STOCKHOLDERS' AGREEMENT
This Stockholder's Agreement, dated as of this 23rd day of June, 1997 by
and among Roller Bearing Holding Company, Inc., a Delaware corporation
("Holdings"), OCM Principal Opportunities Fund, L.P., a Delaware limited
partnership ("OCM"), Northstar Investment Management Corporation, a Delaware
Corporation ("Northstar"), Merban Equity, a corporation organized under the laws
of the Canton of Zug, Switzerland ("CSFB"), those individuals listed on Schedule
A hereto (the "CSFB Individuals" and together with CSFB, collectively the "CSFB
Parties" and individually a "CSFB Party"), Dr. Michael J. Hartnett ("Hartnett"
and together with OCM, Northstar and the CSFB Parties, collectively the "Initial
Parties" and individually an "Initial Party") and the Persons who by operation
of Section 2.9 below become a party hereto.
WHEREAS, OCM is the owner of 1,400 shares (the "OCM Shares") of Class A
Voting Common Stock of Holdings, par value $.01 per share ("Class A Common
Stock"); and (i) 1,322 warrants to purchase shares of Class A Common Stock at
$100.00 per share and (ii) 5,469 warrants to purchase shares of Class A Common
Stock at $.01 per share (collectively, the "OCM Warrants");
WHEREAS, Northstar is the owner of 1,262 warrants to purchase shares of
Class A Common Stock at $.01 per share (collectively, the "Northstar Warrants");
WHEREAS, the CSFB Parties collectively are the owners of 752.80 shares
(the "CSFB Shares") of Class A Common Stock and 2,088 warrants to purchase
shares of Class A
Common Stock at $100.00 per share (the "CSFB Warrants"), all allocated among the
CSFB Parties as set forth on Schedule A hereto;
WHEREAS, Hartnett is the owner of 3,948.8 shares (the "Hartnett Shares"
and collectively with the OCM Shares and the CSFB Shares, the "Shares") of Class
B Supervoting Common Stock of Holdings, par value $.01 per share ("Class B
Common Stock" and collectively with Class A Common Stock, "Common Stock"); and
(i) 8,727.40 warrants to purchase shares of Class B Common Stock at $76.57 per
share and (ii) 1,250 warrants to purchase shares of Class B Common Stock at
$514.00 per share (collectively, the "Hartnett Warrants" and collectively with
the OCM Warrants, the Northstar Warrants and the CSFB Warrants, the "Warrants");
and
WHEREAS, OCM, Northstar, the CSFB Parties and Hartnett (together with any
successors thereto or any Person to whom such parties shall transfer any of the
Securities owned by any of them in a manner permitted by the terms hereof, the
"Parties") desire to set forth their agreements regarding certain matters
relating to their ownership of the Shares and the Warrants (the Shares and the
Warrants, as well as (i) any shares of capital stock or Derivative Securities
that may be issued by Holdings and owned by any of the Parties and (ii) any
shares of Common Stock that may be issued by Holdings to any of the Parties upon
conversion, exchange or exercise of any Warrants or other Derivative Securities,
in each case whether currently owned or hereinafter acquired, being collectively
the "Securities"; and the Securities owned by Hartnett or any person to whom
such Securities are Transferred in a manner permitted hereby, being the
"Hartnett Securities," the Securities owned by OCM or any person to whom such
Securities are Transferred in a manner permitted hereby, being the
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"OCM Securities," the Securities owned by Northstar or any person to whom such
Securities are Transferred in a manner permitted hereby, being the "Northstar
Securities" and the Securities owned by the CSFB Parties or any person to whom
such Securities are Transferred in a manner permitted hereby, being the "CSFB
Securities").
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and intending to
be legally bound hereby, the parties hereto agree as follows:
1. DEFINITIONS
As used herein, the following terms shall have the meanings indicated:
1.1 "Affiliate" shall mean a Person controlled by, in control of, or under
common control with, another Person. For purposes of this definition, "control"
(including the correlative terms "controlled by", "in control of" and "under
common control with"), with respect to any Person, shall mean possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
1.2 "Board" shall mean the Board of Directors of Holdings.
1.3 "Derivative Securities" shall mean options, warrants (including the
Warrants) and other rights to subscribe for, and securities convertible into or
exchangeable or exercisable for, shares of Common Stock.
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1.4 "Exercise Price" shall mean, as applicable, the exercise price of
options, warrants or rights to subscribe for shares of Common Stock and the
consideration payable upon the conversion or exchange of securities convertible
into or exchangeable for shares of Common Stock.
1.5 "Fair Market Value" shall mean as to any property on any date, the
fair market value of such property on such date (without regard to any
liabilities to which such property may be subject) as determined in good faith
by the Board, which determination shall, absent manifest error, be binding on
the Parties.
1.6 "Initial Public Offering" shall mean the first underwritten public
offering of equity securities of Holdings pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Act"), for which
Holdings received not less than $25 million in gross proceeds and following
which there is a public market for the securities so offered.
1.7 "Outstanding Shares", including subsets of such term such as
"Outstanding OCM Shares," "Outstanding Northstar Shares," "Outstanding CSFB
Shares" and "Outstanding Hartnett Shares," shall mean, at any given time, the
sum of (i) all outstanding shares of Common Stock (or, as applicable, in respect
of OCM Securities, Northstar Securities, CSFB Securities or Hartnett Securities)
and (ii) the aggregate number of shares of Common Stock (or, as applicable, in
respect of OCM Securities, Northstar Securities, CSFB Securities or Hartnett
Securities) issuable upon the exercise, conversion or exchange, as applicable,
of outstanding Derivative Securities. Whenever in this Agreement reference is
made to
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ownership of Outstanding Shares, such phrase shall mean ownership of the
applicable underlying Common Stock and Derivative Securities in respect thereof.
1.8 "Permitted Transfer" shall mean, a Transfer to a Permitted Transferee.
1.9 "Permitted Transferee" shall mean, with respect to any Person, (i) if
such Person is an individual, (A) a member of the Immediate Family of such
Person, or (B) a trust or other similar legal entity for the primary benefit of
such Person and/or one or more members of his Immediate Family, or (C) a
partnership, limited partnership, limited liability company, corporation or
other entity in which such Person and members of his Immediate Family possess
100% of the outstanding voting securities, (ii) a Transferee in connection with
a Transfer in compliance with Rule 144 under the Act so long as Holdings is
furnished with evidence reasonably satisfactory to it that such Transfer
complied with such Rule, (iii) if such Person is a partnership or limited
liability company, the general partners, limited partners or members thereof to
whom Securities are Transferred on a pro rata basis in accordance with the terms
of the underlying Partnership Agreement or Limited Liability Company Agreement,
(iii) if such Person is a corporation, any wholly owned subsidiary of such
corporation or parent of such corporation that wholly owns such corporation, and
(iv) Transferees pursuant to an effective registration statement under the Act.
For purposes of this definition, "Immediate Family", with respect to any
individual, shall mean his brothers, sisters, spouse, children (including
adopted children), parents, parents-in-law, grandchildren, great grandchildren
and other lineal descendants and spouses of any of the foregoing.
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1.10 "Person" shall mean any natural person, corporation, organization,
partnership, association, joint-stock company, limited liability company, joint
venture, trust or government, or any agency or political subdivision of any
government.
1.11 "Transfer" shall mean any direct or indirect, voluntary or
involuntary, sale assignment, gift, encumbrance or other direct or indirect
transfer (whether outright or conditional) of any Securities or any interest
therein.
1.12 Additional Defined Terms
The following terms are defined elsewhere in this Agreement in the
Sections and on the pages indicated:
Defined Term Section Page
------------ ------- ----
Act 1.6 4
Affiliate 1.1 3
Blue Sky 4.3(c)(vi) 37
Board 1.2 3
Cause 2.3(c)(i)(C) 10
Class A Common Stock Recitations 1
Class B Common Stock Recitations 2
Commission 4.2(a) 31
Common Stock Recitations 2
Compelled Sale 2.6(a) 21
Compelled Sale Notice 2.6(b) 23
Compelled Sale Purchaser 2.6(a) 20
Control 1.1 3
Controlled by 1.1 3
CSFB Introduction 1
CSFB Individuals Introduction 1
CSFB Parties Introduction 1
CSFB Party Introduction 1
CSFB Securities Recitations 3
CSFB Shares Recitations 1
CSFB Warrants Recitations 2
Demand Notice 4.2(a) 31
Debentures 2.4(h)(ii) 14
Demand Registration Period 4.3(a) 33
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Demand Registration Statement 4.2(a) 31
Demand Securities 4.2(a) 31
Demanding Holders 4.2(a) 31
Derivative Securities 1.3 3
Exchange Act 4.3(d) 41
Exercising RFR Participants 2.4(e) 12
Exercise Price 1.4 4
Fair Market Value 1.5 4
First Refusal Notice 2.4(a) 10
Hartnett Introduction 1
Hartnett Employment Agreement 2.3(c)(i)(C) 10
Hartnett Permitted Transfer 2.3(a) 10
Hartnett Securities Recitations 2
Hartnett Shares Recitations 2
Hartnett Transferors 2.6(a) 20
Hartnett Warrants Recitations 2
Holdings Introduction 1
Holdings Non-Exercise Notice 2.4(d) 11
Immediate Family 1.9 5
Indemnified Parties 4.3(d) 41
Indemnifying Party 4.3(f) 45
Initial Parties Introduction 1
Initial Party Introduction 1
Initial Public Offering 1.6 4
Joinder Agreement 2.9(a)(iii) 25
Listed Securities 2.6(a)(i) 21
New Securities 3.1 27
Northstar Introduction 1
Northstar Securities Recitations 3
Northstar Warrants Recitations 1
Non-Tag-Along Party 2.5(a) 15
OCM Introduction 1
OCM Securities Recitations 3
OCM Shares Recitations 1
OCM Warrants Recitations 1
Other Parties 2.6(a) 20
Outstanding CSFB Shares 1.7 4
Outstanding Hartnett Shares 1.7 4
Outstanding Northstar Shares 1.7 4
Outstanding OCM Shares 1.7 4
Outstanding Shares 1.7 4
Participation Right 3.1 27
Parties Recitations 2
7
Permitted Transfer 1.8 5
Permitted Transferee 1.9 5
Person 1.10 6
Piggyback Shares 4.1 30
Preemptive Issuance 3.1 26
Preemptive Parties 3.1 27
RBC 2.3(c)(i) 10
Registered Securities 4.3(c)(ii) 35
Registering Parties 4.1 29
Registration Statement 4.1 29
Remaining Shares 2.4(e) 12
Remaining Shares Exercise Notice 2.4(e) 12
Remaining Shares Notice 2.4(e) 12
RFR Offeror 2.4(a) 10
RFR Participants 2.4(a) 11
RFR Purchase Terms 2.4(b) 11
RFR Transferor 2.4(a) 10
Securities Recitations 2
Shares Recitations 2
Suspension Period 4.3(a) 33
Tag-Along Notice 2.5(c) 17
Tag-Along Notice Deadline 2.5(c) 17
Tag-Along Offer Notice 2.5(c) 16
Tag-Along Right 2.5(a) 15
Tag-Along Transferee 2.5(a) 15
Tag-Along Transferee Terms 2.5(c) 17
Tag-Along Transferor 2.5(a) 15
Third Party Securities 4.1 30
Transfer 1.11 6
Under Common Control With 1.1 3
Underwriter's Cutback 4.1 30
Warrants Recitations 2
2. TRANSFER RESTRICTIONS
2.1 Legends. None of the Securities, including shares of Common Stock
underlying the Warrants, will have been registered under the Act. Certificates
representing
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the Shares, the Warrants, and upon exercise of the Warrants, the shares of
Common Stock issuable at such time, shall bear the following legend:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended ("Act"), and may not be
offered or sold except pursuant to (i) an effective registration statement
under the Act or (ii) an exemption from registration under such Act
(which, if requested by the issuer, shall be accompanied by an opinion of
counsel to such effect reasonably satisfactory to the issuer).
