Exhibit 3.
SECURITYHOLDERS' AGREEMENT, dated as of _________ ___,
2001 (this "Agreement"), among (i) CB Xxxxxxx Xxxxx Services, a
Delaware corporation ("CBRE") and CBRE Holding, Inc. (the
"Company"), (ii) RCBA Strategic Partners, L.P., a Delaware
limited partnership (together with its successors, "XXXX"),
(iii) FS Equity Partners III, L.P., a Delaware limited partnership
("FSEP"), and FS Equity Partners International, L.P., a Delaware
limited partnership ("FSEP International," and together with FSEP
and their respective successors, the "FS Entities"), (iv) DLJ
Investment Partners II, L.P. ("DLJ") [OTHER DLJ ENTITIES TO
COME], (v) The Xxxx Holding Company, a California corporation
(together with its successors, "Xxxx"), Xxxxxxxx X. Xxxxx
("Xxxxx", and together with Xxxx, the "Other Non-Management
Investors"), and (vi) the individuals identified on the signature
pages hereto as "Management Investors" (together, the "Management
Investors"; collectively with the FS Entities, DLJ and the Other
Non-Management Investors, the "Non-XXXX Investors").
RECITALS:
A. CBRE, the Company and XXXX XX Corp., a Delaware
Corporation ("Newco"), are parties to an Amended and Restated
Agreement and Plan of Merger, dated as of May 31, 2001 (the
"Merger Agreement"), pursuant to which, among other things, Newco
merged with and into CBRE on the date hereof (the "Merger") and
CBRE became a wholly-owned subsidiary of the Company;
B. As a result of the Merger, on the date hereof,
XXXX is the largest holder of the outstanding shares of Common
Stock (as defined below) and the Non-XXXX Investors also hold
outstanding shares of the Common Stock; and
C. The parties hereto wish to provide for certain
matters relating to their respective holdings of the Common
Stock.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements herein contained, the parties hereto
agree as follows:
I INTRODUCTORY MATTERS
1.1. Defined Terms.
The following terms have the following meanings when
used herein with initial capital letters:
"Advisory Services" has the meaning set forth in
Section 4.4.
"Affiliate" means, with respect to any Person, any
Person that directly or indirectly controls, is controlled
by or is under common control with, such Person. As used
in this definition of "Affiliate" and the definition of
"Subsidiary," "control" (including, with correlative
meanings, "controlled by" and "under common control with")
shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of management or
policies, whether through the ownership of securities or
partnership or other ownership interests, by contract or
otherwise. Notwithstanding anything to the contrary stated
herein, the Company shall not be considered an Affiliate of
any Securityholder.
"Agreement" means this Agreement, as the same may be
amended, supplemented or otherwise modified from time to
time in accordance with the terms hereof.
"Approved Sale" has the meaning set forth in Section
2.5(c).
"Assumption Agreement" means an agreement in the form
attached hereto as Exhibit A whereby a transferee of
Restricted Securities becomes a party to, and agrees to be
bound by, the terms of this Agreement in the manner set
forth in Section 6.5 hereto.
"XXXX" has the meaning set forth in the Preamble.
"XXXX Directors" has the meaning set forth in Section
4.1(c)(i).
"XXXX Holder" means (i) XXXX and (ii) any Person to
whom XXXX Transfers Registrable Securities (but only to the
extent of the Registrable Securities acquired from XXXX)
and, in the case of clause (ii), which Person becomes bound
by the provisions of this Agreement in the manner set forth
in Section 6.5 hereto.
"XXXX Sale" has the meaning set forth in Section
2.4(a).
"Board" means the Board of Directors of the Company.
"Bylaws" means the Bylaws of the Company as of the
Closing, as the same may be amended from time to time.
"Cause" has the meaning set forth in Section 4.1(j).
"CBRE" has the meaning set forth in the Preamble.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Company as of the Closing, as the same
may be amended from time to time.
"Claim Notice" has the meaning set forth in Section
5.4(b).
"Class A Common Stock" means Class A common stock, par
value $.01 per share, of the Company.
"Class B Common Stock" means Class B common stock, par
value $.01 per share, of the Company.
"Class B Securityholder" means any Securityholder that
beneficially owns shares of Class B Common Stock pursuant to
the terms of the Certificate of Incorporation.
"Closing" means the Closing of the Merger.
"Common Stock" means Class A Common Stock and Class B
Common Stock, collectively.
"Company" has the meaning set forth in the Preamble.
"Consolidated EBITDA" means, for any period, [the
consolidated net income of the Company and its subsidiaries
for such period as set forth in the consolidated financial
statements of the Company, plus the following of the Company
and its subsidiaries to the extent deducted in calculating
such consolidated net income: (i) consolidated interest
expense, (ii) consolidated income tax expense, (iii)
consolidated depreciation expense and (iv) consolidated
amortization expenses]. [Note: To the extent that the
senior debt financing contains a different definition of
Consolidated EBITDA, this definition will be conformed to
that used in the senior debt financing.]
"Contribution Agreement" means that certain Amended and
Restated Contribution and Voting Agreement, dated as May 31,
2001, among CBRE Holding, Inc., XXXX XX Corp., RCBA
Strategic Partners, L.P., FS Equity Partners III, L.P., FS
Equity Partners International, L.P., Xxxxx, White and the
other investors who are signatories thereto.
"DLJ Holder" means (i) DLJ and (ii) any Person to whom
DLJ Transfers Registrable Securities (but only to the extent
of the Registrable Securities acquired from DLJ) and, in the
case of clause (ii), which Person becomes bound by the
provisions of this Agreement as a DLJ Party in the manner
set forth in Section 6.5 hereto.
"DLJ Parties" means (i) DLJ and (ii) any Person to whom
DLJ Transfers Restricted Securities and, in the case of
clause (ii), which Person becomes bound by the provisions of
this Agreement in the manner set forth in Section 6.5
hereto.
"Drag-Along Notice" has the meaning set forth in
Section 2.5(b).
"Dragging Party" has the meaning set forth in Section
2.5(a).
"Equity Securities" means (i) any Common Stock or
other equity security of the Company, (ii) any security
convertible, with or without consideration, into Common
Stock or any other equity security of the Company (including
any option or other right to purchase or acquire such a
convertible security) and (iii) any option, warrant or other
right to purchase or acquire Common Stock or any other
equity security of the Company.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, or any similar federal statute then in
effect, and a reference to a particular section thereof
shall be deemed to include a reference to the comparable
section, if any, of any such similar federal statute.
"Fair Market Value" means (i) with respect to cash
consideration, the total amount of such cash consideration
in United States dollars, (ii) with respect to non-cash
consideration consisting of publicly-traded securities, the
average daily closing sales price of such securities for
the ten consecutive trading days preceding the date of Fair
Market Value of such securities is required to be determined
hereunder (with the closing price for each day being the
last reported sales price regular way or, in case no such
reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either
case on the principal national securities exchange on which
such securities are listed and admitted to trading, or, if
not listed and admitted to trading on any such exchange on
the NASDAQ National Market System, or if not quoted on the
NASDAQ National Market System, the average of the closing
bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm
selected from time to time by the Company for that purpose)
and (iii) with respect to non-cash consideration not
consisting of publicly-traded securities, such amount as
is determined to be the fair market value of the non-cash
consideration as of the date such Fair Market Value is
required to be determined hereunder as determined in good
faith by the Board.
For the purposes of Section 2.2(a), if the Transferring
Securityholder or XXXX disputes in good faith the
determination by the Board pursuant to the above clause
(iii) of the Fair Market Value of the non-cash consideration
to be paid for the Transfer Securities, then the
Transferring Securityholder or XXXX, as applicable, may
require that an investment bank selected by the Company and
reasonably acceptable to the Transferring Securityholder and
XXXX determine such Fair Market Value for the purposes of
clause (iii).
For the purposes of Section 4.7(a)(ii), if the FS
Director believes in good faith that the Fair Market Value,
determined pursuant to the above clause (iii), of the
consideration to be received for the assets of the Company
or its Subsidiaries to be sold under that Section exceeds
$75 million, then the FS Director may require that such Fair
Market Value be determined by an independent investment bank
selected by the Company and reasonably acceptable to the FS
Director.
The Company shall pay the fees and expenses of the
investment bank in making any Fair Market Value
determination; provided, however that in the case of the
second paragraph of this definition of "Fair Market Value",
if the Transferring Securityholder does not have a good
faith belief that the Fair Market Value of the non-cash
consideration to be paid for the Transfer Securities, as
determined pursuant to the above clause (iii), is greater
than or equal to $5 million, then the fees and expenses of
the investment bank in making any Fair Market Value
determination at the request of such Transferring
Securityholder under such circumstances shall be paid by
such Transferring Securityholder.
"FS Director" has the meaning set forth in Section
4.1(c)(ii).
"FS Entities" has the meaning set forth in the
Preamble.
"FS Holder" means (i) each of the FS Entities and (ii)
any Person to whom either of the FS Entities Transfers
Registrable Securities or Restricted Securities (but only
to the extent of the Registrable Securities or Restricted
Securities acquired from such FS Entity) and, in the case of
clause (ii), which Person becomes bound by the provisions of
this Agreement as a FS Party in the manner set forth in
Section 6.5 hereto.
"FS Parties" means (i) each of the FS Entities and
(ii) any Person to whom either of the FS Entities Transfers
Restricted Securities and, in the case of clause (ii), which
Person becomes bound by the provisions of this Agreement in
the manner set forth in Section 6.5 hereto.
"FS Warrants" means (i) the warrants to acquire Common
Stock acquired by the FS Entities pursuant to the
Contribution Agreement and (ii) any shares of Common Stock
received upon exercise of such warrants.
"Holder" means any Person owning of record Registrable
Securities who (i) is a party to this Agreement on the date
hereof or (ii) subsequently agrees in writing to be bound by
the provisions of this Agreement in accordance with the
terms of Section 6.5 of this Agreement.
"Indebtedness" means any indebtedness for borrowed
money.
"Indemnified Party" has the meaning set forth in
Section 5.4(b).
"Initiating Holder" means, with respect to any
registration effected pursuant to Section 3.1, (i) the XXXX
Holders in the event that the Holder or Holders from whom a
notice is received pursuant to Section 3.1(a) that initiates
such registration is a XXXX Holder, (ii) the FS Holders in
the event that the Holder or Holders from whom a notice is
received pursuant to Section 3.1(a) that initiates such
registration is a FS Holder, and (iii) the DLJ Holders in
the event that the Holder or Holders from whom a notice is
received pursuant to Section 3.1(a) that initiates such
registration is a DLJ Holder.
"IPO" or "Initial Public Offering" means the completion
of an underwritten Public Offering of Common Stock pursuant
to which the Company becomes listed on a national securities
exchange or on the NASDAQ Stock Market.
"Issuance" has the meaning set forth in Section 2.6(a).
"Legend" has the meaning set forth in Section 2.1(d).
"Losses" has the meaning set forth in Section 3.9(d).
"Losses and Expenses" has the meaning set forth in
Section 5.4(a).
"Management Investors" has the meaning set forth in the
Preamble.
"Management Parties" means (i) each of the Management
Investors and (ii) any Person to whom any of the Management
Investors Transfers Restricted Securities and, in the case
of clause (ii), which Person becomes bound by the provisions
of this Agreement in the manner set forth in Section 6.5
hereto.
"Material Securityholder" means XXXX, each of the FS
Entities, each of the DLJ Parties that holds at least 1% of
the total outstanding Common Stock as of such date, DLJ
Investment Partners II, L.P. so long as it and its
affiliates, in the aggregate, hold at least 1% of the total
outstanding Common Stock as of such date, Xxxxx, Xxxx and
any Securityholder who (as determined on a particular date)
beneficially owns, together with its Affiliates, greater
than 10% of the total outstanding Common Stock as of such
date.
"Merger" has the meaning set forth in the Recitals.
"Merger Agreement" has the meaning set forth in the
Recitals.
"Newco" has the meaning set forth in the Recitals.
"Non-XXXX Investors" has the meaning set forth in the
Preamble.
"Non-XXXX Parties" means the FS Parties, the DLJ
Parties, the Other Non-Management Parties and the Management
Parties, collectively.
"Notes" means the Company's 16.0% Senior Notes due
______ ___, 2011.
"Notice Period" has the meaning set forth in Section
5.4(b).
"Observer" has the meaning set forth in Section 4.3(a).
"Offer Price" has the meaning set forth in Section
2.2(a).
"Offer Notice" has the meaning set forth in Section
2.2(a).
"Other Holder" means any Holder other than a XXXX
Holder, a FS Holder or a DLJ Holder.
"Other Non-Management Investors" has the meaning set
forth in the Preamble.
"Other Non-Management Parties" means (i) each of the
Other Non-Management Investors and (ii) any Person to whom
either of the Other Non-Management Investors Transfers
Restricted Securities and, in the case of clause (ii), which
Person becomes bound by the provisions of this Agreement in
the manner set forth in Section 6.5 hereto.
"Ownership" means, with respect to any Person, all
matters related to such Person's and such Person's
Affiliates' (i) beneficial ownership of Restricted
Securities, (ii) due authorization of a Transfer of such
Restricted Securities, (iii) power to Transfer such
Restricted Securities, and (iv) non-violation of agreements,
laws, etc. relating to such Transfer of such Restricted
Securities.
"Permitted Third Party Transfer Date" means the three
year anniversary of the date hereof.
"Permitted Transferees" means any Person to whom
Restricted Securities are Transferred by a Non-XXXX Party in
a Transfer in accordance with Section 2.3 and not in
violation of this Agreement and who is required to, and
does, enter into an Assumption Agreement, and includes any
Person to whom a Permitted Transferee of a Non-XXXX Party
(or a Permitted Transferee of a Permitted Transferee) so
further Transfers Restricted Securities and who is required
to, and does, execute and deliver to the Company and XXXX an
Assumption Agreement.
"Person" means any individual, corporation, limited
liability company, partnership, trust, joint stock company,
business trust, unincorporated association, joint venture,
governmental authority or other legal entity of any nature
whatsoever.
"Proposed Transferee" has the meaning set forth in
Section 2.4(a).
