Exhibit 10.12
DRESSER-RAND GROUP INC.
AMENDED AND RESTATED
STOCKHOLDER AGREEMENT
This Amended and Restated Stockholder Agreement (this "Agreement") is made
and entered into as of July 15, 2005, by and among Dresser-Rand Group Inc., a
Delaware corporation (the "Company"), D-R Interholding, LLC, a Delaware limited
liability company, Dresser-Rand Holdings, LLC (formerly known as First Reserve
Acquisitions LLC), a Delaware limited liability company ("First Reserve"), any
other stockholder who may from time to time be made party to this Agreement
pursuant to Section 7.10 and designated an "Investor" by the Company (any such
stockholders, together with First Reserve, the "Investors"), and any employees
or consultants of the Company who are or hereafter may from time to time be made
party to this Agreement pursuant to Section 7.10 and designated as a "Management
Stockholder" by the Company (the "Management Stockholders"). The Management
Stockholders and the Investors are collectively referred to as the
"Stockholders".
R E C I T A L S
WHEREAS, the Company and its stockholders entered into a Stockholders
Agreement dated as of October 4, 2004 (the "Original Stockholders Agreement"),
and, in contemplation of the consummation of the Company's initial public
offering, the Stockholders wish to set forth certain understandings regarding
the relationship among the Company and the Stockholders and amend and restate
the Original Stockholders Agreement effective as of the consummation of such
initial public offering.
NOW, THEREFORE, in consideration of the foregoing, the mutual promises
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree to
amend and restate the Original Stockholders Agreement as follows:
1. MANAGEMENT RIGHTS.
1.1 Election of Directors.
(a) On the date of the consummation of the Company's initial public
offering, the Board of Directors of the Company (the "Board") shall be comprised
of six directors who shall be natural persons (each, a "Director"). The Board
may adjust from time to time by resolution the number of Directors comprising
the Board, including any expansion necessary to include such additional
"independent" Directors as may be required by the rules of an exchange on which
the shares of the Company's capital stock are traded, or as otherwise required
by federal or state securities laws.
(b) For so long as First Reserve or an FRC Affiliate (as defined in
Section 1.3(a)(v)) directly or indirectly owns at least 5% of the outstanding
shares of the
Company's capital stock (the "Common Stock"), (i) First Reserve (or the
applicable FRC Affiliate) shall be entitled to nominate each of the individuals
to serve on the Board (other than any "independent" Directors), and each
Stockholder agrees to vote all shares of Common Stock held by such Stockholder
in favor of such nominee(s) being elected to the Board and (ii) each
"independent" Director nominated by the Board shall be reasonably acceptable to
First Reserve (or the applicable FRC Affiliate).
1.2 Restricted Actions. Notwithstanding anything in this Agreement to the
contrary, for so long as First Reserve or an FRC Affiliate directly or
indirectly owns at least 20% of the outstanding shares of Common Stock, the
Company shall not, directly or indirectly, and shall cause each of its
"significant subsidiaries", as such term is defined in Rule 1-02(w) of
Regulation S-X under the Exchange Act (each, a "Material Subsidiary"), not to,
directly or indirectly, take any of the following actions (each a "Restricted
Action") unless, in addition to any other vote or consent of the Board or the
stockholders of the Company required by law or the Certificate of Incorporation
or Bylaws of the Company that may be required to effect such Restricted Action,
a majority of the Board shall have approved such Restricted Action (which for
this purpose shall require approval by at least one of the Directors nominated
by First Reserve who is also an officer of First Reserve Corporation). A
"Restricted Action" shall mean any of the following events:
(a) any acquisition or sale of assets (other than acquisitions or
sales of inventory in the ordinary course of business) involving expenditures,
proceeds, or assumption of debt in excess of one percent of sales during any
twelve (12)-month period (aggregating any such transactions on a rolling basis
during such period), or acquisition of another business (either by merger,
combination or asset or equity purchase) or any equity of another entity;
(b) any merger, consolidation, sale of all or substantially all of
the assets, liquidation (partial or complete, or dissolution of the Company or a
Material Subsidiary;
(c) any declaration of dividends;
(d) the issuance of additional Common Stock or any other equity
interest in the Company or any Material Subsidiary or the issuance of any right
to acquire any other equity interest in (or instrument convertible into equity
interests in) the Company or any Material Subsidiary, other than pursuant to a
stock option plan or stock option agreement approved by the Company's Board; and
(e) any amendment to the Certificate of Incorporation or comparable
organizational documents of any Material Subsidiary.
1.3 Fiduciary Duties. For purposes of clarification, each Stockholder and
Optionholder (as defined in Section 7.10) agrees that, without limiting the
fiduciary duties of members of the Board appointed by First Reserve to act in
the best interests of the Company, First Reserve shall have no implied or
express duty to the Company or to any other Stockholder or Optionholder with
respect to its decision to approve or not
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approve any Restricted Action as a result of this Agreement, and may act in its
role as a stockholder accordingly. Each Stockholder and Optionholder further
acknowledges that the scope of the duty of loyalty imposed under the Delaware
General Corporation Law on First Reserve and its designees shall be defined and
limited as follows:
(a) Certain Potential Conflicts. Each Stockholder and Optionholder
acknowledges that:
(i) Any FRC Affiliate (as defined below) may engage in
material business transactions with the Company;
(ii) directors, officers, and/or employees of any FRC
Affiliate may serve as directors, officers, and/or employees of the
Company or its subsidiaries;
(iii) one or more FRC Affiliates may now or in the future
engage in the same or similar lines of business or other business
activities as those in which the Company or its subsidiaries may engage;
and
(iv) one or more FRC Affiliates may exercise a controlling
influence over certain of the business, policy and strategic decisions of
the Company and its subsidiaries.
(v) For purposes of this Agreement,
(A) the term "FRC Affiliate" means each of First
Reserve; First Reserve Corporation ("FRC"); First Reserve Fund
IX, L.P.; First Reserve Fund X, L.P.; any other investment
funds managed or advised, directly or indirectly, by FRC
(including funds formed after the date hereof), and any
subsidiaries, affiliates, or direct or indirect general
partners of any of the foregoing entities.
(B) the term "affiliate" means with respect to any
person, any other person directly or indirectly controlling,
controlled by or under common control with such person. For
purposes of the foregoing definition, the term "controls" "is
controlled by" or "is under common control with" means the
power to direct or cause the direction of the management and
policies of a person or entity, whether through the ownership
of voting securities, by contract or otherwise.
(b) Limitation of Liability. To the fullest extent permitted by law,
neither any FRC Affiliate nor any director, officer or employee of any FRC
Affiliate who may serve as an officer, director and/or employee of the Company
and/or its subsidiaries shall be liable to the Company or its subsidiaries:
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(i) by reason of any business decision or transaction
undertaken by any FRC Affiliate which may be adverse to the interests of
the Company or its subsidiaries;
(ii) by reason of any activity undertaken by any FRC Affiliate
or by any other person in which any FRC Affiliate may have an investment
or other financial interest which is in competition with the Company or
its subsidiaries; or
(iii) without limiting the effect of Section 144 of the
Delaware General Corporation Law, by reason of any transaction with any
FRC Affiliate, or any transaction in which any FRC Affiliate shall have a
financial interest, unless the party seeking to assert such liability
shall bear the burden of proving, by clear and convincing evidence, that
such transaction was not fair to the Company at the time it was authorized
by the Board or a committee thereof; and
(c) Competing Activities. Except as otherwise expressly provided in
a written agreement between the Company and any FRC Affiliate:
(i) any FRC Affiliate and its officers, directors, agents,
shareholders, members, partners, affiliates and subsidiaries may engage or
invest in, independently or with others, any business activity of any type
or description, including without limitation those that might be the same
as or similar to the Company's business. Without limiting the foregoing,
the Stockholders acknowledge that FRC Affiliates (including First Reserve)
may from time to time compete, directly or indirectly, with the Company,
and that any such FRC Affiliate may in its sole discretion pursue such
competing business without disclosure of such competition to the Company);
(ii) none of the Company, any subsidiary of the Company nor
any other stockholder of the Company shall have any right in or to such
business activities or ventures or to receive or share in any income or
proceeds derived therefrom; and
(iii) to the extent required by applicable law in order to
effectuate the purpose of this provision, the Company shall have no
interest or expectancy, and specifically renounces any interest or
expectancy, in any such business activities or ventures.
(d) Corporate Opportunities.
(i) A "Company Opportunity" shall mean an investment or
business opportunity or prospective economic advantage in which the
Company or its subsidiaries or any Investor or Management Stockholder
could, but for the provisions of this Agreement, have an interest or
expectancy. Except as set forth below in Section 1.3(d)(ii), (A) if any
FRC Affiliate or any of its officers, directors, agents, stockholders,
members, partners, affiliates or subsidiaries acquires knowledge of, or an
interest or an expectancy in, a Company Opportunity, none of the Company,
its subsidiaries, nor any Investor or Management
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Stockholder shall have any interest or expectancy, and the Company, each
Investor and each Management Stockholder hereby renounces any interest or
expectancy in such Company Opportunity; and (B) no such FRC Affiliate nor
any of its officers, directors, agents, stockholders, members, partners,
affiliates or subsidiaries shall (1) have a duty to communicate or present
such a Company Opportunity to the Company or its subsidiaries or (2) be
deemed to have breached any fiduciary duty as a stockholder, director, or
officer of the Company or otherwise by pursuing or acquiring such Company
Opportunity for itself or not communicating information regarding such
Company Opportunity to the Company.