2.2 Restrictions on Transfer of OCM Securities, Northstar Securities and
CSFB Securities. Except as otherwise provided for in this Article 2, neither
OCM, Northstar nor any CSFB Party shall Transfer any Securities other than in
compliance with the provisions hereof.
2.3 Restrictions on Transfer of Hartnett Securities. (a) Except as
otherwise provided for in this Article 2, and subject to (b) and (c) below,
Hartnett and his Permitted Transferees (and their Permitted Transferees) shall
not, without the prior written consent of OCM, Transfer Hartnett Securities if,
and to the extent that, (i) following such Transfer, the total Outstanding
Hartnett Shares owned by Hartnett and his Permitted Transferees would be less
than 80% of the total Outstanding Hartnett Shares on the date hereof (as
adjusted to allow for subdivisions and combinations of Common Stock, stock
dividends and other similar dilution events), and (ii) the aggregate gross
proceeds to Hartnett and his Permitted Transferees from such Transfer, when
aggregated with the gross proceeds from prior Transfers of Hartnett Securities
(excluding proceeds from the Transfer of any Hartnett Securities (x) acquired
after the date hereof, or (y) to Permitted Transferees) by Hartnett and
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his Permitted Transferees, are in excess of $1 million (any Transfer permitted
pursuant to the foregoing without OCM's consent is referred to herein as a
"Hartnett Permitted Transfer").
(b) Hartnett shall be permitted to Transfer Hartnett Securities free
of the limitations set forth in this Section 2.3 and free of the rights provided
to others in Section 2.4 in the event that such Transfer is in connection with a
Compelled Sale.
(c) The limitations on Transferability set forth in (a) above shall
terminate and be of no further force and effect (and the sole limitations on
Transferability of the Hartnett Securities shall be solely as set forth in the
other provisions of this Article 2) from and after the first to occur of the
following:
(i) Such time that Hartnett is no longer employed as the Chief
Executive Officer of Holdings and its wholly owned subsidiary Roller Bearing
Company of America, Inc. ("RBC") by reason of his (A) death, (B) physical or
mental disability or (C) involuntary termination of employment other than for
"Cause" as defined in Section 7(b) of the Employment Agreement of even date
herewith between RBC and Hartnett (as such agreement is in effect on the date
hereof the "Hartnett Employment Agreement"), and
(ii) The fifth anniversary of the date hereof.
2.4 Right of First Refusal. No Party may Transfer any Securities except to
Permitted Transferees or otherwise in compliance with this Section 2.4 (except
that Transfers pursuant to Section 2.6 and Transfers by Non-Tag-Along Parties
pursuant to Section 2.5 shall not be subject to this Section 2.4).
(a) A Party desiring to Transfer Securities (the "RFR Transferor")
to a bona fide independent third party (the "RFR Offeror") shall give notice
thereto to Holdings (a
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"First Refusal Notice"). Holdings shall thereupon be obligated promptly to
deliver a copy of the First Refusal Notice to each of the Parties hereto other
than the RFR Transferor (the "RFR Participants").
(b) Any such First Refusal Notice shall contain a true and complete
description of the RFR Offeror's bona fide offer, the proposed purchase price
(allocated as between Shares and Warrants) and all other material terms and
conditions of such offer including the date of the proposed Transfer and all
applicable representations, indemnities and other contract provisions ("RFR
Purchase Terms"). The First Refusal Notice shall constitute an offer by the RFR
Transferor to sell the Securities that are the subject of the First Refusal
Notice at the RFR Purchase Terms.
(c) Holdings shall have the right, exercisable at any time within 10
days after delivery of the First Refusal Notice, to accept the offer made
thereby by furnishing written notice thereof to the RFR Transferor and agreeing
to purchase all and not less than all of the Securities so offered in, and at
the RFR Purchase Terms specified in, the First Refusal Notice.
(d) If Holdings shall not have accepted such offer within such 10
day time period, it shall so notify each of the RFR Participants (the "Holdings
Non-Exercise Notice") and each of the RFR Participants shall thereupon have the
right, exercisable at any time within 20 days after the delivery of the Holdings
Non-Exercise Notice, to exercise its right of first refusal herein by furnishing
written notice thereof to Holdings and to the RFR Transferor and agreeing to
purchase all and not less than all of its pro rata share of the Securities so
offered in, and at the RFR Purchase Terms specified in, the First Refusal
Notice. For the
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purposes hereof, each RFR Participant's pro rata share shall be a fraction, the
numerator of which shall be the number of such RFR Participant's Outstanding
Shares, and the denominator of which shall be the number of all RFR
Participants' Outstanding Shares.
(e) If Holdings shall have delivered a Holdings Non-Exercise Notice
and if not all of the RFR Participants shall have exercised their rights of
first refusal as set forth in (d) above, Holdings shall so notify those RFR
Participants who did exercise their rights of first refusal (the "Exercising RFR
Participants"), which notice (the "Remaining Shares Notice") shall set forth the
aggregate number of Securities with respect to which rights of first refusal
were not exercised by operation of (d) above (the "Remaining Shares"), and the
Exercising RFR Participants shall thereupon have the right, exercisable at any
time within 5 days after the delivery of the Remaining Shares Notice, to
exercise an additional right of first refusal by furnishing written notice
thereof to Holdings and to the RFR Transferor the "Remaining Shares Exercise
Notice") and agreeing to purchase all and not less than all its pro rata share
of the Remaining Shares so offered in, and at the RFR Purchase Terms specified
in, the First Refusal Notice. For the purposes hereof, each Exercising RFR
Participant's pro rata share shall be a fraction, the numerator of which shall
be the number of such Exercising RFR Participant's Outstanding Shares and the
denominator of which shall be the number of all Exercising RFR Participants'
Outstanding Shares. The Exercising RFR Participants may indicate in the
Remaining Shares Exercise Notice their willingness to purchase more than their
pro rata share of the Remaining Shares and if the Exercising RFR Participants do
not all elect to purchase their pro rata shares of the Remaining Shares, the
Exercising RFR Participants electing to purchase more than their pro rata share
of the Remaining Shares (as
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specified in their Remaining Shares Exercise Notice) may do so on a pro rata
basis (determined as among themselves with respect to their Outstanding Shares
as provided above).
(f) Upon accepting any such offer pursuant to (c), (d) or (e) above,
Holdings or, as applicable, the RFR Participants shall deliver payment in the
appropriate amount to the RFR Transferor against (i) delivery of certificates or
other instruments representing the Securities so purchased, appropriately
endorsed by the RFR Transferor and (ii) completion of all documentation
necessary to satisfy all of the RFR Purchase Terms. The closing for the purchase
of Securities pursuant hereto shall occur within 30 days after acceptance by, as
the case may be, Holdings or the last to be given notice of exercise of the RFR
Participants or the Exercising RFR Participants, unless otherwise agreed to as
among the RFR Transferor and the applicable purchasers.
(g) If Holdings, the RFR Participants and the Exercising RFR
Participants shall not have elected to purchase all of the Securities that were
the subject of the First Refusal Notice, the RFR Transferor shall have the
unlimited right at its option, at any time within the 90-day period following
the end of the notice periods set forth in (c), (d) and (e) above either to (i)
sell all of the Securities that were the subject of the First Refusal Notice
free of any obligation to sell any of such Securities to those who exercised
their rights of first refusal, or (ii) sell such of the Securities not purchased
pursuant to the within rights of first refusal (either as a result of the rights
of first refusal not being exercised in full or there having been a default in
the closing therefor), in either case to the RFR Offeror on terms not less
favorable to the RFR Transferor than were set forth in the First Refusal Notice.
Any
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subsequent or other proposed Transfer shall be subject to the rights of first
refusal set forth herein.
(h) Notwithstanding anything contained in Subsections 2.4(b) through
2.4(g) to the contrary:
(i) If the terms specified in the First Refusal Notice provide
for the Purchase Price of the RFR's Transferor's Securities to be paid other
than entirely by cash, the right of first refusal provided above may be
satisfied by payment of cash in an amount equal to the sum of (A) the cash
portion of the consideration specified in the First Refusal Notice and (B) the
Fair Market Value of the non-cash consideration offered by the RFR Offeror.
