EXHIBIT 7
SECURITYHOLDERS' AGREEMENT
among
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.,
THE MANAGEMENT INVESTORS
and
XXXX XX HOLDING CORP.
Dated as of _______________ ____, 2001
I INTRODUCTORY MATTERS 1
1.1. DEFINED TERMS. 1
1.2. CONSTRUCTION. 9
II TRANSFERS 9
2.1. LIMITATIONS ON TRANSFER. 9
2.2. RIGHT OF FIRST OFFER. 11
2.3. CERTAIN PERMITTED TRANSFERS. 12
2.4. TAG-ALONG RIGHTS. 13
2.5. DRAG-ALONG RIGHTS. 14
2.6. PARTICIPATION RIGHT. 15
III REGISTRATION RIGHTS 16
3.1. DEMAND REGISTRATION. 16
3.2. PIGGYBACK REGISTRATIONS. 18
3.3. EXPENSES OF REGISTRATION. 19
3.4. EFFECTIVE REGISTRATION STATEMENT. 19
3.5. SELECTION OF COUNSEL. 20
3.6. OBLIGATIONS OF THE COMPANY. 20
3.7. TERMINATION OF REGISTRATION RIGHTS. 23
3.8. DELAY OF REGISTRATION; FURNISHING INFORMATION. 23
3.9. INDEMNIFICATION. 23
3.10. ASSIGNMENT OF REGISTRATION RIGHTS. 26
3.11. AMENDMENT OF REGISTRATION RIGHTS. 26
3.12. LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. 27
3.13. "MARKET STAND-OFF" AGREEMENT; AGREEMENT TO
FURNISH INFORMATION. 27
3.14. RULE 144 REPORTING. 27
IV GOVERNANCE 28
4.1. THE BOARD PRIOR TO AN INITIAL PUBLIC OFFERING. 28
4.2. THE BOARD SUBSEQUENT TO AN INITIAL PUBLIC
OFFERING. 30
4.3. BOARD OBSERVERS. 30
4.4. ADVISORS. 31
4.5. VOTING. 31
4.6. GENERAL CONSENT RIGHTS. 32
4.7. CONSENT RIGHTS OF FS PARTIES. 33
V OTHER AGREEMENTS 34
5.1. FINANCIAL INFORMATION. 34
5.2. INSPECTION RIGHTS. 34
5.3. CONFIDENTIALITY OF RECORDS. 35
5.4. INDEMNIFICATION. 35
VI MISCELLANEOUS 37
6.1. ADDITIONAL SECURITIES SUBJECT TO AGREEMENT. 37
6.2. TERM. . 37
6.3. NOTICES. 38
6.4. FURTHER ASSURANCES. 40
6.5. NON-ASSIGNABILITY. 40
6.6. AMENDMENT; WAIVER. 41
6.7. THIRD PARTIES. 41
6.8. GOVERNING LAW. 42
6.9. SPECIFIC PERFORMANCE. 42
6.10. ENTIRE AGREEMENT. 42
6.11. TITLES AND HEADINGS. 42
6.12. SEVERABILITY. 42
6.13. COUNTERPARTS. 42
6.14. OWNERSHIP OF SHARES. 42
SECURITYHOLDERS' AGREEMENT, dated as of _________
___, 2001 (this "Agreement"), among (i) CB Xxxxxxx Xxxxx
Services, a Delaware corporation ("CBRE") and XXXX XX Holding
Corp. (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 Funding,
Inc. ("DLJ"), (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 Agreement
and Plan of Merger, dated as of February 23, 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, par value $0.01 per share, of the Company (the
"Common Stock") 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).
"Closing" means the Closing of the Merger.
"Common Stock" has the meaning set forth in the
Recitals.
"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
Contribution and Voting Agreement, dated as of February
23, 2001, among XXXX XX Holding Corp., 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, DLJ, 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 all other Securityholders in
accordance with Section 2.2(a), if the Company shall
decline to purchase all or any portion of the Transfer
Securities.