(ii) Notwithstanding the provisions of clause 1.3(d)(i)(A),
the Company does not renounce any interest or expectancy it may have in
any Company Opportunity that is or was (A) offered to any person who is
both (1) an officer or director of any FRC Affiliate and (2) an officer,
director or employee of the Company, if such opportunity is expressly
offered to such person in his or her capacity as an officer or employee of
the Company; or (B) first identified by any FRC Affiliate solely through
the disclosure of information made by or on behalf of the Company.
(iii) Neither the alteration, amendment or repeal of this
Section 1.3 nor the adoption of any provision or amendment of the
Certificate of Incorporation of the Company inconsistent with this Section
1.3 shall eliminate or reduce the effect of this Section 1.3 in respect of
any matter occurring, or any cause of action, suit or claim that, but for
this Section 1.3, would accrue or arise prior to such alteration,
amendment, repeal or adoption.
2. REGISTRATION RIGHTS.
2.1 Definitions. For purposes of this Section 2:
(a) Registration. The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act of 1933, as amended
(the "Securities Act"), and the declaration or ordering of effectiveness of such
registration statement.
(b) Registrable Securities. The term "Registrable Securities" means
all shares of Common Stock now beneficially owned or hereinafter acquired by a
Stockholder, and any equity of the Company or other entity acquired in exchange
for shares of Common Stock. Notwithstanding the foregoing, "Registrable
Securities" shall exclude (i) any Registrable Securities sold by a person in a
transaction in which rights under this Section 2 are not assigned in accordance
with this Agreement, including any Registrable Securities sold by a Stockholder
in a public offering, whether sold pursuant to Rule 144 promulgated under the
Securities Act, or in a registered offering, or otherwise and (ii) following an
initial public offering of the Common Stock, any shares of Common Stock held by
a Management Stockholder unless such Management Stockholder is an Affiliate of
the Company and the Board determines in good faith that
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the Common Stock held by such Management Stockholder would be subject to
restrictions on resale.
(c) Holder. For purposes of this Section 2, the term "Holder" means
any Stockholder owning of record Registrable Securities or any permitted
assignee of record of such Registrable Securities to whom rights under this
Section 2 have been duly assigned in accordance with this Agreement.
(d) SEC. The term "SEC" means the U.S. Securities and Exchange
Commission.
2.2 Demand Registration.
(a) Request by First Reserve. If the Company shall receive a written
request from First Reserve that the Company file a registration statement under
the Securities Act covering the registration of Registrable Securities pursuant
to this Section 2.2 (a "Demand Notice"), then the Company shall, within ten (10)
business days of the receipt of a Demand Notice, give written notice of such
request ("Request Notice") to all Holders and, in addition to complying with its
obligations under Section 2.3, shall use its best efforts to effect, as soon as
practicable, the registration under the Securities Act of all Registrable
Securities that First Reserve requests to be registered in the Demand Notice,
subject only to the limitations of this Section 2.2 and the rights of other
Holders pursuant to Section 2.3. Notwithstanding the prior sentence, the Company
shall not be obligated to effect any such registration if the Company has,
within the three (3) month period preceding the date of such request, already
effected a registration under the Securities Act pursuant to (i) this Section
2.2, or (ii) Section 2.3 in which First Reserve participated, other than a
registration from which all or a portion of the Registrable Securities of First
Reserve were excluded pursuant to the provisions of Section 2.3(b).
(b) Underwriting. If First Reserve intends to distribute the
Registrable Securities covered by its request by means of an underwritten
offering, then it shall so advise the Company as a part of the Demand Notice,
and the Company shall include such information in the Request Notice. In such
event, the right of any Holder to include his Registrable Securities in such
registration pursuant to the rights set forth in Section 2.3 shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by First Reserve and such Holder) as provided herein.
The Company and all Holders proposing to distribute their securities through
such underwriting shall enter into an underwriting agreement in customary form
with the managing underwriter or underwriters selected for such underwriting by
First Reserve. Notwithstanding any other provision of this Section 2.2 or
Section 2.3, if the Board, after having consulted with the managing
underwriter(s), determines in good faith that the Company should impose a
limitation of the number of securities to be underwritten, the Company shall so
advise all Holders of Registrable Securities that would otherwise be registered
and underwritten pursuant hereto, and the Company may exclude shares of the
Registrable Securities as necessary from the registration and the underwriting,
with the number of shares to be included in the registration and the
underwriting allocated in the following
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manner: first to First Reserve; second to the Company; and third to each of the
other Holders requesting inclusion of their Registrable Securities in such
registration statement pursuant to Section 2.3, and among such other Holders on
a pro rata basis based on the total number of Registrable Securities then held
by each such other Holder. No other Registrable Securities may be included in
the Registration Statement (other than by the Company or by the Holders pursuant
to Section 2.3) without First Reserve's consent. If, as a result of any
reduction or limitation at the request of an underwriter, a registration
effected pursuant to this Section 2.2 does not include at least 80% of the
Registrable Securities that First Reserve requested to be registered in the
Demand Notice, such registration shall not constitute a demand for purposes of
Section 2.2(d). For any Holder that is a partnership, the Holder and the
partners and retired partners (if any) of such Holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons, and for any Holder that is a corporation, the
Holder and all corporations that are affiliates of such Holder, shall be deemed
to be a single "Holder," and any pro rata reduction with respect to such
"Holder" shall be based upon the aggregate amount of Registrable Securities
owned by all entities and individuals included in such "Holder, " as defined in
this sentence.
(c) Shelf Registration. If the Company is eligible to register the
resale of Registrable Securities by Holders on Form S-3, then any registration
under Section 2.2(a) shall, if requested in the Demand Notice, be effected on
Form S-3 pursuant to Rule 415 under the Act (or its successor) on a continuous
basis for the period requested (a " Shelf Registration"). If such a Shelf
Registration is requested in the Demand Notice (such Shelf Registration, a
"Holder Shelf Registration"):
(i) the Company shall be entitled to require that a Holder or
Holders refrain from effecting any public sales or distributions of the
Registrable Securities pursuant to a Holder Shelf Registration (a
"Distribution Suspension"), if the Board reasonably determines that such
public sales or distributions would interfere in any material respect with
any transaction involving the Company that the Board reasonably determines
to be material to the Company; provided, however, that in no event shall
any one or more Distribution Suspension(s) be in effect for more than a
total of ninety (90) days in any twelve month period. The Board shall, as
promptly as practicable, give the Holders written notice of any
Distribution Suspension. If the Board institutes a Distribution
Suspension, the Company shall be required to lift that Distribution
Suspension as soon as reasonably practicable after the Board determines
public sales or distributions by Holders shall not interfere with any such
transaction (and, in all events, on or before the 90 day limit set forth
above).
(ii) The Form S-3 shall provide that First Reserve and the
other Holders participating in the Shelf Registration (collectively, the
"Shelf Holders"), may from time to time distribute some or all of the
Registrable Securities included in that Shelf Registration (the "Shelf
Securities") by means of an underwritten offering (a "Shelf
Underwriting"). The Company may not participate in any such Shelf
Underwriting without the prior consent of First Reserve in its sole
discretion. Only First Reserve shall have the right to initiate a Shelf
Underwriting
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with respect to Shelf Securities included in a Holder Shelf Registration,
and each such Shelf Underwriting shall be governed by the terms of this
Section 2.2 but shall not constitute an additional demand for purposes of
Section 2.2(d).
(iii) First Reserve shall provide the Company with written
notice (a "Shelf Underwriting Request") if it wishes to distribute Shelf
Securities pursuant to a Shelf Underwriting. Each Shelf Underwriting
Request shall indicate the proposed timing and number of Shelf Securities
to be sold by First Reserve pursuant to the Shelf Underwriting, and shall
also include First Reserve's good faith judgment as to whether, given the
proposed timing of the Shelf Underwriting, it would be reasonably
practicable for the other Shelf Holders to participate in such Shelf
Underwriting. The requirements of this Section 2.2(c)(iii) shall not apply
to any Shelf Underwriting in which, in First Reserve's good faith
judgment, it would not be reasonably practicable for the other Shelf
Holders to participate given the proposed timing of that Shelf
Underwriting (each such Shelf Underwriting, an "Overnight Deal"). No other
Shelf Holder shall have a right to participate with First Reserve in any
Overnight Deal. First Reserve shall inform each other Holder of any
Overnight Deal promptly after its consummation.