(ii) The rights of first refusal shall not apply as to (A)
Transfers of Securities (other than Hartnett Securities which shall on all cases
be subject to the within rights regardless of the number thereof) by any Party
that, in the aggregate together with all other Transfers subject to the
exception set forth in this subparagraph (ii), constitute less than 10% of the
total Outstanding Shares owned by such Party on the date hereof (as adjusted to
allow for subdivisions and combinations of common stock, stock dividends and
other similar dilution events), or (B) Transfers occurring within six (6) months
of the date hereof by either OCM or Northstar of Warrants acquired by either, as
the case may be, in connection with its purchase of the 13% Senior Secured
Discount Debentures of Holdings (the "Debentures").
(iii) If OCM or Northstar propose to Transfer OCM Securities
or Northstar Securities (and such Transfer is not subject to (ii)(B) above) and
such Transfer is a component of a transaction including the sale of its
Debentures to the RFR Offeror, then Holdings or the RFR Participants, as the
case may be, may exercise their rights of first refusal
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only by also acquiring the accompanying Debentures subject to all of the RFR
Purchase Terms.
(i) For the purposes of Subsections (c), (d) and (e) above, any
Party who fails to deliver a notice of exercise of its right of first refusal
within the time periods for exercise provided for therein shall be deemed not be
have exercised such right.
2.5 Tag-Along Rights.
(a) Subject to (j) below, if Hartnett (here, the "Tag-Along
Transferor") wishes to Transfer any Securities owned by him (in a transaction in
which, if subject to the provisions of Section 2.4, the rights of first refusal
set forth therein shall not have been fully exercised) to any Person other than
a Permitted Transferee (a "Tag-Along Transferee"), each other Party (each a
"Non-Tag-Along Party") shall have the right (the "Tag-Along Right") to require,
as a condition to such Transfer by the Tag-Along Transferor of those Securities
not purchased pursuant to the rights of first refusal set forth in Section 2.4,
that the Tag-Along Transferee purchase from such Non-Tag-Along Party, at the
same price and on the same terms and conditions as involved in the Transfer by
the Tag-Along Transferor, up to that number of Outstanding Shares owned by such
Non-Tag-Along Party equaling the number derived by multiplying the total number
of Outstanding Shares owned by such Non-Tag-Along Party by a fraction, the
numerator of which is the actual number of Outstanding Shares to be Transferred
to the Tag-Along Transferee by the Tag-Along Transferor as set forth in the
Tag-Along Offer Notice, and the denominator of which is the aggregate number of
Outstanding Shares owned by the Tag-Along Transferor immediately prior to such
Transfer. Notwithstanding the foregoing, in the event the Tag-Along Transferee
is unwilling to purchase
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the sum of the aggregate number of Securities that the Tag-Along Transferor and
the Non-Tag-Along Parties (and each of them) desire to Transfer to the Tag-Along
Transferee pursuant hereto, each Party who desires to Transfer Securities to the
Tag-Along Transferee shall be entitled to Transfer only that number of
Outstanding Shares equal to the number of Outstanding Shares which such Party
desires to Transfer to such Tag-Along Transferee, as set forth in its Tag-Along
Notice or, in the case of the Tag-Along Transferor, in the Tag-Along Offer
Notice, multiplied by a fraction, the numerator of which is the total number of
Outstanding Shares which the Tag-Along Transferee is willing to acquire and the
denominator of which is the total number of Outstanding Shares which the
Tag-Along Transferor and all of the Non-Tag-Along Parties wish to Transfer to
such Tag-Along Transferee (all as set forth, as applicable, in the Tag Along
Offer Notice and the Tag Along Notices).
(b) Unless the Tag-Along Transferee shall agree to the contrary,
prior to any Transfer to the Tag-Along Transferee, the Tag-Along Transferor and
the Non-Tag-Along Parties shall exercise, convert or exchange such number of
their Derivative Securities as may be necessary so that only shares of Common
Stock are Transferred.
(c) Any Tag-Along Transferor who proposes to Transfer any Securities
in a transaction subject to this Section 2.5 shall notify each Non-Tag-Along
Party in writing of each such proposed Transfer (a "Tag-Along Offer Notice").
Such Tag-Along Offer Notice shall set forth: (i) the name of the Tag-Along
Transferee, (ii) the number and nature of the Securities proposed to be
Transferred, (iii) the proposed amount and form of consideration and all other
material terms and conditions of such offer, including the date of the proposed
Transfer and all applicable representations, indemnities and other contract
provisions, offered
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by the Tag-Along Transferee (the "Tag-Along Transferee Terms"), (iv) the total
number and nature of Securities owned by such Tag-Along Transferor and (v) that
the Tag-Along Transferee has been informed of the Tag-Along Right provided for
in this Section 2.5 and has agreed to purchase Securities subject hereto. The
Tag-Along Right may be exercised by any Non-Tag-Along Party by delivery of a
written notice to the Tag-Along Transferor (the "Tag-Along Notice") within 20
days following delivery of the Tag-Along Offer Notice (the "Tag-Along Notice
Deadline"). The failure by any Non-Tag-Along Party to provide the Tag-Along
Notice on or before the Tag-Along Notice Deadline shall be deemed to be an
election by such Non-Tag-Along Party not to exercise the Tag-Along Right with
respect to the transaction described in the Tag-Along Offer Notice.
(d) Upon delivery of a Tag-Along Notice, each participating
Non-Tag-Along Party shall be entitled and obligated to sell to the Tag-Along
Transferee the number of Securities owned by it determined in accordance with
subparagraph (a) of this Section 2.5, subject to the Tag-Along Transfer Terms,
(including the same representations, indemnities and the like made by the
Tag-Along Transferor). Notwithstanding the foregoing, any liability of a
participating Non-Tag-Along Transferee thereunder shall be (i) several (and not
joint and several), (ii) limited to the proceeds actually received by such
participating Non-Tag-Along Party and, (iii) in any event except for any
liability occasioned by the specific wrongdoing of any Person, the liability of
each participating Non-Tag-Along Party and the Tag-Along Transferor shall be
further limited to damages occasioned by the breach of the representations and
warranties made by them (which shall only include representations and warranties
as to their ownership of the Securities being sold and other matters
specifically applicable to them
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and their Securities) and damages arising under any indemnity or escrow
provisions that are limited to their proportion of the aggregate proceeds
received by all of them.
(e) The Non-Tag-Along Parties electing to participate in the sale of
Securities to the Tag-Along Transferee (and each of them) shall execute and
deliver to the Tag-Along Transferor within 5 business days after delivery to
such Non-Tag-Along Parties for such execution, all documents required to be
executed by each such Non-Tag-Along Party in order to consummate such sale,
subject to the limitations on liability contained in Section 2.5(d) above.
Further, and in any event, each of the participating Non-Tag-Along Transferees
hereby appoints the Secretary of Holdings as its attorney-in-fact to execute any
and all documents and instruments and take all actions reasonably necessary to
Transfer the Securities owned by such Non-Tag-Along Party in order to effect the
terms of this Section 2.5, which power of attorney may only be exercised if the
Transfer complies with all of the terms of this Section 2.5. It is understood
and agreed that the appointment of the Secretary of Holdings as the
attorney-in-fact of each of the participating Non-Tag-Along Parties for the
purposes set forth above is coupled with an interest and is irrevocable.
(f) In the event that the Tag-Along Transfer Terms are at any time
changed in any material respect (including any decrease in the applicable
purchase price) prior to the consummation of the Tag-Along Transfer, the
Tag-Along Transferor shall notify each of the Non-Tag-Along Transferees, and
each of the Non-Tag-Along Transferees shall have the right, exercisable at any
time within 20 days following delivery thereof, to withdraw its participation in
the Tag-Along-Transfer by so notifying the Tag-Along-Transferor.
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(g) To the extent that the Non-Tag-Along Parties (or any of them)
elect not to participate in the Transfer described in the Tag-Along Offer
Notice, the Tag-Along Transferor shall have the right at any time within 90 days
following the Tag-Along Notice Deadline to Transfer that number of Securities
proposed to be Transferred, as set forth in the Tag-Along Transfer Notice (and
that are not being sold by participating Non-Tag-Along Parties) to the Tag-Along
Transferee subject to the following:
(i) such Transfer shall be of the number of Securities, to the
Tag-Along Transferee and upon the Tag-Along Transferor Terms, all as
set forth in Tag-Along Notice; and
(ii) such Transfer must in all events be made in compliance
with the provisions hereof.
(h) At the closing of the Transfer of Securities to a Tag-Along
Transferee (of which the Tag-Along Transferor shall give each participating
Non-Tag-Along Party at least 5 business days' prior written notice), the
Tag-Along Transferee shall remit to the Tag-Along Transferor and each
participating Non-Tag-Along Party the consideration for the total sales price of
Securities of such Parties sold pursuant hereto, against delivery by such
Parties of such evidences of ownership of such Parties' Securities as may be
requested by the Tag-Along Transferee, and the compliance by such Parties with
any other conditions to closing generally applicable to the Tag-Along Transferor
and all participating Non-Tag-Along Parties.
(i) If any Transfer contemplated by Sections 2.5(e) and (g) above is
terminated or is otherwise not consummated for any reason (in the case of
Transfers allowed pursuant to Section 2.5(g) within the 90-day period allowed
for such Transfer), the Tag-Along
19
Transferor shall, without prejudice to his rights hereunder to deliver a
subsequent Tag-Along Notice, provide written notice of such termination to the
other Parties and shall promptly return to all Non-Tag-Along Parties who elected
to participate in such Transfer all documentation which such Non-Tag-Along
Parties had previously delivered to the Tag-Along Transferor in connection with
such Transfer.
(j) Notwithstanding the foregoing, Hartnett shall have no
obligations under this Section 2.5 in respect of a Hartnett Permitted Transfer;
provided that in the case of Transfers of Hartnett Securities in excess of the
amounts constituting a Hartnett Permitted Transfer (and in which any rights of
first refusal shall not have been fully exercised), the within Tag-Along Rights
shall apply to such excess.