"Public Offering" means the sale of shares of any class
of the Common Stock to the public 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 in connection with an underwritten
offering.
"Purchase Agreement" means that certain Purchase
Agreement, dated as of the date hereof, between the Company
and DLJ, pursuant to which, among other things, the Company
issued and sold to DLJ, and DLJ purchased from the Company,
the Notes.
"Purchase Price" means the Fair Market Value of the
consideration paid by the Company or any of its
Subsidiaries.
"Qualified Purchaser" means any Person to whom any
Transferring Securityholder wishes to sell Restricted
Securities pursuant to Section 2.2; provided that such
Person (i) shall be acceptable to XXXX (such acceptance to
be evidence in writing and to not be unreasonably withheld;
it is understood that, if the proposed Qualified Purchaser
is a nationally-recognized private equity sponsor or
institutional equity investor, such consent will not be
withheld unless XXXX'x decision to withhold consent results
from XXXX'x or any of its Affiliate's direct experience with
such proposed Qualified Purchaser in connection with another
actual or proposed transaction) and (ii) execute and deliver
to the Company and XXXX an Assumption Agreement.
"Registrable Securities" means any shares of Common
Stock held by the Securityholders, including as a result of
the exercise of options or warrants to acquire Common Stock.
For purposes of this Agreement, any Registrable Securities
held by any Person will cease to be Registrable Securities
when (A) a registration statement covering such Registrable
Securities has been declared effective and such Registrable
Securities have been disposed of pursuant to such effective
registration statement, (B) the registration rights of the
holder of such Registrable Securities have terminated
pursuant to Section 3.7 hereto, or (C) such Registrable
Securities cease to be outstanding.
"Registration Expenses" means all expenses incident to
performance of or compliance with Sections 3.1 and 3.2
hereof, including, without limitation, all registration and
filing fees, printing, messenger and delivery expenses, fees
and expenses of listing the Registrable Securities on any
securities exchange, rating agency fees, fees and
disbursements of counsel for the Company and of its
independent public accountants, reasonable fees and
disbursements of a single special counsel for the Holders
selected in accordance with Section 3.5, blue sky fees and
expenses and the expense of any special audits incident to
or required by any such registration (including "cold
comfort" letters), fees and disbursements of underwriters
customarily paid by the issuers or sellers of securities
(including liability insurance but excluding Selling
Expenses), and other reasonable out-of-pocket expenses of
Holders (but excluding the compensation of regular employees
of the Company which shall be paid in any event by the
Company).
"Related Party" has the meaning set forth in Section
5.3.
"Relevant Period" has the meaning set forth in Section
3.1(c)(iv).
"Restricted Period" means the period beginning on the
date hereof and ending on the earlier of (i) the ten year
anniversary of the date hereof and (ii) the date of the
Initial Public Offering.
"Restricted Securities" has the meaning set forth in
Section 2.1(a).
"Right" has the meaning set forth in Section 2.6(a).
"Rule 144" means Rule 144 of the Securities Act.
"SEC" or "Commission" means the Securities and Exchange
Commission.
"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.
"Securityholder" means each of the holders of Common
Stock or the FS Warrants who are parties to this Agreement
or an Assumption Agreement.
"Selling Expenses" means all underwriting discounts and
selling commissions and transfer taxes applicable to the
sale.
"Subsidiary" means, with respect to any Person, any
other Person (i) of which (or in which) such first Person
beneficially owns, directly or indirectly, 50% or more of
the outstanding capital stock or other equity interests
having ordinary voting power to elect the Board of Directors
or any equivalent body of such other Person or (ii) of which
such first Person or its Subsidiary is a general partner,
managing member or an equivalent.
"Tagging Securityholder" has the meaning set forth in
Section 2.4(a).
"Third Party" has the meaning set forth in Section
2.4(a).
"Transfer" means a transfer, sale, assignment, pledge,
hypothecation or other disposition (including, without
limitation, by operation of law), whether directly or
indirectly pursuant to the creation of a derivative
security, the grant of an option or other right.
"Transfer Offer" means the offer to sell the Transfer
Securities owned by the Transferring Securityholder to XXXX
or one or more of its assignees in accordance with Section
2.2(a).
"Transfer Period" has the meaning set forth in Section
2.2(c).
"Transfer Securities" has the meaning set forth in
Section 2.2(a).
"Transferring Securityholder" has the meaning set forth
in Section 2.2(a).
"Twelve-Month Normalized EBITDA" means, as of any date,
the Consolidated EBITDA for the 12-month period ending on
the last day of the most recent quarter for which
consolidated financial statements of the Company have been
filed with the SEC (or, if the Company is not then filing
such statements with the SEC, the most recent quarter for
which such statements are available); provided, however that
such determination of Consolidated EBITDA shall be adjusted
for such period to (i) include the pro forma effects for the
entire period of any acquisitions or dispositions by the
Company since the beginning of such period and (ii)
disregard any extraordinary or similar one-time charges or
revenues of the Company.
"Violation" has the meaning set forth in Section
3.9(a).
"White" means W. Xxxxx Xxxxx.
"Xxxxx" means Xxxxxxx X. Xxxxx.
1.2. Construction.
The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied
against any party. Unless the context otherwise requires: (a)
"or" is disjunctive but not exclusive, (b) words in the singular
include the plural, and in the plural include the singular, and
(c) the words "hereof," "herein," and "hereunder" and words of
similar import when used in this Agreement refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and Section references are to this Agreement unless
otherwise specified.
II TRANSFERS
2.1. Limitations on Transfer.
(a) Each Securityholder hereby agrees that it will not,
directly or indirectly, Transfer any shares of Common Stock or FS
Warrants (collectively, the "Restricted Securities") unless such
Transfer complies with the provisions hereof and (i) such Transfer
is pursuant to an effective registration statement under the
Securities Act and has been registered under all applicable state
securities or "blue sky" laws or (ii) (A) such Securityholder
shall have furnished the Company with a written opinion of
counsel in form and substance reasonably satisfactory to the
Company to the effect that no such registration is required
because of the availability of an exemption from registration
under the Securities Act and (B) the Company shall be reasonably
satisfied that no such registration is required because of the
availability of exemptions from registration under all applicable
state securities or "blue sky" laws.
(b) During the Restricted Period,
(i) each of the Non-XXXX Parties may not Transfer any
Restricted Securities other than (x) pursuant to Sections 2.3, 2.4
or 2.5, and (y) with respect to the FS Parties, the DLJ Parties
and the Other Non-Management Parties only, Transfers after the
Permitted Third Party Transfer Date to Persons other than a
Permitted Transferee of the Securityholder making the Transfer
(subject to prior compliance in full with Section 2.2 and such
Persons executing and delivering Assumption Agreements to the
Company); and
(ii) XXXX and its Affiliates will not Transfer any
Restricted Securities in a transaction subject to Section 2.4
unless Section 2.4 is complied with in full prior to such Transfer.
(c) In the event of any purported Transfer by any of the
Securityholders of any Restricted Securities in violation of the
provisions of this Agreement, such purported Transfer will be
void and of no effect and the Company will not give effect to
such Transfer.
(d) Each certificate representing Restricted Securities
issued to the Securityholders will bear a legend on the face thereof
substantially to the following effect (with such additions
thereto or changes therein as the Company may be advised by
counsel are required by law or necessary to give full effect to
this Agreement, the "Legend"):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO A SECURITYHOLDERS' AGREEMENT AMONG CBRE HOLDING, INC.,
RCBA STRATEGIC PARTNERS, L.P., FS EQUITY PARTNERS III, L.P.,
FS EQUITY PARTNERS INTERNATIONAL, L.P., THE XXXX HOLDING
COMPANY, XXXXXXXX X. XXXXX, DLJ INVESTMENT FUNDING, INC.,
CERTAIN MANAGEMENT INVESTORS AND CB XXXXXXX XXXXX SERVICES,
INC., A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY. NO TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF SUCH STOCKHOLDERS'
AGREEMENT. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE
OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE
PROVISIONS OF SUCH SECURITYHOLDERS' AGREEMENT."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THEY HAVE
BEEN REGISTERED UNDER THAT ACT OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE."
The Legend will be removed by the Company by the delivery of
substitute certificates without such Legend in the event of (i) a
Transfer permitted by this Agreement in which the Permitted
Transferee is not required to enter into an Assumption Agreement
or (ii) the termination of Article II pursuant to the terms
hereof; provided, however, that the second paragraph of the
Legend will only be removed if at such time it is no longer
required for purposes of applicable securities laws and, if
requested by the Company, the Company receives an opinion to such
effect of counsel to the applicable Securityholder in form and
substance reasonably satisfactory to the Company.
2.2. Right of First Offer.
(a) If, following the Permitted Third Party Transfer Date,
any of the FS Parties, the DLJ Parties or the Other Non-Management
Parties (each, a "Transferring Securityholder") desires to
Transfer all or any portion of the Restricted Securities (the
"Transfer Securities") then owned by such Transferring
Securityholder to a Person that is not a Permitted Transferee of
the Transferring Securityholder, such Transferring Securityholder
shall provide XXXX with a written notice (the "Offer Notice")
setting forth: (i) the number of shares of Common Stock proposed
to be Transferred and (ii) the material terms and conditions of
the proposed transfer including the minimum price (the "Offer
Price") at which such Transferring Securityholder proposes to
Transfer such shares. The Offer Notice shall also constitute an
irrevocable offer to sell the Transfer Securities to XXXX or, at
XXXX'x option following receipt of the Offer Notice, to one or
more assignees of XXXX (subject to such assignee's or assignees'
delivery of an Assumption Agreement in compliance with Section
6.5 hereof) (x) at the Offer Price and on the same terms and
conditions as the Transfer Offer or (y) if the Transfer Offer
includes any consideration other than cash, at the option of XXXX
or such assignee, at a cash price equal to the Fair Market Value
of such non-cash consideration (the "Transfer Consideration").
(b) If XXXX or its assignee wishes to accept the offer set
forth in the Offer Notice, XXXX or such assignee shall deliver within
15 business days of receipt of the Offer Notice (such period, the
"Election Period") an irrevocable notice of acceptance to the
Transferring Securityholder (the "Acceptance Notice"), which
Notice shall indicate the form of Transfer Consideration chosen
(to the extent that the Transfer Offer includes any consideration
other than cash). XXXX or its assignee may accept such offer for
any or all of the Transfer Securities, provided, however, that if
XXXX or its assignee agrees to purchase less than all of the
Transfer Securities specified in the Offer Notice, then the
Transferring Securityholder can choose not to sell any shares to
XXXX or its assignee, as applicable, by delivering written notice
thereof to XXXX or such assignee within five Business Days of the
Transferring Securityholder's receipt of the Acceptance Notice.
In the event that the Transferring Securityholder elects not to
sell any shares to XXXX or its assignee pursuant to the proviso
in the immediately preceding sentence, such Transferring
Shareholder may transfer the Transfer Securities to one or more
Qualified Purchasers pursuant to Section 2.2(c) only if such
Qualified Purchasers purchase in the aggregate at least as many
shares of the Transfer Securities as XXXX had agreed to purchase.
(c) If the option to purchase the Transfer Securities
represented by the Offer Notice is accepted on a timely basis by
XXXX or its assignee, in accordance with all the terms specified
in Section 2.2(b) and such acceptance (if it is for less than all
of the Transfer Securities) has not been rejected by the
Transferring Securityholder, no later than the later of (x) 30
business days after the date of the receipt by XXXX of the Offer
Notice or (y) the second business day after the receipt of any
necessary governmental approvals (including, without limitation,
the expiration or early termination of any applicable waiting
periods under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended), XXXX (or its assignee), as applicable, shall
deliver payment by wire transfer of immediately available funds,
to the extent the Transfer Consideration is cash, and/or by
delivery of the non-cash Transfer Consideration (to the extent
chosen by XXXX or its assignee), to such Transferring
Securityholder against delivery of certificates or other
instruments representing the Common Stock so purchased,
appropriately endorsed by such Transferring Securityholder. Each
Transferring Securityholder shall deliver its shares of Common
Stock free and clear of all liens, claims, options, pledges,
encumbrances and security interests. To the extent XXXX or its
assignee (i) has not given notice of its acceptance of the offer
represented by the Offer Notice to purchase all of the Transfer
Securities prior to the expiration of the Election Period, (ii)
has accepted as to less than all of the Transfer Securities and
such acceptance has been rejected by the Transferring
Securityholder, (iii) has accepted as to less than all of the
Transfer Securities and such acceptance has not been rejected by
the Transferring Securityholder, or (iv) has not tendered the
Purchase Price for the Transfer Securities in the manner and
within the period set forth above in this Section 2.2(c), such
Transferring Securityholder shall be free (subject to the last
sentence of Section 2.2(b)) for a period of 120 days from the end
of the Election Period to transfer the Transfer Securities (or in
the case of the foregoing clause (iii), such remaining portion of
the Transfer Securities) to a Qualified Purchaser at a price
equal to or greater than the Offer Price and otherwise on terms
which are no more favorable in any material respect to such
Qualified Purchaser than the terms and conditions set forth in
the Offer Notice. If for any reason such Transferring
Securityholder does not transfer the Transfer Securities (or in
the case of the foregoing clause (iii), such remaining portion of
the Transfer Securities) to a Qualified Purchaser on such terms
and conditions or if such Transferring Securityholder wishes to
Transfer the Transfer Securities (or in the case of the foregoing
clause (iii), such remaining portion of the Transfer Securities)
at a lower Purchase Price or on terms which are more favorable in
any material respect to a Qualified Purchaser than those set
forth in the Offer Notice, the provisions of this Section 2.2
shall again be applicable to the Transfer Securities (or in the
case of the foregoing clause (iii), such remaining portion of the
Transfer Securities); provided that if the Transferring
Securityholder does not transfer all of the Transfer Securities
(or in the case of the foregoing clause (iii), such remaining
portion of the Transfer Securities) to a Qualifying Purchaser
within 120 days from the end of the Election Period (the
"Transfer Period") then such Transferring Securityholder may not
deliver another Offer Notice until 90 days have elapsed since the
end of the Transfer Period.