(iv) Within two business days of receiving a Shelf
Underwriting Request for a Shelf Underwriting that is not an Overnight
Deal, the Company shall give written notice (a "Shelf Notice") of such
Shelf Underwriting Request to all other Shelf Holders. Each Shelf Holder
desiring to include all or any part of the Shelf Securities held by such
Shelf Holder in any such Shelf Underwriting shall within two business days
after receipt of the Shelf Notice so notify in writing the Company and
First Reserve, and in such notice shall inform the Company and First
Reserve of the number of Shelf Securities such Shelf Holder (each, along
with First Reserve, a "Participating Holder") wishes to include in such
Shelf Underwriting.
(v) The Company and all Participating Holders shall enter into
an underwriting agreement in customary form with the managing underwriter
or underwriters selected for such Shelf Underwriting by First Reserve. If
the Board, after having consulted with the managing underwriter(s),
determines in good faith that the Company should impose a limitation of
the number of securities proposed to be included in the Shelf
Underwriting, the Company shall so advise all Participating Holders, and
the Company may exclude shares of the Shelf Securities as necessary from
the Shelf Underwriting, with the number of shares to be included in the
Shelf Underwriting allocated in the following manner: first to First
Reserve; and second to each of the other Participating Holders requesting
inclusion of their Shelf Securities in such Shelf Underwriting, and among
such other Holders on a pro rata basis based on the total number of Shelf
Securities then held by each such other Participating Holder (the defined
term "Participating Holder" shall be construed for purposes of this
Section 2.2(c)(v) in the same manner as the term "Holder" is construed in
the last sentence of Section 2.2(b)).
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(d) Maximum Number of Demand Registrations. Except as set forth
below, the Company shall be obligated to effect only four (4) such registrations
pursuant to Section 2.2(a), each of which may be a Shelf Registration. A
Registration shall be effected for purposes of this Section 2.2(d) when and if a
registration statement is declared effective by the SEC and the distribution of
securities thereunder has been completed without the occurrence of any stop
order or proceeding relating thereto suspending the effectiveness of the
Registration. Notwithstanding the foregoing sentences, there shall be no limit
to the number of registrations on Form S-3 that may be requested and obtained by
First Reserve, other than demands for Shelf Registrations (each of which shall
count against the four demand registration limit).
(e) Deferral. Notwithstanding the foregoing, if the Company shall
furnish to First Reserve a certificate signed by the President or Chief
Executive Officer of the Company stating that, in the good faith judgment of the
Board, it would be materially detrimental to the Company and its stockholders
for such registration statement to be filed, then the Company shall have the
right to defer such filing for a period of not more than ninety (90) days after
receipt of the request of First Reserve; provided that the Company may not
utilize this right more than once in any twelve (12) month period.
(f) Expenses. All expenses incurred in connection with any
registration pursuant to this Section 2.2, including, but not limited to, all
federal and "blue sky" registration, filing and qualification fees, printer's
and accounting fees, fees and disbursements of counsel for the Company, and fees
and expenses of one counsel for the Holders (selected by First Reserve) shall be
borne by the Company. Each Holder participating in a registration pursuant to
this Section 2.2 shall bear such Holder's proportionate share (based on the
total number of Registrable Securities sold in such registration other than for
the account of the Company) of all discounts, commissions or other amounts
payable to underwriters or brokers in connection with such offering by the
Holders. Notwithstanding the foregoing, the Company shall not be required to pay
for any expenses of any registration proceeding begun pursuant to this Section
2.2 if the registration request is subsequently withdrawn at the request of
First Reserve, unless First Reserve agrees that such registration constitutes
the use by it of one (1) demand registration pursuant to this Section 2.2;
provided that if at the time of such withdrawal, First Reserve has learned of a
material adverse change in the condition, business, or prospects of the Company
not known to First Reserve at the time of its request for such registration and
has withdrawn its request for registration with reasonable promptness after
learning of such material adverse change, then the Company shall be required to
pay all such expenses and such registration shall not constitute the use of a
demand registration pursuant to this Section 2.2.
2.3 Piggyback Registrations.
(a) Notices. The Company shall promptly notify all Holders in
writing (a "Piggyback Notice", which may also constitute the Request Notice
required under Section 2.2(a)), prior to filing any registration statement under
the Securities Act for purposes of effecting an offering of securities of the
Company (including, but not limited to, registration statements relating to the
initial or secondary public offerings of securities
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of the Company, whether pursuant to Section 2.2 or otherwise, but excluding
registration statements relating to any employee benefit plan or a corporate
reorganization). Subject to Section 2.3(b), the Company will afford each such
Holder an opportunity to include in such registration statement all or any part
of the Registrable Securities then held by such Holder. Each Holder desiring to
include in any such registration statement all or any part of the Registrable
Securities held by such Holder shall within ten (10) days after receipt of the
Piggyback Notice so notify the Company in writing, and in such notice shall
inform the Company of the number of Registrable Securities such Holder wishes to
include in such registration statement. If a Holder decides not to include all
of its Registrable Securities in any such registration statement, such Holder
shall nevertheless continue to have the right to include any Registrable
Securities in any subsequent registration statement or registration statements
as may be filed by the Company with respect to offerings of its securities, all
upon the terms and conditions set forth in this Agreement.
(b) Underwriting. If a registration statement referred to in the
Piggyback Notice is for an underwritten offering, then the Company shall so
advise the Holders. In such event, the right of any such Holder to include
Registrable Securities in such a Registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting as provided herein. All Holders
proposing to distribute their Registrable Securities through such underwriting
shall enter into an underwriting agreement in customary form with the managing
underwriter or underwriters selected for such underwriting. Notwithstanding any
other provision of this Agreement, if the Board, after having consulted with the
managing underwriter(s), determines in good faith that the Company should impose
a limitation of the number of shares to be underwritten, then the Company shall
so advise all Holders of Registrable Securities that would otherwise be
registered and underwritten pursuant hereto, and the Company may exclude shares
of the Registrable Securities from the registration and the underwriting, and
the number of shares that will be included in the registration and the
underwriting shall be allocated as set forth in Section 2.2, or, if the
underwriting is not pursuant to Section 2.2, shall be allocated first to the
Company, and second, to each of the Holders requesting inclusion of their
Registrable Securities in such registration statement on a pro rata basis based
on the total number of Registrable Securities then held by each such Holder. If
any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter(s), delivered at least ten (10) business days prior to the effective
date of the registration statement. Any Registrable Securities excluded or
withdrawn from such underwriting shall be excluded and withdrawn from the
registration. The defined term "Holder" shall be construed for purposes of this
Section 2.3(b) in the same manner as set forth in the last sentence of Section
2.2(b)).
(c) Expenses. All expenses incurred in connection with a
registration pursuant to this Section 2.3 (excluding underwriters' and brokers'
discounts and commissions relating to shares sold by the Holders), including,
without limitation all federal and "blue sky" registration, filing and
qualification fees, printers' and accounting fees, fees and disbursements of
counsel for Holders (selected by First Reserve, or, if First
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Reserve is not participating in such offering, selected with the consent of
First Reserve by participating Holders holding a majority of Registrable
Securities being registered), and fees and disbursements of counsel for the
Company, shall be borne by the Company. Each Holder participating in a
registration pursuant to this Section 2.3 shall bear such Holder's proportionate
share (based on the total number of Registrable Securities sold in such
registration other than for the account of the Company) of all discounts,
commissions or other amounts payable to underwriters or brokers in connection
with such offering by the Holders.
(d) Not Demand Registration. Registration pursuant to this Section
2.3 shall not be deemed to be a demand registration as described in Section 2.2,
unless First Reserve specifically elects otherwise in writing. There shall be no
limit on the number of times the Holders may request registration of Registrable
Securities under this Section 2.3.
(e) Withdrawal Right. Notwithstanding any provision contained in
this Section 2.3 to the contrary, the Company shall have the right to terminate
or withdraw any registration statement initiated by it (other than in response
to a Holder Notice under Section 2.2) prior to the effectiveness of such
registration statement whether or not any Holder has elected to include his
Registrable Securities in such registration statement.
(f) Shelf Registrations. In the event the registration commenced by
the Company pursuant to this Section 2.3 was not commenced pursuant to a Demand
Notice and is a Shelf Registration (any such Shelf Registration, a "Company
Shelf Registration"): (i) the Company and any Holders requesting inclusion of
their Registrable Securities in such registration pursuant to Section 2.3(a)
shall comply with the provisions of Section 2.2(c); (ii) the piggy-back rights
of the Holders and the other provisions of Section 2.3 shall apply to both the
Company Shelf Registration and any Shelf Underwriting initiated from time to
time by the Company or First Reserve to distribute some or all of the
Registrable Securities included in a Company Shelf Registration; and (iii) for
purposes of Section 2.3, any such Shelf Underwriting shall be deemed to be a
registration for an underwritten offering commenced by the Company pursuant to
Section 2.3; provided that (A) the piggy-back rights with respect to a Shelf
Underwriting shall not apply to all Holders, but shall be limited to the
applicable Shelf Holders that have elected to participate in a Company Shelf
Registration; and (B) each Shelf Holder may only attempt to include in the Shelf
Underwriting the Shelf Securities beneficially owned by such Shelf Holder (and
may not include in the Shelf Underwriting any Registrable Securities that are
not Shelf Securities). Notwithstanding anything contained in Section 2.2(c), the
Company (along with First Reserve) shall have the right to initiate a Shelf
Underwriting to distribute Registrable Securities included in a Company Shelf
Registration, and the Company shall be deemed a Shelf Holder for purposes of any
Shelf Underwriting initiated by First Reserve with respect to Registrable
Securities included in the Company Shelf Registration.