2.6 Right to Compel Sale.
(a) Subject to subparagraph (b) below, if at a time that Hartnett
and his Permitted Transferees have the power to vote with respect to, and the
power to dispose of, Outstanding Shares representing not less than 50% of the
Outstanding Shares owned by Hartnett on the date hereof (as adjusted to allow
for subdivisions and combinations of Common Stock, stock dividends and other
similar dilution events), Hartnett and/or such Permitted Transferees, as
applicable (the "Hartnett Transferors"), wish to sell all, and not less than
all, of the Hartnett Securities then owned by Hartnett and such Permitted
Transferees on such date, to any bona fide independent third party other than an
Affiliate or a Permitted Transferee of Hartnett (the "Compelled Sale
Purchaser"), and if such Compelled Sale Purchaser requires, as a condition to
acquiring such Hartnett Securities upon the terms acceptable to the Hartnett
Transferors, that all other Parties (the "Other Parties") sell to such
20
Compelled Sale Purchaser all, and not less than all, of the Securities owned by
the Other Parties, then each of the Other Parties shall be obligated to join and
fully cooperate in the sale together with the concurrent sale by the Hartnett
Transferors (a "Compelled Sale") of all of its respective Securities to the
Compelled Sale Purchaser, subject to the following:
(i) The terms and conditions applicable to the sale of the
Securities owned by the Other Parties shall be identical to those applicable to
the sale of the Hartnett Securities, including, without limitation, the amount
and nature of consideration and the same representations, indemnities and the
like required of the Hartnett Transferors; provided, however, that the Other
Parties shall not be obligated to accept as consideration for their Securities
payment other than in cash and securities that are listed on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ National Market ("Listed
Securities"); provided, further, that (A) the aggregate consideration per Share
(including the Fair Market Value of any Listed Securities) payable to any Other
Party shall be no less than that payable to the Hartnett Transferors, and (B) no
Other Party shall be required to accept a smaller amount of cash (as a
percentage of the total consideration) than the Hartnett Transferors.
Accordingly, the Hartnett Transferors may either reallocate such consideration
so as to satisfy the preceding sentence or, if the Compelled Sale Purchaser is
not paying sufficient cash and Listed Securities to allow such reallocation, the
Hartnett Transferors may themselves pay to the Other Parties cash so as to
comply therewith. For the purposes of this subparagraph (i), the value of the
consideration other than cash being paid by the Compelled Sale Purchaser shall
be the Fair Market Value thereof.
21
(ii) Notwithstanding the foregoing, any liability of any Other
Party in connection with such sale shall be (i) several and not joint and
several, (ii) shall be limited to the proceeds actually received by such Other
Party, and, (iii) in any event except for any liability occasioned by the
specific wrongdoing of any Person, the liability of the Hartnett Transferors and
the Other Parties shall be further limited to damages occasioned by the breach
of the representations and warranties made by them (which shall only include
representations and warranties as to their ownership of the Securities being
sold and other matters specifically applicable to them and their Securities) and
damages arising under any indemnity or escrow provisions that are limited to
their proportion of the aggregate proceeds received by all of them.
(iii) The Hartnett Transferors shall be obligated to deliver
to the Other Parties an opinion of counsel to the Company, in form reasonably
acceptable to the Other Parties, to the effect that such Transfer does not
require any registration under the Act or otherwise.
(iv) No Hartnett Transferor who holds any debt or other
securities issued by Holdings or any of its subsidiaries (i.e., securities other
than Common Stock of Holdings) shall, pursuant to the Compelled Sale, receive,
in consideration of such debt or other securities, an amount greater than the
sum of, without duplication, (x) the face amount or liquidation preference of
such securities, plus (y) any accrued but unpaid interest or dividends thereon
(including cumulative dividends, if applicable), plus (z) any prepayment or
redemption premium or penalty set forth in the terms of the agreement evidencing
such securities.
22
(b) The Hartnett Transferors shall notify each of the Other Parties
in writing of a Compelled Sale (a "Compelled Sale Notice"), which Compelled Sale
Notice shall set forth all of the material terms and conditions of the Compelled
Sale, including, without limitation, the proposed amount and nature of
consideration and all other material terms and conditions, including the date of
the proposed Transfer and all applicable representations, indemnities and other
contract provisions. The Other Parties (and each of them) shall execute and
deliver to the Hartnett Transferors within 5 business days after delivery to
such Other Parties for such execution, all documents required to be executed by
each such Other Party in order to consummate such Compelled Sale, subject to the
limitations on liability contained in Subsection (a)(ii) above. Further, and in
any event, each of the Other Parties hereby appoints the Secretary of Holdings
as its attorney-in-fact to execute any and all documents and instruments and
take all actions reasonably necessary to Transfer the Securities owned by such
Other Party in order to effect the terms of this Section 2.6, which power of
attorney may only be exercised if the Compelled Sale complies with all of the
terms of this Section 2.6. It is understood and agreed that the appointment of
the Secretary of Holdings as the attorney-in-fact of each of the Other Parties
for the purposes set forth above is coupled with an interest and is irrevocable.
(c) Upon consummation of the sale of the Securities to the Compelled
Sale Purchaser pursuant to the Compelled Sale, the Hartnett Transferors shall
(i) notify the Other Parties of such completion and shall furnish such evidence
of said sale (including time of completion) and of the terms thereof as the any
of the Other Parties may reasonably request,
23
and (ii) promptly remit to each of the Other Parties proceeds of such sale
attributable to the sale of such Other Party's Securities.
(d) If any Compelled Sale Offer is withdrawn, or terminated for any
reason, prior to consummation, the Hartnett Transferor shall, without prejudice
to his (or any other Hartnett Transferor's) rights hereunder to deliver a
subsequent Compelled Sale Notice, return to each of the Other Parties all
documentation which such Other Parties had previously delivered to the Hartnett
Transferor in connection with such Compelled Sale Offer.
(e) For the purposes hereof, a Compelled Sale shall be deemed to
include a transaction in which all of the Hartnett Securities are to be acquired
by Holdings pursuant to an arrangement in which one or more of the other holders
of Common Stock elect to retain their ownership, but only if (i) Hartnett has no
continuing interest of any kind or nature whatsoever in Holdings and/or any of
its subsidiaries following such transaction other than (A) any interests
identical in nature to those of all other sellers of Securities, and (B)
pursuant to employment arrangements as are no more favorable to Hartnett than in
existence prior to such transaction, and (ii) Holdings shall have obtained an
opinion from an investment bank or other firm of national reputation in the
valuation of business enterprises that the consideration being paid in such
transaction represents a fair value therefor. In such case, the Compelled Sale
Purchaser shall be Holdings and the Other Parties shall be all of the Parties
other than, if applicable, the holders of Common Stock who elected to retain
their ownership.
2.7 Transfers to Permitted Transferees. Notwithstanding anything contained
in this Article 2 to the contrary, a Party may Transfer any or all Securities
owned by such Party
24
to a Permitted Transferee of such Party without regard to the rights or
obligations respecting Transfers set forth in Sections 2.4, 2.5 and 2.6.
2.8 Termination on Initial Public Offering. The restrictions on Transfer
of Securities and the other rights, restrictions and obligations contained in
this Article 2 shall terminate and be of no further force and effect following
an Initial Public Offering.
2.9 Shares of Transferees. (a) Notwithstanding anything contained in
Sections 2.4 and 2.7 above, any Transfer to (i) a RFR Offeror pursuant to
Section 2.4 above (after application of the rights of first refusal set forth
therein), or (ii) another Party exercising its right of first refusal pursuant
to Section 2.4, or (iii) a Transferee pursuant to Section 2.4(h)(ii) or (iii),
or (iv) a Permitted Transferee pursuant to Section 2.7 above, shall be
conditioned in each such case upon any such Transferee first entering into a
joinder agreement (a "Joinder Agreement"), in the form attached hereto as
Exhibit A, pursuant to which such Transferee, and the Securities acquired, shall
become subject to the terms and conditions of this Agreement, including (c)
below.
(b) (i) Upon any Transfer and the execution of a Joinder Agreement,
each Transferee, and the Securities acquired by it, shall be subject to all of
the limitations and obligations set forth in Sections 2.2, 2.3, 2.4, 2.5 and 2.6
hereof, and, except as set forth in (ii) below, shall obtain the benefits and
rights of a Party hereunder, with respect to the Securities so acquired,
pursuant to Sections 2.4, 2.5, 2.7, Article 3 and the provisions of Article 4
hereof other than 4.2.
(ii) Transferees other than Permitted Transferees, Parties who
obtain Securities by operation of their rights of first refusal and Transferees
pursuant to 2.4(h)(ii)(B)
25
shall not obtain those benefits and rights set forth in Section 2.4, 2.5, 2.7
and Article 3 hereof.
(c) In the event that any Initial Party Transfers any of its
Securities hereunder, until notice thereof shall have been delivered by the
Initial Party to Holdings and all other Parties (i) any notices to be given to
such Transferees shall be deemed given if delivered to its Initial Party
Transferor, (ii) a notice from any such Transferee shall be deemed delivered
only if delivered by its Initial Party Transferor, (iii) all of the Parties
hereto shall be permitted to rely upon any notice given by an Initial Party as
containing the intentions of its Transferees, and (iv) where applicable such
Transferees shall share any rights contained in this Agreement as they shall
deem appropriate, and as reflected by any notices provided by their Initial
Party Transferor. If any Initial Party transfers all of its Securities it may
designate, by written notice to Holdings and all other Parties, a successor
Person to give and accept notices, on behalf of all Transferees of such Initial
Party, as set forth herein.
2.10 Transfers Not in Compliance Void. Any purported Transfer of
Securities owned by a Party that is not in compliance with this Agreement shall
be null and void and of no force and effect whatsoever. Accordingly, such
Transfer shall not be reflected on the books of Holdings and Holdings will not
recognize any such proposed transferee as the holder of any such Securities.