2.3. Certain Permitted Transfers.
Notwithstanding any other provision of this Agreement
to the contrary, each Non-XXXX Party shall be entitled from time
to time to Transfer any or all of the Restricted Securities held
by it to (i) any of its Affiliates, (ii) in the case of each of
the DLJ Parties, its employees, (iii) in the case of each of the
DLJ Parties, to a transferee of Notes in connection with the
Transfer of such Notes (or an affiliate of such transferee),
(iv) in the case of the FS Entities, beginning on April 12, 2003,
on a pro rata basis to the partners of such Transferor, (v) in
the case of any Non-XXXX Party (including any transferee that
receives shares from an FS Entity pursuant to clause (iv) of this
Section 2.3) who is an individual, (A) such Transferor's spouse
or direct lineal descendants (including adopted children) or
antecedents, (B) a charitable remainder trust or trust, in each
case the current beneficiaries of which, or to a corporation or
partnership, the stockholders or limited or general partners of
which, include only such transferor and/or such transferor's
spouse and/or such transferor's direct lineal descendants
(including adopted children) or antecedents, or (C) the executor,
administrator, testamentary trustee, legatee or beneficiary of
any deceased transferor holding Restricted Securities or
(vi) in the case of a transferee from an FS Entity pursuant
to clause (iv) of this Section 2.3 that is a corporation,
partnership, limited liability company, trust or other entity,
pro rata without payment of consideration, to its shareholders,
partners, members, beneficiaries or other entity owners, as the
case may be; provided that with respect to each of the foregoing
(x) any such transferee duly executes and delivers an Assumption
Agreement, (y) each such transferee pursuant to clause (i) or (v)
shall, and each such Transferring Non-XXXX Party shall cause such
transferee (and, if applicable, such transferee's spouse) to,
Transfer back to such Transferring Non-XXXX Party any Restricted
Securities it owns prior to such transferee ceasing to satisfy
any of the foregoing clause (i) or (v) of this Section 2.3 with
respect to its relationship to such Transferring Non-XXXX Party,
and (z) (1) if requested by the Company the Company has been
furnished with an opinion of counsel in connection with such
Transfer, in form and substance reasonably satisfactory to the
Company, that such Transfer is exempt from or not subject to the
provisions of Section 5 of the Securities Act and (2) the Company
shall be reasonably satisfied that such Transfer is exempt from
or not subject to any other applicable securities laws.
2.4. Tag-Along Rights.
(a) Prior to an Initial Public Offering, with respect to
any proposed Transfer by XXXX and its Affiliates of shares of Common
Stock to any Person other than XXXX and its Affiliates (each a
"Third Party") (other than in a Public Offering, which shall be
subject to Article III), whether pursuant to a stock sale,
merger, consolidation, a tender or exchange offer or any other
transaction (any such transaction, a "XXXX Sale"), XXXX and its
Affiliates will have the obligation, and each of the Non-XXXX
Parties will have the right, to require the proposed transferee
or acquiring Person (a "Proposed Transferee") to purchase from
each of the Non-XXXX Parties who exercises its rights under
Section 2.4(b) (a "Tagging Securityholder") a number of shares of
Common Stock up to the product (rounded to the nearest whole
number of shares) of (i) the quotient determined by dividing (A)
the aggregate number of outstanding shares of Common Stock owned
by such Tagging Securityholder by (B) the aggregate number of
outstanding shares of Common Stock and (ii) the total number of
shares of Common Stock proposed to be directly or indirectly
Transferred to the Proposed Transferee at the same price per
share and upon the same terms and conditions (including, without
limitation, time of payment and form of consideration) as to be
paid by and given to XXXX and/or its Affiliates (as applicable).
In order to be entitled to exercise its right to sell shares of
Common Stock to the Proposed Transferee pursuant to this Section
2.4, each Tagging Securityholder must agree to make to the
Proposed Transferee the same covenants, indemnities (with respect
to all matters other than XXXX'x and/or its Affiliates' Ownership
of Common Stock) and agreements as XXXX and/or its Affiliate (as
applicable) agrees to make in connection with the XXXX Sale and
such representations and warranties (and related indemnification)
as to its Ownership of its Common Stock as are given by XXXX
and/or its Affiliate (as applicable) with respect to such party's
Ownership of Common Stock; provided, that all such covenants,
indemnities and agreements shall be made by each Tagging
Securityholder, severally and not jointly, and that the
liabilities thereunder (other than with respect to Ownership,
which shall be several obligations) shall be borne on a pro rata
basis based on the number of shares Transferred by each of XXXX,
and its Affiliates and the Tagging Securityholders. Each Tagging
Securityholder will be responsible for its proportionate share of
the reasonable out-of-pocket costs incurred by XXXX and its
Affiliates in connection with the XXXX Sale to the extent not
paid or reimbursed by the Company or the Proposed Transferee.
(b) XXXX will give notice to each Tagging Securityholder
of each proposed XXXX Sale at least 15 business days prior to the
proposed consummation of such XXXX Sale, setting forth the number
of shares of Common Stock proposed to be so Transferred, the name
and address of the Proposed Transferee, the proposed amount and
form of consideration (and if such consideration consists in part
or in whole of property other than cash, XXXX will provide such
information, to the extent reasonably available to XXXX, relating
to such consideration as the Tagging Securityholder may
reasonably request in order to evaluate such non-cash
consideration) and other terms and conditions of payment offered
by the Proposed Transferee. The tag-along rights provided by
this Section 2.4 must be exercised by each Tagging Securityholder
within 10 business days following receipt of the notice required
by the preceding sentence by delivery of an irrevocable written
notice to XXXX indicating such Tagging Securityholder's exercise
of its, her or his rights and specifying the number of shares of
Common Stock it, she or he desires to sell. The Tagging
Securityholder will be entitled under this Section 2.4 to
Transfer to the Proposed Transferee the number of shares of
Common Stock determined in accordance with Section 2.4(a).
(c) If any Tagging Securityholder exercises its, her
or his rights under Section 2.4(a), the closing of the purchase
of the Common Stock with respect to which such rights have been
exercised is subject to, and will take place concurrently with,
the closing of the sale of XXXX'x or its Affiliate's Common Stock
to the Proposed Transferee.
2.5. Drag-Along Rights.
(a) If XXXX and/or its Affiliates (in such capacity, the
"Dragging Party") agree to Transfer to a Third Party or a group
of Third Parties (other than in a Public Offering) a majority of
the shares of Common Stock beneficially owned by XXXX and its
Affiliates at the time of such Transfer, then each of the Non-
XXXX Parties hereby agrees that, if requested by the Dragging
Party, it will Transfer to such Third Party on the same terms and
conditions (including, without limitation, time of payment and
form of consideration, but subject to Section 2.5(b)) as to be
paid and given to the Dragging Party, the same portion (as
determined by the immediately succeeding sentence) of such Non-
XXXX Party's Restricted Securities as is being Transferred by
XXXX and its Affiliates. Each Non-XXXX Party can be required to
sell pursuant to this Section 2.5 that number of Restricted
Securities equal to the product obtained by multiplying (i) a
fraction, (A) the numerator of which is the aggregate number of
shares of Common Stock to be Transferred by XXXX and its
Affiliates and (B) the denominator of which is the aggregate
number of shares of Common Stock owned by XXXX and its Affiliates
at the time of the Transfer by (ii) the aggregate number of
shares of Common Stock owned by such Non-XXXX Party (including
for these purposes all shares of Common Stock issuable upon
exercise, exchange or conversion of other Equity Securities).
(b) The Dragging Party will give notice (the "Drag-Along
Notice") to each of the Non-XXXX Parties of any proposed Transfer
giving rise to the rights of the Dragging Party set forth in
Section 2.5(a) at least ten (10) calendar days prior to such
Transfer. The Drag-Along Notice will set forth the number of
shares of Common Stock proposed to be so Transferred, the name of
the Proposed Transferee, the proposed amount and form of
consideration (and if such consideration consists in part or in
whole of property other than cash, the Dragging Party will
provide such information, to the extent reasonably available to
the Dragging Party, relating to such consideration as the Non-
XXXX Parties may reasonably request in order to evaluate such non-
cash consideration), the number of Restricted Securities sought
and the other terms and conditions of the proposed Transfer. In
connection with any such Transfer, such Non-XXXX Parties shall be
obligated only to (i) make representations and warranties (and
provide related indemnification) as to their respective
individual Ownership of Restricted Securities (and then only to
the same extent such representations and warranties are given by
the Dragging Party with respect to its Ownership of Common
Stock), (ii) agree to pay its pro rata share (based on the number
of shares transferred by each stockholder in such transaction) of
any liability arising out of any representations, warranties,
covenants or agreements of the selling Securityholders that
survive the closing of such transaction and do not relate to
Ownership of Restricted Securities; provided, however that this
Section 2.5(b)(ii) shall not apply if, no later than five (5)
calendar days after receipt of the Drag-Along Notice by the FS
Entities, the FS Entities deliver to XXXX a certificate signed by
the FS Entities certifying in good faith that they (x) do not
desire to Transfer any of the Restricted Securities beneficially
owned by them in the proposed Transfer set forth in the Drag-
Along Notice and (y) would not exercise their rights pursuant to
Section 2.4 hereto in connection with such proposed Transfer if
XXXX had not otherwise delivered a Drag-Along Notice with respect
thereto, and (iii) agree to pay their proportionate share of the
reasonable costs incurred in connection with such transaction to
the extent not paid or reimbursed by the Company or the Proposed
Transferee. If the Transfer referred to in the Drag-Along Notice
is not consummated within 120 days from the date of the Drag-
Along Notice, the Dragging Party must deliver another Drag-Along
Notice in order to exercise its rights under this Section 2.5
with respect to such Transfer or any other Transfer.
(c) If XXXX approves (i) any merger, consolidation,
amalgamation or other business combination involving the Company or
any of its Subsidiaries or (ii) the sale of all of the business or
assets of, or substantially all of the assets of, the Company or any
of its Subsidiaries (any of the foregoing events, a "Transaction"),
then each of the Non-XXXX Parties agrees to vote all shares of
Common Stock held by it or its Affiliates to approve such
Transaction and not to exercise any appraisal or dissenters'
rights available to such Non-XXXX Parties under any rule,
regulation, statute, agreement among the stockholders, the
Certificate of Incorporation, the Bylaws or otherwise.
2.6. Participation Right.
(a) The Company shall not issue (an "Issuance") additional
Equity Securities of the Company to any Person (other than (i)
Equity Securities issued upon the exchange, exercise or
conversion of other Equity Securities in accordance with the
terms thereof, (ii) Equity Securities issued in connection with
any stock split, stock dividend or recapitalization of the
Company, as long as the same is fully proportionate for each
class of affected security and entails equal treatment for all
shares or units of such class, (iii) Equity Securities issued by
the Company pursuant to the acquisition by the Company or its
Subsidiaries of another Person or a material portion of the
assets thereof, by merger, purchase of assets or otherwise in
consideration for the assets and/or equity securities so
acquired, (iv) Equity Securities issued to employees, officers,
directors, or consultants of the Company or its Subsidiaries, (v)
Equity Securities issued in connection with a Public Offering or
(vi) Equity Securities issued to customers, venders, lenders, and
other non-equity financing sources, lessors of equipment and
other providers of goods or services to the Company or its
Subsidiaries, each of which will not be subject to this
Section 2.6), unless, prior to such Issuance, the Company
notifies each Securityholder party hereto in writing of the
Issuance and grants to each such Securityholder or, at such
Securityholder's election, one of its Affiliates, the right (the
"Right") to subscribe for and purchase such Securityholder's pro
rata share (determined as provided below) of such additional
Equity Securities so issued at the same price and upon the same
terms and conditions as issued in the Issuance. Each
Securityholder's pro rata share is equal to the ratio of (A) the
number of shares of Common Stock owned by such Securityholder
(including for these purposes all shares of Common Stock issuable
upon exercise, exchange or conversion of other Equity Securities)
to (B) the total number of shares of the Company's outstanding
Common Stock (including for these purposes all shares of Common
Stock issuable upon exercise, exchange or conversion of other
Equity Securities) immediately prior to the issuance of the
Equity Securities.
(b) The Right may be exercised by each Securityholder
party hereto or its Affiliates at any time by written notice to
the Company received by the Company within 10 business days after
receipt of notice from the Company of the Issuance, and the
closing of the purchase and sale pursuant to the exercise of the
Right shall occur at least 20 business days after the giving of
the notice of the Issuance by the Company and prior to or
concurrently with the closing of the Issuance. Notwithstanding
the foregoing (i) the Right shall not apply to any Issuance, pro
rata, to all holders of Common Stock and (ii) the Company shall
not be required to offer or sell any Equity Security to any
Securityholder who is not an "accredited investor" as defined in
Regulation D of the rules and regulations promulgated by the SEC
under the Exchange Act or who would cause the Company to be in
violation of applicable federal securities laws by virtue of such
offer or sale.
III REGISTRATION RIGHTS
3.1. Demand Registration.
(a) Subject to the conditions of this Section 3.1, if
the Company shall receive a written request from (i) XXXX Holders
holding not less than 25% of the Registrable Securities then
outstanding held by the XXXX Holders, (ii) FS Holders holding not
less than 25% of the Registrable Securities then outstanding held
by the FS Holders or (iii) DLJ Holders holding not less than 25%
of the Registrable Securities then outstanding held by the DLJ
Holders, that the Company file a registration statement under the
Securities Act covering the registration of Registrable
Securities, then the Company shall, within five (5) days of the
receipt thereof, give written notice of such request to all
Holders, who must respond in writing within fifteen (15) days
requesting inclusion in the registration. The request must
specify the amount and intended disposition of such Registrable
Securities. The Company, subject to the limitations of this
Section 3.1, must use its best efforts to effect, as soon as
practicable, the registration under the Securities Act of all
Registrable Securities that the Holders request to be registered
in accordance with this Section 3.1 together with any other
securities of the Company entitled to inclusion in such
registration.
(b) If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their
request made pursuant to this Section 3.1 and the Company shall
include such information in the written notice referred to in
Section 3.1(a). In such event, the right of any Holder to
include its Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting
and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in
interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their
securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in
interest of the Initiating Holders (which underwriter or
underwriters shall be reasonably acceptable to the Company).