2.4 Lock-ups. With respect to any underwritten offering in which the
Company or First Reserve is selling securities pursuant to Section 2.2 or 2.3
(including, but not limited to, the Company's initial public offering and any
Shelf Underwriting), beginning
11
on (a) the effective date of a registration statement filed by the Company
pursuant to Section 2.2 or 2.3 (in the case of a registration statement other
than a Shelf Registration) or (b) the date of the underwriting agreement
executed in connection with a Shelf Underwriting (each an "Effective Date"),
other than as provided in the last sentence of this Section 2.4, each
Stockholder and Optionholder, whether or not such Person is participating in
such offering, and the Company each agree to not (i) effect any issuance, sale,
transfer, assignment, pledge, conveyance (including, without limitation, taking
any short position in), or repurchase of Common Stock (or any securities of the
Company exchangeable or convertible into Common Stock) for a period of 90 days
after the Effective Date (the "Lock-up Period") or such longer time (not to
exceed an additional 90 days) as requested by the underwriters for such offering
and agreed to by First Reserve in its sole discretion; and (ii) the Company
agrees to not file with the SEC any other registration statement, or any
supplement or amendment to a previously filed shelf registration statement, from
the Effective Date until the later of the expiration of the Lock-up Period or
the completion of the period of distribution of any underwritten offering. Each
Stockholder and Optionholder and the Company agree to enter into customary
lock-up agreements with an underwriter consistent with the terms of this Section
2.4. The restrictions in this Section 2.4 shall not prevent the Company from
filing with the SEC registration statements relating to any employee benefit
plan, corporate reorganization, or issuance of debt that is not convertible into
equity, and shall not apply to (X) the Registrable Securities to be sold under
any underwritten offering contemplated by Section 2.2 or 2.3; (Y) any shares of
Common Stock issued by the Company upon the exercise of an option or warrant or
the conversion of a security outstanding on the Effective Date; or (Z) any
shares of Common Stock issued or options to purchase Common Stock granted
pursuant to employee benefit plans of the Company existing as of the Effective
Date.
2.5 Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities under this Agreement the Company
shall, as expeditiously as reasonably possible:
(a) Registration Statement. Subject to the provisions of Section
2.2(e), prepare and file with the SEC a registration statement with respect to
such Registrable Securities and use its best efforts to cause such registration
statement to become effective and to keep any such registration statement
(including any Shelf Registration) effective for so long as required by the
Securities Act to complete the distribution, provided however that in no event
shall the Company be required to keep a registration statement effective for
greater than two years.
(b) Amendments and Supplements. Prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement.
(c) Prospectuses. Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of
12
the Securities Act, and such other documents as they may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by them
that are included in such registration.
(d) Blue Sky. Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(e) Underwriting. In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement in usual
and customary form (including indemnification provisions), with the managing
underwriter(s) of such offering. Each Holder participating in such underwriting
shall also enter into and perform its obligations under such an agreement.
(f) Notification. Notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing. In addition, the Company shall promptly notify each Holder and
each underwriter, broker, dealer and placement agent participating in any
offering or sale or other distribution of securities covered by such
registration statement of the issuance or threatened issuance of any order
suspending the registration or qualification of any Registrable Securities
covered by such registration statement for disposition in any jurisdiction; use
its commercially reasonable efforts to prevent the issuance of any such
threatened order and, if any such order is issued, use its commercially
reasonable efforts to obtain the lifting or withdrawal of such order at the
earliest possible moment and promptly notify each Holder and each such
underwriter, broker, dealer and placement agent of any lifting or withdrawal.
(g) Opinion and Comfort Letter. Furnish, at the request of any
Holder requesting registration of Registrable Securities (but only if such
Holder is First Reserve or an FRC Affiliate) or of any underwriter in connection
herewith, on the date or dates requested by such Holder (but only if such Holder
is First Reserve or an FRC Affiliate), (i) an opinion, dated as of such date, of
the counsel representing the Company for the purposes of such registration, in
form and substance as is customarily given to underwriters in an underwritten
public offering and reasonably satisfactory to a majority in interest of the
Holders requesting registration, addressed to the underwriters, if any, and to
First Reserve or an FRC Affiliate requesting registration of Registrable
Securities and (ii) a "comfort" letter dated as of such date, from the
independent certified public accountants of the Company, in form and substance
as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering and reasonably satisfactory to a
majority in interest of the Holders requesting
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registration, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities.
(h) Road Shows. To the extent reasonably requested by First Reserve,
cause the appropriate members of the management and employees of the Company to
participate in meetings, diligence sessions, and road shows.
(i) Maintenance of Listed Status. Following its initial public
offering, the Company shall use its best efforts to (i) cause all Registrable
Securities to be listed on the securities exchange or automated quotation system
on which the Company's Common Stock is initially listed; and (ii) to maintain
its status as a listed company on such exchange or quotation system. In the
event the Company should be de-listed from such exchange or quotation system,
the Company shall use its best efforts to regain its status as a listed company
on such exchange or quotation system as promptly as is reasonably possible.
(j) Additional Actions. Take all other actions which are reasonably
necessary or which may be reasonably requested by First Reserve or any
underwriter, broker, dealer or placement agent participating in any offering or
sale or other distribution of securities covered by such registration statement
to effect the registration and qualification of the Registrable Securities
covered by such registration statement and to facilitate the disposition thereof
in accordance with the respective plans of distribution of the selling Holders.
2.6 Indemnification. In the event any Registrable Securities are included
in a registration statement under Sections 2.2 or 2.3:
(a) By the Company. To the extent permitted by law, the Company will
indemnify and hold harmless each selling Holder, the partners, officers and
directors of each such Holder, any underwriter (as determined in the Securities
Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Securities Act or the Securities Exchange
Act of 1934, as amended, (the "Exchange Act"), against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"):
(i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto;
(ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make
the statements therein not misleading, or
14
(iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any federal or state securities
law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any federal or state securities law in
connection with the offering covered by such registration statement;
and the Company will reimburse each such Holder, partner, officer or director,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them, as incurred, in connection with investigating or defending any
such loss, claim, damage, liability or action; provided that the indemnity
agreement contained in this subsection 2.6(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld, nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, officer, director, underwriter
or controlling person of any such person.
(b) By Selling Holders. To the extent permitted by law, each selling
Holder will indemnify and hold harmless the Company, each of its directors, each
of its officers who have signed the registration statement, each person, if any,
who controls the Company within the meaning of the Securities Act, any
underwriter and any other Holder selling securities under such registration
statement or any of such other Holder's partners, directors or officers or any
person who controls such Holder within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such director, officer, controlling person,
underwriter or other such Holder, partner or director, officer or controlling
person of such other Holder may become subject under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with written
information furnished by such Holder concerning such Holder expressly for use in
connection with such registration; and each such Holder will reimburse any legal
or other expenses reasonably incurred by the Company or any such director,
officer, controlling person, underwriter or other Holder, partner, officer,
director or controlling person of such other Holder in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided that the indemnity agreement contained in this subsection 2.6(b) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; and provided, further,
that the total amounts payable in indemnity by a Holder under this Section
2.6(b) in respect of any Violation shall not exceed the net proceeds received by
such Holder in the registered offering out of which such Violation arises.
(c) Notice. Promptly after receipt by an indemnified party under
this Section 2.6 of notice of the commencement of any action (including any
governmental
15
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.6, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided that an indemnified party shall have the
right to retain its own counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential conflict of interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall relieve such indemnifying party of
liability to the indemnified party under this Section 2.6 to the extent the
indemnifying party is prejudiced as a result thereof, but the omission so to
deliver written notice to the indemnified party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 2.6.
(d) Defect Eliminated in Final Prospectus. The foregoing indemnity
agreements of the Company and Holders are subject to the condition that, insofar
as they relate to any Violation made in a preliminary prospectus but eliminated
or remedied in the amended prospectus on file with the SEC at the time the
registration statement in question becomes effective or the amended prospectus
filed with the SEC pursuant to SEC Rule 424(b) (the "Final Prospectus"), such
indemnity agreement shall not inure to the benefit of any person if a copy of
the Final Prospectus was timely furnished to the indemnified party, was not
furnished to the person asserting the loss, liability, claim or damage at or
prior to the time such action is required by the Securities Act, and the
furnishing of such Final Prospectus as so required would have eliminated
liabilities under the Securities Act or the Exchange Act.