3. PREEMPTIVE RIGHTS
3.1 Participation Right. If, subsequent to the date hereof, Holdings shall
determine to issue (each such determination, a "Preemptive Issuance") any shares
of Common
26
Stock or Derivative Securities ("New Securities"), except as provided in Section
3.5 below each of OCM, Northstar and Hartnett (the "Preemptive Parties") shall
have the right (the "Participation Right") to purchase New Securities of the
same class and series issued in such Preemptive Issuance at the amount per New
Security paid in connection therewith and otherwise upon the same terms and
conditions as the New Securities being issued in the Preemptive Issuance.
3.2 Acquisitions. If the New Securities are being issued to a seller in
connection with an acquisition of stock or assets of another entity being
consummated by Holdings or any of its subsidiaries, the consideration to be paid
by the Preemptive Parties in connection with the exercise of their Participation
Rights shall be equal to the Fair Market Value of the New Securities determined
after giving effect to such acquisition.
3.3 Notices. In the case of a Preemptive Issuance, Holdings shall provide
each Preemptive Party with written notice identifying the New Securities, the
Person to whom the New Securities are being Issued and describing the terms and
amount of the Preemptive Issuance. A Preemptive Party may exercise its
Participation Right by written notice to Holdings within 15 days following
delivery of the notice described in the preceding sentence. The failure by any
Preemptive Party to provide such notice before the expiration of the 15-day
period shall be deemed to be an election by such Preemptive Party not to
exercise its Participation Right with respect to the Issuance. Each Preemptive
Party electing to exercise its rights under this Article 3 shall pay for the New
Securities being purchased within 10 days of delivery of the notice of exercise.
27
3.4 Number of New Securities Purchasable. The number of New Securities
each Preemptive Party may purchase under this Article 3 with respect to each
Preemptive Issuance shall be such number so that after exercise of the
Participation Right such Preemptive Party's Outstanding Shares will represent
the same percentage of the total Outstanding Shares following the Preemptive
Issuance as such Preemptive Party's Outstanding Shares represented of the total
Outstanding Shares prior thereto. The number of New Securities purchasable by a
Preemptive Party with respect to any Preemptive Issuance shall be reduced by any
New Securities or shares of Common Stock, Derivative Securities or other rights
received by such Preemptive Party pursuant to any other preemptive rights or
anti-dilution provisions, including, without limitation, the anti-dilution
provisions relating to the OCM Warrants contained in the Warrant Agreement,
dated concurrently herewith, between Holdings and OCM, pursuant to which the OCM
Warrants were issued.
3.5 Exceptions to Participation Right. The Participation Right provided
for in this Article 3 shall not apply to any New Securities being Issued in
connection with, and the term "Preemptive Issuance" shall not include an
Issuance in respect of, (i) the exercise, conversion or exchange of Derivative
Securities outstanding on the date hereof or issued or sold pursuant to any
Participation Right, (ii) a restructuring, including a cancellation or
modification of the terms of any, of the debt of Holdings or any of its
subsidiaries in which lenders or owners of debt securities of Holdings or its
subsidiaries receive equity interests in consideration of such restructuring or
otherwise, (iii) options or warrants to purchase up to 10% of the total
Outstanding Shares on the date hereof (as adjusted to allow for subdivisions and
combinations of Common Stock, stock dividends and other similar dilution events)
granted pursuant to
28
management option plans approved by the Board, (iv) other preemptive rights or
anti-dilution provisions in favor of any stockholder or warrantholder of
Holdings, (v) the issuance of Derivative Securities (or the subsequent exercise,
conversion or exchange in respect thereof) as a component of the issuance of
debt by Holdings or its subsidiaries where (A) such Derivative Securities, if
immediately exchanged, converted or exchanged, would represent less than 10% of
the Outstanding Shares, and (B) the requisite return to the purchaser of such
debt includes the value of such Derivative Securities or (vi) an Initial Public
Offering.
3.6 Termination on Initial Public Offering. The Participation Right
provided for in this Article 3 shall terminate and be of no further force and
effect following an Initial Public Offering.
4. REGISTRATION RIGHTS.
4.1 Piggyback Registration. If, at any time Holdings proposes to
file a registration statement or statements under the Act (together with
any registration statement filed pursuant to a demand made under Section
4.2, "Registration Statement") for the public sale of Common Stock for
cash (other than in connection with a merger or pursuant to Form S-4, Form
S-8 or comparable registration statement); it will give written notice by
registered mail, at least 30 days prior to the filing of each such
registration statement, to each Party of its intention to do so. If any
Party (all such Parties collectively with any Parties who have made a
demand pursuant to Section 4.2 if the context so requires, the
"Registering Parties") notifies Holdings within 10 business days after
delivery of any such notice of its desire to include any such Common Stock
(including Common Stock underlying Derivative Securities)
29
(all such shares, "Piggyback Shares") in such proposed Registration Statement,
Holdings shall afford such Registering Party the opportunity to have any
Piggyback Shares owned by such Party registered under such Registration
Statement; provided, however, that in the case of an underwritten offering, if
the managing underwriter notifies any Registering Party that the inclusion in
the registration statement of any portion of its Piggyback Shares would have an
adverse effect on such underwritten offering, then the managing underwriter may
limit the number of Piggyback Shares to be included in such registration
statement only to the extent necessary to avoid such adverse effect (an
"Underwriter's Cutback"). Such limit will apply pro rata among the Registering
Parties based upon the number of Piggyback Shares such Parties have requested to
be so included (provided that if the Registration Statement is being filed
pursuant to Section 4.2 below, then, as between the holders of Demand Securities
(as defined below) and the Securities held by other Parties, any Underwriter's
Cutback shall first be applied to such other Parties' Securities); and in the
event securities of Holdings held by any person or entity other than Holdings or
the Parties ("Third Party Securities") are to be included in such underwritten
offering, and the managing underwriter shall have determined to effect an
Underwriter's Cutback, then such limitation shall first be applied to the Third
Party Securities, and then to the Piggyback Shares.
Notwithstanding the provisions of this Section 4.1, Holdings shall have
the right at any time after it shall have given written notice pursuant to this
Section 4.1 (irrespective of whether a written request for inclusion of any such
securities shall have been made) to elect not to file any such proposed
registration statements or to withdraw the same after the filing but prior to
the effective date thereof.
30
4.2 Demand Registration.
(a) (i) At any time commencing on the earlier of (A) six months
following the effective date of an Initial Public Offering and (B) the third
anniversary of the date hereof, and expiring five years thereafter and provided,
that such Securities shall not at that time be eligible for sale pursuant to
Rule 144(k) under the Act, the holders of OCM Securities and Northstar
Securities shall have the right, subject to the next two sentences, on one
occasion (which right is in addition to the registration rights under Section
4.1 hereof), exercisable by written notice to Holdings (the "Demand Notice")
given by the holders of a majority (the "Demanding Holders") of the OCM
Securities and Northstar Securities then outstanding that have not been sold
pursuant to a Registration Statement or pursuant to Rule 144(k) and have had all
transfer restrictions contained thereon removed (the "Demand Securities"), to
have Holdings prepare and file with the Securities and Exchange Commission (the
"Commission") a registration statement ("Demand Registration Statement") and
such other documents, including a prospectus, as may be necessary in the opinion
of counsel for Holdings, and shall keep such registration statement effective
and the disclosure in such documents current, in order to comply with the
provisions of the Act, so as to permit a public offering and sale of the Demand
Securities by the holders thereof for nine consecutive months.
(ii) A registration requested pursuant to this Section 4.2 shall not be
deemed to have been effected (and thereby the right to make a demand not used)
(A) unless a Registration Statement with respect thereto has become effective,
provided that a registration which does not become effective after Holdings has
filed a Registration Statement with respect thereto
31
solely by reason of the refusal to proceed of the holders (other than a refusal
to proceed based upon the advice of counsel relating to a matter with respect to
Holdings) shall be deemed to have been effected by Holdings at the request of
such holders unless the holders of Demand Securities shall have elected to pay
all expenses referred to in Section 4.3(b) in connection with such registration,
(B) if, after it has become effective, such registration becomes subject to any
stop order, injunction or other order or requirement of the Commission or other
governmental agency or court for any reason and such order, injunction or
requirement is not promptly withdrawn or lifted, or (C) the conditions to
closing specified in the purchase agreement or underwriting agreement entered
into in connection with such registration are not satisfied, other than by
reason of some act or omission by such holders.
(b) Holdings shall have the right, at its option, following receipt
of the demand referred to in Section 4.2(a) above, in lieu of filing a
registration statement referred to in such demand, to undertake the filing of a
registration statement under the Act with the Commission for the sale by
Holdings of securities of Holdings, in which case, the Parties (including OCM
and Northstar) shall be permitted to exercise their rights under Section 4.1
above. Should Holdings exercise its rights under this Section 4.2(b), the rights
of the Demanding Holders to make a demand under Section 4.2(a) above on one
occasion shall not be deemed to have been exercised, and such parties shall
retain such right subject to the limitations contained therein.
(c) In Holdings' discretion, it may include a sale of shares or
shares owned by others or an issuance of shares by Holdings in a registration
pursuant to this Section 4.2. In the event of an Underwriter's Cutback in
connection with a registration pursuant to this
32
Section 4.2, such Underwriter's Cutback shall first be applied in respect of the
Piggyback Shares, then in respect of the shares to be included by Holdings,
pursuant to this Section 4.2(c) and lastly in respect of the Demand Securities.