Notwithstanding any other provision of this Section 3.1, if the
managing underwriter advises the Company in writing that
marketing factors require a limitation of the number of
securities to be underwritten (including Registrable Securities)
because the number of securities to be underwritten is likely to
have an adverse effect on the price, timing or the distribution
of the securities to be offered, then the Company shall so advise
all Holders of Registrable Securities which would otherwise be
underwritten pursuant hereto, and the number of shares that may
be included in the underwriting shall be allocated among
participating Holders, (i) first among the Initiating Holders as
nearly as possible on a pro rata basis based on the total number
of Registrable Securities held by all such Initiating Holders and
(ii) second to the extent all Registrable Securities requested to
be included in such underwriting by the Initiating Holders have
been included, among the Holders requesting inclusion of
Registrable Securities in such underwritten offering (other than
the Initiating Holders), as nearly as possible on a pro rata
basis based on the total number of Registrable Securities held by
all such Holders. Any Registrable Securities excluded or
withdrawn from such underwriting shall be withdrawn from the
registration. To facilitate the allocation of shares in
accordance with the foregoing, the Company or the underwriters
may round the number of shares allocated to any Holder to the
nearest 100 shares.
(c) The Company shall not be required to effect a
registration pursuant to this Section 3.1:
(i) prior to the date one hundred eighty (180) days
following the effective date of the registration statement
pertaining to the Initial Public Offering;
(ii) in the case of (x) a registration requested by
XXXX Holders pursuant to Section 3.1(a)(ii), after the Company
has effected six (6) registrations requested by XXXX Holders
pursuant to such Section, (y) a registration requested by FS Holders
pursuant to Section 3.1(a)(ii), after the Company has effected
three (3) registration requested by FS Holders pursuant to such
Section, and (z) a registration requested by DLJ Holders pursuant
to Section 3.1(a)(ii), after the Company has effected one (1)
registration requested by DLJ Holders pursuant to such Section;
(iii) if the anticipated aggregate gross proceeds to
be received by such Holders are less than $2,000,000;
(iv) if within five (5) days of receipt of a written
request from the Initiating Holders pursuant to Section 3.1(a),
the Company in good faith gives notice to the Initiating Holders
of the Company's intention to make a public offering within ninety
(90)days in which case Section 3.2 shall govern; provided that
if the Company does not file a registration statement under the
Securities Act relating to such public offering within such ninety
(90) day period (such 90 day period being referred to herein as
the "Relevant Period") the Company shall be prohibited from
delivering additional notices pursuant to this Section 3.1(c)(iv)
until the 181st day following the last day of the Relevant Period; or
(v) if the Company shall furnish to Holders requesting
a registration statement pursuant to this Section 3.1, a
certificate signed by the Chairman of the Board stating that
in the good faith judgment of the Board, it would be seriously
detrimental to the Company for such registration statement to
be effected at such time, in which event the Company shall have
the right to defer such filing for a period of not more than
ninety (90) days after receipt of the request of the Initiating
Holders; provided that the Company shall not defer filings pursuant
to this clause (v) more than an aggregate of ninety (90) days in
any twelve (12) month period.
(d) The Company shall select the registration statement form
for any registration pursuant to Section 3.1, but shall cooperate
with the requests of the Initiating Shareholders or managing
underwriters selected by them as to the inclusion therein of
information not specifically required by such form.
3.2. Piggyback Registrations.
(a) The Company shall notify all Holders of Registrable
Securities in writing at least fifteen (15) days prior to the
filing of any registration statement under the Securities Act for
purposes of a public offering of securities of the Company
(including, but not limited to, registration statements relating
to secondary offerings of securities of the Company, but
excluding (i) registration statements relating to employee
benefit plans or with respect to corporate reorganizations or
other transactions under Rule 145 of the Securities Act; (ii) any
registration statement filed pursuant to Section 3.1 (with
respect to which the Holders rights to participate in such
registered offering shall be governed by Section 3.1); and (iii)
any registration statement relating to the Initial Public
Offering unless Registrable Securities of XXXX or its Affiliates
are to be sold in the IPO) and, subject to Section 3.13(a), will
use its best efforts to afford each such Holder an opportunity to
include in such registration statement all or part of such
Registrable Securities held by such Holder. Each Holder desiring
to include in any such registration statement all or any part of
the Registrable Securities held by it shall, within fifteen (15)
days after the above-described notice from the Company, so notify
the Company in writing. Such notice shall state the intended
method of disposition of the Registrable Securities by such
Holder. If a Holder decides not to include all of its
Registrable Securities in any registration statement thereafter
filed by the Company, such Holder shall nevertheless continue to
have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as
may be filed by the Company with respect to offerings of its
securities, all upon the terms and conditions set forth herein.
(b) If the registration statement under which the Company
gives notice under this Section 3.2 is for an underwritten offering,
the Company shall so advise the Holders of Registrable Securities
as part of the written notice provided to the Holders pursuant to
Section 3.2(a). In such event, the right of any such Holder to
be included in a registration pursuant to this Section 3.2 shall
be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable
Securities in the underwriting to the extent provided herein.
All Holders proposing to distribute their Registrable Securities
through such underwriting shall enter into an underwriting
agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding
any other provision of this Agreement, if the managing
underwriter advises the Company in writing that marketing factors
require a limitation of the number of securities to be
underwritten (including Registrable Securities) in an offering
subject to this Section 3.2 because the number of securities to
be underwritten is likely to have an adverse effect on the price,
timing or the distribution of securities to be offered, then the
Company shall so advise all Holders of Registrable Securities
which would otherwise be underwritten pursuant hereto, and the
number of shares that may be included in the underwriting shall
be allocated, first, to the Company and second, to the Holders on
a pro rata basis based on the total number of Registrable
Securities held by the Holders. No such reduction shall (i)
reduce the securities being offered by the Company for its own
account to be included in the registration and underwriting, or
(ii) reduce the amount of securities of the selling Holders
included in the registration below twenty-five percent (25%) of
the total amount of securities included in such registration,
unless such offering does not include shares of any other selling
shareholders, in which event any or all of the Registrable
Securities of the Holders may be excluded in accordance with the
immediately preceding sentence.
(c) The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section 3.2
prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
The Registration Expenses of such withdrawn registration shall be
borne by the Company in accordance with Section 3.3 hereof.
3.3. Expenses of Registration.
Except as specifically provided herein, all
Registration Expenses incurred in connection with any
registration, qualification or compliance pursuant to Section 3.1
or Section 3.2 herein shall be borne by the Company. All Selling
Expenses incurred in connection with any registrations hereunder,
shall be borne by the Holders of the Registrable Securities so
registered pro rata on the basis of the number of shares so
registered. The Company shall not, however, be required to pay
for expenses of any registration proceeding begun pursuant to
Section 3.1, the request of which has been subsequently withdrawn
by the Initiating Holders unless (a) the withdrawal is based upon
material adverse information concerning the Company of which the
Initiating Holders were not aware at the time of such request or
(b) (x) XXXX Holders holding not less than 50% of the Registrable
Securities then outstanding held by all XXXX Holders, in the case
of a registration requested pursuant to Section 3.1(a)(i), (y) FS
Holders holding not less than 50% of the Registrable Securities
then outstanding held by all FS Holders, in the case of a
registration requested pursuant to Section 3.1(a)(ii), or (z) DLJ
Holders holding not less than 50% of the Registrable Securities
then outstanding held by all DLJ Holders, in the case of a
registration requested pursuant to Section 3.1(iii), agree to
forfeit their right to one requested registration pursuant to
Section 3.1, as applicable, in which event such right shall be
forfeited by all XXXX Holders, in the case of clause (x), all FS
Holders in the case of clause (y) and all DLJ Holders in the case
of clause (z). If the Holders are required to pay the
Registration Expenses, such expenses shall be borne by the
holders of securities (including Registrable Securities)
requesting such registration in proportion to the number of
shares for which registration was requested. If the Company is
required to pay the Registration Expenses of a withdrawn offering
pursuant to clause (a) above, then the Holders shall not forfeit
their rights pursuant to Section 3.1 to a demand registration.
3.4. Effective Registration Statement.
A registration requested pursuant to Section 3.1 will
not be deemed to have been effected unless it has become
effective and all of the Registrable Securities registered
thereunder have been sold; provided, that if within 180 days
after it has become effective, the offering of Registrable
Securities pursuant to such registration is interfered with by
any stop order, injunction or other order or requirement of the
Commission or other governmental entity, such registration shall
be deemed not to have been effected.
3.5. Selection of Counsel.
In connection with any registration of Registrable
Securities pursuant to Sections 3.1 or 3.2 hereof, the Holders of
a majority in interest of the Initiating Holders (or the Holders
of a majority of the Registrable Securities covered by the
registration pursuant to Section 3.2) may select one counsel to
represent all Holders of Registrable Securities covered by such
registration; provided, however, that in the event that the
counsel selected as provided above is also acting as counsel to
the Company in connection with such registration, the remaining
Holders shall be entitled to select one additional counsel to
represent all such remaining Holders.
3.6. Obligations of the Company.
Whenever required to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as
reasonably possible:
(a) (1) in the case of a registration initiated under
Section 3.1 prepare and, in any event within ninety (90) days
after the receipt of the notice contemplated by Section 3.1(a),
file with the SEC a registration statement with respect to such
Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, (2) in the case
of any registration effected under Section 3.1, upon the request
of the Holders of a majority of the Registrable Securities
registered thereunder, keep such registration statement effective
for up to one hundred and eighty (180) days or, if earlier, until
the Holder or Holders have completed the distribution related
thereto.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus
used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by
such registration statement; provided, that before filing a
registration statement or prospectus, or any amendments or
supplements thereto, the Company will furnish to counsel
(selected pursuant to Section 3.5 hereof) for the Holders of
Registrable Securities copies of all documents proposed to be
filed, which documents will be subject to the review of such
counsel.
(c) Furnish to each Holder such number of copies of
such registration statement and of each amendment and supplement
thereto (in each case including all exhibits filed therewith
including any documents incorporated by reference), such number
of copies of the prospectus included in such registration
statement (including each preliminary prospectus and summary
prospectus), in conformity with the requirements of the
Securities Act, and such other documents as such Holder may
reasonably request in order to facilitate the disposition of
Registrable Securities owned by such Holder.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as shall be
reasonably requested by the Holders, 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; provided, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in
any such states or jurisdictions unless the Company is already
subject to service in such jurisdiction and except as may be
required by the Securities Act.
(e) Use its best efforts to cause such Registrable
Securities covered by such registration statement to be registered
with or approved by such other governmental entities as may be
necessary to enable the Holders thereof to consummate the disposition
of such Registrable Securities.
(f) Enter into such customary agreements (including an
underwriting agreement in customary form), which may include
indemnification provisions in favor of underwriters and other
Persons in addition to, or in substitution for the provisions of
Section 3.9 hereof, and take such other actions as Holders 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.
(g) Notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of
the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing, and prepare and furnish to each
Holder any supplement or amendment necessary so that the
supplemented or amended prospectus no longer includes such untrue
or misleading statements or omissions of material fact.
(h) Otherwise comply with all applicable rules and
regulations of the Commission, 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.
(i) Use its best efforts to list such Registrable
Securities on any securities exchange on which the Common Stock is
then listed if such Registrable Securities are not already so
listed and if such listing is then permitted under the rules of
such exchange, and use its best efforts to provide a transfer
agent and registrar for such Registrable Securities covered by such
registration statement not later than the effective date of such
registration statement.
(j) Furnish, at the request of the Holders of a majority
of the Registrable Securities being registered in the registration,
on the date that such Registrable Securities are delivered to the
underwriters for sale, if such securities are being sold through
underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with
respect to such securities becomes effective, (i) an opinion,
dated as of such date, of the counsel representing the Company
for the purposes of such registration, in form and substance as
is customarily given to underwriters in an underwritten public
offering and reasonably satisfactory in form, substance and scope
to a majority in interest of the Initiating Holders (or Holders
requesting registration in the case of a registration pursuant to
Section 3.2), addressed to the underwriters, if any, and to the
Holders requesting registration of Registrable Securities and
(ii) a "cold comfort" letter dated as of such date, from the
independent certified public accountants of the Company, in form
and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public
offering and reasonably satisfactory to a majority in interest of
the Initiating Holders (or Holders requesting registration in the
case of a registration pursuant to Section 3.2), addressed to the
underwriters, if any, and if permitted by applicable accounting
standards, to the Holders requesting registration of Registrable
Securities.
(k) 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, all pertinent financial and other records, pertinent
corporate documents and properties of the Company, and cause all
of the Company's officers, directors and employees to supply all
information reasonably requested by any such Holder, underwriter,
attorney, accountant or agent in connection with such
registration statement.
(l) Notify counsel (selected pursuant to Section 3.5
hereof) for the Holders of Registrable Securities included in such
registration statement and the managing underwriter or agent,
immediately, and confirm the notice in writing (i) 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 prospectus shall
have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any request of the Commission to amend the
registration statement or amend or supplement the prospectus or
for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the
registration statement or of any order preventing or suspending
the use of any preliminary 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 legal actions for any of such purposes.
(m) Make every reasonable effort to prevent the issuance
of any stop order suspending the effectiveness of the registration
statement or of any order preventing or suspending the use of any
preliminary prospectus and, if any such order is issued, to
obtain the withdrawal of any such order at the earliest possible
moment.
(n) If requested by the managing underwriter or agent
or any Holder of Registrable Securities covered by the registration
statement, promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing
underwriter or agent or such Holder reasonably requests to be
included therein, including, with respect to the number of
Registrable Securities being sold by such Holder to such
underwriter or agent, the Purchase Price being paid therefor by
such underwriter or agent 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
practicable after being notified of the matters incorporated in
such prospectus supplement or post-effective amendment.
(o) Cooperate with the Holders of Registrable Securities
covered by the registration statement and the managing underwriter
or agent, if any, to facilitate the timely preparation and delivery
of certificates (not bearing any restrictive legends) 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 managing underwriter or agent, if any, or such Holders
may request.
(p) Cooperate with each Holder of Registrable Securities
and each underwriter or agent participating in the disposition of
such Registrable Securities and their respective counsel in
connection with any filings required to be made with the National
Association of Securities Dealers, Inc.