(e) Contribution. In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
either (i) any Holder exercising rights under this Agreement, or any controlling
person of any such Holder, makes a claim for indemnification pursuant to this
Section 2.6 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 2.6 provides
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any such selling Holder or any such controlling
person in circumstances for which indemnification is provided under this Section
2.6; then, and in each such case, the Company and such Holder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so that such Holder
is responsible for the portion represented by the percentage that the public
offering price of its Registrable Securities offered by and sold under the
registration statement bears to the public offering price of all securities
offered by and sold under such registration statement, and the Company and other
selling Holders are responsible for the remaining portion; provided that, in any
such case: (A) no such Holder will be required to contribute any amount in
16
excess of the public offering price of all such Registrable Securities offered
and sold by such Holder pursuant to such registration statement; (B) no person
or entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation, and (C) in
determining relative fault, due consideration shall be given to the source of
any written information furnished by a Holder concerning such Holder expressly
for use in connection with such registration
(f) Survival. The obligations of the Company and Holders under this
Section 2.6 shall survive until the earlier of (i) the one year anniversary of
the expiration of all applicable statutes of limitation or extensions of such
statutes or (ii) the termination of First Reserve Fund IX, L.P. or First Reserve
Fund X, L.P. (whichever is later).
2.7 Furnish Information. The selling Holders, as a condition to their
participation in any registration or offering contemplated by this Section 2,
agree to furnish to the Company such information regarding themselves, the
Registrable Securities held by them, and the intended method of disposition of
such securities as shall be reasonably requested by the Company or otherwise
required to timely effect the Registration of their Registrable Securities.
2.8 Rule 144 Reporting; S-3 Eligibility. With a view to making available
the benefits of certain rules and regulations of the SEC which may at any time
permit the sale of "Restricted Securities" (used herein as defined in Rule 144
under the Securities Act) to the public without registration, and to be eligible
to use Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times during
which the Company is subject to the reporting requirements of the Exchange Act;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
(at all times during which the Company is subject to such reporting
requirements); and
(c) so long as any Holders own any Restricted Securities, to furnish
to such holder forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of said Rule 144 and with regard
to the Securities Act and the Exchange Act (at all times during which the
Company is subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company and other information in the possession of or reasonably
obtainable by the Company as such holder of the Registrable Securities may
reasonably request in availing itself of any rule or regulation of the SEC
allowing such holder to sell any such securities without registration.
2.9 Impact of Merger. In the event the Company merges with or into another
entity or undergoes a similar transaction, the terms of this Section 2 shall
apply to any equity received by the Holders in connection with the merger or
similar transaction in
17
exchange for the Common Stock or other Registrable Securities held by such
Holders immediately prior to the consummation of the merger or similar
transaction.
2.10 Termination of Registration Rights. Other than any Holder that is an
FRC Affiliate, no Holder shall have any rights under Sections 2.2 or 2.3 with
respect to any Registrable Securities held by such Holder if, in the reasonable
opinion of counsel to the Company, addressed to such Holder, all such
Registrable Securities then held by such Holder could be sold under Rule 144
promulgated under the Securities Act in a single transaction.
3. SALES BY STOCKHOLDERS.
3.1 General Restrictions and Notification Requirements.
(a) Restrictions on Transfers. No Stockholder shall sell, transfer,
assign, pledge, convey, encumber, gift, or otherwise dispose, whether directly,
indirectly, by merger, operation of law, transfer of any ownership interest in
such Stockholder or its beneficial owners or otherwise (collectively,
"Transfer") any shares of Common Stock now held or hereafter acquired without
the consent of the Board, except for Permitted Transfers (as defined in Section
3.6) and Transfers in accordance with the applicable procedures of this Section
3. In addition to the foregoing restrictions, except for Permitted Transfers, no
Management Stockholder shall Transfer any Common Stock prior to October 31, 2009
without the consent of the Board. Any Transfer or attempted Transfer of Common
Stock in violation of this Section 3 shall be null and void and without effect,
and the Company shall not record any such purported Transfer on its books or
treat any transferee of Common Stock involved in such purported Transfer as the
owner of such Common Stock.
(b) Notice of Sales. Except for Permitted Transfers and Compelled
Transfers (as defined in Section 3.5), if any Stockholder (the "Seller")
proposes to Transfer any Common Stock, then the Seller shall promptly give
written notice (the "Sale Notice") to the Company and the other Stockholders at
least thirty (30) days prior to the proposed closing of such sale or transfer.
In addition to any requirements of Section 3.2, the Sale Notice shall describe
in reasonable detail the proposed Transfer including, without limitation, the
number of shares of Common Stock to be sold or transferred, the nature of the
Transfer, the consideration to be paid, the proposed closing date, and, if
known, the name and address of each prospective purchaser or transferee.
3.2 Right of First Refusal. If at any time a Seller (other than First
Reserve) receives a bona fide offer from any person (an "Offering Party") to
purchase shares of Common Stock or any interest therein held by such Seller (a
"Purchase Offer") that such Seller wishes to accept, the Seller shall cause such
Purchase Offer to be reduced to writing and a true copy shall be attached to the
Sale Notice. In such an event, the Sale Notice shall contain an irrevocable
offer to sell such Common Stock to the Company and First Reserve at a purchase
price equal to the price contained in, and on the same terms and conditions of,
the Purchase Offer; provided that the Company or First Reserve may pay cash to
the Seller in an amount equal to the then-current fair market value of any
18
portion of such offer constituting non-cash consideration offered by the
Offering Party in the Purchase Offer. At any time within ten (10) days after the
date of receipt by the Company of the Sale Notice, the Company may elect to
purchase all or any portion of the Common Stock covered by the Purchase Offer at
the same price and on the same terms and conditions as the Purchase Offer, and
at any time prior to the latest date specified for closing in the Purchase
Offer. If at the end of such ten (10) day period the Company has not elected to
purchase all Common Stock covered by such Purchase Offer, the Seller shall
redeliver the Sale Notice to all other Stockholders along with a statement as to
the number of shares of Common Stock to be purchased by the Company (if any).
Within ten (10) days after receipt by First Reserve of such redistributed Sale
Notice, First Reserve, by providing notice to the Seller, may elect to purchase
all or part of any remaining Common Stock covered by the Purchase Offer at the
same price and on the same terms and conditions as the Purchase Offer, at any
time within the latest date specified for closing in the Purchase Offer. This
Section 3.2 shall not apply to any Permitted Transfer or to a Transfer pursuant
to Section 3.5.
3.3 Co-Sale Right. If (a) a Seller other than First Reserve has received a
Purchase Offer and not all of the Common Stock covered by such Purchase Offer
has been purchased pursuant to Section 3.2, or (b) if First Reserve wishes to
Transfer Common Stock other than a Transfer to any FRC Affiliate or a Transfer
resulting in an exercise by First Reserve of the Compelled Transfer rights set
forth in Section 3.5, then the Seller or First Reserve, as the case may be,
shall deliver the Sale Notice (the "Final Notice") to the other Stockholders. If
the Final Notice is sent by a Seller other than First Reserve, it shall include
a statement as to the number of shares of Common Stock to be purchased pursuant
to Section 3.2 (if any). Subject to the terms and conditions of this Section
3.3, the Stockholders who are not Sellers (the "Co-Sale Stockholders") shall
each have the right, exercisable upon written notice to the Seller within ten
(10) days after receipt of the Final Notice, to participate in such sale of
Common Stock on the same terms and conditions as set forth in the Final Notice,
up to the total number of shares of Common Stock for each Co-Sale Stockholder
equal to the product of (a) the total number of shares included in the Final
Notice; multiplied by (b) a quotient found by dividing the total number of
shares owned by such Co-Sale Stockholder by the total number of shares owned by
the Seller, such Co-Sale Stockholder, and all other Co-Sale Stockholders that
are participating in the sale of Stock pursuant to this Section 3.3. To the
extent any Co-Sale Stockholders exercise such right of participation (each such
Co-Sale Stockholder, a "Participating Stockholder"), the number of shares of
Common Stock that the Seller may sell in the transaction shall be
correspondingly reduced by the aggregate number of shares included in the
transaction by all Participating Stockholders. Each Participating Stockholder
shall effect its participation in the sale by promptly delivering to Seller for
transfer to the prospective purchaser one or more certificates, properly
endorsed for transfer, which represent the number of shares of Common Stock
which such Participating Stockholder elects to sell. The Seller will use his,
her, or its best efforts to obtain the agreement of the prospective
transferee(s) to the participation of the Participating Stockholders in the
contemplated transfer and will not transfer any Common Stock to the prospective
transferee(s) if such transferee(s) refuses to allow the sale to the
Participating Stockholders, or refuses to become a party to this Agreement. This
Section 3.3 shall not apply to any Permitted Transfer or to a Transfer covered
by Section 3.5.
