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EXHIBIT NO. 4.3
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (the "Agreement"), dated as of August 31,
1998, is entered into by and among NEXTERA ENTERPRISES, L.L.C., a Delaware
limited liability company ("Nextera"), NEXTERA ENTERPRISES, INC., a Delaware
corporation (the "Company"), and the individuals and other parties listed on the
Table of Stockholders attached hereto as Schedule A and their permitted
successors and assigns (each a "Stockholder" and collectively, the
"Stockholders").
WHEREAS, from its inception in February 1997 through the date hereof,
Nextera has operated as a Delaware limited liability company;
WHEREAS, pursuant to a Share Exchange Agreement (the "Exchange
Agreement") dated as of the date hereof, by and among Nextera, and other parties
named therein, Nextera and Knowledge Enterprises, Inc., ("KE"), Nextera's
controlling member, have agreed to cause the business of Nextera to be
incorporated;
WHEREAS, pursuant to the Exchange Agreement and the Second Amended and
Restated Limited Liability Company Agreement of Nextera, as amended through the
date hereof (the "Nextera Operating Agreement") the incorporation of the Nextera
business into the Company, shall be accomplished as follows (the "Incorporation
Transaction"): (i) all of the Members of Nextera other than the transferees of
Sibson & Company, L.P. (which will be Sibson & Company, Inc. and SC2, Inc.)
shall contribute and assign their Class A and Class B Common Units of Nextera to
the Company in exchange for stock of the Company and (ii) the shareholders of
Sibson & Company, Inc. and SC2, Inc. shall contribute and assign the stock of
Sibson & Company, Inc. and SC2, Inc. to the Company in exchange for stock of the
Company;
WHEREAS, as a result of the Incorporation Transaction, each
Stockholder will own the number of shares of Class A Common stock of the Company
(the "Class A Common Stock") and Class B Common Stock of the Company (the "Class
B Common Stock," and together with the Class A Common Stock, the "Common Stock")
set forth opposite his or its name on Schedule A attached hereto which will be
completed and updated prior to completion of the Incorporation Transaction as
provided herein (such shares of Common Stock, together with any other shares of
capital stock of the Company acquired by such Stockholder after the date hereof
and during the term of this Agreement (including through the exercise of any
stock options, warrants or similar instruments), being collectively referred to
herein as the "Subject Shares");
WHEREAS, the Nextera Operating Agreement contains various provisions
which are to be included in a stockholders agreement at the time that the
Nextera business is incorporated; and
WHEREAS, Nextera, the Company and the Stockholders desire to enter
into this Agreement to set forth these agreements among the Stockholders and the
Company which shall become effective upon completion of the Incorporation
Transaction (the "Incorporation Date");
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NOW, THEREFORE, to induce each other to proceed with, and in
consideration of their consummation of, the Incorporation Transaction, and in
consideration of the promises and the representations, warranties and agreements
contained herein, the parties agree as follows:
1. Definitions.
1.1 "Affiliate" means, with respect to any Person, (a) any Person
ten percent (10%) or more of whose outstanding voting securities are directly or
indirectly owned, controlled, or held with power to vote, by such Person; or (b)
any Person directly or indirectly controlling, controlled by, or under common
control with such Person.
1.2 "Family" means a person's spouse, lineal descendants,
parents, siblings, and lineal descendants of siblings. Any such relationship by
legal adoption shall be included.
1.3 "Founders' Interests" means any equity interests in the
Company or a successor entity which were received by Stockholders in respect of
membership interests in Nextera which membership interests were received by
Stockholders other than KE's assignors upon the liquidation and dissolution of
Nextera Enterprises Holdings, L.L.C., a Delaware limited liability company, and
in the case of Xxxxxxx X. Xxxxxxx, Xx., Xxxxxx Xxxxxx, Xxxxxxx Xxxxxxxxx, Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxx, and Xxxxxx Xxxxxx includes the Class A and Class B
Common Units purchased pursuant to Section 9 of the First Amendment to the
Nextera Operating Agreement". Founders' Interests do not include any equity
interests owned by Sibson Persons (as defined in Section 6.2 below).
1.4 "Person" means any natural person, partnership, corporation,
limited liability company, trust, association, or other legal entity.
1.5 "Qualified Initial Public Offering" means the Company's (or a
successor's to the Company's business) first underwritten initial public
offering of common equity interests under the Securities Act of 1933, as amended
(the "Securities Act") after the date hereof, that results in such common equity
interests being listed for trading on a national securities exchange or being
authorized for trading on the Nasdaq National Market System at such time.
1.6 "Qualified Transfer" means (i) any transfer of shares of
Common Stock by will or pursuant to the laws of descent and distribution to any
member or members of a Stockholder's Family, (ii) any transfer of shares of
Common Stock by a Stockholder to a domestic trust created for the sole benefit
of one or more of the Stockholder or any member or members of the Stockholder's
Family, (iii) any transfer of shares of Common Stock from a trust described in
clause (ii) above to the Stockholder (or former Stockholder) who transferred
shares of Common Stock to such trust, and (iv) any transfer to a domestic
limited partnership or a domestic limited liability company if there are no
partners or members of such limited partnership or limited liability company
other than the Stockholder and members of the Stockholder's Family; (v) any
transfer of Common Stock from a limited partnership or limited liability company
described in clause (iv) above to the Stockholder (or former Stockholder) who
transferred Common Stock to such limited partnership or limited liability
company; and (vii) any transfer of
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shares of Common Stock from one Stockholder to another Stockholder; provided
that none of the above transfers shall constitute a "Qualified Transfer" unless
(a) the transferee agrees in writing to be bound by the terms and provisions of
this Agreement as a Stockholder, and specifically, without limiting the
generality of the foregoing, agrees that (i) the repurchase option provision of
Section 4.4 hereof (and if and to the extent such provision is modified by an
employment agreement, then as so modified) shall continue to apply to such
Common Stock as if they had not been transferred, (ii) to the extent the Common
Stock was Founders' Interests in the hands of the transferor, the restrictions
contained in Section 4.5 hereof shall continue to apply to such as Common Stock
as if they had not been transferred, (iii) to the extent that such Common Stock
was received by the transferor pursuant to the Company's 1998 Equity
Participation Plan, all provisions of the Company's 1998 Equity Participation
Plan, the Equity Participation Agreement by which such Common Stock was awarded,
the transferor's employment agreement with the Company or a subsidiary, if any,
and all relevant provisions of this Agreement shall continue to apply to such
shares of Common Stock as if they had not been transferred, and (iv) to the
extent the ownership of any shares of Common Stock which are held in an escrow
are so transferred, such shares of Common Stock shall remain subject to the
provisions of such escrow agreement as if they had not been transferred, and (b)
the Company receives an opinion of counsel reasonably acceptable to the Company
that such transfer does not violate federal or state securities laws (if the
Stockholder represents to the Company in writing that the transfer was made as a
bona fide gift without payment of consideration, no securities law opinion is
required), and further provided that if the transfer is to a limited
partnership, limited liability company, or trust of which the Stockholder (or
former Stockholder) is not the trustee, then such transfer will not constitute a
"Qualified Transfer" unless the limited partnership, limited liability company,
or trustee, as the case may be, gives a proxy to vote such shares of Common
Stock to a person acceptable to the Company. Any Stockholder or any person or
entity designated as a "Shareholder Representative" pursuant to the Exchange
Agreement or an escrow agreement to which the Company or Nextera is a party
shall be deemed acceptable to the Company. Any such proxy shall be deemed to be
terminated upon a Qualified Initial Public Offering. Qualified Transfer shall
also mean (i) any transfer or sale of shares of Common Stock between a
Stockholder and the Company or Nextera to satisfy an indemnification claim and
(ii) any pledge of shares of Common Stock pursuant to an escrow agreement to
which the Company or Nextera is a party.