(q) Make available the executive officers of the Company
to participate with the Holders of Registrable Securities and any
underwriters in any "road shows" or other selling efforts that
may be reasonably requested by the Holders in connection with the
methods of distribution for the Registrable Securities.
3.7. Termination of Registration Rights.
A Holder's registration rights pursuant to this Article
III shall expire if (i) the Company has completed its Initial
Public Offering and is subject to the provisions of the Exchange
Act, (ii) such Holder (together with its Affiliates, partners and
former partners) holds less than 2% of the Company's outstanding
Common Stock and (iii) all Registrable Securities held by such
Holder (and its Affiliates, partners and former partners) may be
sold under Rule 144 during any ninety (90) day period. Upon
expiration of a Holder's registration rights pursuant to this
Section 3.7, the obligations of the Company under this Article
III to give such Holder notice of registrations or take any other
actions under this Article III with respect to the registration
of securities held by such Holder shall also terminate.
3.8. Delay of Registration; Furnishing Information.
It shall be a condition precedent to the obligations
of the Company to take any action pursuant to Section 3.1 or
3.2 that the selling Holders shall furnish to the Company upon
written request of the Company such information regarding
themselves, the Registrable Securities held by them and the
intended method of disposition of such securities as shall
reasonably be required to effect the registration of their
Registrable Securities.
3.9. Indemnification.
(a) The Company will indemnify and hold harmless each
Holder, each Affiliate of each Holder and their respective partners,
officers and directors (and any director, officer, Affiliate,
employee, agent or controlling Person of any of the foregoing),
legal counsel and accountants of each Holder, any underwriter (as
defined in the Securities Act) for such Holder and each Person,
if any, who controls such Holder or underwriter within the
meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages, liabilities (joint or several) or
expenses, as incurred, to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) or expenses arise out of or are based
upon any of the following statements, omissions or violations
(collectively, a "Violation") by the Company: (i) any untrue
statement or alleged untrue statement of a material fact
contained in any registration statement, including any
preliminary prospectus, summary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii)
the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the
statements therein not misleading, or (iii) any violation or
alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any
state securities law in connection with the offering covered by
such registration statement; and the Company will reimburse each
such Holder, partner, officer or director, underwriter, legal
counsel, accountants or controlling Person for any legal or other
expenses, as incurred, reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity
agreement contained in this Section 3.9(a) shall not apply (x) to
amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the
consent of the Company, which consent shall not be unreasonably
withheld, nor shall the Company be liable in any such case for
any such loss, claim, damage, liability or action to the extent
that it arises out of or is based upon a Violation which occurs
in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration
by such Holder, partner, officer, director, underwriter or
controlling Person of such Holder, and (y) to indemnify
underwriters in the offering or sale of Registrable Securities or
any other Person, if any, who controls such underwriter within
the meaning of the Securities Act with respect to preliminary,
final or summary prospectus, or any amendments or supplement
thereto, to the extent that it is established that any such
action, loss, damage, liability or expense of such underwriter or
controlling Person resulted from the fact that such underwriter
sold Registrable Securities to a Person whom there was not sent
or given, at or prior to the written confirmation of such sale,
a copy of the final prospectus (including any documents
incorporated by reference therein) or of the final prospectus,
as then amended or supplemented (including any documents
incorporated by reference therein), whichever is most recent,
if the Company has previously furnished copies thereof to such
underwriter.
(b) Each Holder will, severally but not jointly, if
Registrable Securities held by such Holder are included in the
securities as to which such registration, qualification or compliance
is being effected, indemnify and hold harmless the Company, each of
its directors, its officers, legal counsel, accountants and each
Person, if any, who controls the Company within the meaning of
the Securities Act, any underwriter and any other Holder selling
securities under such registration statement or any of such other
Holder's partners, directors or officers, legal counsel,
accountants or any Person who controls such Holder, against any
losses, claims, damages, liabilities (joint or several) or
expenses to which the Company or any such director, officer,
controlling Person, underwriter or other such Holder, or partner,
director, officer, legal counsel, accountants or controlling
Person of such other Holder may become subject under the
Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) or expenses arise out of or are based
upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by such Holder
under an instrument duly executed by such Holder and stated to be
specifically for use in connection with such registration; and
each such Holder will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer,
controlling Person, underwriter or other Holder, or partner,
officer, director or controlling Person of such other Holder in
connection with investigating or defending any such loss, claim,
damage, liability or action if it is judicially determined that
there was such a Violation; provided, however, that the indemnity
agreement contained in this Section 3.9(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably
withheld; provided, further, that in no event shall any indemnity
under this Section 3.9 exceed the total net proceeds from the
offering received by such Holder.
(c) Promptly after receipt by an 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 3.9, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of
such action; provided that the failure of the indemnified party
to give notice as provided herein shall relieve the indemnifying
party of its obligations under the preceding subdivisions of this
Section 3.9 only to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any
such action is brought against an indemnified party, unless in
such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may
exist in respect of such claim or there may be a legal defense
available to such indemnified party different from or in addition
to those available to the identifying party, the indemnifying
party will be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel
reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying
party will not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs
of investigation.
(d) In order to provide for just and equitable contribution
in circumstances in which the indemnity provided for in this Section
3.9 is unavailable to an indemnified party, the indemnifying
party shall contribute to the aggregate losses, damages,
liabilities and expenses (collectively, "Losses") of the nature
contemplated by such indemnity incurred by any indemnified party,
(i) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the
indemnified parties on the other, in connection with the
statements or omissions which resulted in such Losses or (ii) if
the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect
not only the relative fault of but also the relative benefits to
the indemnifying party on the one hand and each such indemnified
party on the other, in connection with the statements or
omissions which resulted in such Losses, as well as any other
relevant equitable considerations. The relative benefits to the
indemnifying party and the indemnified party shall be determined
by reference to, among other things, the total proceeds received
by the indemnifying party and the indemnified party in connection
with the offering to which such losses relate. The relative
fault of the indemnifying party and the indemnified party shall
be determined by reference to, among other things, whether the
action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or related to
information supplied by, the indemnifying party or the
indemnified party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
action. The parties hereto agree that it would be not be just or
equitable if contribution pursuant to this Section 3.9 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 the immediately preceding
paragraph. Notwithstanding the provisions of this Section 3.10,
no indemnified party shall be required to contribute any amount
in excess of the amount of total net proceeds to such indemnified
party from sales of the Registrable Securities of such
indemnified party pursuant to the offering that gave rise to such
Losses.
(e) The obligations of the Company and Holders under
this Section 3.9 shall survive completion of any offering of
Registrable Securities in a registration statement and the
termination of this Agreement.
3.10. Assignment of Registration Rights.
The rights to cause the Company to register Registrable
Securities pursuant to this Article III may be assigned by a
Holder to a transferee of such Registrable Securities; provided,
however, that in each case (i) such Transfer of Registrable
Securities shall comply with the provisions of Article II hereto,
(ii) the Transferor shall, within ten (10) days after such
Transfer, furnish to the Company written notice of the name and
address of such transferee and the securities with respect to
which such registration rights are being Transferred and
(iii) such transferee shall execute and deliver to XXXX and
the Company an Assumption Agreement and become bound by the
provisions of this Agreement in the manner set forth in Section
6.5 hereto.
3.11. Amendment of Registration Rights.
Any provision of this Article III may be amended and
the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively),
only with the written consent of the Company, XXXX and the
Holders of at least a majority of the Registrable Securities then
outstanding; provided that no such amendment shall adversely
affect the rights of the FS Holders relative to the rights of the
XXXX Holders without the written consent of the Holders of a
majority of the Registrable Securities then outstanding held by
the FS Holders, provided, further that no such amendment shall
adversely affect the rights of the DLJ Holders relative to the
rights of the XXXX Holders without the written consent of the
Holders of a majority of the Registrable Securities then
outstanding held by all DLJ Holders and provided, further that
no such amendment shall adversely affect the rights of the Other
Holders relative to the rights of the XXXX Holders without the
written consent of the Holders of a majority of the Registrable
Securities then outstanding held by all Other Holders. No such
amendment shall adversely affect the rights of the DLJ Holders
relative to the rights of the FS Holders or the Other Holders
without the written consent of the Holders of a majority of the
Registrable Securities then outstanding held by the DLJ Holders.
No such amendment shall adversely affect the rights of the Other
Holders relative to the rights of the FS Holders or the DLJ
Holders without the written consent of the Holders of a majority
of the Registrable Securities then outstanding held by the Other
Holders. Each Holder of any Registrable Securities at the time
or thereafter outstanding shall be bound by any amendment
authorized by this Section, whether or not such Registrable
Securities shall have been marked to indicate such amendment.
3.12. Limitation on Subsequent Registration Rights.
After the date of this Agreement, the Company shall
not, without the prior written consent of the Holders of a
majority of the Registrable Securities then outstanding, enter
into any agreement with any holder or prospective holder of
any securities of the Company that would grant such holder
registration rights senior to or otherwise more favorable than
those granted to the Holders hereunder.
3.13. "Market Stand-Off" Agreement; Agreement to Furnish
Information.
(a) Subject to the condition that all Holders holding
at least 2% of the outstanding shares of Common Stock are subject
to the same restrictions, each Holder hereby agrees that such
Holder shall not sell, transfer, make any short sale of, grant any
option for the purchase of, or enter into any hedging or similar
transaction with the same economic effect as a sale, regarding
any Common Stock (or other securities) of the Company held by
such Holder (other than those included in the registration) for a
period specified by the representative of the underwriters of
Common Stock (or other securities) of the Company not to exceed
one hundred eighty (180) days following the effective date of a
registration statement of the Company filed under the Securities
Act pursuant to which an Initial Public Offering is effected.
The Company may impose stop-transfer instructions with respect to
the Common Stock (or other securities) subject to the foregoing
restriction until the end of said one hundred eighty (180) day
period. For the avoidance of doubt such agreement shall apply
only to the Initial Public Offering.
(b) Each Holder agrees to execute and deliver such
other agreements as may be reasonably requested by the Company
or the underwriter which are consistent with the foregoing or
which are necessary to give further effect thereto. In addition,
if requested by the Company or the representative of the
underwriters of Common Stock (or other securities) of the
Company, each Holder shall provide, within ten (10) days of such
request, such information concerning such Holder as may be
required by the Company or such representative in connection with
the completion of any public offering of the Company's securities
pursuant to a registration statement filed under the Securities
Act. The obligations described in this Section 3.13 shall not
apply to a registration relating solely to employee benefit plans
on Form S-1 or Form S-8 or similar forms that may be promulgated
in the future, or a registration relating solely to a Commission
Rule 145 transaction on Form S-4 or similar forms that may be
promulgated in the future. Each Holder further agrees the
foregoing restriction shall be binding on any transferee from the
Holder.
3.14. Rule 144 Reporting.
With a view to making available to the Holders the
benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Securities to the public
without registration, the Company agrees to use its best efforts
to:
(a) File, make and keep public information available,
as those terms are understood and defined in Rule 144 or any similar
or analogous rule promulgated under the Securities Act, at all times
after the effective date of the first registration filed by the
Company for an offering of its securities pursuant to the
Securities Act or pursuant to the requirements of Section 12 of
the Exchange Act;
(b) File with the SEC, in a timely manner, all reports
and other documents required of the Company under the Exchange Act;
and
(c) So long as a Holder owns any Registrable Securities,
furnish to such Holder forthwith upon request: a written statement
by the Company as to its compliance with the reporting requirements
of Rule 144 of the Securities Act, and of the Exchange Act (at any
when it is subject to such reporting requirements); a copy of the
most recent annual or quarterly report of the Company; and such
other reports and documents as a Holder may reasonably request in
availing itself of any rule or regulation of the SEC allowing it
to sell any such securities without registration.
IV GOVERNANCE
4.1. The Board Prior to an Initial Public Offering.
The following provisions shall apply with respect to
the Board prior to an Initial Public Offering:
(a) Immediately after the Closing, the Board shall consist
of eight (8) directors, unless XXXX exercises its right pursuant to
Section 4.1(f) hereof, in which case the Board shall then consist
of nine (9) directors.
(b) Each of the Company and the Class B Securityholders
agrees to take all action necessary to cause each of the designees
described in Section 4.1(c) below to be elected or appointed to
the Board concurrently with the Closing, including without
limitation, seeking and accepting resignations of incumbent
directors.
(c) Each Class B Securityholder agrees that at all times
prior to an IPO, it will vote, or execute a written consent in lieu
thereof with respect to, all of the shares of voting capital
stock of the Company owned or held of record by it, or cause all
of the shares of voting capital stock of the Company beneficially
owned by it to be voted, or cause a written consent in lieu
thereof to be executed, to elect and, during such period, to
continue in office a Board consisting solely of the following
(subject to the other provisions of this Section 4.1):
(i) three (3) designees of XXXX, subject to Section
4.1(e) below (including any director designee of XXXX pursuant
to Section 4.1(f) below, the "XXXX Directors");
(ii) one designee of the FS Entities, collectively
(the "FS Director");
(iii) Xxxxx for so long as he is employed by the
Company or, if Xxxxx is no longer employed by the Company, the
Chief Executive Officer of the Company at such time;
(iv) White for so long as he is employed by the
Company or, if White is no longer employed by the Company,
the Chairman of the Americas of the Company at such time;
provided, however that in the event that any Person other
than White shall hold such title, XXXX shall have the option
to reduce the size of the Board by one director and eliminate
this clause (iv); and
(v) immediately after the Closing and for so long as
a majority of the members of the Board shall agree, an employee
(the "Production Director") of the Company or CBRE involved in
CBRE's "Transaction Management" business (as described in the
Company 10-K (as defined in the Merger Agreement)); provided,
however that, during any period in which the Production
Director is a member of the Board, the number of XXXX
Directors set forth in Section 4.1(c)(i) shall be increased
to four (4) during such period (which number does not include
the director designee of XXXX pursuant to Section 4.1(f) below).
provided that each of the foregoing designation rights will be
subject to the following provisions of this Section 4.1.