19
3.4 Further Sales. To the extent the Company, First Reserve and the
Co-Sale Stockholders do not exercise their rights under Sections 3.2 or 3.3 with
respect to the sale of Common Stock subject to the Notice or the Final Notice,
the Seller may, not later than sixty (60) days following delivery to the Company
and the Stockholders of the Final Notice, conclude a transfer of the Common
Stock covered by the Final Notice on terms and conditions equal to those
described in the Final Notice. Any proposed transfer on terms and conditions
other than those described in the Final Notice or any proposed transfer of any
Common Stock by the Seller after such sixty day period shall again be subject to
the co-sale rights and first refusal rights of the Stockholders and shall
require compliance by the Seller with the procedures described in this Section
3. Notwithstanding the foregoing, no transfer of the Common Stock shall be
effective unless such transferee agrees to be bound by the terms of this
Agreement as a Stockholder.
3.5 Rights to Compel Transfer.
(a) If First Reserve or any FRC Affiliate propose to make a Transfer
to any person or entity who is not an FRC Affiliate immediately prior to such
Transfer, then First Reserve shall have the right, exercisable as set forth
below, to require each of the other Stockholders and each of the Optionholders
(the "Remaining Stockholders") to Transfer an equivalent pro-rata portion of the
Common Stock and any securities convertible or exercisable into Common Stock
(the "Stock Rights") then owned by such Remaining Stockholders (such pro-rata
portion, the "Transfer Stock") to the proposed transferee (the "Acquirer") for
the same consideration per share as is being paid to First Reserve and on the
same terms as are applicable to First Reserve (the "Compelled Transfer"). If the
Remaining Stockholders are compelled to Transfer shares under this Section 3.5
in connection with a merger, consolidation or reorganization of the Company, the
Remaining Stockholders agree to vote all Common Stock and Stock Rights in favor
of approving such merger, consolidation or reorganization and, to the extent
requested by First Reserve, become a party to any applicable agreement of
merger, consolidation or reorganization; provided that any liabilities or
obligations of the Stockholders and Optionholders under such agreement shall be
several, and not joint or joint and several, and shall be borne pro rata by
First Reserve and the Remaining Stockholders in relation to the Common Stock and
Stock Rights then owned by them and shall be limited to an amount no greater
than the amount of proceeds received by such Remaining Stockholder. The purchase
price for each vested Stock Right in any such Transfer shall equal the "spread"
between the exercise price for such vested Stock Right and the purchase price
per share of Common Stock. The terms and conditions other than the consideration
to be received by the Remaining Stockholders for Common Stock and vested Stock
Rights sold pursuant to this Section 3.5 shall be as set forth in the applicable
purchase agreement between First Reserve and the Acquirer, merger agreement to
which the Company is a party, or other agreement effecting such Transfer. Upon
the consummation of any such Transfer and subject to the terms of any agreements
related to such Stock Rights, any unvested Stock Rights shall automatically be
terminated and any transaction involving such unvested Stock Rights shall be
void and of no effect. In addition, if the Company proposes to sell all or a
substantial portion of its assets in a transaction consented to by First Reserve
and such transaction is submitted to the Stockholders for approval, each
20
Stockholder agrees to vote all Common Stock and Stock Rights in favor of such
transaction.
(b) First Reserve shall cause the terms of the Compelled Transfer to
be reduced to writing and shall provide a written notice (the "Compelled
Transfer Notice") of such Compelled Transfer to the Remaining Stockholders. The
Compelled Transfer Notice shall contain written notice of the exercise by First
Reserve of its rights pursuant to Section 3.5(a), setting forth the
consideration to be paid by the Acquirer for each type of Common Stock and Stock
Right and the other terms and conditions of the Compelled Transfer. Within
fifteen (15) days following the date of receipt of the Compelled Transfer
Notice, each of the Remaining Stockholders shall deliver to First Reserve
certificates representing the Common Stock and instruments representing Stock
Rights owned by such Remaining Stockholder and any requested proxies, duly
endorsed, together with all other documents required to be executed in
connection with such Compelled Transfer or, if such delivery is not permitted by
applicable law, an unconditional agreement to deliver such certificates pursuant
to this Section 3.5(b) at the closing for such Compelled Transfer against
delivery to such Remaining Stockholder of the consideration therefore. Such
certificates shall be held by First Reserve in escrow for the benefit of the
appropriate Remaining Stockholder. In the event that a Remaining Stockholder
should fail to deliver such certificates as aforesaid and the Compelled Transfer
is consummated, (i) the Company shall cause the books and records of the Company
to show that such Common Stock and Stock Rights are bound by the provisions of
this Section 3.5(b) and that such Common Stock and Stock Rights shall be
transferred only to the Acquirer (on the terms of the Compelled Transfer) upon
surrender for Transfer by the Remaining Stockholder thereof; (ii) the Company
shall be entitled to withhold funds payable to the Remaining Stockholder with
respect to such Common Stock and Stock Rights until such time as they are
surrendered; and (iii) notwithstanding Section 5.2, any and all rights of such
Remaining Stockholder under this Agreement may be amended or terminated without
the consent of such Remaining Stockholder.
(c) If, within 180 days (or such longer period not exceeding 210
days as may be necessary to comply with any applicable provisions of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, or to obtain
other required regulatory approval) after First Reserve gives the Compelled Sale
Transfer Notice, it has not completed the sale of all the Transfer Stock, First
Reserve shall return to each of the Remaining Stockholders all certificates
representing Common Stock and Stock Rights that such Remaining Stockholders
delivered for sale pursuant hereto, and all the restrictions on sale or other
disposition contained in this Agreement with respect to such Common Stock and
Stock Rights and the Common Stock owned by First Reserve shall again be in
effect.
(d) Upon the consummation of the Compelled Transfer, First Reserve
shall give notice thereof to the Remaining Stockholders, and shall (or shall
cause the Acquirer to) remit to each of the Remaining Stockholders a net amount
with respect to the Common Stock and Stock Rights of such Remaining Stockholders
sold pursuant thereto, after deducting of a pro rata portion of any
out-of-pocket fees and expenses (including attorney fees) incurred by First
Reserve in connection with the Compelled
21
Transfer, and shall furnish such other evidence of the completion and time of
completion of such sale or other disposition and the terms thereof as may be
reasonably requested by such Remaining Stockholders.
3.6 Permitted Transfers. The following shall be considered "Permitted
Transfers," and not subject to the restrictions of this Section 3: (a) Transfers
approved in advance by the Board; (b) Transfers by any FRC Affiliate to any
other FRC Affiliate or to the partners of First Reserve; (c) Transfers by a
Management Stockholder to another Management Stockholder, to First Reserve or
any FRC Affiliate or by an Investor to an Affiliate of such Investor, in each
case with the prior approval of the Board, which shall not be unreasonably
withheld; (d) Transfers by a Stockholder for bona fide estate planning purposes
with the consent of the Board, which shall not be unreasonably withheld; (e)
Transfers by will or by intestate succession; or (f) any Transfer made in
connection with a registered offering under, or a sale pursuant to Rule 144
promulgated under, the Securities Act. Notwithstanding the foregoing, no
Transfer prior to an initial public offering pursuant to items (a) - (e) of this
Section 3.6 shall be consummated unless and until the proposed transferee agrees
in writing to become a party to and be bound by the provisions of this Agreement
as a Stockholder (such writing, a "Joinder Agreement"). Upon consummation of any
Permitted Transfer, the transferring Stockholder shall send to the Company and
all other Stockholders a notice of the Permitted Transfer, indicating the number
of shares of Stock transferred, the date of the transfer, and the names and
addresses of the transferees, along with a copy of the Joinder Agreement (other
than with respect to any transfers made pursuant to item (f), for which no
Joinder Agreement is required from the Transferee(s)).
3.7 Effect of Initial Public Offering or Change in Control. The provisions
of Sections 3.1, 3.2, 3.3, 3.5 and Section 4 shall cease to apply following an
initial public offering of the Common Stock. The provisions of Section 3.1 and
Section 4 shall cease to apply following a Change in Control. For these purposes
a Change in Control means (a) a transaction or series of related transactions in
which any Person acquires voting equity interests in the Company representing
50% of more of the voting power of the voting equity interests (other than FRC
Affiliates or Affiliates of the Company); (b) any merger, consolidation,
amalgamation, recapitalization or similar transaction of the Company that
results in any Person other than FRC Affiliates or Affiliates of the Company
acquiring more than 50% of the voting power of the Company or its successor in
such merger, consolidation, amalgamation, recapitalization or similar
transaction; or (c) a transaction or series of related transactions involving
the sale, transfer or other disposition of all of the assets of the Company and
its subsidiaries, taken as a whole, to one or more persons or entities that are
not, immediately prior to such sale, transfer or other disposition, FRC
Affiliates or Affiliates of the Company.
4. REPURCHASE OF SHARES.
4.1 Optional Repurchase Upon Termination of Employment or Consultancy.
Each Management Stockholder agrees that the Company shall have the right (but
not the obligation) to repurchase all or part of the Common Stock and vested
Stock Rights of the Company held by such Management Stockholder (the "Repurchase
Shares") at the
22
Repurchase Price (as such term is defined below in Section 4.2) upon the
termination of the employment or consulting relationship of such Management
Stockholder (a "Terminated Stockholder") prior to an Initial Public Offering
under the following circumstances:
(a) a termination by the Company or the Subsidiary that employs the
Terminated Stockholder at any time "for cause;" or
(b) the voluntarily resignation of the Terminated Stockholder other
than a termination for "good reason" (but only if such Terminated Stockholder is
party to an effective employment or consulting agreement with the Company or one
of its Subsidiaries that provides for "good reason" termination by such
Terminated Stockholder); or
(c) death, disability, a termination by the Company or the
Subsidiary that employs the Terminated Stockholder other than "for cause" or a
voluntary resignation of the Terminated Stockholder for "good reason" (but only
if such Terminated Stockholder is party to an effective employment or consulting
agreement with the Company or one of its Subsidiaries that provides for "good
reason" termination by such Terminated Stockholder).