2. Representations and Warranties of each Stockholder. Each
Stockholder hereby, severally and not jointly, represents and warrants to
Nextera as of the date hereof in respect of himself or itself that such
Stockholder has all requisite power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby. This Agreement has been
duly authorized, executed and delivered by the Stockholder and constitutes a
valid and binding obligation of the Stockholder enforceable against the
Stockholder in accordance with its terms (assuming the due authorization,
execution and delivery by the other parties hereto), subject to the effect of
any applicable bankruptcy, reorganization, insolvency, moratorium or similar
laws affecting creditors' rights generally and subject to the effect of general
principles of equity, including, without limitation, the possible unavailability
of specific performance or injunctive relief, regardless of whether considered
in a proceeding in equity or at law.
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3. Representations and Warranties of Nextera and the Company. Nextera
hereby represents and warrants to each Stockholder that Nextera has all
requisite limited liability company power and authority, and that the Company
hereby represents and warrants that it has all requisite corporate power and
authority, to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly authorized, executed and
delivered by Nextera and the Company, and constitutes a valid and binding
obligation of Nextera and the Company, enforceable against Nextera and the
Company in accordance with its terms (assuming the due authorization, execution
and delivery by the other parties hereto), subject to the effect of any
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject to the effect of general
principles of equity, including, without limitation, the possible unavailability
of specific performance or injunctive relief, regardless of whether considered
in a proceeding in equity or at law.
4. Transfers of Interests.
4.1 General. Except as otherwise provided in Sections 4.2 and
4.4, a Stockholder may not sell, assign, pledge, hypothecate, transfer, exchange
or otherwise dispose of (collectively "Assign") or offer to Assign, in whole or
in part, his or its Common Stock unless Stockholders holding a majority of the
Common Stock subject to the Agreement approve of such Assignment; provided,
however, that, Sections 4.1, 4.2, 4.3 and 4.4 hereof shall no longer apply if a
Stockholder desires to Assign his or its Common Stock following a Qualified
Initial Public Offering.
4.2 Qualified Transfer. A Stockholder may, without consent,
transfer some or all of his or its shares of Common Stock pursuant to a
Qualified Transfer.
4.3 Transferee Not A Stockholder. If a Stockholder attempts to
Assign, in whole or in part, his or its Common Stock in violation of Section
4.1, such assignment shall be void ab initio and of no effect and the purported
transferee shall not be recognized as a Stockholder and shall have no right to
participate in the business and affairs of the Company.
4.4 Repurchase Option. Prior to a Qualified Initial Public
Offering, the Company shall have the right, but not an obligation, to repurchase
the shares of Common Stock of any Stockholder who is employed by or similarly
associated with the Company or any other entity controlled by or affiliated with
the Company at such time as such Stockholder is no longer employed by or so
associated with the Company or such other entity for any reason. For a six month
period (the "Repurchase Option Period") following such termination, the Company
shall have an option (the "Repurchase Option") to repurchase all or any portion
of the shares of Common Stock held by such Stockholder. If the Company so elects
to exercise the Repurchase Option in whole or in part, it shall give written
notice of such (the "Repurchase Notice") to such Stockholder (or his estate or
legal representative, as the case may be) during the Repurchase Option Period.
The fair market value of such Stockholder's shares of Common Stock being
repurchased shall be determined by the Board of Directors of the Company (the
"Board") and the Board shall give notice (the "Valuation Notice") of such
determination to such Stockholder (or his estate or legal representative, as the
case may be) within thirty (30) days of the Xxxxxxxxxx
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Notice. If such Stockholder (or his estate or legal representative, as the case
may be) does not dispute the fair market value of the shares of Common Stock
being repurchased within the time period specified below for giving the
Appraisal Notice, then the Company shall pay to such Stockholder (or his estate
or legal representative, as the case may be), in cash and within thirty days of
the date of the Valuation Notice, the fair market value of the shares of Common
Stock being repurchased. If such Stockholder (or his estate or legal
representative, as the case may be) disputes the fair market value of the shares
of Common Stock being repurchased as set forth in the Valuation Notice, then
such Stockholder (or his estate or legal representative, as the case may be)
shall so notify the Board in writing (the "Appraisal Notice") within five (5)
business days of receipt of the Valuation Notice. Within fifteen (15) business
days of the receipt of the Appraisal Notice, the Board and such Stockholder (or
his estate or legal representative, as the case may be) shall each appoint a
professional appraiser to determine the fair market value of the shares of
Common Stock being repurchased. Each appraiser shall have at least five (5)
years experience in appraising companies similar to the Company. The two
appraisers shall within the succeeding twenty (20) day period after their
selection, attempt to reach agreement on the fair market value. If the
appraisers reach such agreement, their agreement shall be final and binding on
the Company and such Stockholder (or his estate or legal representative, as the
case may be). If the appraisers fail to agree, they shall within ten (10) days
thereafter select a third appraiser with the same qualification requirements,
and the three (3) appraisers shall establish the fair market value by majority
vote within the succeeding twenty (20) day period and such determination of the
fair market value shall be final and binding on the Company and such Stockholder
(or his estate or legal representative, as the case may be). In all events, the
appraisers selected shall be unaffiliated with and otherwise independent of the
Company, the Board, such Stockholder and their affiliates. If the fair market
value of the shares of Common Stock being repurchased, as determined by the
appraisers, is less than or no more than five percent (5%) greater than the
value as determined by the Board, then such Stockholder (or his estate or legal
representative, as the case may be) shall pay all costs associated with the
appraisers, and such costs shall be deducted from the amount owed by the
Company. If the fair market value as determined by the appraisers is more than
five percent (5%) greater than the value as determined by the Board, then the
Company shall pay for all costs associated with the appraisers. Notwithstanding
the provisions of this Section 4.4, if such a Stockholder has an employment
contract with the Company or an entity controlled by or affiliated with the
Company and such employment contract provides for the repurchase of shares of
Common Stock being repurchased upon such Stockholder's termination of
employment, then to the extent there is any conflict between the terms of this
Section 4.4 and the terms of the employment contract, the terms of the
employment contract shall govern.
4.5 Restrictions on Sale or Transfer After a Qualified Initial
Public Offering. If there is a Qualified Initial Public Offering of the Company
or a successor to the Company's business, then, subject to all applicable market
and legal restrictions, each Stockholder that holds Founders' Interests hereby
agrees and covenants that such Stockholder will not Assign any of such
Stockholder's Founders' Interests for a six month period following the Qualified
Initial Public Offering, and that subsequent to such six month period, such
Stockholder: (A) will not Assign more than one-third of such Founders' Interests
in the twelve calendar month period following such six month period; and (B)
will not Assign more than a total of two-thirds of such Founders' Interests in
the twenty-four calendar month period following such six month period.
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4.6 Compliance with Securities Laws. Each Stockholder agrees and
covenants that such Stockholder will not Assign any of his or its Common Stock
except in compliance with all applicable securities laws.
5. Registration Rights. The Stockholders shall have registration
rights as specified in this Section 5.
5.1 Piggyback Registration Rights.
5.1.1 Right to Piggyback. Whenever the Company proposes to
register any Common Stock (or securities convertible into or
exchangeable for, or options to purchase, Common Stock) with the
Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act") and the
registration form to be used may be used for the registration of the
"Registrable Securities," as defined in Section 5.9 hereof (a
"Piggyback Registration"), the Company (i) will give written notice to
all Stockholders who hold Registrable Securities (collectively,
"Holders") and each holder of an option to purchase Registrable
Securities, no later than the later of (a) 45 days prior to the
anticipated filing date or (b) promptly following its decision to
file, of its intention to effect such a registration, which notice
will specify the proposed offering price (or reasonable range
thereof), the kind and number of securities proposed to be registered,
the distribution arrangements and such other information that at the
time would be appropriate to include in such notice, and (ii) will,
subject to Section 5.1.2 below, include in such Piggyback Registration
all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 20 days after
the date of the Company's notice. Notwithstanding the foregoing, the
rights provided in this Section 5.1 shall not apply to the Qualified
Initial Public Offering as long as no Stockholder is allowed to sell
any Common Stock in such Qualified Initial Public Offering. The
Company shall reasonably cooperate with the holders of options to
purchase Registrable Securities in connection with such holders'
desire, if any, to exercise such options contemporaneously with the
sale of the underlying Registrable Securities.