(d) The director designation right of XXXX in
Section 4.1(c) will reduce (i) to three (or two if there shall
not be a Production Director as a member of the Board at such time)
if XXXX and its Affiliates, collectively, beneficially own Common
Stock representing less than 22.5% of the outstanding Common
Stock, (ii) to two (or one if there shall not be a Production
Director as a member of the Board at such time) if XXXX and its
Affiliates, collectively, beneficially own Common Stock
representing less than 15% of the outstanding Common Stock, and
(iii) to zero if XXXX and its Affiliates, collectively,
beneficially own Common Stock representing less than 7.5% of the
outstanding Common Stock.
(e) The director designation right of the FS Entities in
Section 4.1(c)(ii) will reduce to zero if the FS Entities and their
Affiliates, collectively, beneficially own Common Stock
representing less than 7.5% of the outstanding Common Stock.
(f) At the request of XXXX (provided that XXXX is
then entitled to designate three XXXX Directors pursuant to this
Section 4.1), the number of XXXX Directors will be increased such
that XXXX thereafter has the right to designate a majority of the
entire Board (e.g., four out of seven directors), and the size of
the Board will be expanded to the extent necessary to create
director vacancies in connection therewith (subject to subsequent
reduction in the number of XXXX Directors pursuant to Section
4.1(d) hereof). In the event that the size of the Board will
exceed the board size specified by the Company's Certificate of
Incorporation or Bylaws, each of the Company and the Class B
Securityholders will take all necessary steps to expand the size
of the Board.
(g) Each committee of the Board will include at least
one XXXX Director and the FS Director (provided that at least one
such director position is then filled and unless the Securityholder
appointing such director(s) shall otherwise agree), unless
otherwise agreed in writing by XXXX or Xxxxxxx Xxxxxx,
respectively.
(h) If either XXXX or the FS Entities notifies the
other Class B Securityholders in writing of its desire to remove,
with or without cause, any director of the Company previously
designated by it, each Class B Securityholder will vote (to the
extent eligible to vote) all of the shares of voting capital stock
of the Company beneficially owned or held of record by it, him or
her so as to remove such director or, upon request, each Class B
Securityholder will promptly execute and return to the Company
any written resolution or consent to such effect. In the event
that any of such Persons is no longer entitled pursuant to this
Section 4.1 to designate a director previously designated by such
Securityholder(s), such director promptly will be removed from
the Board, and each Class B Securityholder will vote (to the
extent eligible to vote) all of the shares of voting capital
stock of the Company beneficially owned or held of record by it
so as to remove such director or, upon request, each Class B
Securityholder will promptly execute and return to the Company
any written resolution or consent to such effect.
(i) If any director previously designated by XXXX or
the FS Entities ceases to serve on the Board (whether by reason
of death, resignation, removal or otherwise), the Person who
designated such director will be entitled to designate a
successor director to fill the vacancy created thereby, and
each Class B Securityholder will vote (to the extent eligible
to vote) all of the shares of voting capital stock of the Company
beneficially owned or held of record by it or him or her in favor
of such designation or, upon request, each Class B Securityholder
will promptly execute and return to the Company any written
resolution or consent to such effect.
4.2. The Board Subsequent to an Initial Public Offering.
Following the IPO, (a) XXXX shall be entitled to
nominate a percentage of the total number of directors on the
Board that is equivalent to the percentage of the outstanding
Common Stock beneficially owned by XXXX and its Affiliates,
collectively (such percentage of directors nominated by XXXX and
its Affiliates to be rounded up to the nearest whole number of
directors) and (b) the FS Entities shall be entitled to nominate
one director as long as the FS Entities own in the aggregate at
least 7.5% of the outstanding Common Stock. The Company hereby
agrees that, at all times after the IPO, at and in connection
with each annual or special meeting of stockholders of the
Company at which directors of the Company are to be elected, the
Company, the Board and the nominating committee thereof will (A)
nominate and recommend to stockholders for election or re-
election as part of the management slate of directors each such
individual and (B) provide the same type of support for the
election of each such individual as a director of the Company as
provided by the Company, its directors, its management and its
Affiliates to other Persons standing for election as directors of
the Company as part of the management slate. Each Securityholder
that is a Class B Securityholder immediately prior to the IPO
hereby agrees that, at all times after the IPO, such
Securityholder will, and will cause each of its Affiliates to,
vote all shares of Common Stock owned or held of record by it, at
each annual or special meeting of stockholders of the Company at
which directors of the Company are to be elected, in favor of the
election or re-election as a member of the Board of each such
individual nominated by any Securityholder pursuant to this
4.3. Observers.
(a) Prior to the IPO, the FS Entities, collectively,
shall be entitled to have two observers in addition to the FS
Director (the "FS Observers") at all regular and special meetings
of the Board for so long as the FS Entities, collectively,
beneficially own Common Stock representing at least 7.5% of
the outstanding Common Stock.
(b) Prior to the IPO and solely for so long as needed
by DLJ, upon the advice of counsel, to maintain its qualification
as a "Venture Capital Operating Company" pursuant to Section 29
C.F.R. 2510.3, the DLJ Parties, by vote of a majority of the
outstanding Restricted Securities held by the DLJ Parties, shall
be entitled to have one observer (the "DLJ Observer", and
together with the FS Observers, the "Observers") at all regular
and special meetings of the Board for so long as the DLJ Parties,
collectively, beneficially own (i) Restricted Securities
representing at least 1.0% of the outstanding Common Stock or
(ii) a majority in principal amount of the Notes.
(c) The Company shall reimburse each Observer for
out-of-pocket expenses, if any, relating to attendance at such
meetings but only to the same extent that the Company reimburses
the non-employee members of the Board for such attendance expenses.
Each Observer shall be entitled to receive the same notice of any
such meeting as any director, and shall have the right to participate
therein, but shall not have the right to vote on any matter or to
be counted for purposes of determining whether a quorum is
present thereat. In addition, each Observer shall have the right
to receive copies of any action proposed to be taken by written
consent of the Board without a meeting. Notwithstanding the
foregoing, no action of the Board duly taken in accordance with
the laws of the State of Delaware, the Certificate of
Incorporation and the By-Laws shall be affected by any failure to
have provided notice to any Observer of any meeting of the Board
or the taking of action by the Board without a meeting. Any
Observer may be required by the Board to temporarily leave a
meeting of the Board if the presence of such Observer at the
meeting at such time would prevent the Company from asserting the
attorney-client or other privilege with respect to matters
discussed before the Board at such time. The FS Entities agree
to cause the FS Observers to keep any matters observed or
materials received by them at any meeting of the Board strictly
confidential. The DLJ Parties agree to cause the DLJ Observer to
keep any matters observed or materials received by him or her at
any meeting of the Board strictly confidential.
(d) With respect to each committee of the Board for which
XXXX or the FS Entities agrees in writing to waive its right set
forth in Section 4.1(g) hereto, XXXX or the FS Entities, as the case
may be, shall be entitled to have one observer at all meetings of
such committee (provided that XXXX or the FS Entities, as the
case may be, shall at such time be entitled to designate at least
one director to the Board pursuant to Section 4.1 hereto). Each
such observer shall be entitled to receive the same notice of any
such meeting as any director that is a member thereof, and shall
have the right to participate therein, but shall not have the
right to vote on any matter or to be counted for purposes of
determining whether a quorum is present thereat. In addition,
each such observer shall have the right to receive copies of any
action proposed to be taken by written consent of such committee
without a meeting. Notwithstanding the foregoing, no action of
the such committee duly taken in accordance with the laws of the
State of Delaware, the Certificate of Incorporation and the By-
Laws shall be affected by any failure to have provided notice to
any observer of any meeting of such committee or the taking of
action by such committee without a meeting. Any such observer
may be required by such committee to temporarily leave a meeting
of the committee if the presence of such observer at the meeting
at such time would prevent the Company from asserting the
attorney-client or other privilege with respect to matters
discussed before the committee at such time. XXXX agrees to
cause any observer designated by it to keep any matters observed
or materials received by him or her at any meeting of such
committee strictly confidential. The FS Entities agree to cause
the any observer designated by it to keep any matters observed or
materials received by them at any meeting of such committee
strictly confidential.
4.4. Advisors.
For so long as each Other Non-Management Investor shall
be a Securityholder, such Other Non-Management Investor shall
have the right to provide, and at the reasonable request of the
Board or the management of the Company, shall provide, advice
with respect to the Company's industry, business and operations
("Advisory Services"), which advice the Board or the management
of the Company, as applicable, will consider in good faith. With
respect to the provision of such Advisory Services at the request
of the Board or the management of the Company, the Company shall
reimburse each Other Non-Management Investor for any reasonable
out-of-pocket expenses incurred by such Other Non-Management
Investor in connection therewith.
4.5. Voting.
(a) Except as otherwise provided in this Section 4.5 or
this Article IV, prior to an Initial Public Offering, each of the
Non-XXXX Parties that is a Class B Securityholder agrees to vote
at any stockholders meeting (or in any written consent in lieu
thereof) all of the shares of voting capital stock of the Company
owned or held of record by it, or cause all of the shares of
voting capital stock of the Company beneficially owned by it to
be voted at any stockholders meeting (or in any written consent
in lieu thereof), in same the manner as XXXX votes the shares of
voting capital stock of the Company beneficially owned by it at
such meeting (or in such written consent in lieu thereof), except
with respect to the following actions by the Company or any of
its Subsidiaries:
(i) any transaction between (x) XXXX or any of its
Affiliates and (y) the Company or any of its Subsidiaries, other
than a transaction (A) with another portfolio company of XXXX or
any of its Affiliates that has been negotiated on arms-length
terms in the ordinary course of business between the managements
of the Company or any of its Subsidiaries and such other
portfolio company, (B) with respect to which the Securityholders
may exercise their rights under Section 2.6 of this Agreement or
(C) specifically contemplated by the Merger Agreement; or
(ii) any amendment to the Certificate of Incorporation
or Bylaws of the Company that adversely affects
such Securityholder relative to XXXX, other than (x) an increase
in the authorized capital stock of the Company, or (y) amendments
made in connection with any reorganization of the Company
effected to facilitate an Initial Public Offering or the acquisition
of the Company by merger or consolidation (provided that
in such reorganization or acquisition each share of each class
or series of capital stock held by the Non-XXXX Parties is
treated the same as each share of the same class or series of
capital stock held by XXXX; provided, however that, subject to
compliance with applicable law, in the event that the one or more
of the other corporations or entities that is a party to
such an acquisition notifies the Company that it will require
the structure of such acquisition to be treated as a
recapitalization for financial accounting purposes and that it
will require the Company to no longer be subject to
the reporting requirements or Section 14 of the Exchange Act
after the closing date of the acquisition, then, solely to
the extent deemed necessary by such other corporation or entity
to satisfy such requirements, the consideration per share the Non
-XXXX Parties shall be entitled to receive with respect may be
a different kind than the consideration per share XXXX shall be
entitled to receive).
(b) In order to effectuate Section 4.5(a), each Non-
XXXX Party that is a Class B Securityholder hereby grants to
XXXX an irrevocable proxy, coupled with an interest, to vote,
during the period specified in Section 4.5(a) above, all of the
shares of voting capital stock of the Company owned by the grantor
of the proxy in the manner set forth in Section 4.5(a).
4.6. General Consent Rights.
Notwithstanding anything to the contrary stated herein,
prior to an Initial Public Offering, neither the Company nor any
of its Subsidiaries shall take any of the following actions
without the prior affirmative vote or written consent of (a) a
majority of the directors of the Company, and (b) a majority of
the directors of the Company that are not XXXX Directors:
(i) any transaction between (x) XXXX or any of its
Affiliates and (y) the Company or any of its Subsidiaries, other
than a transaction (A) with another portfolio company of XXXX of
any of its Affiliates that has been negotiated on arms-length
terms in the ordinary course of business between the managements
of the Company or any of its Subsidiaries and such other portfolio
company, (B) with respect to which the Securityholders may
exercise their rights under Section 2.6 of this Agreement or (C)
specifically contemplated by the Merger Agreement;
(ii) any amendment to the Certificate of Incorporation
or Bylaws of the Company that adversely affects any
Securityholder relative to XXXX, other than (x) an increase
in the authorized capital stock of the Company, or (y) amendments
made in connection with any reorganization of the Company
effected to facilitate an Initial Public Offering or the acquisition
of the Company by merger or consolidation (provided that
in such reorganization or acquisition each share of each class or
series of capital stock held by the Non-XXXX Parties is treated the
same as each share of the same class or series of capital stock
held by XXXX; provided, however that, subject to compliance
with applicable law, in the event that the one or more of
the other corporations or entities that is a party to such
an acquisition notifies the Company that it will require the
structure of such acquisition to be treated as a
recapitalization for financial accounting purposes and that it
will require the Company to no longer be subject to
the reporting requirements or Section 14 of the Exchange Act
after the closing date of the acquisition, then, solely to the
extent deemed necessary by such other corporation or entity
to satisfy such requirements, the consideration per share the
Non-XXXX Parties shall be entitled to receive with respect may
be a different kind than the consideration per share XXXX
shall be entitled to receive); or
(iii) repurchase or redeem, or declare or pay a
dividend with respect to or make a distribution upon, any shares
of capital stock of the Company beneficially owned by XXXX or
any of its Affiliates, unless (x) such repurchase, redemption
dividend or distribution is made pro rata among all holders of
such class of capital stock (or, in the case of a repurchase or
redemption, all of the Non-XXXX Parties are given a proportionate
right to participate in such repurchase or redemption (to the
extent they own shares of such class of capital stock)) or (y)
if such capital stock is not Common Stock, such repurchase,
redemption or dividend is required by the terms of such capital
stock.
