in effect with respect to other Awards, and there shall be no further effect on any provision of the Plan.

 

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18.7                        Leave of Absence or Transfer.  A transfer between the Company and any Affiliate or between Affiliates, or a leave of absence duly authorized by the Company, shall not be deemed to be a termination of employment.  Periods of time while on a duly authorized leave of absence shall be disregarded for purposes of determining whether a Participant has satisfied a Restricted Period or Performance Cycle under an Award.

 

18.8                        Amendments to Comply with Laws, Regulations or Rules.  Notwithstanding any other provision of the Plan or any Award Agreement to the contrary, in its sole and absolute discretion and without the consent of any Participant, the Board may amend the Plan, and the Committee may amend any Award Agreement, to take effect retroactively or otherwise as it deems necessary or advisable for the purpose of conforming the Plan or such Award Agreement to any present or future law, regulation or rule applicable to the Plan, including, but not limited to, Section 409A of the Code.

 

18.9                        Tolling.  In the event a Participant is prevented from exercising an Option or the Company is unable to settle an Award due to either any trading restrictions applicable to the Company’s Shares, the Participant’s physical infirmity or administrative error by the Company relied upon and not caused by the Participant, then unless otherwise determined by the Committee, the length of time applicable to any such restriction, condition or event shall toll any exercise period (i) until such restriction lapses, (ii) until the Participant (or his representative) is able to exercise the Award or (iii) until such error is corrected, as applicable.

 

18.10                 No Duty to Inform Regarding Exercise Rights.  Neither the Company, any Affiliate, the Committee nor the Board shall have any duty to inform a Participant of the pending expiration of the period in which a Stock Appreciation right may be exercised or in which an Option may be exercised.

 

19.                               Issuance of Shares; Fractional Shares.

 

19.1                        Form for Issuing Shares; Legends.  Shares may be issued on a certificated or uncertificated basis.  Shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer of such Shares.

 

19.2                        Delivery of Title.  The Company shall have no obligation to issue or deliver evidence of title for Shares issued under the Plan prior to: (i) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and (ii) completing any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.

 

19.3                        Inability to Obtain Authority.  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the

 

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failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

 

19.4                        Investment Representations.  The Committee may require any individual receiving Shares pursuant to an Award under the Plan to represent and warrant in writing that the individual is acquiring the Shares for investment and without any present intention to sell or distribute such Shares,

 

19.5                        Fractional Shares.  The Company shall not be required to issue any fractional Shares pursuant to the Plan.  The Committee may provide for the elimination of fractions or for the settlement thereof in cash.

 

20.                               Limitations Period.  Any person who believes he or she is being denied any benefit or right under the Plan may file a written claim with the Committee.  Any claim must be delivered to the Committee within forty-five (45) days of the specific event giving rise to the claim.  Untimely claims will not be processed and shall be deemed denied.  The Committee, or its designated agent, will notify the Participant of its decision in writing as soon as administratively practicable.  Claims not responded to by the Committee in writing within ninety (90) days of the date the written claim is delivered to the Committee shall be deemed denied.  The Committee’s decision shall be final, conclusive and binding on all persons.  No lawsuit relating to the Plan may be filed before a written claim is filed with the Committee and is denied or deemed denied, and any lawsuit must be filed within one year of such denial or deemed denial or be forever barred.  The venue for any lawsuit shall be Charlotte, North Carolina.

 

21.                               Governing Law.  The validity, construction and effect of the Plan and any Award hereunder will be determined in accordance with the State of Delaware except to the extent governed by applicable federal law.

 

22.                               Compliance with Section 409A.

 

22.1                        In General.  The Plan is intended to be administered in a manner consistent with the requirements, where applicable, of Section 409A.  For avoidance of doubt, Stock Options and Stock Appreciation Rights are intended to qualify for the stock rights exemptions from Section 409A.  Where reasonably possible and practicable, the Plan shall be administered in a manner to avoid the imposition on Participants of immediate tax recognition and additional taxes pursuant to such Section 409A.  Notwithstanding the foregoing, neither the Company nor the Committee shall have any liability to any person in the event Section 409A applies to any such Award in a manner that results in adverse tax consequences for the Participant or any of his or her transferees.

 

22.2                        Elective Deferrals.  No elective deferrals or re-deferrals other than in regard to Restricted Stock Units are permitted under the Plan.

 

22.3                        Applicable Requirements.  To the extent any of the Awards granted under the Plan are deemed “deferred compensation” and hence subject to Section 409A, the following rules shall apply to such Awards:

 

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(a)                                 Mandatory Deferrals.  If the Company decides that the payment of compensation under the Plan shall be deferred within the meaning of Section 409A, then, except as provided under Treas. Reg. Section 1.409A-1(b)(4)(ii), on granting of the Award to which such compensation payment relates, the Company shall specify the date(s) at which such compensation will be paid in the Award Agreement.