5.1.2 Priority on Piggyback Registrations. If the managing
underwriter or underwriters, if any, advise the selling Holders in
writing that in its or their reasonable opinion or, in the case of a
Piggyback Registration not being underwritten, the Company shall
reasonably determine (and notify the selling Holders of such
determination), based upon the written advice of an independent
investment banker of nationally recognized standing, a copy of which
advice shall also be delivered to the selling Holders, that the number
or kind of securities proposed to be sold in such registration
(including Registrable Securities to be included pursuant to Section
5.1.1 above) is inconsistent with that which can be sold in such
registration without having a material adverse effect on the success
of the offering (including, without limitation, an impact on the
selling price or the number of securities that any participant may
sell), the Company will include in such registration the number of
securities, if any, which, in the opinion of such underwriter or
underwriters, or the Company, based upon the advice of an independent
investment banker of nationally recognized standing, as the case may
be, can be sold as follows: (i) first, the Common
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Stock the Company proposes to sell and (ii) second, the Registrable
Securities requested to be included in such registration by the
Holders. To the extent that the privilege of including Registrable
Securities in any Piggyback Registration must be allocated among the
selling Holders pursuant to clause (ii) above, the allocation shall be
made pro rata based on the number of Registrable Securities that each
such Holder shall have requested to include therein.
5.1.3 Selection of Underwriters. If any Piggyback
Registration is an underwritten offering, the Company will (i) select
a managing underwriter or underwriters to administer the offering,
which managing underwriter or underwriters will be of nationally
recognized standing and (ii) determine the terms under which such
underwriting shall take place.
5.1.4 Withdrawal. A request for Piggyback Registration may
be withdrawn by any Holder making such a request provided that such
Holder reimburses the Company for all expenses reasonably incurred by
the Company in connection with the request.
5.2 Demand Registration Rights.
5.2.1 Right to Demand. After 180 days after a Qualified
Initial Public Offering, Knowledge Enterprises, Inc. or an affiliate
thereof that then owns an equity interest in the Company may make a
one time written request of the Company for registration with the
Commission, under and in accordance with the provisions of the
Securities Act, of all or part of its Registrable Securities (a
"Demand Registration"); provided, however, that (x) the Company need
not effect a Demand Registration unless such Demand Registration shall
include at least 10% of the issued and outstanding Common Stock of the
Company and (y) the Company may, if the Board determines in the
exercise of its reasonable judgment that effecting such Demand
Registration at such time would have a material adverse effect on the
Company, defer such Demand Registration for a single period not to
exceed 180 days. Within 10 days after receipt of the request for a
Demand Registration, the Company will send written notice (the
"Notice") of such registration request and its intention to comply
therewith to each of the other Holders and each holder of an option to
purchase Registrable Securities and, subject to Section 5.2.3 below,
the Company will include in such registration all Registrable
Securities of the Holders with respect to which the Company has
received written requests for inclusion therein within 20 business
days after the effectiveness of the Notice. All requests made pursuant
to this Section 5.2.1 will specify the aggregate number of Registrable
Securities requested to be registered and will also specify the
intended methods of disposition thereof. The Company shall reasonably
cooperate with the holders of options to purchase Registrable
Securities in connection with such holders' desire, if any, to
exercise such options contemporaneously with the sale of the
underlying Registrable Securities.
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After 180 days after a Qualified Initial Public Offering,
Holders who together hold at least 10% of the issued and outstanding
Common Stock of the Company may make a one time written request of the
Company for a Demand Registration on the terms set forth above.
5.2.2 Expenses; Number of Demand Registrations; Withdrawal.
The expenses of each Demand Registration (including the fees and
expenses of a total of one counsel for the selling Holders in
accordance with Section 5.5.2 below) shall be borne by the Company. A
Demand Registration shall not be counted as a Demand Registration
hereunder until such Demand Registration has been declared effective
by the Commission and maintained continuously effective for a period
of at least six months or such shorter period when all Registrable
Securities included therein have been sold in accordance with such
Demand Registration. A Demand Registration may be withdrawn by the
Holders making the demand without the demand counting as a Demand
Registration hereunder provided that the Holders making the demand
reimburse the Company for all reasonable expenses incurred by the
Company in connection with the demand.
If the Company elects to issue and sell any equity
securities pursuant to any Registration Statement filed in connection
with a Demand Registration, then such Registration shall be deemed not
to be a Demand Registration solely for purposes of determining the
number of Demand Registrations granted by this Section 5.2.2.
5.2.3 Priority on Demand Registrations. If in any Demand
Registration the managing underwriter or underwriters thereof advise
the Company in writing that in its or their reasonable opinion (or in
the case of a Demand Registration not being underwritten, the Company
shall reasonably determine (and notify the selling Holders of such
determination)), based upon the written advice of an independent
investment banker of nationally recognized standing, a copy of which
advice shall also be delivered to the selling Holders, that the number
of securities proposed to be sold in such Demand Registration is
inconsistent with that which can be sold in such offering without
having a material adverse effect on the success of the offering
(including, without limitation, an impact on the selling price or the
number of Registrable Securities that any participating Holder may
sell), the Company will include in such registration only the number
of securities that, in the reasonable opinion of such underwriter or
underwriters (or the Company, based upon the advice of an independent
investment banker of nationally recognized standing, as the case may
be) can be sold without having a material adverse effect on the
success of the offering as follows: (i) first, the Registrable
Securities requested to be included in such Demand Registration by
Holders pro rata on the basis of the number of Registrable Securities
requested to be included and (ii) second, any securities held by
persons other than the Holders and requested to be included in such
Demand Registration.
5.2.4 Selection of Underwriters. The Company shall have the
right to determine whether any Demand Registration shall be
underwritten or not underwritten. If any Demand Registration is an
underwritten offering, the Company will (i) select a managing
underwriter or underwriters to administer the offering, which managing
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underwriter or underwriters shall be of nationally recognized standing
and (ii) determine the terms under which such underwriting shall take
place.
5.3 Registration Procedures. With respect to any Piggyback
Registration or Demand Registration (generically, a "Registration"),
the Company will, subject to Sections 5.1.2 and 5.2.3, as
expeditiously as practicable:
5.3.1 Prepare and file with the Commission, within 90 days
after mailing the applicable Notice, a registration statement or
registration statements (the "Registration Statement") relating to the
applicable Registration on any appropriate form under the Securities
Act, which form shall be available for the sale of the Registrable
Securities in accordance with the intended method or methods of
distribution thereof; provided, however, that the Company will include
in any Registration Statement on a form other than Form S-1 all
information that the selling Holders shall reasonably request and
shall include all financial statements required by the Commission to
be filed therewith, cooperate and assist in any filings required to be
made with the National Association of Securities Dealers, Inc.