4.3 Covenants With Respect to Registration. In connection with any
registration under Section 4.1 or 4.2 hereof, as applicable, Holdings covenants
and agrees as follows:
(a) Holdings shall prepare and use commercially reasonable efforts
to, not later than 60 days after (or if the 60th day is not a business day, the
first business day thereafter) of delivery of any demand therefor, to cause such
Demand Registration Statement to become effective under the Act within 150 days
(or if the 150th day is not a business day, the first business day thereafter)
after demand therefor and shall keep the Demand Registration Statement effective
for not less than nine months after the date on which notice of the
effectiveness thereof is received (such period being called the "Demand
Registration Period"), and shall furnish holders of Demand Securities such
number of prospectuses as shall reasonably be requested; provided, however, that
Holdings may, at any time, delay the filing or delay or suspend the
effectiveness of such Demand Registration Statement or, without suspending such
effectiveness, instruct Demanding Holders not to sell any securities included in
such demand registration, (i) if Holdings shall have determined that Holdings
would be required to disclose any actions taken or proposed to be taken by
Holdings in good faith and for valid business reasons, including without
limitation, the acquisition or divestiture of assets, which disclosure would
have a material adverse effect on Holdings or on such actions, or (ii) if
required by law, to update the prospectus relating to any such registration to
include updated financial statements or other information (a "Suspension
Period"), by providing such
33
Demanding Holders with written notice of such Suspension Period and the reasons
therefor; and provided, further, that the Suspension Periods, in the aggregate,
do not exceed 90 days. Holdings shall provide such notice as soon as practicable
and in any event prior to the commencement of such a Suspension Period. In the
event of a Suspension Period, the nine-month effective period during which a
demand registration is to remain effective pursuant to Section 4.2(a) shall be
tolled until the end of any such Suspension Period.
(b) Holdings shall pay all costs (including fees and expenses of one
counsel to the Registering Parties, but excluding any underwriting or selling
commissions or discounts or other charges of any broker-dealer acting on behalf
of any holder of Demand Securities), fees and expenses in connection with all
registration statements filed pursuant to Sections 4.1 and 4.2 hereof and offers
and sales pursuant thereto including, without limitation, Holdings' legal and
accounting fees, printing expenses, blue sky fees and expenses, registration
fees, filing fees and listing fees.
(c) In connection with any registration contemplated by Section 4.1
or 4.2 hereof, the following provisions shall apply:
(i) Holdings shall (A) furnish to the Registering Parties,
prior to the filing of a Registration Statement with the Commission, a
copy of the Registration Statement and each amendment thereto (including
any incorporated documents) and each supplement, if any, to the prospectus
included therein and any document that is filed after the filing of the
Registration Statement and that is incorporated or would be deemed
incorporated by reference therein, and (B) include the names of the
34
Registering Parties who propose to sell securities pursuant to the
Registration Statement as selling security holders.
(ii) Holdings shall promptly give written notice to each
Registering Party:
(A) when the Registration Statement or any amendment
thereto has been filed with the Commission and when the
Registration Statement or any post-effective amendment thereto
has become effective;
(B) of any request by the Commission or other
governmental authority for amendments or supplements to the
Registration Statement or the prospectus included therein or
for additional information;
(C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose;
(D) of the receipt by Holdings or its legal counsel of
any notification with respect to the suspension of the
qualification of the Piggyback Shares or Demand Securities (as
applicable, the "Registered Securities") for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(E) of the happening of any event that requires Holdings
to make changes in the Registration Statement or the
prospectus in order that the Registration Statement or the
prospectus does not contain an
35
untrue statement of a material fact nor omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading or of the
commencement of any Suspension Period.
(iii) Holdings shall make every reasonable effort to prevent
the issuance of and obtain the withdrawal at the earliest possible time of any
order suspending the effectiveness of the Registration Statement or of the
qualification (or exemption therefrom) of any of the Piggyback Shares or Demand
Securities for sale in any jurisdiction.
(iv) Holdings shall furnish to each Registering Party, without
charge, at least one copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, and, if the
Registering Party so requests in writing, all exhibits thereto (including those,
if any, incorporated by reference).
(v) Holdings shall deliver to each Registering Party, without
charge, as many copies of the prospectus (including each preliminary prospectus)
included in the Registration Statement and any amendment or supplement thereto
as such person may reasonably request. Holdings consents, subject to the
provisions of this Agreement, to the use of the prospectus or any amendment or
supplement thereto included in the Registration Statement by each of the
Registering Parties in connection with the offering and sale of the Registered
Securities covered by such prospectus or any such amendment or supplement.
(vi) Prior to any public offering of the Registered
Securities, pursuant to any Registration Statement, Holdings shall register or
qualify or cooperate with the Registering Parties and their respective counsel
in connection with the registration or qualification of the Registered
Securities covered thereby for offer and sale under the
36
securities or "blue sky" laws of such states of the United States as any
Registering Party reasonably requests in writing and do any and all other acts
or things necessary or advisable to enable the offer and sale in such
jurisdictions of the Registered Securities covered by such Registration
Statement; provided, however, that Holdings shall not be required to (i) qualify
generally to do business in any jurisdiction where it is not then so qualified
or (ii) take any action which would subject it to general service of process or
to taxation in any jurisdiction where it is not then so subject.
(vii) Holdings shall cooperate with the Registering Parties to
facilitate the timely preparation and delivery of certificates representing the
Registered Securities to be sold pursuant to any Registration Statement free of
any restrictive legends and in such denominations and registered in such names
as the Registering Parties may request (including being eligible for deposit
with The Depository Trust Company) a reasonable period of time prior to sales of
the Registered Securities pursuant to such Registration Statement.
(viii) Upon the occurrence of any event contemplated by
paragraphs (B) through (E) of Section 4.3(c)(ii) above during the period for
which Holdings is required to maintain an effective Registration Statement,
Holdings shall promptly prepare and file a post-effective amendment to the
Registration Statement or a supplement to the related prospectus and any other
required document so that, as thereafter delivered to the Registering Parties or
purchasers of Registered Securities covered by such Registration Statement, the
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If Holdings notifies the
37
Registering Parties in accordance with paragraphs (B) through (E) of Section
4.3(c)(ii) above to suspend the use of the prospectus until the requisite
changes to the prospectus have been made, then the Registering Parties shall
suspend use of such prospectus, and the period of effectiveness of the
Registration Statement provided for in Section 4.2(a) above shall each be
extended by the number of days from and including the date of the giving of such
notice to and including the date when the Registering Parties shall have
received such amended or supplemented prospectus pursuant to this paragraph.
(ix) Not later than the effective date of the applicable
Registration Statement, Holdings will obtain one CUSIP number for all of the
Registered Securities covered by such Registration Statement.
(x) Holdings may require each Registering Party to furnish to
Holdings such information regarding the Registering Party and the distribution
of the Registered Securities as Holdings may from time to time reasonably
require for inclusion in the Registration Statement, and Holdings may exclude
from such registration the Registered Securities of any Registering Party that
fails to furnish such information within a reasonable time after receiving such
request.
(xi) In the case of any Demand Registration Statement,
Holdings shall (i) make reasonably available for inspection by the Registering
Parties, any underwriter participating in any disposition pursuant to the Demand
Registration Statement and any attorney, accountant or other agent retained by
the Registering Parties or any such underwriter all relevant financial and other
records, pertinent corporate documents and properties of Holdings and its
subsidiaries and (ii) cause Holdings' and its subsidiaries, officers, directors,
38
employees, accountants and auditors to supply all relevant information
reasonably requested by the Registering Parties or any such underwriter,
attorney, accountant or agent in connection with the Demand Registration
Statement, in each case as shall be reasonably necessary, in the judgment of the
Registering Parties or any such underwriter, attorney, accountant or agent
referred to in this paragraph, to conduct a reasonable investigation within the
meaning of Section 11 of the Act; provided, however, that the foregoing
inspection and information gathering shall be coordinated on behalf of the
Registering Parties by one counsel designated by and on behalf of all
Registering Parties and one counsel designated by and on behalf of the
underwriters.
(xii) In the case of any Demand Registration Statement,
Holdings, if requested by holders of a majority of the Demand Securities, shall
cause (i) its counsel to deliver an opinion and updates thereof relating to the
Demand Securities to be registered in customary form addressed to holders of the
Demand Securities and the managing underwriters, if any, thereof and dated, in
the case of the initial opinion, the effective date of such Demand Registration
Statement (it being agreed that the matters to be covered by such opinion shall
include, without limitation, the due incorporation and good standing of Holdings
and its subsidiaries; the due authorization, execution, authentication and
issuance, and the validity and enforceability, of the applicable Demand
Securities; the absence of governmental approvals required to be obtained in
connection with the Demand Registration Statement or the offering and sale of
the applicable Demand Securities; the compliance as to form of such Demand
Registration Statement and any documents incorporated by reference therein with
the requirements of the Securities Act; and, as of the date of the opinion and
as of the effective
39
date of the Demand Registration Statement or most recent post effective
amendment thereto, as the case may be, the absence from such Demand Registration
Statement and the prospectus included therein, as then amended or supplemented,
and from any documents incorporated by reference therein of an untrue statement
of a material fact or the omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading (in
the case of any such documents, in the light of the circumstances existing at
the time that such documents were filed with the Commission under the Exchange
Act)); (ii) its officers to execute and deliver all customary documents and
certificates and updates thereof reasonably requested by any underwriters of the
applicable Demand Securities and (including, without limitation, an underwriting
agreement in form and substance as is customary in underwritten public
offerings), and (iii) its independent public accountants and the independent
public accountants with respect to any business acquired, to the extent
financial information with respect thereto is included or incorporated by
reference in the Demand Registration Statement to provide to the holders of the
Demand Securities and any underwriter therefor a comfort letter in customary
form and covering matters of the type customarily covered in comfort letters in
connection with primary underwritten offerings, subject to receipt of
appropriate documentation as contemplated, and only if permitted, by Statement
of Auditing Standards No. 72.
(xiii) Holdings shall comply with all applicable rules and
regulations of the Commission and make generally available to its security
holders earnings statements satisfying the provisions of Section 11(a) of the
Act and Rule 158 thereunder (or any similar rule promulgated under the Act) no
later than 45 days after the end of any 12-month period
40
(or 90 days after the end of any 12-month period if such period is a fiscal
year) (or in each case within such extended period of time as may be permitted
by the Commission for filing the applicable report with the Commission) (i)
commencing at the end of any fiscal quarter in which Demand Securities are sold
to underwriters in a firm commitment or best efforts underwritten offering and
(ii) if not sold to underwriters in such an offering, commencing on the first
day of the first fiscal quarter of Holdings after the effective date of a
Registration Statement, which statements shall cover said 12-month period.