4.2 Definitions. For purposes of this Section 4, the following definitions
apply:
(a) The term "Repurchase Price" shall be defined as the fair market
value of the Repurchase Shares, as determined in the good faith judgment of the
Board. The fair market value shall be determined using the same method of
valuation that First Reserve uses for purposes of reporting to its limited
partners. "Fair market value" shall be determined with a discount of 25% applied
to Repurchase Shares representing a minority ownership position (and without any
discount attributable to lack of liquidity of the Repurchase Shares), unless
such determination is made in connection with a valuation under Section 4.1(c),
or after 15 years from the date of this Agreement, under Section 4.1(b). The
Board shall determine the fair market value of the Repurchase Shares as of the
last day of the month in which the employment of the Terminated Stockholder is
terminated. Vested Stock Rights (including unvested Stock Rights that become
vested as a result of such termination) shall be valued as set forth in this
Section 4.2(a); and
(b) The term "for cause" shall mean any termination resulting from:
(i) the Terminated Stockholder's continued failure to follow reasonable
directions of the Board for a period of ten days after the Board has provided
written notice to such employee specifying such directions, (ii) the Terminated
Stockholder's conviction of, or the entering by such employee of a plea of
guilty or nolo contendere to, a felony charge or crime involving moral
turpitude, (iii) the Terminated Stockholder engaging in fraudulent or criminal
activity (whether or not prosecuted) against the Company or any subsidiary or
affiliate of the Company, (iv) any misconduct by the Terminated Stockholder that
has caused or is reasonably likely to cause a material financial loss to the
Company, (v) a material violation of any provisions of any agreement between the
Terminated Stockholder and the Company or an affiliate or subsidiary of the
Company,
23
including any employment/consulting agreement or the Company's employee manual
or code of conduct, (vi) receipt by the Terminated Stockholder of any kickback
or rebate of any fee or expense paid by the Company, (vii) the use of illegal
drugs, the persistent excessive use of alcohol or engaging in any other activity
that materially impairs the Terminated Stockholder's ability to perform his
duties hereunder or results in conduct that could bring the Company or any of
its subsidiaries or affiliates into substantial public disgrace or disrepute,
(viii) excessive absenteeism by the Terminated Stockholder not related to
permanent disability, or (ix) any dishonesty by the Terminated Stockholder to
the Company or an affiliate or subsidiary of the Company. The term "disability"
shall mean a long-term disability within the meaning of the company-sponsored
long-term disability insurance program then applicable to the Terminated
Stockholder (or in the absence of such program, as determined by the Board in
good faith). Notwithstanding the foregoing definitions, the term "for cause" or
"disability" shall instead be defined as set forth in any management, employment
or consulting agreement, as the case may be, between the Company or one of its
Subsidiaries and the Terminated Stockholder, as shall "good reason" (where
applicable).
(c) Procedure for Repurchase. In the event the Company elects to
purchase the Repurchase Shares, the Company shall deliver written notice of such
intention to the Terminated Stockholder on or prior to the last day of the third
full calendar month following the month in which the employment/consultant
relationship of the Terminated Stockholder was terminated (the "Notice of
Repurchase"). Upon delivery of the Notice of Repurchase, the Terminated
Stockholder shall promptly transfer and deliver to the Company the number of
Repurchase Shares specified in the Notice of Repurchase, and the Company shall
pay the Repurchase Price for such Repurchase Shares in cash or immediately
available funds within ten (10) days of delivery of the Repurchase Shares. The
purchase of the Repurchase Shares shall be deemed to have occurred upon delivery
of the Repurchase Price, notwithstanding any failure by the Terminated
Stockholder to deliver share certificates representing the Repurchase Shares or
any dispute regarding the Repurchase Price.
4.3 Disputes as to Repurchase Price. (a) Any dispute regarding the price
to be paid for the Repurchase Shares shall be resolved in the manner set forth
in Section 4.3(b). In the event of any such dispute, pending its resolution, the
Terminated Stockholder will irrevocably transfer the Repurchase Shares to the
Company as set forth in Section 4.2(b) and the Company shall pay the Repurchase
Price for the Repurchase Shares (as determined by the Board) within ten (10)
business days of the Notice of Repurchase. The Company shall pay the difference,
if any, between the Repurchase Price determined by the Board and the Repurchase
Price determined by the procedures outlined in Section 4.3(b) upon a final
determination of the Repurchase Price, together with interest on any such
difference at the "prime lending rate" charged by the Company's primary
commercial lender.
(b) Should any Terminated Stockholder (the "Challenging
Stockholder") desire to challenge the determination by the Board as to
Repurchase Price, such Challenging Stockholder may, within five (5) days of
receiving such notification from the Company of the Repurchase Price, notify the
Company that such Stockholder wishes to
24
challenge said determination, which notice shall include the valuation asserted
by the Challenging Stockholder, and retain Xxxxxx Xxxxxxx & Co., or such other
investment banking firm selected by the Challenging Stockholder and approved by
the Board in its sole discretion, to determine the Repurchase Price. The
investment bank selected shall be empowered solely to chose between the
Repurchase Price determined by the Board and the Repurchase Price asserted by
the Challenging Stockholder. The decision of said investment bank shall be
delivered in writing to the Board not more than fourteen (14) days after its
retention. The cost and expense of the investment bank shall be paid by the
Company if the Board's Repurchase Price is not chosen by such investment bank,
and shall be paid by the Challenging Stockholder if the Board's Repurchase Price
is so chosen. Failure of a Stockholder to exercise its right to challenge a
valuation shall be deemed to be an acceptance of the Board's Repurchase Price.
4.4 Unvested Stock Rights. Any unvested Stock Right shall not be
repurchased pursuant to this Section 4 and, except as otherwise provided in the
agreement or instrument pursuant to which such Stock Right was granted, shall
terminate upon termination of Employment.
5. ASSIGNMENT, AMENDMENT AND TERMINATION.
5.1 Assignment. Notwithstanding anything herein to the contrary:
(a) Registration Rights. The registration rights of First Reserve
under Section 2 of this Agreement may be assigned in connection with any
Transfers made by First Reserve; provided that no party may be assigned any of
the foregoing rights unless (i) the Company is given written notice by the
assigning party at the time of such assignment stating the name and address of
the assignee and identifying the securities of the Company as to which the
rights in question are being assigned and (ii) any such assignee shall have
agreed to be subject to all the terms and conditions of this Agreement,
including without limitation the provisions of this Section 5.
(b) Voting Rights. The voting rights under Section 1 of this
Agreement may be assigned by First Reserve to another FRC Affiliate.
(c) Repurchase Rights. The Company may assign its rights under
Section 4 to First Reserve or another FRC Affiliate.
5.2 Amendment of Rights; Termination.
(a) Amendment. Subject to Section 7.10, any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively)
with the written consent of Stockholders holding not less than a majority of the
outstanding shares of Common Stock held by Stockholders. Notwithstanding the
foregoing, but subject to Section 3.5(b), no provision of this Agreement may be
amended or waived if a particular Stockholder (or discrete group of
Stockholders) would be materially and disproportionately (vis a vis other
Stockholders) prejudiced thereby, unless such Stockholder (or a majority of
shares of such group of Stockholders) consents in writing to
25
such amendment or waiver; provided that the addition of any Investor or
Management Stockholder as a Stockholder and the amendment of this Agreement in
connection therewith shall not be deemed to materially prejudice any Investor or
Management Stockholder or group of Investors or Management Stockholders so long
as any such amendments do not provide (i) any such new Investor with any rights
or privileges under this Agreement other than rights which are on parity with or
subordinate to those of First Reserve or any other Investor contained in this
Agreement as of the date hereof, notwithstanding the fact such rights may be
senior to those of Management Stockholders; or (ii) any such new Management
Stockholders with any rights or privileges under this Agreement other than
rights which are on parity with or subordinate to those of Management
Stockholders contained in this Agreement as of the date hereof. Any amendment or
waiver effected in accordance with this Section 5.2 shall be binding upon the
Stockholders, each Holder, each permitted successor or assignee of such
Stockholder or Holder and the Company; provided that subject to Section 3.5(b),
the rights under Section 2 shall terminate only as set forth in Section 2.