("NASD") and use its best efforts to cause such Registration Statement
to become effective; provided further, that before filing a
Registration Statement or prospectus related thereto (a "Prospectus")
or any amendments or supplements thereto, the Company will furnish to
the Holders covered by such Registration Statement and the
underwriters, if any, copies of all such documents proposed to be
filed, which documents will be subject to the reasonable review of
such Holders and underwriters and their respective counsel, and the
Company will not file any Registration Statement or amendment thereto
or any Prospectus or any supplement thereto to which the holders of a
majority of the Registrable Securities covered by such Registration
Statement or the underwriters, if any, shall reasonably object;
5.3.2 Prepare and file with the Commission such amendments
and post-effective amendments to the Registration Statement as may be
necessary to keep each Registration Statement effective for the
applicable period, or such shorter period which will terminate when
all Registrable Securities covered by such Registration Statement have
been sold; cause each Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act; and comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the
sellers thereof set forth in such Registration Statement or supplement
to the Prospectus. The Company shall not be deemed to have used its
best efforts to keep a Registration Statement effective during the
applicable period if it voluntarily takes any action that would result
in selling Holders covered thereby not being able to sell such
Registrable Securities during that period unless such action is
required under applicable law, provided that the foregoing shall not
apply to actions taken by the Company in good faith and for valid
business reasons, including, without limitation, the acquisition or
divestiture of assets, so long as the Company promptly thereafter
complies with the requirements of Section 5.3.11 below, if applicable;
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5.3.3 Notify the selling Holders and the managing
underwriters, if any, promptly, and (if requested by any such person
or entity) confirm such advice in writing, (A) when the Prospectus or
any Prospectus supplement or post-effective amendment has been filed,
and, with respect to the Registration Statement or any post-effective
amendment, when the same has become effective, (B) of any request by
the Commission for amendments or supplements to the Registration
Statement or the Prospectus or for additional information, (C) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose, (D) if at any time the representations
and warranties of the Company contemplated by Section 5.3.14 below
cease to be true and correct, (E) of the receipt by the Company of any
notification with respect to the suspension of the qualification of
the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose and (F)
of the happening of any event which makes any statement made in the
Registration Statement, the Prospectus or any document incorporated
therein by reference untrue or which requires the making of any
changes in the Registration Statement, the Prospectus or any document
incorporated therein by reference in order to make the statements
therein not misleading;
5.3.4 Make every reasonable effort to obtain the withdrawal
of any order suspending the effectiveness of the Registration
Statement at the earliest possible moment;
5.3.5 If requested by the managing underwriter or
underwriters or a holder of Registrable Securities being sold in
connection with an underwritten offering, promptly incorporate in a
Prospectus supplement or post-effective amendment such information as
the managing underwriters and the holders of a majority of the
Registrable Securities being sold agree should be included therein
relating to the plan of distribution with respect to such Registrable
Securities, including, without limitation, information with respect to
the number of Registrable Securities being sold to such underwriters,
the purchase price being paid therefor by such underwriters and with
respect to any other terms of the underwritten offering of the
Registrable Securities to be sold in such offering; and make all
required filings of such Prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in
such Prospectus supplement or post-effective amendment;
5.3.6 Furnish to each managing underwriter and, if requested
by the holders of a majority of the Registrable Securities being sold,
to each selling Holder, without charge, at least one signed copy of
the Registration Statement and any amendment thereto, including
financial statements and schedules, all documents incorporated therein
by reference and all exhibits (including those incorporated by
reference);
5.3.7 Deliver to each selling Holder and the underwriters,
if any, without charge, as many copies of the Prospectus (including
each preliminary prospectus) and any amendment or supplement thereto
as such Holder and underwriters may reasonably request. The Company
consents to the use of each Prospectus or any amendment or supplement
thereto by each of the selling Holders and the underwriters, if any,
in
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connection with the offering and sale of the Registrable Securities
covered by such Prospectus or any amendment or supplement thereto;
5.3.8 Prior to any public offering of Registrable
Securities, register or qualify or cooperate with the selling Holders,
the underwriters, if any, and their respective counsel in connection
with the registration or qualification of such Registrable Securities
for offer and sale under the securities or "Blue Sky" laws of such
jurisdictions as any seller or underwriter reasonably requests in
writing, considering the amount of Registrable Securities proposed to
be sold in each such jurisdiction, and do any and all other acts or
things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the
Registration Statement; provided, however, that the Company will not
be required to qualify generally to do business in any jurisdiction
where it is not then so qualified or to take any action that would
subject it to general service of process in any such jurisdiction
where it is not then so subject;
5.3.9 Cooperate with the selling Holders and the managing
underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be
sold and not bearing any restrictive legends and in such denominations
and registered in such names as the managing underwriters may request
at least two business days prior to any sale of Registrable Securities
to the underwriters;
5.3.10 Use its best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers
thereof or the underwriters, if any, to consummate the disposition of
such Registrable Securities;
5.3.11 Upon the occurrence of any event contemplated by
Section 5.3.3(F) above, prepare a supplement or post-effective
amendment to the Registration Statement or the related Prospectus or
any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers
of the Registrable Securities, the Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading;
5.3.12 Cause all Registrable Securities covered by any
Registration Statement to be listed on each securities exchange on
which similar securities issued by the Company are then listed or
cause such Registrable Securities to be authorized for trading on the
Nasdaq National Market System if any similar securities issued by the
Company are then so authorized, if requested by the holders of a
majority of such Registrable Securities or the managing underwriters,
if any;
5.3.13 Provide a CUSIP number for all Registrable
Securities, not later than the effective date of the applicable
Registration Statement;
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5.3.14 Enter into such agreements (including an underwriting
agreement) and take all such other actions in connection therewith in
order to facilitate the disposition of such Registrable Securities as
shall be reasonably necessary, and in connection therewith: (A) make
such representations and warranties to the selling Holders and the
underwriters, if any, in form, substance and scope as are customarily
made by issuers to underwriters in primary underwritten offerings; (B)
obtain opinions of counsel to the Company and updates thereof (which
counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters, if any, and the
holders of a majority of the Registrable Securities being sold)
addressed to each selling Holder and the underwriters, if any,
covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by such Holders and underwriters; (C) obtain "cold comfort"
letters and updates thereof from the Company's independent certified
public accountants addressed to the underwriters, if any, such letters
to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters by underwriters in connection with
primary underwritten offerings; (D) if an underwriting agreement is
entered into, the same shall set forth in full the indemnification
provisions and procedures set forth in Section 5.6 below with respect
to all parties to be indemnified pursuant to said Section; and (E) the
Company shall deliver such documents and certificates as may be
requested by the holders of a majority of the Registrable Securities
being sold and the managing underwriters, if any, to evidence
compliance with Section 5.3.3(F) above and with any customary
conditions contained in the underwriting agreement or other agreement
entered into by the Company. The above shall be done at each closing
under such underwriting or similar agreement or as and to the extent
required thereunder;
5.3.15 Make available for inspection during normal business
hours by a representative of each seller of Registrable Securities,
any underwriter participating in any disposition pursuant to such
Registration and any attorney or accountant retained by the
representative or underwriter, all financial and other records and
pertinent corporate documents of the Company and its subsidiaries and
cause the Company's officers, directors and employees to supply all
information reasonably requested by any such representative,
underwriter, attorney or accountant in connection with such
Registration Statement; provided, however, that any records,
information or documents that are designated by the Company in writing
as confidential shall be kept confidential by such persons unless
disclosure of such records, information or documents is required by
court or administrative order or any regulatory body having
jurisdiction;
5.3.16 Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and make earnings
statements satisfying the provisions of Section 11(a) of the
Securities Act generally available to its security holders no later
than 45 days after the end of any 12-month period (or 90 days, if such
period is a fiscal year) (A) commencing at the end of any fiscal
quarter in which Registrable Securities are sold to underwriters in a
firm or best efforts underwritten offering or (B) if not sold to
underwriters in such an offering, beginning with the first month of
the Company's first fiscal quarter commencing after the effective date
of the Registration Statement, which statements shall cover said
12-month periods;
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5.3.17 Promptly prior to the filing of any document that is
to be incorporated by reference into any Registration Statement or
Prospectus (after initial filing of the Registration Statement),
provide copies of such document to counsel to the selling Holders and
to the managing underwriters, if any, make the Company's
representatives available for discussion of such document and make
such changes in such document prior to the filing thereof as counsel
for such selling Holders or underwriters may reasonably request; and
5.3.18 Keep each seller of Registrable Securities advised in
writing as to the initiation and progress of any Registration
hereunder.
The Company may require each seller of Registrable Securities as
to which any Registration is being effected to furnish to the Company such
information regarding the proposed distribution of such securities as the
Company may from time to time reasonably request in writing.
Each Holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 5.3.3(F), such
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to the Registration Statement until such Holder (i) has received copies of the
supplemented or amended Prospectus as contemplated by Section 5.3.11 above or
until such Holder is advised in writing (the "Advice") by the Company that the
use of the Prospectus may be resumed and (ii) has received copies of any
additional or supplemental filings that are incorporated by reference in the
Prospectus, and, if so directed by the Company, such Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such Registrable
Securities. In the event the Company shall give any such notice, the six-month
time period referred to in Section 5.2.2 shall be extended by the number of days
during the period from and including the date of the giving of such notice to
and including the date when each seller of Registrable Securities covered by
such Registration Statement shall have received the copies of the supplemented
or amended prospectus contemplated by Section 5.3.3(F) or the Advice.