(xiv) Holdings shall cooperate with each seller of Demand
Securities covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Demand Securities and their respective
counsel in connection with any filings required to be made with the NASD.
(xv) Holdings shall use commercially reasonable efforts to
take all other steps necessary to effect the registration of the Registered
Securities covered by a Registration Statement contemplated hereby.
(d) Holdings agrees to indemnify and hold harmless each Registering
Party, the officers, directors, partners and fiduciaries of each Registering
Party and each person, if any, who controls such Party within the meaning of the
Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the officers, directors, partners and fiduciaries of each such controlling
person (collectively the "Indemnified Parties") from and against any losses,
claims, damages or liabilities, joint or several, or any actions in respect
thereof (including, but not limited to, any losses, claims, damages, liabilities
or actions relating to purchases and sales of the Registered Securities) to
which each Indemnified Party may
41
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages, liabilities or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in a Registration Statement or prospectus or in any amendment or
supplement thereto or in any preliminary prospectus relating to a Registration
Statement, or arise out of, or are based upon, 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, and shall reimburse, as incurred,
each Indemnified Party for any legal or other expenses reasonably incurred by it
in connection with investigating or defending any such loss, claim, damage,
liability or action in respect thereof; provided, however, that (i) Holdings
shall not be liable in any such case to the extent that such loss, claim,
damage, liability or action arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Registration Statement in
reliance upon and in conformity with written information pertaining to such
Registering Party and furnished to Holdings by or on behalf of such Registering
Party specifically for inclusion therein; (ii) with respect to any untrue
statement or omission or alleged untrue statement or omission made in any
prospectus relating to a Registration Statement, the indemnity agreement
contained in this subsection (d) shall not inure to the benefit of any
Registering Party from whom the person asserting any such losses, claims,
damages or liabilities purchased the Registered Securities concerned, to the
extent that a prospectus relating to such Registered Securities was required to
be delivered by such Registering Party under the Securities Act in connection
with such purchase and any
42
such loss, claim, damage or liability of such Registering Party results from the
fact that there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Registered Securities to such person, a copy of
the final prospectus, as amended or supplemented, if Holdings had previously
furnished copies thereof to such Registering Party and (iii) the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any underwriter or Registering Party from whom the person
asserting any such loss, claim, damage or liability purchased the Registered
Securities if a copy of the prospectus included in the applicable Registration
Statement (as then amended or supplemented, if such amendment or supplement was
furnished by Holdings) was not sent or given by or on behalf of any underwriter
or Registering Party to such person, if such is required by law, at or prior to
the written confirmation of the sale of such Registered Securities to such
person and if the prospectus (as so amended or supplemented) would have cured
the defect giving rise to such loss, claim, damage or liability; provided
further, however, that this indemnity agreement will be in addition to any
liability which Holdings may otherwise have to such Indemnified Party. Holdings
shall also indemnify underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution (in each
case as described in a Registration Statement), their officers and directors and
each person who controls such persons within the meaning of the Securities Act
or the Exchange Act to the same extent as provided above with respect to the
indemnification of the Registering Parties if requested by such holders.
(e) Each Registering Party, severally and not jointly, will
indemnify and hold harmless Holdings and each person, if any, who controls
Holdings within the meaning of
43
the Securities Act or the Exchange Act from and against any losses, claims,
damages, liabilities or actions in respect thereof to which Holdings or any such
controlling person may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement or prospectus or in any
amendment or supplement thereto or in any preliminary prospectus relating to a
Registration, or arise out of or are based upon the omission or alleged omission
to state therein a material fact necessary to make the statements therein not
misleading (in the case of the prospectus or preliminary prospectus, in light of
the circumstances under which they were made), but in each case only to the
extent that the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information pertaining to such Registering Party and furnished to Holdings by or
on behalf of such Registering Party specifically for inclusion therein; and,
subject to the limitation set forth immediately preceding this clause, shall
reimburse, as incurred, Holdings for any legal or other expenses reasonably
incurred by Holdings or any such controlling person in connection with
investigating or defending any loss, claim, damage, liability or action in
respect thereof. This indemnity agreement will be in addition to any liability
which such Registering Party may otherwise have to Holdings or any of its
controlling persons.
(f) Promptly after receipt by an Indemnified Party under Section
4.3(d) or (e) of notice of the commencement of any action or proceeding
(including a governmental investigation), such Indemnified Party will, if a
claim in respect thereof is to be made against
44
any person (the "Indemnifying Party") under Section 4.3(d) or (e), notify the
Indemnifying Party of the commencement thereof; but the omission so to notify
the Indemnifying Party will not, in any event, relieve the Indemnifying Party
from any obligations to any Indemnified Party other than the indemnification
obligation provided in paragraph (d) or (e) above unless and to the extent that
the Indemnifying Party has been prejudiced in any material respect by such
failure. In case any such action is brought against any Indemnified Party, and
it notifies the Indemnifying Party of the commencement thereof, the Indemnifying
Party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other Indemnifying Party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such Indemnified
Party (who shall not, except with the consent of the Indemnified Party, be
counsel to the Indemnifying 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 under Section
4.3(d) or (e) for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such Indemnified Party in connection
with the defense thereof. Notwithstanding the foregoing, an Indemnified Party
shall have the right to employ separate counsel in any such proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party or parties unless (1) the
Indemnifying Party has agreed to pay such fees and expenses; (2) the
Indemnifying Party shall have failed promptly after notice to assume the defense
of such proceeding or shall have failed to employ counsel reasonably
satisfactory to such Indemnified Party; or (3) the named parties to any such
proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying
45
Party or any of its affiliates or controlling persons, and such Indemnified
Party shall have been advised in writing by counsel that either (x) a conflict
of interest may exist if such counsel represents such Indemnified Party and the
Indemnifying Party (or such affiliate or controlling person) or (y) there may be
one or more legal defenses available to such Indemnified Party that are
different from or in addition to those available to the Indemnifying Party or
such affiliate or controlling person (in which case, if such Indemnified Party
notifies the Indemnifying Parties in writing that it elects to employ separate
counsel at the expense of the Indemnifying Parties, the Indemnifying Parties
shall not have the right to assume the defense thereof and the fees and expenses
of such counsel shall be at the expense of the Indemnifying Party; it being
understood, however, that the Indemnifying Party shall not, in connection with
any one such proceeding or separate but substantially similar or related
proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for all such Indemnifying Parties. No Indemnifying Party shall be liable
for any settlement of any such proceeding effected without its written consent,
but if settled with its written consent, or if there be a final unappealable
judgment for the plaintiff in any such proceeding, each Indemnifying Party
jointly and severally agrees, subject to the exceptions and limitations set
forth above, to indemnify and hold harmless each indemnified party from and
against any and all losses, claims, damages or liabilities by reason of such
settlement or judgment. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending or
threatened action in respect of which any Indemnified Party is or could have
been a party
46
sand indemnity could have been sought hereunder by such Indemnified Party unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on any claims that are the subject matter of such action.
(g) If the indemnification provided for in Section 4.3(d) or (e) is
unavailable or insufficient to hold harmless an Indemnified Party thereunder,
then each Indemnifying Party shall contribute to the amount paid or payable by
such Indemnified Party as a result of the losses, claims, damages, liabilities
or actions in respect thereof referred to in Sections 4.3(d) and (e) above in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party or Parties on the one hand and the Indemnified Party on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by Holdings,
on the one hand, or such Registering Party or such other indemnified person, as
the case may be, on the other, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid by an Indemnified Party as a result of the losses,
claims, damages, liabilities or actions referred to in the first sentence of
this subsection (g) shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any action or claim which is the subject of this Section 4.3(g),
the Registering Party shall not be required to contribute any amount in excess
of the amount by which the net proceeds received by such
47
holders from the sale of Registered Securities pursuant to a Registration
Statement exceeds the amount of damages which such holders have otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The parties agree that it would not be just and equitable if
contribution pursuant to this section were determined by pro rata allocation or
by any other method that does not take account of the equitable considerations
referred to above. For purposes of this subparagraph (g), each person, if any,
who controls such Indemnified Party within the meaning of the Securities Act or
the Exchange Act shall have the same rights to contribution as such Indemnified
Party and each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act shall have the same rights to
contribution as the Company.
(h) The agreements contained in Sections 4.3(d) through (g) shall
survive the sale of the Registered Securities pursuant to a Registration
Statement and shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement or any investigation made by or on
behalf of any indemnified party.
4.4 Extension of Exercise Period. Provided the holders of Demand
Securities shall have timely furnished Holdings with all information and taken
such other actions as may be required by Holdings in order to effect such
registration, if Holdings shall willfully fail to comply with the provisions of
Section 4.3(a), Holdings shall, in addition to any other
48
equitable or other relief available to the holders of Demand Securities, extend
the Exercise Period by such number of days as shall equal the delay caused by
Holdings' failure.
4.5 Definition of Common Stock. For the purposes of this Article 4, the
term "common stock" shall include any securities issued or issuable with respect
to such securities by any of stock dividend or stock split or in connection with
a combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise.
4.6 Designation of Underwriters. In connection with any underwritten
public offering pursuant to a Demand Registration, Holdings shall select the
managing underwriter (with the consent of the holders of a majority of the
Demand Securities, such consent not to be unreasonably withheld), and the
holders of a majority of the Demand Securities shall select the co-manager if
one is desired by them (with the consent of Holdings, such consent not to be
unreasonably withheld).
5. SPECIAL OCM PRIVILEGES
5.1 OCM Designee.
(a) Prior to an Initial Public Offering and so long as OCM and its
Permitted Transferees own more than one-third of the Outstanding Shares it owns
on the date hereof (as adjusted to allow for subdivisions and combinations of
Common Stock, stock dividends and other similar dilution events), the other
Parties shall, at any annual meeting of stockholders of Holdings or any special
meeting of stockholders of Holdings called for the purpose of electing
directors, vote their Shares for the election of (i) one member of the
49
Board designated by OCM, and (ii) if the Board consists of more than seven
members, for one additional member designated by OCM.