 

(b)                                 Initial Deferral Elections.  For Awards of RSUs where the Committee provides the opportunity to elect the timing and form of the payment of the underlying Shares at some future time once any requirements have been satisfied, the Participant must make his or her initial deferral election for such Award in accordance with the requirements of Section 409A, i.e., within thirty (30) days of first becoming eligible to receive such award or prior to the start of the year in which the Award is granted to the Participant, in each case pursuant to the requirements of Section 409A and Treas. Reg. Section 1.409A-2.

 

(c)                                  Subsequent Deferral Elections.  To the extent the Company or Committee decides to permit compensation subject to Section 409A to be re-deferred pursuant to Treas. Reg. Section 1.409A-2(b), then the following conditions must be met: (i) such election will not take effect until at least 12 months after the date on which it is made; (ii) in the case of an election not related to a payment on account of disability, death or an unforeseeable emergency, the payment with respect to which such election is made must be deferred for a period of not less than five years from the date such payment would otherwise have been paid; and (iii) any election related to a payment at a specified time or pursuant to a fixed schedule (within the meaning of Treas. Reg. Section 1.409A-3(a)(4)) must be made not less than 12 months before the date the payment is scheduled to be paid.

 

(d)                                 Timing of Payments.  Payment(s) of compensation that is subject to Section 409A shall only be made upon an event or at a time set forth in Treas. Reg. Section 1.409A-3, i.e., the Participant’s separation from service, the Participant’s becoming disabled, the Participant’s death, at a time or a fixed schedule specified in the Plan or an Award Agreement, a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, or the occurrence of an unforeseeable emergency.

 

(e)                                  Certain Delayed Payments.  Notwithstanding the foregoing, to the extent an amount was intended to be paid such that it would have qualified as a short-term deferral under Section 409A and the applicable regulations, then such payment is or could be delayed if the requirements of Treas. Reg. 1.409A-1(b)(4)(ii) are met.

 

(f)                                   Acceleration of Payment.  Any payment made under the Plan to which Section 409A applies may not be accelerated, except in accordance with Treas. Reg. 1.409A-3(j)(4).

 

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(g)                                  Payments upon a Change in Control.  Notwithstanding any provision of the Plan to the contrary, to the extent an Award subject to Section 409A shall be deemed to be vested or restrictions lapse, expire or terminate upon the occurrence of a Change in Control and such Change in Control does not constitute a “change in the ownership or effective control” or a “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A(a)(2)(A)(v), then even though such Award may be deemed to be vested or restrictions lapse, expire or terminate upon the occurrence of the Change in Control or any other provision of the Plan, payment will be made, to the extent necessary to comply with the provisions of Section 409A, to the Participant on the earliest of (i) the Participant’s “separation from service” with the Company (determined in accordance with Section 409A), (ii) the date payment otherwise would have been made pursuant to the regular payment terms of the Award in the absence of any provisions in the Plan to the contrary (provided such date is permissible under Section 409A) or (iii) the Participant’s death.

 

(h)                                 Payments to Specified Employees.  Payments due to a Participant who is a “specified employee” within the meaning of Section 409A on account of the Participant’s “separation from service” with the Company (determined in accordance with Section 409A) shall be made on the date that is six months after the date of the Participant’s separation from service or, if earlier, the Participant’s date of death.

 

22.4                        Deferrals to Preserve Deductibility under Section 162(m).  The Committee may postpone the exercising of Awards, the issuance or delivery of Shares under any Award or any action permitted under the Plan to prevent the Company, a Subsidiary or any Affiliate from being denied a Federal income tax deduction with respect to any Award other than an ISO as a result of Section 162(m) in accordance with IRS regulations.  In such case, payment of such deferred amounts must be made as soon as reasonably practicable following the first date on which the Company, a Subsidiary and/or Affiliate anticipates or reasonably should anticipate that, if the payment were made on such date, the Company’s, Subsidiary’s and/or Affiliate’s deduction with respect to such payment would no longer be restricted due to the application of Section 162(m).

 

22.5                        Determining “Controlled Group”.  In order to determine for purposes of Section 409A whether a Participant or eligible individual is employed by a member of the Company’s controlled group of corporations under Section 414(b) of the Code (or by a member of a group of trades or businesses under common control with the Company under Section 414(c) of the Code) and, therefore, whether the Shares that are or have been purchased by or awarded under the Plan to the Participant are shares of “service recipient” stock within the meaning of Section 409A, a Participant or eligible employee of Premier Healthcare Alliance, L.P. shall be considered employed by the Company’s controlled group (or by a member of a group of trades or businesses under common control with the Company, as applicable).

 

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23.                               Transferability.

 

23.1                        Transfer Restrictions.  Except as provided in Sections 23.2 and 23.4, no Award granted under the Plan shall be transferable by a Participant other than upon death by will or the laws of descent and distribution, and Options and Stock Appreciation Rights shall be exercisable during a Participant’s lifetime only by the Participant or, in the event of the Participant’s legal incapacity, by his guardian or legal representative acting in a fiduciary capacity on behalf of the Participant under state law.  Any attempt to transfer an Award in violation of the Plan shall render such Award null and void.