5.4 Restrictions on Public Sale.
5.4.1 Public Sale by Holders. To the extent not inconsistent
with applicable law, each Holder (i) agrees not to effect any public
sale or distribution of Common Stock, including a sale pursuant to
Rule 144 (or any similar provision then in force) under the Securities
Act, during the 180-day period (or such shorter period as may be
agreed to by the managing underwriter or underwriters) following a
Qualified Initial Public Offering and (ii) whose Registrable
Securities are included in a Registration Statement hereunder, if
requested by the managing underwriter or underwriters for such
Registration, agrees not to effect any public sale or distribution of
Registrable Securities, including a sale pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act, during the
15 business days prior to, and during the 90-day period (or such
shorter period as may be agreed to by such underwriter or
underwriters) beginning on, the
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effective date of a Registration Statement pursuant to such Piggyback
Registration or Demand Registration (except as part of such Piggyback
or Demand Registration).
5.4.2 Public Sale by the Company. If requested by the
managing underwriter or underwriters for any underwritten Registration
or by the holders of a majority of the Registrable Securities being
registered in a Demand Registration that is not being underwritten,
(i) the Company will not effect any public sale or distribution of
Common Stock (or securities convertible into or exchangeable or
exercisable for Common Stock) for its own account during the 15
business days prior to, and during the 90-day period beginning on, the
effective date of such Registration and (ii) the Company will use its
best efforts to cause each other holder of Common Stock (or securities
convertible into or exchangeable for, or options to purchase, Common
Stock) purchased from the Company at any time after the date hereof
(other than in a registered public offering) to agree not to effect
any public sale or distribution of any such securities during the
period described in (i) above (except as part of such Registration, if
otherwise permitted).
5.4.3 Other Registrations. If the Company has previously
filed a Registration Statement with respect to Registrable Securities,
and if such previous Registration has not been withdrawn or abandoned,
the Company will not file or cause to be effected any other
registration of any of its Common Stock (or securities convertible
into or exchangeable for, or options to purchase, Common Stock) under
the Securities Act (except on Form S-4 or S-8 or any similar successor
forms), whether on its own behalf or at the request of any holder or
holders of Common Stock (or securities convertible into or
exchangeable or exercisable for Common Stock), until a period of at
least six months has elapsed from the effective date of such previous
Registration; provided, however, that if the holders of 50% or more of
the aggregate number of Registrable Securities included in such
previous Registration shall agree in writing, such period may be
shortened by the Company but not to a period shorter than three
months.
5.5 Registration Expenses.
5.5.1 All expenses incident to the Company's performance of
or compliance with this Section 5 will be borne by the Company,
including, without limitation, all registration and filing fees, the
fees and expenses of the counsel and accountants for the Company
(including the expenses of any "cold comfort" letters and special
audits required by or incident to the performance of such persons),
all other costs and expenses of the Company incident to the
preparation, printing and filing under the Securities Act of the
Registration Statement (and all amendments and supplements thereto)
and furnishing copies thereof and of the Prospectus included therein,
the costs and expenses incurred by the Company in connection with the
qualification of the Registrable Securities under the state securities
or "Blue Sky" laws of various jurisdictions, the costs and expenses
associated with filings required to be made with the NASD (including,
if applicable, the fees and expenses of any "qualified independent
underwriter" and its counsel as may be required by the rules and
regulations of the NASD), the costs and expenses of listing the
Registrable Securities for trading on a national securities exchange
or authorizing them for trading on the Nasdaq National
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Market System and all other costs and expenses incurred by the Company
in connection with any Registration hereunder; provided, however,
that, except as otherwise provided in Section 5.5.2 below, the Company
shall not bear the costs and expenses of any selling Holder for
underwriters' commissions, brokerage fees or transfer taxes, or the
fees and expenses of any counsel, accountants or other representative
retained by any selling Holder.
5.5.2 Notwithstanding the foregoing, in connection with each
Demand Registration hereunder, the Company will reimburse the selling
Holders for the reasonable fees and disbursements of not more than one
counsel (up to a maximum of $25,000). Such counsel shall be chosen by
the holders of a majority of the Registrable Securities covered by the
Registration, subject to the approval of the Company (which approval
shall not unreasonably be withheld).
5.6 Indemnification.
5.6.1 Indemnification by the Company. The Company agrees to
indemnify, to the full extent permitted by law, each Holder, its
officers, directors and agents and each person who controls such
Holder within the meaning of the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (each, an
"Indemnified Holder"), against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue
statement of a material fact contained in any Registration Statement,
Prospectus or preliminary Prospectus or any omission or alleged
omission to state therein a material fact necessary to make the
statements therein (in the case of a Prospectus or any preliminary
Prospectus, in light of the circumstances under which they were made)
not misleading, except to the extent that such untrue statement or
omission is caused by any information with respect to such Indemnified
Holder furnished in writing to the Company by such Indemnified Holder
or its representative expressly for use therein. The Company will also
indemnify underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution,
their officers and directors and each person who controls such persons
(within the meaning of the Securities Act) to the same extent as
provided above with respect to Indemnified Holders; provided, however,
that if pursuant to an underwritten public offering of Registrable
Securities, the Company and any underwriters enter into an
underwriting or purchase agreement relating to such offering that
contains provisions relating to indemnification and contribution
between the Company and such underwriters, such provisions shall be
deemed to govern indemnification and contribution as between the
Company and such underwriters.
5.6.2 Indemnification by Holders of Registrable Securities.
In connection with any Registration, each Holder participating therein
will furnish to the Company in writing such information with respect
to the Holder as the Company reasonably requests for use in connection
with any Registration Statement, Prospectus or preliminary Prospectus
and agrees to indemnify, to the full extent permitted by law, the
Company, the directors and officers of the Company signing the
Registration Statement and each person who controls the Company
(within the meaning of the Securities Act and the Exchange Act)
against any losses, claims, damages, liabilities and expenses
resulting from any untrue
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statement of a material fact or any omission to state a material fact
required to be stated therein or necessary to make the statements in
the Registration Statement, Prospectus or preliminary Prospectus (in
the case of the Prospectus or any preliminary Prospectus, in light of
the circumstances under which they were made) not misleading, to the
extent, and only to the extent, that such untrue statement or omission
is caused by any information with respect to the Holder so furnished
in writing by the Holder or its representative specifically for
inclusion therein. In no event shall the liability of any selling
Holder hereunder be greater in amount than the dollar amount of the
proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation. The Company
shall be entitled to receive indemnities from underwriters, selling
brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided
above with respect to information with respect to such persons or
entities so furnished in writing by such persons or entities or their
representatives specifically for inclusion in any Registration
Statement, Prospectus or preliminary Prospectus.
5.6.3 Conduct of Indemnification Proceedings. Any person or
entity entitled to indemnification hereunder will (i) give prompt
written notice to the indemnifying party after the receipt by the
indemnified party of a written notice of the commencement of any
action, suit, proceeding or investigation or threat thereof made in
writing for which such indemnified party will claim indemnification or
contribution pursuant to this Agreement; provided, however, that the
failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations under the
preceding Section 5.6.1 or 5.6.2, as applicable, except to the extent
that the indemnifying party is actually prejudiced by such failure to
give notice and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest may exist between such indemnified and
indemnifying parties with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. Whether or not such
defense is assumed by the indemnifying party, the indemnifying party
will not be subject to any liability for any settlement made without
its consent (but such consent will not be unreasonably withheld). No
indemnifying party will be required to consent to the entry of any
judgment or to enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff of
a release from all liability in respect of such claim or litigation.
An indemnifying party who is not entitled to, or elects not to, assume
the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel in any one jurisdiction for all
parties indemnified by such indemnifying party with respect to such
claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim, in which
event the indemnifying party shall be obligated to pay the fees and
expenses of such additional counsel or counsels.
5.6.4 Contribution. If for any reason the indemnification
provided for in the preceding Section 5.6.1 or 5.6.2, as applicable,
is unavailable to an indemnified party as contemplated by such
Section, then the indemnifying party, in lieu of indemnification,
shall contribute to the amount paid or payable by the indemnified
party as a result of such
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loss, claim, damage, liability or expense in such proportion as is
appropriate to reflect not only the relative benefits received by the
indemnified party and the indemnifying party, but also the relative
fault of the indemnified party and the indemnifying party, as well as
any other relevant equitable considerations; provided, however, that
no selling Holder shall be required to contribute in an amount greater
than the difference between the net proceeds received by the Holder
with respect to the sale of Registrable Securities and all amounts
already contributed by the Holder with respect to such claims,
including amounts paid for any legal or other fees or expenses
incurred by the Holder.