(b) Following an Initial Public Offering and, so long as OCM and its
Permitted Transferees continue to own not less than 10% of the Outstanding
Shares, the other Parties shall, at any annual meeting of stockholders of
Holdings or any special meeting of stockholders of Holdings called for the
purpose of electing directors, vote their Shares for the election of one member
of the Board designated by OCM.
(c) Upon the resignation or removal of any member of the Board
designated by OCM, if the conditions specified in Section 5.1(a) or 5.1(b), as
applicable, are satisfied, the other Parties shall vote their Shares for such
replacement director as shall be designated by OCM. No director designated by
OCM may be removed from the Board without the vote or consent of OCM absent
fraud or willful misconduct by such individual.
5.2 Compensation of Designated Director(s). Any member of the Board
designated by OCM shall receive the same fee, reimbursement of expenses and
other compensation, if any, received by the other members of the Board who are
not affiliated with or members of management of Holdings or its subsidiaries.
5.3 Executive Committees. Until an Initial Public Offering, the Board
shall not act through any executive committee or similar body unless one OCM
Board representative is a member thereof.
5.4 RBC Board. Upon the request of OCM, OCM shall have all of the same
rights in respect of the Board of Directors of RBC as are described in Section
5.1 through 5.3 above as to the Board.
50
5.5 OCM Issues. Prior to an Initial Public Offering, and so long as OCM
and its Permitted Transferees own more than one-third of the Outstanding Shares
owned by OCM on the date hereof (as adjusted to allow for subdivisions and
combinations of Common Stock, stock dividends and other similar dilution
events), the approval of the director designated by OCM shall be required in
respect of any of the following matters:
(a) Any repeal, alteration, amendment, recision or other
modification to the Certificate of Incorporation or By-laws of the Corporation
if any such action would adversely affect the rights and entitlements of OCM as
set forth in this Agreement, Certificate of Incorporation or such By-laws.
(b) Any modification to the Tax Sharing Agreement, entered into as
of June 23, 1997, by and among Holdings, RBC, Industrial Tectonics Bearings
Corporation, RBC Linear Precision Products, Inc. and RBC Nice Bearings, Inc.
(c) Any transaction between Holdings or any of its Affiliates and
Hartnett other than pursuant to the Hartnett Employment Agreement which provides
material benefit to Hartnett and (i) is on terms less favorable to the
Corporation than could be available through independent Persons, or (ii)
involves the direct or indirect payment to Hartnett of more than $500,000.
(d) Any transaction described in Article Fourth B.(1)(c)(ii) of the
Certificate of Incorporation as in effect on the date hereof.
5.6 Delivery of Financial Information. Prior to an Initial Public
Offering, and so long as OCM and its Permitted Transferees own more than
one-third of the Outstanding Shares owned by OCM on the date hereof (as adjusted
to allow for subdivisions and
51
combinations of Common Stock, stock dividends and other similar dilution
events), upon the request of OCM, the Corporation shall provide to OCM monthly,
quarterly and annual financial statements, but only to the extent, and in such
form, as are normally prepared by the Corporation. The delivery of any such
financial statements shall not be deemed to constitute a representation by
Holdings respecting the accuracy of the information contained therein. Holdings
may condition the delivery thereof upon execution of a confidentiality agreement
in form reasonably acceptable to OCM.
6. TERMINATION; AMENDMENT; WAIVER
6.1 Termination; Amendment.
(a) This Agreement may be terminated and the terms hereof amended at
any time only by the execution of a written instrument signed on behalf of the
owners of 80% of the Outstanding Shares held by the Parties.
(b) In the event of the termination of this Agreement, this
Agreement shall forthwith become void and have no effect, without any liability
on the part of any party hereto or any of their directors, officers, partners or
stockholders.
6.2 Waiver. Any agreement on the part of any Party hereto as to any waiver
of any of its rights hereunder shall be valid only if set forth in an instrument
in writing signed on behalf of such Party.
52
7. MISCELLANEOUS
7.1 Notices.
(a) Any notice, request, instruction, or other communication to be
given hereunder by any party to another shall be in writing and shall be deemed
to have given if delivered by hand or sent by telecopier (transmission
confirmed), certified or registered mail (return receipt requested), postage
prepaid, or by overnight express service, addressed to the respective party or
parties at the following addresses:
If to Holdings: Roller Bearing Holding Company, Inc.
60 Round Hill Road
P.O. Box 430
Fairfield, Connecticut 06430-0430
Telecopier: 203-256-0775
Attention: Chief Executive Officer
with a copy (which shall
not constitute notice) to: McDermott, Will & Emery
50 Rockefeller Plaza
New York, New York 10020
Telecopier: 212-547-5444
Attention: C. David Goldman, Esq.
If to OCM: OCM Principal Opportunities Fund, L.P.,
550 South Hope Street
Los Angeles, California 90071
Telecopier: 213-694-1593
Attention: Stephen A. Kaplan
with a copy (which shall
not constitute notice) to: Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, California 90071
Telecopier: 213-687-5600
Attention: Jeffrey H. Cohen, Esq.
53
If to Northstar: Northstar Investment Management Corporation
Two Pickwick Plaza
Greenwich, Connecticut 06830-9847
Telecopier: 203-862-8603
Attention: Thomas Ole Dial and Jeffrey Aurigemma
with a copy (which shall
not constitute notice) to: Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, California 90071
Telecopier: 213-687-5600
Attention: Jeffrey H. Cohen, Esq.
If to any CSFB Party: c/o Credit Suisse First Boston
11 Madison Avenue
New York, New York 10010
Telecopier: 212-325-____
Attention: Transaction Advisory Group
and to
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Telecopier: 212-474-3700
Attention: Kris F. Heinzelman, Esq.
If to Hartnett: Dr. Michael J. Hartnett
c/o Roller Bearing Holding
Company, Inc.
60 Round Hill Road
P.O. Box 430
Fairfield, Connecticut 06430-0430
Telecopier: 203-256-0775
with a copy (which shall
not constitute notice) to: McDermott, Will & Emery
50 Rockefeller Plaza
New York, New York 10020
Telecopier: 212-547-5444
Attention: C. David Goldman, Esq.
54
or to such other address or addresses as any party may designate to the others
by like notice as set forth above. Any notice given hereunder shall be deemed
given and received on the date of hand delivery or transmission by telecopier,
or three days after mailing by certified or registered mail or one day after
delivery to an overnight express service for next day delivery, as the case may
be.
(b) For the purposes of this Agreement all of the CSFB Parties shall
be deemed to be a single Party, such that (i) any notices to be given to any
CSFB Party shall be deemed given if delivered to CSFB, (ii) a notice from any
CSFB Party shall be deemed delivered only if delivered by CSFB, (iii) all of the
Parties hereto other than the CSFB Parties shall be permitted to rely upon any
notice given by CSFB as containing the intentions of all of the CSFB Parties,
and (iv) the CSFB Parties shall share any rights contained in this Agreement as
they shall deem appropriate, and as reflected by any notices provided by CSFB.
7.2 Entire Agreement. This Agreement contains the entire agreement between
the parties with respect to the subject matter contemplated hereby.
7.3 Captions. The captions of the various Articles and Sections of this
Agreement have been inserted only for convenience of reference and shall not be
deemed to modify, explain, enlarge or restrict any provision of this Agreement
or affect the construction hereof.
7.4 No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the parties hereto and their respective heirs, personal
representatives, legal representatives, and successors, any rights or remedies
under or by reason of this Agreement.
55
7.5 Remedies Cumulative. No remedy made available by any of the provisions
of this Agreement is intended to be exclusive of any other remedy, and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity.
7.6 Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SAID STATE WITHOUT GIVING EFFECT TO THE RULES OF
SAID STATE GOVERNING THE CONFLICTS OF LAWS.
(b) The Parties hereby agree that any action, proceeding or claim
against it arising out of, or relating in any way to, this Agreement may be
brought and enforced in the courts of the State of New York or of the United
States of America for the Southern District of New York, and irrevocably submits
to such jurisdiction for such purpose. The Parties hereby irrevocably waive any
objection to such exclusive jurisdiction or inconvenient forum. Any such process
or summons to be served upon any of the Parties (at the option of the party
bringing such action, proceeding or claim) may be served by transmitting a copy
thereof, by registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in Section 7.1 hereof. Such
mailing shall be deemed personal service and shall be legal and binding upon the
Party so served in any action, proceeding or claim. Nothing herein shall affect
the right of any party hereto to serve process in any other manner
56
permitted by law or to commence legal proceedings or otherwise proceed against
any other party in any other jurisdiction.
7.7 Assignment. Except as otherwise set forth in this Agreement, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the Parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
7.8 No Inconsistent Agreements. Holdings will not, on or after the date of
this Agreement, enter into any agreement that conflicts with the provisions
hereof. Holdings has not previously entered into any agreement (that is still in
effect) granting any registration rights with respect to its securities to any
Person other than in connection with the offering of the Debentures.
7.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered one and the same agreement and
shall become effective when a counterpart has been signed by each of the parties
and delivered to the other party, it being understood that all parties need not
sign the same counterpart.
57
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders'
Agreement on this 23rd day of June, 1997.
ROLLER BEARING HOLDING COMPANY, INC.
By: _________________________________________
Name:
Title:
OCM PRINCIPAL OPPORTUNITIES FUND, L.P.
By: Oaktree Capital Management, LLC,
its General Partner
By: ___________________________________
Name:
Title:
By: ___________________________________
Name:
Title:
NORTHSTAR INVESTMENT MANAGEMENT
CORPORATION
By: _________________________________________
Name:
Title:
_____________________________________________
Michael J. Hartnett
58
__________________________________
Mark Kennelley
__________________________________
Mark Patterson
__________________________________
Tim O'Hara
__________________________________
Richard Gallant
__________________________________
Rod Rivera
__________________________________
Vikram Limaye
__________________________________
Michael Maechling
59
MERBAN EQUITY
By: _________________________
Name:
Title:
60