4.7. Consent Rights of FS Director.
Notwithstanding anything to the contrary stated herein,
prior to an Initial Public Offering, for so long as the FS
Entities shall be entitled to appoint the FS Director pursuant to
Section 4.1 hereto, neither the Company nor any of its
Subsidiaries shall take any of the following actions without the
prior affirmative vote or written consent of (x) a majority of
the directors of the Company, and (y) the FS Director:
(a) the acquisition by purchase or otherwise, in any single or
series of related transactions, of any business or assets for a
Purchase Price in excess of $75 million; provided, however that
this Section 4.7(a) shall not apply to (i) the acquisition of any
business or asset by an investment fund that is controlled by the
Company or any of its Subsidiaries in connection with the
ordinary course conduct of the investment advisory and management
business of the Company or any of its Subsidiaries, or (ii)
acquisitions in connection with the origination of mortgages by
the Company or any of its Subsidiaries;
(b) the sale or other disposition, in any single or
series of related transactions, of assets of the Company
or its Subsidiaries for aggregate consideration having a
Fair Market Value in excess of $75 million; provided, however
that this Section 4.7(b) shall not apply to (i) the sale
of other disposition of any business or asset by an investment
fund that is controlled by the Company or any of its
Subsidiaries in connection with the ordinary course conduct
of the investment advisory and management business of the Company
or any of its Subsidiaries, or (ii) sales or dispositions in
connection with the origination of mortgages by the Company or any
of its Subsidiaries;
(c) incur Indebtedness, unless such Indebtedness would
(i) be permitted pursuant to the terms of the documents
governing the senior and senior subordinated Indebtedness
entered into by the Company and CBRE in connection with the
closing of the Merger as in effect on the Closing Date of the
Merger (including any refinancing or replacement of such
Indebtedness in an equal or lesser aggregate principal amount)
or (ii)immediately following such incurrence the ratio of
(x) the consolidated Indebtedness of the Company and
its subsidiaries determined in accordance with United
States generally accepted accounting principles applied in
a manner consistent with the Company's consolidated financial
statements to (y) the Twelve-Month Normalized EBITDA, does
not exceed 4.5:1; or
(d) issue capital stock of the Company (or options, warrants
or other securities to acquire capital stock of the Company) to
employees, directors or consultants of the Company or any of its
Subsidiaries if such issuances, in the aggregate, exceed 5% of
the total amount of outstanding capital stock of the Company
immediately after the Closing on a fully diluted basis (i.e.,
assuming the exercise, exchange or conversion of all Equity
Securities that are exercisable, exchangeable or convertible into
Common Stock), other than (i) issuances to employees, directors
or consultants of the Company and its Subsidiaries of up to 25%
of the capital stock of the Company on a fully-diluted basis
within six (6) months of the closing of the Merger and (ii)
issuances in amounts equal to the capital stock of the Company
repurchased by the Company from, or the options, warrants or
other securities to acquire capital stock cancelled by the
Company or its Subsidiaries or terminated or expired without
prior exercise with respect to, Persons who, at the time of such
repurchase, cancellation, termination or expiration, were current
or former employees, directors or consultants of the Company or
its Subsidiaries.
4.8. Board of Directors of CBRE.
Prior to an Initial Public Offering, the Company agrees
to cause the Board of Directors of CBRE (the "CBRE Board") to be
comprised of the same individuals as comprise the Board pursuant
to Section 4.1 of this Agreement.
V OTHER AGREEMENTS
5.1. Financial Information.
(a) Within 90 days after the end of each fiscal year of
the Company, the Company will furnish each Securityholder who is a
Material Securityholder a consolidated balance sheet of the
Company, as at the end of such fiscal year, and a consolidated
statement of income and a consolidated statement of cash flows of
the Company, for such year, all prepared in accordance with
generally accepted accounting principles consistently applied and
setting forth in each case in comparative form the figures for
the previous fiscal year, all in reasonable detail. Such
financial statements shall be accompanied by a report and opinion
thereon by independent public accountants of national standing
selected by the Board.
(b) The Company will furnish each Securityholder who
is a Material Securityholder within 45 days after the end of the
first, second and third quarterly accounting periods in each
fiscal year of the Company, a consolidated balance sheet of the
Company as of the end of each such quarterly period, and a
consolidated statement of income and a consolidated statement of
cash flows of the Company for such period and for the current
fiscal year to date, prepared in accordance with generally
accepted accounting principles, with the exception that no notes
need be attached to such statements and year-end audit
adjustments may not have been made.
(c) The Company will furnish each Securityholder who
is a Material Securityholder any monthly financial statements of
the Company that are provided to the Board no later than five (5)
days after the day upon which first furnished to the Board.
5.2. Inspection Rights.
Each Securityholder who is a Material Securityholder
shall have the right to visit and inspect any of the books,
records and properties of the Company or any of its Subsidiaries,
and to discuss the affairs, finances and accounts of the Company
or any of its Subsidiaries with its officers and independent
aviators, and to review such information as is reasonably
requested, all at such reasonable times and as often as may be
reasonably requested.
5.3. Confidentiality of Records.
Each Securityholder agrees to use, and to use all
reasonable efforts to insure that its authorized representatives
use, the same degree of care as such Securityholder uses to
protect its own confidential information to keep confidential any
information furnished to it which the Company identifies as being
confidential or proprietary (so long as such information is not
in the public domain); provided, however, that any Securityholder
may disclose such confidential or proprietary information without
the prior written consent of the other parties hereto (i) to any
"Related Party" (as defined below) for the purpose of evaluating
an investment in the Company so long as such Related Party is
advised of the confidentiality provisions of this Section 5.3 and
agrees to comply with such provisions, (ii) if such information
is publicly available or (iii) if disclosure is requested or
compelled by legal proceedings, subpoena, civil investigative
demands or similar proceedings, (iv) if such information was
obtained by such Securityholder either independently without
breaching this Section 5.3, or from a party not known to such
Securityholder to be subject to a confidentiality agreement or
(v) to any proposed transferee of Restricted Securities from a
Securityholder for the purpose of evaluating an investment in the
Company so long as such proposed transferee either executes and
delivers to the Company a confidentiality agreement with terms no
less favorable to the Company than those set forth in this
Section 5.3 or is advised of the confidentiality provisions of
this Section 5.3 and agrees in a signed writing delivered to the
Company to comply with such provisions. Any Securityholder who
provides proprietary or confidential information to a Related
Party shall be liable for any breach by such Related Party of the
confidentiality provisions of this Section 5.3. For purposes of
this Section 5.3, "Related Party" shall mean, with respect to any
Securityholder, (A) any partner, member, director, officer or
employee of such Securityholder or (B) any Affiliate of such
Securityholder.
5.4. Indemnification.
(a) The Company shall indemnify and hold harmless
(x) each Securityholder and each of their respective Affiliates
and any controlling Person of any of the foregoing, (y) each of the
foregoing's respective directors, officers, employees and agents
and (z) each of the heirs, executors, successors and assigns of
any of the foregoing from and against any and all damages,
claims, losses, expenses, costs, obligations and liabilities
including, without limiting the generality of the foregoing,
liabilities for all reasonable attorneys' fees and expenses
(including attorney and expert fees and expenses incurred to
enforce the terms of this Agreement) (collectively, "Losses and
Expenses"), but excluding in each case any special or
consequential damages except to the extent part of any
governmental or other third party claims against the indemnified
party, suffered or incurred by any such indemnified Person or
entity to the extent arising from, relating to or otherwise in
respect of, any governmental or other third party claim against
such indemnified Person that arises from, relates to or is
otherwise in respect of (i) the business, operations, liabilities
or obligations of the Company or its Subsidiaries or (ii) the
ownership by such Securityholder or any of their respective
Affiliates of any equity securities of the Company (except to the
extent such Losses and Expenses (x) arise from any claim that
such indemnified Person's investment decision relating to the
purchase or sale of such securities violated a duty or other
obligation of the indemnified Person to the claimant or (y) are
finally determined in a judicial action by a court of competent
jurisdiction to have resulted from the gross negligence or
willful misconduct of such Securityholder or its Affiliates)
including, without limitation, any Losses and Expenses arising
from or under any federal, state or other securities law. The
indemnification provided by the Company pursuant to this Section
5.4 is separate from and in addition to any other indemnification
by the Company to which the indemnified Person may be entitled,
including, without limitation, pursuant to the Certificate of
Incorporation, the Bylaws, any indemnification agreements with
the Company and Section 3.9 hereto.
(b) With respect to third-party claims, all claims for
indemnification by an indemnified Person (an "Indemnified Party")
hereunder shall be asserted and resolved as set forth in this
Section 5.4. In the event that any written claim or demand for
which the Company would be liable to any Indemnified Party
hereunder is asserted against or sought to be collected from any
Indemnified Party by a third party, such Indemnified Party shall
promptly notify the Company in writing of such claim or demand
(the "Claim Notice"), provided that the failure to promptly
provide a Claim Notice will not affect an Indemnified Party's
right to indemnification except to the extent such failure
materially prejudices the Company. The Company shall have twenty
(20) days from the date of receipt of the Claim Notice (the
"Notice Period") to notify the Indemnified Party (i) whether or
not the Company disputes the liability of the Company to the
Indemnified Party hereunder with respect to such claim or demand
and (ii) whether or not it desires to defend the Indemnified
Party against such claim or demand. All costs and expenses
incurred by the Company in defending such claim or demand shall
be a liability of, and shall be paid by, the Company. Except as
hereinafter provided, in the event that the Company notifies the
Indemnified Party within the Notice Period that it desires to
defend the Indemnified Party against such claim or demand, the
Company shall have the right to defend the Indemnified Party by
appropriate proceedings and shall have the sole power to direct
and control such defense; provided, however, that (1) if the
Indemnified Party reasonably determines that there may be a
conflict between the positions of the Company and of the
Indemnified Party in conducting the defense of such claim or that
there may be legal defenses available to such Indemnified Party
different from or in addition to those available to the Company,
then counsel for the Indemnified Party shall be entitled to
conduct the defense at the expense of the Company to the extent
reasonably determined by such counsel to be necessary to protect
the interests of the Indemnified Party and (2) in any event, the
Indemnified Party shall be entitled at its cost and expense to
have counsel chosen by such Indemnified Party participate in, but
not conduct, the defense. The Indemnified Party shall not settle
a claim or demand without the consent of the Company. The
Company shall not, without the prior written consent of the
Indemnified Party, settle, compromise or offer to settle or
compromise any such claim or demand on a basis which would result
in the imposition of a consent order, injunction or decree which
would restrict the future activity or conduct of the Indemnified
Party or any Subsidiary or Affiliate thereof or if such
settlement or compromise does not include an unconditional
release of the Indemnified Party for any liability arising out of
such claim or demand. If the Company elects not to defend the
Indemnified Party against such claim or demand, whether by not
giving the Indemnified Party timely notice as provided above or
otherwise, then the amount of any such claim or demand or, if the
same be contested by the Indemnified Party, that portion thereof
as to which such defense is unsuccessful (and the reasonable
costs and expenses pertaining to such defense) shall be the
liability of the Company hereunder. The Indemnified Party and
Company shall each render to each other such assistance as may
reasonably be requested in order to insure the proper and
adequate defense of any such claim or proceeding.
(c) If the indemnification provided for in this Section
5.4 is unavailable or insufficient to hold harmless an Indemnified
Party under this Section 5.4, then the Company, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of the Losses and
Expenses referred to in this Section 5.4: (i) in such proportion
as is appropriate to reflect the relative benefits received by
the Company and the Indemnified Party from the matter giving rise
to indemnification hereunder or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative
fault of the Company and the Indemnified Party in connection with
the matter that resulted in such Losses and Expenses, as well as
any other relevant equitable considerations. Relative fault
shall be determined by reference to, among other things, the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent the matter giving rise to such
Losses and Expenses.
(d) The parties agree that it would not be just and
equitable if contributions pursuant to Section 5.4(c) were to be
determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred
to in the first sentence of Section 5.4(c). The amount paid by
any indemnified party as a result of the losses, claims, damages
or liabilities, or actions in respect thereof, referred to in the
first sentence of Section 5.4(c) shall be deemed to include any
legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigation, preparing to defend or
defending against any claim which is the subject of Section 5.4.
(e) As long as it is reasonably attainable at a
reasonable price, the Company will maintain directors' and
officers' insurance in an amount to be determined in good faith
by the Company's board of directors to be consistent with insurance
provided to officers and directors of comparable companies.
VI MISCELLANEOUS
6.1. Additional Securities Subject to Agreement.
(a) Subject to the following sentence, each Securityholder
agrees that any other equity securities of the Company which they
hereafter acquire by means of a stock split, stock dividend,
distribution, exercise or conversion of securities or otherwise
will be subject to the provisions of this Agreement to the same
extent as if held on the date hereof. Notwithstanding anything
to the contrary stated herein, this Agreement shall not apply to
any shares of Common Stock or any options to acquire Common Stock
granted to, or purchased by, Xxxxx or White, which are subject to
the terms of a subscription agreement with the Company (the
"Management Securities"), and any references to Common Stock or
Equity Securities held or beneficially owned by Xxxxx or White
shall not include any Management Securities.
6.2. Term.
This Agreement will be effective from and after the
date hereof and will terminate with respect to the provisions
referred to below as follows: (i) with respect to Sections 4.1,
4.3, 4.4, 4.5, 4.6, 4.7, 5.1 and 5.2, upon completion of an IPO;
(ii) with respect to Sections 2.1(b), 2.2, 2.3, 2.4, 2.5 and 2.6,
upon the expiration of the Restricted Period; (iii) with respect
to Article III (other than Sections 3.9 and 3.14) at such time as
set forth in Section 3.7; (iv) with respect to Sections 3.9 and
5.4, upon the expiration of the applicable statutes of
limitations; and (iv) with respect to all Sections (other than
Sections 3.9, 3.14 and 5.4), upon (A) the sale of all or
substantially all of the equity interests in the Company to a
Third Party whether by merger, consolidation or securities or
otherwise, or (B) approval in writing by XXXX, the FS Parties and
the holders of a majority of the shares of Common Stock owned by
the following Persons voting as a group: the Management Parties,
the DLJ Parties and the Other Non-Management Parties.
6.3. Notices.
All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given
or made (and shall be deemed to have been duly given or made upon
receipt) by delivery in person, by courier service, by cable, by
telecopy, by telegram, by telex or registered or certified mail
(postage prepaid, return receipt requested) to the respective
parties at the addresses set forth below (or at such other
address for a party as shall be specified in a notice given in
accordance with this Section 6.3):
(a) If to the Company or to CBRE:
CB Xxxxxxx Xxxxx Services, Inc.