5.7 Rule 144. The Company agrees that at all times after it has
filed a registration statement pursuant to the requirements of the Securities
Act relating to any class of equity securities of the Company, it will file in a
timely manner all reports required to be filed by it pursuant to the Securities
Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act") and
will take such further action as any Holder may reasonably request in order that
such Holder may effect sales of Registrable Securities pursuant to Rule 144. At
any reasonable time and upon request of a Stockholder, the Company will furnish
such Stockholder and others with such information as may be necessary to enable
the Stockholder to effect sales of Common Stock pursuant to Rule 144 under the
Securities Act and will deliver to such Stockholder a written statement as to
whether it has complied with such requirements. Notwithstanding the foregoing,
the Company may deregister any class of its equity securities under Section 12
of the Exchange Act or suspend its duty to file reports with respect to any
class of its securities pursuant to Section 15(d) of the Exchange Act if it is
then permitted to do so pursuant to the Exchange Act and the rules and
regulations thereunder.
5.8 Participation in Underwritten Registrations. No Holder may
participate in any underwritten registration hereunder unless such Holder (i)
agrees to sell its Registrable Securities on the basis provided in any
underwriting arrangements approved by the Company and (ii) accurately completes
in a timely manner and executes all questionnaires, powers of attorney,
underwriting agreements and other documents customarily required under the terms
of such underwriting arrangements.
5.9 Registrable Securities. The term Registrable Securities shall
mean the Class A Common Stock of the Company; provided, however, that a
Registrable Security shall cease to be a Registrable Security at such time that
(i) the Registrable Security has been effectively registered under the
Securities Act and disposed of in accordance with the registration statement
covering it or (ii) has been sold to the public pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act.
6. Tag-Along Right.
6.1 General Tag-Along Right. Prior to a Qualified Initial Public
Offering, and notwithstanding the fact that the Stockholders have approved an
Assignment pursuant to Section 4.1, a Stockholder (the "proposed transferor")
shall not transfer, sell, or otherwise dispose of more than 5% of its Class A
Common Stock or Class B Common Stock (collectively a "proposed tag-along
transfer") to a person (a "proposed tag-along purchaser") other than pursuant to
a Qualified Transfer or, in the case of KE, other than pursuant to a transfer to
an entity controlled
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by KE, in one transaction or a related series of transactions, unless the
proposed tag-along purchaser shall offer to each of the Stockholders that hold
Common Stock, whether or not of the same class, (a "Tag-Along Offer") the
opportunity to include in the proposed tag-along transfer the same percentage of
his or its Common Stock as that percentage of Common Stock proposed to be
transferred by the proposed transferor (based upon all outstanding Common Stock)
upon the same terms and conditions, and with the same price per share of Common
Stock, form of consideration and terms of payment offered by the proposed
tag-along purchaser to the proposed transferor (it being understood that Class A
Common Stock and Class B Common Stock shall be treated alike for purposes of
this Section 6.1). The proposed transferor shall, not less than 45 nor more than
90 days prior to the proposed tag-along transfer, notify, or cause to be
notified, each other Stockholder (the "Other Stockholder" or "Other
Stockholders") in writing of such proposed tag-along transfer (the "Tag-Along
Notice"). The Tag-Along Notice shall set forth: (i) the name of the proposed
transferor, the number and class or classes of Common Stock that the proposed
transferor proposes to transfer, and the percentage of his or its Common Stock
of that class or classes that the proposed transferor proposes to transfer and
the percentage of all outstanding Common Stock represented thereby; (ii) the
name of the proposed tag-along purchaser; (iii) the proposed amount and form of
consideration and terms and conditions of payment offered by the proposed
tag-along purchaser; and (iv) that the proposed tag-along purchaser has been
informed of the tag-along right provided for in this Section 6.1 and has agreed
to purchase such Common Stock in accordance with the terms hereof. The Tag-Along
Offer may be accepted by any Other Stockholder holding Common Stock, whether or
not of the same class as is subject to the proposed transfer, by delivery of a
written notice (the "Exercise Notice") to the proposed transferor within 15 days
following the date the Tag-Along Notice is given (the "Exercise Period"). The
Exercise Notice shall state the maximum number of shares of Common Stock that
such Other Stockholder proposes to include in the transfer to the proposed
tag-along purchaser, as determined herein. In the event the total number of
shares of Common Stock proposed to be sold to the proposed tag-along purchaser
by the proposed transferor and the Other Stockholders exceeds the number of
shares of Common Stock which the proposed tag-along purchaser is willing to
purchase, the number of shares of Common Stock to be sold by the proposed
transferor and the Other Stockholders shall be reduced pro rata based on the
total number of shares of Common Stock offered for sale by the proposed
transferor and each Other Stockholder. At the closing of the transfer to the
proposed tag-along purchaser (of which the proposed transferor shall give each
selling Other Stockholder at least 10 business days prior written notice), each
selling Other Stockholder shall (i) execute any documents or instruments,
including, without limitation, representations and warranties, reasonably
requested by the proposed tag-along purchaser (if any selling Other Stockholder
is unwilling to make such representations and warranties and/or related
indemnification as may be required by the proposed tag-along purchaser, such
Other Stockholder shall not have the tag-along right provided for in this
Section 6.1) and (ii) deliver certificates for the shares of Common Stock being
sold, duly endorsed or accompanied by duly executed Common Stock assignments
separate from certificate, free and clear of all claims and encumbrances,
against delivery by the proposed tag-along purchaser of the consideration for
the total sales price of the Common Stock of such Other Stockholders being sold
pursuant to this Section 6.1.
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6.2 Special Tag-Along Right. If, prior to a Qualified Initial
Public Offering, equity securities of any entity which is a "Controlled
Affiliate" of the "KU Control Group" (in each case as defined below) and which,
directly, or indirectly through its Controlled Affiliates, owns Common Stock (a
"Common Stock Owning KU Affiliate") are sold to any Person (other than a
Controlled Affiliate of the KU Control Group) and the total aggregate sales
price of such transfer, sale or other disposition of such equity securities in
such transaction or in a series of related transactions exceeds $10,000,000,
then the "Sibson Persons" (as that term is defined below) shall have the right
(the "Special Tag-Along Right") to have KE purchase a portion of their Common
Stock as set forth herein. If the $10,000,000 threshold is exceeded, then KE
shall within 10 days thereafter notify the Sibson Persons in writing (the
"Threshold Notice") of the details of such transaction and the percentage of
Common Stock (the "Applicable Percentage") indirectly transferred as a result of
such sale (based upon the percentage of equity ownership of the Common Stock
Owning KU Affiliate sold in the transaction and the number of shares of Common
Stock held, directly, or indirectly through one or more intermediaries, by such
Common Stock Owning KU Affiliate). The Sibson Persons shall have 30 days from
receipt of the Threshold Notice (which notice shall contain the calculation of
the Applicable Percentage and the details of how it was determined) to notify KE
in writing (the "Special Tag-Along Notice") that they desire to invoke the
Special Tag-Along Right. If any Sibson Person invokes the Special Tag-Along
Right, then such Sibson Person shall have the right to require KE and KE hereby
agrees to purchase a percentage of such Sibson Person's Common Stock in the
Company equal to the Applicable Percentage multiplied by the total percentage of
Common Stock in the Company held by such Sibson Person (with respect to any
Sibson Person, the "Sibson Percentage"). In determining the Sibson Percentage
the total number of shares of Common Stock held by such Sibson Person (including
for this purpose the number of shares of Common Stock for which there are
outstanding vested options held by such Sibson Person) shall be divided by the
total number of outstanding shares of Common Stock of the Company (including for
this purpose the number of shares of Common Stock for which there are
outstanding vested options held by all persons). For example, if the Applicable
Percentage is 20% and the Sibson Percentage is 5%, then the Special Tag-Along
Right shall apply to a number of shares of Common Stock (and shares of Common
Stock for which there are vested options) equal to 1.0% of the shares of Common
Stock (and for which there are vested options) of the Company, and such Sibson
Person shall have the right to require KE and, if the Special Tag-Along Right is
exercised, KE shall be obligated to purchase from him or it a number of shares
of Common Stock (and vested options) equal to 1.0% of the total number of shares
of Common Stock and vested options. The purchase price of shares of Common Stock
to be sold pursuant to the Special Tag-Along Right shall be determined in the
same manner as provided in Section 4.4. The purchase price of a vested option
(on a per share of Common Stock basis) shall be the purchase price of a share of
Common Stock, as determined above, less the strike price of such vested option.