"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) 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
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, (y) with respect to the FS Parties
and the Other Non-Management Parties only, Transfers after
the applicable 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 (z) with respect
to the DLJ Parties only, Transfers of Restricted Securities
in connection with Transfers of Notes to the same transferee
(subject to 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 XXXX XX
HOLDING CORP., 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. AND CERTAIN MANAGEMENT
INVESTORS, 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 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 the FS Entities, beginning on
April 12, 2003, on a pro rata basis to the partners of such
Transferor or (iii) in the case of any Non-XXXX Party
(including any transferee that receives shares from an FS
Entity pursuant to clause (ii) 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 (iv) in the case of a transferee
from an FS Entity pursuant to clause (ii) 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
(iii) 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 (iii)
of this Section 2.3 with respect to its relationship to such
Transferring Non-XXXX Party, and (z) 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 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 such class owned by such
Tagging Securityholder by (B) the aggregate number of
outstanding shares of such class and (ii) the total number of
shares of such class 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, (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 50% 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, and in the case of each of the foregoing
clauses (x), (y) and (z), such registrations have been
declared or ordered effective;
(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) 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) or (y) FS Holders holding not less than 50%
of the Registrable Securities then outstanding, in the case
of a registration requested pursuant to Section 3.1(a)(ii),
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), and all FS Holders in the case of clause (y). 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, the 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 not 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, 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 Securityholders and the Company
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 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, the Company and the 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).
(h) If either XXXX or the FS Entities notifies the other
Securityholders in writing of its desire to remove, with or
without cause, any director of the Company previously
designated by it, each 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 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
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 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 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
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
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 Section 4.2.
4.3. Board 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 Restricted Securities
representing at least 1.0% of the outstanding Common Stock.
(c) 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.
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 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
(provided that in such reorganization 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) or the acquisition of the
Company by merger or consolidation.
(b) In order to effectuate Section 4.5(a), each Non-XXXX
Party 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
(provided that in such reorganization 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) or the acquisition of the
Company by merger or consolidation; 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 in connection with the closing of
the Merger under the terms of the documents governing the
original Indebtedness 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.
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 proprietary or confidential 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
or (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. 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, (i)
any partner, member, director, officer or employee of such
Securityholder or (ii) 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 the
Management Securityholders' Agreement (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:
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) (f) If to any of the DLJ Parties, 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):
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 executive 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. 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.
XXXX XX HOLDING CORP.
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 FUNDING, INC.
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 CB Xxxxxxx Xxxxx Services,
Inc., RCBA Strategic Partners, L.P., FS Equity Partners III,
L.P., FS Equity Partners International, L.P., DLJ Investment
Funding, Inc., 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 CB Xxxxxxx Xxxxx Services,
Inc., RCBA Strategic Partners, L.P., FS Equity Partners III,
L.P., FS Equity Partners International, L.P., DLJ Investment
Funding, Inc., 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 CB Xxxxxxx Xxxxx Services,
Inc., RCBA Strategic Partners, L.P., FS Equity Partners III,
L.P., FS Equity Partners International, L.P., DLJ Investment
Funding, Inc., 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 CB Xxxxxxx Xxxxx Services,
Inc., RCBA Strategic Partners, L.P., FS Equity Partners III,
L.P., FS Equity Partners International, L.P., DLJ Investment
Funding, Inc., 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 XXXX XX Holding Corp., CB Xxxxxxx Xxxxx
Services, Inc., RCBA Strategic Partners, L.P., FS Equity
Partners III, L.P., FS Equity Partners International, DLJ
Investment Funding, Inc., 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 CB Xxxxxxx Xxxxx Services, Inc., RCBA
Strategic Partners, L.P., FS Equity Partners III, L.P., FS
Equity Partners International, L.P., DLJ Investment Funding,
Inc., 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 _________ __, 2001 ___________________________
[Spouse]