000 Xxxxx Xxxxxxxxx Xxxx.
Xx Xxxxxxx, XX 00000-0000
Attn: Xxxxxx Xxxxxxxx, General Counsel
Fax: (000) 000-0000
with a copy to (which copy shall not be deemed
notice pursuant to this Section 6.3):
[counsel to the Company]
with an additional copy to (which copy shall not
be deemed notice pursuant to this Section 6.3):
Xxxxxxx Xxxxxxx & Xxxxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxx
Fax: (000) 000-0000
(b) If to XXXX or any of its Affiliates:
c/o BLUM Capital Partners, L.P.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, General Counsel
Fax: (000) 000-0000
with a copy to (which copy shall not be deemed
notice pursuant to this Section 6.3):
Xxxxxxx Xxxxxxx & Xxxxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxx
Fax: (000) 000-0000
(c) If to any of the FS Parties or any of their Affiliates:
c/o Xxxxxxx Xxxxxx & Co., Inc.
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 0000
Xxxxx Xxxxxx, XX 00000
Attn: J. Xxxxxxxxx Xxxxxxx
Fax: (000) 000-0000
with a copy to (which copy shall not be deemed
notice pursuant to this Section 6.3):
Xxxxxxx & XxXxxxxx
California Plaza
29th Floor, 000 Xxxxx Xxxxx Xxx.
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
Fax: (000) 000-0000
(d) If to any of the Management Parties or Xxxx, to the
address set forth below their name on the signature pages to this
Agreement, with a copy to (which copy shall not be deemed notice
pursuant to this Section 6.3):
O'Melveny & Xxxxx LLP
000 Xxxxxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxx Xxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxx
Fax: (000) 000-0000
(e) If to Xxxxx:
c/x Xxxxxx Capital Partners
0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Fax: (000) 000-0000
with a copy to (which copy shall not be deemed
notice pursuant to this Section 6.3):
Xxxxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxxx Xxxxxx
Fax: (000) 000-0000
(f) If to any of the DLJ Parties:
DLJ Investment Partners II, L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxx
Fax: (000) 000-0000
with a copy to (which copy shall not be deemed
notice pursuant to this Section 6.3):
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxxxx
Fax: (000) 000-0000
6.4. Further Assurances.
The parties hereto will sign such further documents,
cause such meetings to be held, resolutions passed, exercise
their votes and do and perform and cause to be done such further
acts and things as may be necessary in order to give full effect
to this Agreement and every provision hereof.
6.5. Non-Assignability.
This Agreement will inure to the benefit of and be
binding on the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned by any
party hereto without the express prior written consent of the
other parties, and any attempted assignment, without such
consents, will be null and void; provided, however, that with
respect to any Person who acquires any Restricted Securities from
any Securityholder in compliance with the terms hereunder: (a)
such Securityholder making such Transfer shall, prior to such
Transfer, furnish to the Company written notice of the name and
address of such transferee, and (b)(i) in the case of any
Transfer from XXXX, (A) if such Person acquires a majority of the
Common Stock beneficially owned by XXXX, XXXX shall have the
right to assign to such Person all of the rights and obligations
of XXXX hereunder, (B) if such Person acquires less than a
majority of the Common Stock beneficially owned by XXXX, such
Person shall assume and be entitled to all of the rights and
obligations of a XXXX Holder under Article III hereof, and (C) in
any case, such Person shall execute and deliver to the Company an
Assumption Agreement and assume and be entitled to all of the
rights and obligations of a Holder hereunder, (ii) in the case of
an assignment by XXXX of its rights pursuant to Section 2.2
hereto, such assignee or assignees shall assume and be entitled
to all of the rights and obligations of a XXXX Holder under
Article III hereof and shall execute and deliver to the Company
an Assumption Agreement and assume and be entitled to all of the
rights and obligations of a Holder hereunder, (iii) in the case
of any Transfer from any of the FS Parties, (A) such Person shall
assume all of the rights and obligations of an FS Party hereunder
and shall execute and deliver to the Company an Assumption
Agreement, and (B) in addition, if such Person acquires a
majority of the Common Stock beneficially owned by the FS
Entities at the time of such transfer and following such
acquisition such Person beneficially owns at least 10% of the
outstanding Common Stock, the FS Entities shall have the right to
assign to such Person all of the rights and obligations of the FS
Entities under Section IV of this Agreement, (iv) in the case of
any Transfer from a DLJ Party, such Person shall assume and be
entitled to all of the rights and obligations of a DLJ Party
hereunder and execute and deliver to the Company an Assumption
Agreement, (v) in the case of any Transfer from an Other Non-
Management Party, such Person shall assume and be entitled to all
of the rights and obligations of an Other Non-Management Party
hereunder and execute and deliver to the Company an Assumption
Agreement, and (vi) in the case of any Transfer from a Management
Party, such Person shall assume and be entitled to all of the
rights and obligations of a Management Party hereunder and
execute and deliver to the Company an Assumption Agreement.
6.6. Amendment; Waiver.
This Agreement may be amended, supplemented or
otherwise modified only by a written instrument executed by
(a) the Company, (b) XXXX, so long as XXXX and its Affiliates own
in the aggregate more Common Stock than the aggregate amount of
Common Stock owned by any other Person and its Affiliates, and
(c) the holders of a majority of the Restricted Securities held
by the Securityholders; provided, however that no such amendment,
supplement or modification shall adversely affect (i) the FS
Parties relative to XXXX without the prior written consent of the
holders of a majority of the Restricted Securities held by the FS
Parties at such time, (ii) the DLJ Parties relative to XXXX
without the prior written consent of the holders of a majority of
the shares of the Restricted Securities held by the DLJ Parties
at such time, (iii) the Other Non-Management Parties relative to
XXXX without the prior written consent of the holders of a
majority of the shares of Common Stock held by the Other Non-
Management Parties at such time, and (iv) the Management Parties
relative to XXXX without the prior written consent of the holders
of a majority of the shares of Common Stock held by the
Management Parties at such time; provided, further that no such
amendment, supplement or modification shall amend or modify in a
manner adverse to DLJ the agreements herein to which the Class B
Securityholders are subject with respect to the voting of shares
of voting capital stock without the prior written consent of the
holders of a majority of the Restricted Securities held by the
DLJ Parties at such time. No waiver by any party of any of the
provisions hereof will be effective unless explicitly set forth
in writing and executed by the party so waiving. Except as
provided in the preceding sentence, no action taken pursuant to
this Agreement, including without limitation, any investigation
by or on behalf of any party, will be deemed to constitute a
waiver by the party taking such action of compliance with any
covenants or agreements contained herein. The waiver by any
party hereto of a breach of any provision of this Agreement will
not operate or be construed as a waiver of any subsequent breach.
6.7. Third Parties.
This Agreement does not create any rights, claims or
benefits inuring to any Person that is not a party hereto nor
create or establish any third party beneficiary hereto.
6.8. Governing Law.
This Agreement will be governed by, and construed in
accordance with, the laws of the State of Delaware, applicable to
contracts executed and to be performed entirely within that
state.
6.9. Specific Performance.
Without limiting or waiving in any respect any rights
or remedies of the parties hereto under this Agreement now or
hereinafter existing at law or in equity or by statute, each of
the parties hereto will be entitled to seek specific performance
of the obligations to be performed by the other in accordance
with the provisions of this Agreement.
6.10. Entire Agreement.
This Agreement sets forth the entire understanding of
the parties hereto with respect to the subject matter hereof.
6.11. Titles and Headings.
The section headings contained in this Agreement are
for reference purposes only and will not affect the meaning or
interpretation of this Agreement.
6.12. Severability.
If any provision of this Agreement is declared by any
court of competent jurisdiction to be illegal, void or
unenforceable, all other provisions of this Agreement will not be
affected and will remain in full force and effect.
6.13. Counterparts.
This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original and
all of which together will be deemed to be one and the same
instrument.
6.14. Ownership of Shares.
Whenever a provision of this Agreement refers to shares
of Common Stock owned by a Securityholder or owned by a
Securityholder and its Affiliates, such provision shall be deemed
to refer to those shares owned of record by such Securityholder
or such Securityholder and its Affiliates, as applicable, and
shall not be deemed to include other Restricted Securities that
such Securityholder (or such Securityholder and its Affiliates,
if applicable) may be deemed to beneficially own due to the
provisions of this Agreement and/or any other agreements,
arrangements or understandings among the parties hereto relating
to the voting or Transfer of Restricted Securities.
IN WITNESS WHEREOF, each of the undersigned has
executed this Agreement or caused this Agreement to be executed
on its behalf as of the date first written above.
CBRE HOLDING, INC.
By:
Name:
Title:
CB XXXXXXX XXXXX SERVICES, INC.
By:
Name:
Title:
RCBA STRATEGIC PARTNERS, L.P.
By: RCBA GP, L.L.C., its general
partner
By:
Name:
Title:
FS EQUITY PARTNERS III, L.P.
By: FS Capital Partners, L.P., its
general
Partner
By: FS Holdings, Inc., its
general partner
By:
Name:
Title:
FS EQUITY PARTNERS INTERNATIONAL,
L.P.
By: FS&Co. International, L.P.,
its general
Partner
By: FS International Holdings
Limited,
its general partner
By:
Name:
Title:
DLJ INVESTMENT PARTNERS II, L.P.
By: DLJ Investment Partners, II,
Inc., its
managing general partner
By:
Name:
Title:
THE XXXX HOLDING COMPANY
______________________________
By: Xxxxxx X. Xxxx
______________________________
Xxxxxxxx X. Xxxxx
MANAGEMENT INVESTORS:
______________________________
Xxxxxxx X. Xxxxx
______________________________
W. Xxxxx Xxxxx
CONSENT OF SPOUSE
In consideration of the execution of the foregoing
Securityholders' Agreement among CBRE Holding, Inc., CB Xxxxxxx
Xxxxx Services, Inc., RCBA Strategic Partners, L.P., FS Equity
Partners III, L.P., FS Equity Partners International, L.P., DLJ
Investment Partners II, L.P., The Xxxx Holding Company, Xxxxxxxx
X. Xxxxx and the Management Investors named therein, I,
_______________________, the spouse of Xxxxxx X. Xxxx, do hereby
join with my spouse in executing the foregoing Securityholders'
Agreement and do hereby agree to be bound by all of the terms and
provisions thereof.
Dated as of ______________ ____, 2001
[Spouse]
CONSENT OF SPOUSE
In consideration of the execution of the foregoing
Securityholders' Agreement among CBRE Holding, Inc., CB Xxxxxxx
Xxxxx Services, Inc., RCBA Strategic Partners, L.P., FS Equity
Partners III, L.P., FS Equity Partners International, L.P., DLJ
Investment Partners II, L.P., The Xxxx Holding Company, Xxxxxxxx
X. Xxxxx and the Management Investors named therein, I,
_______________________, the spouse of Xxxxxxxx X. Xxxxx, do
hereby join with my spouse in executing the foregoing
Securityholders' Agreement and do hereby agree to be bound by all
of the terms and provisions thereof.
Dated as of ______________ ____, 2001
[Spouse]
CONSENT OF SPOUSE
In consideration of the execution of the foregoing
Securityholders' Agreement among CBRE Holding, Inc., CB Xxxxxxx
Xxxxx Services, Inc., RCBA Strategic Partners, L.P., FS Equity
Partners III, L.P., FS Equity Partners International, L.P., DLJ
Investment Partners II, L.P., The Xxxx Holding Company, Xxxxxxxx
X. Xxxxx and the Management Investors named therein, I,
_______________________, the spouse of Xxxxxxx X. Xxxxx, do
hereby join with my spouse in executing the foregoing
Securityholders' Agreement and do hereby agree to be bound by all
of the terms and provisions thereof.
Dated as of ______________ ____, 2001
[Spouse]
CONSENT OF SPOUSE
In consideration of the execution of the foregoing
Securityholders' Agreement among CBRE Holding, Inc., CB Xxxxxxx
Xxxxx Services, Inc., RCBA Strategic Partners, L.P., FS Equity
Partners III, L.P., FS Equity Partners International, L.P., DLJ
Investment Partners II, L.P., The Xxxx Holding Company, Xxxxxxxx
X. Xxxxx and the Management Investors named therein, I,
_______________________, the spouse of W. Xxxxx Xxxxx, do hereby
join with my spouse in executing the foregoing Securityholders'
Agreement and do hereby agree to be bound by all of the terms and
provisions thereof.
Dated as of ______________ ____, 2001
[Spouse]
Exhibit A
FORM OF ASSUMPTION AGREEMENT
[DATE]
To the Parties to the Securityholders' Agreement dated as of
_______ ___, 2001
Dear Sirs or Madams:
Reference is made to the Securityholders' Agreement, dated
as of _________ ___, 2001 (the "Securityholders' Agreement"),
among CBRE Holding, Inc., CB Xxxxxxx Xxxxx Services, Inc., RCBA
Strategic Partners, L.P., FS Equity Partners III, L.P., FS Equity
Partners International, DLJ Investment Partners II, L.P., The
Xxxx Holding Company, Xxxxxxxx X. Xxxxx, and the individuals
identified on the signature pages thereto as "Management
Investors."
In consideration of the representations, covenants and
agreements contained in the Securityholders' Agreement, the
undersigned hereby confirms and agrees that it shall be bound by
all or certain of the provisions thereof in the manner set forth
in Section 6.5 thereto.
This Assumption Agreement will be governed by, and
construed in accordance with, the laws of the State of Delaware,
applicable to contracts executed and to be performed entirely
within that state.
Very truly yours,
[Transferee]
CONSENT OF SPOUSE
In consideration of the execution of the foregoing
Assumption Agreement with respect to the Securityholders'
Agreement among CBRE Holding, Inc., CB Xxxxxxx Xxxxx Services,
Inc., RCBA Strategic Partners, L.P., FS Equity Partners III,
L.P., FS Equity Partners International, L.P., DLJ Investment
Partners II, L.P., The Xxxx Holding Company, Xxxxxxxx X. Xxxxx
and the Management Investors named therein, I, __________________,
the spouse of [Transferee], do hereby join with my spouse in
executing the foregoing Assumption Agreement and do hereby agree
to be bound by all of the terms and provisions thereof.
Dated as of ______________ ____, 20__
[Spouse]