For purposes of this provision, the term "Sibson Persons" shall mean any and all
of the following: those persons who received shares of Common Stock pursuant to
the Exchange Agreement, those persons who received shares of Common Stock
pursuant to their employment agreements with SC/NE, LLC or any subsidiary of
SC/NE, LLC, those persons who received options to purchase shares of Common
Stock of the Company pursuant to their employment with SC/NE, LLC, or any
subsidiary of SC/NE LLC, those persons who received Common Stock pursuant to
rights granted in that certain Share Purchase Agreement dated as of the date
hereof by and among Nextera, Sibson Acquisition Co.
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and the holders of all of the shares of Sibson Canada, Inc. and transferees of
such persons if pursuant to a Qualified Transfer. For purposes hereof, the "KU
Control Group" shall mean a group comprised of one or more of the three natural
persons who as of the date hereof beneficially own directly or indirectly the
majority of the capital stock of KE, and a "Controlled Affiliate" shall mean,
with respect to any Person, any Person controlled, directly or indirectly, by
such Person by ownership of voting securities, contract or otherwise.
7. Sibson Board Representative. Until such time as both (i) the
percentage of the Company's consolidated net revenue generated by SC/NE, LLC
falls below 15% of the Company's total consolidated net revenue for any fiscal
year and (ii) the earnings before interest, taxes, depreciation and amortization
("EBITDA") generated by of SC/NE, LLC falls below 15% of the Company's total
consolidated EBITDA less corporate headquarters expense for any such fiscal year
(such event being the "Board Representation Termination Event"), the
Stockholders shall be required to elect the "Manager/SMP" of SC/NE, LLC, as that
term is defined in the Limited Liability Company Agreement of SC/NE, LLC dated
as of the date hereof, to the Board of Directors of the Company and each
Stockholder agrees to vote his Subject Shares to effectuate the same. Following
the Board Representation Termination Event, the Stockholders shall have no
obligation to elect the Manager/SMP of SC/NE, LLC to the Board.
8. Certain Transactions. The Company shall not enter into any "Covered
Transaction" (as hereinafter defined) with any Affiliate without the prior
approval of a majority of the members of the Board of Directors of the Company
who are not (and have not been within the past five years) directly or
indirectly affiliated with such Affiliate, do not receive (and have not received
during the past five years) directly or indirectly any compensation from such
Affiliate (except for service as a director of the Company) and do not own (and
have not owned within the past five years) directly or indirectly any equity
interest in such Affiliate or any Affiliate of such Affiliate (other than the
Company). A "Covered Transaction" shall mean (i) any transaction or related
series of transactions between the Company or any subsidiary of the Company and
an Affiliate (including Affiliates of such Affiliate) which involves, in the
aggregate, a transaction sum in excess of $2,000,000 or (ii) any transaction
between the Company or any subsidiary of the Company and an Affiliate (including
Affiliates of such Affiliate) if such transaction, when taken together with all
other transactions between the Company and such Affiliate (including all
Affiliates of such Affiliate) during any period of 24 consecutive months,
involves, in the aggregate, a total transaction sum or value in excess of
$2,000,000.
9. Further Assurances. Each Stockholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further consents, documents and other instruments as the Company may reasonably
request for the purpose of effectively carrying out the transactions
contemplated by this Agreement.
10. Certain Events. Each Stockholder agrees that this Agreement and
the obligations hereunder shall attach to such Stockholder's Subject Shares and
shall be binding upon any person or entity to which legal or beneficial
ownership of such Subject Shares shall pass, whether by operation of law or
otherwise, including such Stockholder's heirs, guardians, administrators or
successors. In the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital structure of the
Company affecting the Common
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Stock, or the acquisition of additional shares of Common Stock or other voting
securities of the Company by any Stockholder, the number of Subject Shares
listed in Schedule A beside the name of such Stockholder shall be adjusted
appropriately and this Agreement and the obligations hereunder shall attach to
any additional shares of Common Stock or other voting securities of the Company
issued to or acquired by such Stockholder.
11. Assignment. Except in connection with an Assignment specifically
permitted by Section 4, neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any Stockholder without the prior
written consent of the Company. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
12. General Provisions.
12.1 Amendments. This Agreement may not be amended except by an
instrument in writing signed by Nextera or the Company, Stockholders holding a
majority of the Subject Shares and Stockholders holding a majority of the
Subject Shares held by Sibson Persons.
12.2 Notice. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or sent by
overnight courier (providing proof of delivery) to Nextera or the Company, One
Cranberry Hill, Lexington, Massachusetts, Attention: President and to the
Stockholders at their respective addresses set forth on the records of the
Company, until such time as Schedule A is attached hereto when completed as
described in Section 16 below, and thereafter to the Stockholders at their
respective addresses set forth thereon (or at such other address for a party as
shall be specified in like notice).
12.3 Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section to this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Wherever the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation."
12.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each of the parties and delivered to the other party, it being understood that
each party need not sign the same counterpart.
12.5 Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein) (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
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12.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law thereof.
13. Enforceable. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement this being in addition to any other
remedy to which they are entitled at law or in equity.
14. Public Announcements. Except as otherwise specifically provided in
that certain Asset Purchase Agreement dated as of the date hereof by and among
Nextera, SC/NE, LLC, Sibson & Company, L.P., Sibson & Company, Inc., SC2, Inc.
and the shareholders of Sibson & Company, Inc. and SC2, Inc., no Stockholder
shall issue any press release or other public statement with respect to the
transactions contemplated by this Agreement and the documents implementing the
Incorporation Transaction without the prior written consent of Nextera, except
as required by law.
15. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule or law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
16. Schedule A. As soon as practical, but in no event later than ten
business days prior to the completion of the Incorporation Transaction (subject
to further updates through the Incorporation Transaction), Nextera agrees to
update and complete Schedule A hereto, including the number of shares of Class A
Common Stock and Class B Common Stock held by, and the address of, each
Stockholder and cause a copy thereof certified as being true and correct by
officers of each of the Company and Nextera to be delivered to the Stockholders
for attachment to this Agreement.
17. Company Charter. The Company agrees that prior to consummation of
the Incorporation Transaction it shall adopt the Amended and Restated
Certificate of Incorporation and By-laws in substantially the forms attached as
Exhibit A-1 and Exhibit A-2 hereto, with any changes thereto as will not
materially adversely affect the rights of the Stockholders hereunder and
thereunder (collectively the "Constituent Documents"). From and after the
Incorporation Transaction, the Company and the Stockholders shall take all steps
reasonably necessary and appropriate from time to time to assure that the
Constituent Documents, to the extent permitted under applicable law, do not
conflict with the terms and provisions of this Agreement and that the rights of
holders of Class A Common Stock are identical to rights of holders of Class B
Common Stock (except for (i) holders of shares of Class A Common Stock being
entitled to ten votes per
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share and (ii) that shares of Class B Common Stock will convert into shares of
Class A Common Stock as set forth on Schedule 3.2 to the Exchange Agreement).
[THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]
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IN WITNESS WHEREOF, Nextera has caused this Agreement to be signed by
its officer thereunto duly authorized and each Stockholder has signed this
Agreement, all as of the date first written above.