(b) Termination. This Agreement may be terminated (i) with the
written consent of Stockholders holding not less than a majority of the
outstanding shares of Common Stock held by Stockholders; provided that if such
termination is in connection with any transaction which would have resulted in a
Management Stockholder having rights under Sections 2.3 or 3.3, or First Reserve
having rights under Sections 3.2 or 3.5, the Management Stockholders or First
Reserve, notwithstanding the termination, shall be entitled to exercise any
rights provided to them under such Sections; or (ii) with the consent of a
majority of the outstanding shares of Common Stock held by Investors, and a
majority of the outstanding shares of Common Stock held by Management
Stockholders, voting separately as a class.
6. LEGEND.
Prior to an initial public offering, each certificate representing shares
of capital stock of the Company now or hereafter owned by a Stockholder shall be
endorsed with the following legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY
26
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.
THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN
STOCKHOLDER AGREEMENT BY AND BETWEEN, THE STOCKHOLDER, THE CORPORATION AND
CERTAIN HOLDERS OF SHARES OF STOCK OF THE CORPORATION. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE
CORPORATION.
7. GENERAL PROVISIONS.
7.1 Notices. Except as may be otherwise provided herein, all notices,
requests, waivers and other communications made pursuant to this Agreement shall
be in writing and shall be conclusively deemed to have been duly given (a) when
hand delivered to the other party; (b) when received when sent by facsimile at
the address and number set forth below; (c) three (3) business days after
deposit in the U.S. mail with first class or certified mail receipt requested
postage prepaid and addressed to the parties as set forth below; or (d) the next
business day after deposit with a national overnight delivery service, postage
prepaid, addressed to the parties as set forth below with next-business-day
delivery guaranteed, provided that the sending party receives a confirmation of
delivery from the delivery service provider.
To First Reserve:
First Reserve Fund IX, L.P.
c/o First Reserve Corporation
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: X. Xxxxx Xxxxxxxxx
Fax: (000) 000-0000
With a copy to:
First Reserve Corporation
Xxx Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Fax Number: (000) 000-0000
27
To the Company:
Dresser-Rand Group Inc.
c/o First Reserve Corporation
Xxx Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Fax Number: (000) 000-0000
With a copy to:
Debevoise & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
And to:
Dresser-Rand Group Inc.
Xxxx Xxxxx Xxxxx
Xxxxx, Xxx Xxxx 00000
Attention: General Counsel
To any of the Management Stockholders:
To their address of record on the books of the Company
Each person making a communication hereunder by facsimile shall promptly confirm
by telephone to the person to whom such communication was addressed each
communication made by it by facsimile pursuant hereto but the absence of such
confirmation shall not affect the validity of any such communication. A party
may change or supplement the addresses given above, or designate additional
addresses, for purposes of this Section 7.1 by giving the other parties written
notice of the new address in the manner set forth above.
7.2 Effective Date; Entire Agreement; Interpretation; Termination of Prior
Agreements. This Amended and Restated Stockholder Agreement shall become
effective upon the consummation of the Company's first underwritten public
offering of Common Stock pursuant to Registration Statement No. 333-124963 filed
under the Securities Act. This Agreement contains the entire agreement and
understanding of the parties with respect to the subject matter hereof (other
than any additional restrictions on transfer and repurchase rights contained in
subscription or restricted stock agreements, employment/consulting agreements or
stock option agreements between the Company and the Management Stockholders)
and, once effective, shall supersede the Original Stockholders Agreement and any
and all prior negotiations, correspondence, agreements, understandings, duties
or obligations between the parties respecting the subject matter of this
Agreement
28
7.3 Governing Law. This Agreement shall be governed by and construed
exclusively in accordance with the internal laws of the State of Delaware,
excluding that body of law relating to conflict of laws and choice of law.
7.4 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, then such provision(s) shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision(s) were so excluded and shall be enforceable in accordance with
its terms.
7.5 Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any person, other than the parties hereto and their
permitted successors and assigns, any rights or remedies under or by reason of
this Agreement.
7.6 Successors and Assigns. Subject to the provisions of Section 5.1, the
provisions of this Agreement shall inure to the benefit of, and shall be binding
upon, the successors and permitted assigns of the parties hereto.
7.7 Captions. The captions to sections of this Agreement have been
inserted for identification and reference purposes only and shall not be used to
construe or interpret this Agreement.
7.8 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Facsimile signatures to this Agreement shall be
valid for all purposes.
7.9 Voting to Effectuate Agreement. Each Stockholder party to this
Agreement agrees to vote his, her or its shares of capital stock consistent with
the terms and conditions of this Agreement. In the event of any inconsistency
between this Agreement and the Certificate of Incorporation or Bylaws of the
Company, the provisions of this Agreement shall control, and each Stockholder of
the Company shall vote his, her or its capital stock in such manner as to
effectuate any and all amendments to the Certificate of Incorporation or Bylaws
that may be necessary in order to bring the Certificate of Incorporation and
Bylaws in conformity with the provisions of this Agreement. The vote of any
Stockholder of the Company in violation of the provisions of this Agreement
shall be void and shall be ignored by the Company. In connection therewith, each
Stockholder hereby grants an irrevocable proxy with full power of substitution
to Xxxx XxXxxxxxxx or Xxxxxxx X. Xxxxx for purposes of voting all shares of
capital stock subject to this Agreement at any meeting of stockholders or in any
action by written consent of stockholders in any manner necessary to give effect
to the provisions of this Agreement, it being acknowledged that such proxy is
coupled with an interest under this Agreement.
7.10 New Stockholders to Become Parties. Prior to an initial public
offering of the Common Stock, the Company shall cause each new stockholder of
the Company (including any Permitted Transferee) to become a party to this
Agreement as a "Stockholder" by executing a counterpart to this Agreement or a
written instrument agreeing to be bound by the provisions hereof and will
designate such party as an "Investor" or a "Management Stockholder," as the case
may be. Prior to an initial public
29
offering of the Common Stock, the Company shall also cause any person that is
granted stock options by the Company (an "Optionholder") but who is not already
a Stockholder at the time of such grant to become a party to this Agreement by
executing a counterpart to this Agreement or a written instrument agreeing to be
bound by the provisions hereof. Each such Optionholder shall become a
Stockholder under this Agreement upon the exercise of any options, and at such
time, the Company shall make the Investor/Management Stockholder designation
described in this Section 7.10 with respect to such party. Prior to becoming a
Stockholder, each Optionholder will have no rights under this Agreement other
than those specifically set forth in this Agreement.
7.11 Arbitration. Any controversy, dispute, or claim arising out of, in
connection with, or in relation to, the interpretation, performance or breach of
this Agreement, including, without limitation, the validity, scope, and
enforceability of this section, may at the election of any party, be solely and
finally settled by arbitration conducted in, by and in accordance with the then
existing rules for commercial arbitration of the American Arbitration
Association, or any successor organization and with the Expedited Procedures
thereof (collectively, the "Rules"). Each of the parties hereto agrees that such
arbitration shall be conducted by a single arbitrator selected in accordance
with the Rules; provided that such arbitrator shall be experienced in deciding
cases concerning the matter which is the subject of the dispute. Any of the
parties may demand arbitration by written notice to the other and to the
Arbitrator set forth in this Section 7.11 ("Demand for Arbitration"). Each of
the parties agrees that if possible, the award shall be made in writing no more
than 30 days following the end of the proceeding. Any award rendered by the
arbitrator(s) shall be final and binding and judgment may be entered on it in
any court of competent jurisdiction. Each of the parties hereto agrees to treat
as confidential the results of any arbitration (including, without limitation,
any findings of fact and/or law made by the arbitrator) and not to disclose such
results to any unauthorized person. The parties intend that this agreement to
arbitrate be valid, enforceable and irrevocable.
7.12 Jurisdiction. In the absence of an arbitration election pursuant to
Section 7.11, the parties hereby irrevocably submit and consent to the
nonexclusive jurisdiction of the State and Federal Courts located in the Borough
of Manhattan in The City of New York in the State of New York with respect to
any action or proceeding arising out of this Agreement or any matter arising
therefrom or relating thereto. In any such action or proceeding, each
Stockholder waives personal service of the summons and complaint or other
process and papers therein and agrees that the service thereof may be made by
mail directed to such Stockholder at the address for such Stockholder provided
herein, service to be deemed complete seven (7) days after mailing, or as
permitted under the rules of either of said Courts.
[Signature Page Follows]
30
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
DRESSER-RAND GROUP INC. FIRST RESERVE
DRESSER-RAND HOLDINGS, LLC
BY: FIRST RESERVE GP IX, L.P., AS
MANAGER
BY: FIRST RESERVE GP IX, INC.,
ITS GENERAL PARTNER
By: /S/ Xxxxxxx X. Xxxxxxx By: /S/ Xxxxxx X. Xxxxxxx
---------------------------------- ----------------------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President Title: Managing Director
and Chief Financial Officer
BY: FIRST RESERVE GP X, L.P., AS
MANAGER
BY: FIRST RESERVE GP X, INC.,
ITS GENERAL PARTNER
By: /S/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Managing Director
D-R INTERHOLDING, LLC
BY: XXXXXX X. XXXXXXX, AS MANAGER
By: /S/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Managing Director
[Signature Page to Stockholder Agreement]