 

23.2                        Limited Transfer Rights.  The Committee may expressly provide in an Award Agreement that a Participant may transfer such Award (other than an Incentive Stock Option), in whole or in part, to a Family Member, a trust for the exclusive benefit of the Participant and Family Members, a partnership or other entity in which all the beneficial owners are the Participant and Family Members, or any other entity affiliated with the Participant that may be approved by the Committee.  Subsequent transfers of Awards shall be prohibited except in accordance with this Section 23.2.  All terms and conditions of the Award, including provisions relating to the termination of the Participant’s covered employment or service shall continue to apply following a transfer made in accordance with this Section 23.2.

 

23.3                        Additional Restrictions on Transfer.  Any Award made under the Plan may provide that all or any part of the Shares that are to be issued or transferred by the Company upon exercise, vesting or settlement shall be subject to further restrictions upon transfer.

 

23.4                        Domestic Relations Orders. Notwithstanding the foregoing provisions of this Section 23, any Award made under the Plan may be transferred as necessary to fulfill any domestic relations order as defined in Section 414(p)(1)(B) of the Code.

 

24.                               Forfeiture and Recoupment.  Without limiting in any way the generality of the Committee’s power to specify any terms and conditions of an Award consistent with law, and for greater clarity, the Committee may specify in an Award Agreement that the Participant’s rights, payments and benefits with respect to an Award, including any payment of Shares received upon exercise or in satisfaction of an Award under the Plan shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions, without limit as to time.  Such events shall include, but not be limited to, failure to accept the terms of the Award Agreement, termination of service under certain or all circumstances, violation of material Company policies, misstatement of financial or other material information about the Company, fraud, misconduct, breach of noncompetition, confidentiality, nonsolicitation, noninterference, corporate property protection, or other agreements that may apply to the Participant, or other conduct by the Participant that the Committee determines is detrimental to the business or reputation of the Company and its Affiliates, including facts and circumstances discovered after termination of service.  Awards granted under the Plan shall be subject to any compensation recovery policy or

 

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minimum stock holding period requirement as may be adopted or amended by the Company from time to time.

 

25.                               No Constraint on Corporate Action.  Nothing in the Plan shall be construed to: (i) limit, impair, or otherwise affect the Company’s or an Affiliate’s or a Subsidiary’s right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets; or, (ii) limit the right or power of the Company or an Affiliate or a Subsidiary to take any action which such entity deems to be necessary or appropriate.

 

26.                               Effect of Disposition of Facility or Operating Unit.  If the Company or any of its Affiliates closes or disposes of the facility at which a Participant is located or the Company or any of its Affiliates diminish or eliminate ownership interests in any operating unit of the Company or any of its Affiliates so that such operating unit ceases to be majority owned by the Company or any of its Affiliates then, with respect to Awards held by Participants who, subsequent to such event, will not be Employees, the Committee may, to the extent consistent with Section 409A (if applicable), take any of the actions described in Section 13.1 with respect to a Change in Control.  If the Committee takes no special action with respect to any disposition of a facility or an operating unit, then the Participant shall be deemed to have terminated his or her employment with the Company and its Subsidiaries and Affiliates and the terms and conditions of the Award Agreement and the other terms and conditions of the Plan shall control.

 

27.                               Indemnification.  Subject to requirements of applicable state law, each individual who is or shall have been a member of the Board, or a Committee appointed by the Board, or an officer of the Company to whom authority was delegated in accordance with Section 3, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him in connection with or resulting from any claim, action, suit, or proceeding to which he may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him in settlement thereof, with the Company’s approval, or paid by him in satisfaction of any judgment in any such action, suit, or proceeding against him, provided he shall give the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his own behalf, unless such loss, cost, liability, or expense is a result of his own willful misconduct or except as expressly provided by statute.   The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such individuals may be entitled under the Company’s Certificate of Incorporation or by-laws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

 

28.                               Nonexclusivity of the Plan.  The adoption of the Plan shall not be construed as creating any limitations on the power of the Board or Committee to adopt such other compensation arrangements as it may deem desirable for any Participant.

 

29.                               Miscellaneous.

 

29.1                        Gender and Number.  Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular, and the singular shall include the plural.

 

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29.2                        Severability.  In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

 

29.3                        Requirements of Law.  The granting of Awards and the issuance of Shares under this Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

 

29.4                        Successors.  All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

 

29.5                        Payment Following a Participant’s Death.  Any remaining vested rights or benefits under the Plan upon a Participant’s death shall be paid or provided to the Participant’s legal spouse or, if no such spouse survives the Participant, to the Participant’s estate.

 

29.6                        Rights as a Shareholder.  Except as otherwise provided herein, a Participant shall have none of the rights of a shareholder with respect to Shares covered by any Award until the Participant becomes the record holder of such Shares.

 

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IN WITNESS WHEREOF, the Company has caused the Plan to be executed in its name and behalf this          day of                    2013, by its duly authorized officer, effective as of the Effective Date.

 

 

	
PREMIER, INC.
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
[Name]
    	
 
    
	
 
    	
 
    
	
Witness:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
[Name]
    	
 
    

 

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