"NEXTERA":
NEXTERA ENTERPRISES, L.L.C.,
a Delaware limited liability company
By: /s/ XXXXXXX X. XXXXXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
NEXTERA ENTERPRISES, INC.,
a Delaware corporation
By: /s/ XXXXXXX X. XXXXXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
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"STOCKHOLDERS"
KNOWLEDGE ENTERPRISES, INC.,
a Delaware corporation
By: /s/ XXXXX XXXXXXXX
-----------------------
Xxxxx Xxxxxxxx
Its Secretary
/s/ XXXXXXX BREBACH, JR. /s/ XXXXX XXXXXXXXX
---------------------------------- ------------------------------------
Xxxxxxx Brebach, Jr. Xxxxx Xxxxxxxxx
/s/ XXXXXX XXXXXX /s/ XXXXX XXXXXX
---------------------------------- ------------------------------------
Xxxxxx Xxxxxx Xxxxx Xxxxxx
/s/ XXXXXXX XXXXXXXXX /s/ XXXXXX XXXXXX
---------------------------------- ------------------------------------
Xxxxxxx Xxxxxxxxx Xxxxxx Xxxxxx
/s/ XXXXXX XXXXX /s/ XXXXXXX XXXXX
---------------------------------- ------------------------------------
Xxxxxx Xxxxx Xxxxxxx Xxxxx
/s/ XXXXX X. XXXXXX /s/ XXXXXXX XXXXXXXXX
---------------------------------- ------------------------------------
Xxxxx X. Xxxxxx Xxxxxxx Xxxxxxxxx
/s/ XXXXXX X. XXXXXX /s/ XXXXXXX XXXXX
---------------------------------- ------------------------------------
Xxxxxx X. Xxxxxx Xxxxxxx Xxxxx
/s/ XXXXXXX X. XXXX /s/ XXXXX VAN STRAATUM
---------------------------------- ------------------------------------
Xxxxxxx X. Xxxx xxxx Van Straatum
/s/ XXXXXXX XXXXXXXXXX /s/ XXXX XxXXXX
---------------------------------- ------------------------------------
Xxxxxxx Xxxxxxxxxx Xxxx XxXxxx
/s/ XXXX XXXXXXXX /s/ XXXX X. XXXXX
---------------------------------- ------------------------------------
Xxxx Xxxxxxxx Xxxx X. Xxxxx
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/s/ XXXXXXXX XXXXXXXXX /s/ XXXXXXX X. XXXXXXXX
---------------------------------- ------------------------------------
Xxxxxxxx Xxxxxxxxx Xxxxxxx X. Xxxxxxxx
/s/ XXXXXX XXXXXXXXX /s/ XXXXXXX XXXXXXXXX
---------------------------------- ------------------------------------
Xxxxxx Xxxxxxxxx Xxxxxxx Xxxxxxxxx
/s/ XXXXX X. XXXXXXXX /s/ XXXXXX XXXXXXX
---------------------------------- ------------------------------------
Xxxxx X. Xxxxxxxx Xxxxxx Xxxxxxx
/s/ XXXXXXX XXXXXXXX /s/ XXXXXX XXXXXXX
---------------------------------- ------------------------------------
Xxxxxxx Xxxxxxxx Xxxxxx Xxxxxxx
/s/ XXXX XXXXXXX /s/ XXXX XXXXXXXXXXX
---------------------------------- ------------------------------------
Xxxx Xxxxxxx Xxxx Xxxxxxxxxxx
/s/ XXXXXXXXX XXXXXX /s/ XXXXX XXXXXX
---------------------------------- ------------------------------------
Xxxxxxxxx (Xxx) Xxxxxx Xxxxx Xxxxxx
/s/ XXXXXXX XXXXXXXX /s/ XXXXXX XXXXX
---------------------------------- ------------------------------------
Xxxxxxx Xxxxxxxx Xxxxxx Xxxxx
/s/ XXXXX XXXXXX /s/ XXXXXXX XXXXX
---------------------------------- ------------------------------------
Xxxxx Xxxxxx Xxxxxxx Xxxxx
/s/ XXXXXX XXXXX /s/ XXXXXX XXXXX
---------------------------------- ------------------------------------
Xxxxxx Xxxxx Xxxxxx Xxxxx
/s/ XXXXXXXXX XXXX /s/ XXXXX XXXXXXXXX
---------------------------------- ------------------------------------
Xxxxxxxxx Xxxx Xxxxx Xxxxxxxxx
/s/ XXXXX XXXXXXXXX /s/ XXXXXX XXXXXXXX
--------------------------------- ------------------------------------
Xxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx
/s/ XXXXX XxXXXXX /s/ XXXXXXX X'XXXXXXX
---------------------------------- ------------------------------------
Xxxxx XxXxxxx Xxxxxxx X'Xxxxxxx
/s/ XXXXXXX XXXXX /s/ XXXX XXXX
---------------------------------- ------------------------------------
Xxxxxxx Xxxxx Xxxx Xxxx
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/s/ XXXXX XXXXX /s/ XXXX XXXXXXX
---------------------------------- ------------------------------------
Xxxxx Xxxxx Xxxx Xxxxxxx
/s/ XXXXXXX XXXXXX /s/ XXXXXXX XXXXXXXX
---------------------------------- ------------------------------------
Xxxxxxx Xxxxxx Xxxxxxx Xxxxxxxx
/s/ XXXXXX XXXXXX /s/ XXXXXXX XXXXXX
---------------------------------- ------------------------------------
Xxxxxx (Chip) Xxxxxx Xxxxxxx Xxxxxx
/s/ XXXXX XXXXXXXX XXXXX
----------------------------------
Xxxxx Xxxxxxxx Xxxxx
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/s/ XXXXXXX XxXXXXXXX
----------------------------------
Xxxxxxx XxXxxxxxx
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/s/ XXXX XXXXXXXXXX
----------------------------------
Xxxx Xxxxxxxxxx
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SCHEDULE A
TABLE OF STOCKHOLDERS
NUMBER OF SHARES OF CLASS A NUMBER OF SHARES OF CLASS B
NAME OF STOCKHOLDER COMMON STOCK OWNED OF RECORD COMMON STOCK OWNED OF RECORD ADDRESS
Knowledge Enterprises, Inc.
Brebach, Xxxxxxx Jr.
Xxxxxx, Xxxxxx
Xxxxxxxxx, Xxxxxxx
Xxxxxxxxx, Xxxxx
Xxxxxx, Xxxxx
Xxxxxx, Xxxxxx
Xxxxx, Xxxxxx
Xxxxx, Xxxxxxx
Xxxxxx, Xxxxx X.
Xxxxxx, Xxxxxx X.
Xxxx, Xxxxxxx X.
Xxxxxxxxxx, Xxxxxxx
Xxxxxxxx, Xxxx
Xxxxx, Xxxx X.
Xxxxxxxx, Xxxxx X.
Xxxxxxxxx, Xxxxxxxx
Xxxxxxxx, Xxxxxxx X.
Xxxxxxx, Xxxxxx
Xxxxxxxx, Xxxxxxx
Xxxxxxx, Xxxxxx
Xxxxxxxxx, Xxxxxx
Xxxxxxxxx, Xxxxxxx
Xxxxxxxxx, Xxxxxxx
Xxxxx, Xxxxxxx
Van Straatum, Xxxxx
XxXxxx, Xxx
Xxxxxxx, Xxxx
Xxxxxxxxxxx, Xxxx
Xxxxxx, Xxxxxxxxx (Xxx)
Xxxxxx, Xxxxx
Xxxxxxxx, Xxxxxxx
Xxxxx, Xxxxxx
Xxxxxx, Xxxxx
Xxxxx, Xxxxxxx
Xxxxx, Xxxxxx
Xxxxx, Xxxxxx
Xxxx, Xxxxxxxxx
Xxxxxxxxx, Xxxxx
Xxxxxxxxx, Xxxxx
Xxxxxxxx, Xxxxxx
XxXxxxx, Xxxxx
X'Xxxxxxx, Xxxxxxx
Xxxxx, Xxxxxxx
Xxxx, Xxxx
Xxxxx, Xxxxx
Xxxxxxx, Xxxx
Xxxxxx, Xxxxxxx
Xxxxxxxx, Xxxxxxx
Xxxxxx, Xxxxxx (Chip)
Xxxxxx, Xxxxxxx
Xxxxx, Xxxxx Xxxxxxxx
XxXxxxxxx, Xxxxxxx
Xxxx Xxxxxxxxxx
