EXHIBIT 10.9
EXECUTION COPY
STOCKHOLDERS AGREEMENT
BY AND AMONG
CMH HOLDINGS, INC.,
THE FOUNDERS
AS DEFINED HEREIN
AND
THE INVESTORS
AS DEFINED HEREIN
DATED AS OF MARCH 31, 2005
TABLE OF CONTENTS
SECTION I. DEFINITIONS...................................................................2
1.1. Construction of Terms........................................................2
1.2. Terms Not Defined............................................................2
1.3. Number of Shares of Stock....................................................2
1.4. Defined Terms................................................................2
SECTION II. REPRESENTATIONS AND WARRANTIES...............................................4
2.1. Representations and Warranties of the Founders...............................4
2.2. Representations and Warranties of the Investors..............................5
2.3. Representations and Warranties of New Holdings...............................5
SECTION III. RESTRICTIONS ON TRANSFER AND ISSUANCE; RIGHT OF FIRST
OFFER; CO-SALE PROVISIONS; DRAG ALONG....................................6
3.1. Restrictions on Transfer and Issuance........................................6
3.2. Permitted Transfers..........................................................6
3.3. Right of First Offer.........................................................6
3.4. Co-Sale Option of Eligible Investors.........................................8
3.5. Co-Sale Option of Participating Stockholders.................................9
3.6. Drag Along..................................................................11
3.7. Contemporaneous Transfers...................................................12
3.8. Effect of Prohibited Transfers..............................................12
3.9. Assignment of Rights........................................................13
SECTION IV. RIGHTS TO PURCHASE..........................................................13
4.1. Right to Participate in Certain Sales of Additional Securities..............13
4.2. Eligible Person Acceptance..................................................13
4.3. Calculation of Pro Rata Allotment...........................................13
4.4. Sale to Third Party.........................................................14
4.5. Exceptions to Pre-Emptive Rights............................................14
4.6. Assignment of Rights........................................................14
SECTION V. BOARD REPRESENTATION.........................................................14
5.1. Board Composition...........................................................14
5.2. Removal; Vacancies..........................................................15
SECTION VI. COVENANTS OF NEW HOLDINGS...................................................15
6.1. Financial Statements, Reports, Etc..........................................15
6.2. Inspection, Consultation and Advice.........................................16
6.3. Key Person Insurance........................................................16
6.4. Directors and Officers' Insurance; Charter and Bylaws.......................17
6.5. Compensation of Directors and Investors.....................................17
6.6. Employee Agreements.........................................................17
6.7. Lock-Up Agreements..........................................................17
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6.8. Material Adverse Change.....................................................17
6.9. Indemnification.............................................................18
6.10. Amendments to Certificate of Incorporation..................................19
6.11. Related Party Transactions..................................................19
6.12. Management Compensation.....................................................19
6.13. Special Bonus to TMHC Founders..............................................20
6.14. Special Provisions Relating to ▇▇▇▇▇▇▇ Contribution Agreement...............20
SECTION VII. MISCELLANEOUS PROVISIONS...................................................21
7.1. Reliance....................................................................21
7.2. Legend on Shares............................................................22
7.3. Amendment and Waiver; Actions of the Board..................................22
7.4. Notices.....................................................................22
7.5. Headings....................................................................23
7.6. Counterparts................................................................23
7.7. Remedies; Severability......................................................23
7.8. Entire Agreement............................................................24
7.9. Adjustments.................................................................24
7.10. Law Governing...............................................................24
7.11. Successors and Assigns......................................................24
7.12. Dispute Resolution..........................................................24
7.13. Termination.................................................................24
7.14. Stockholder Lock-Up.........................................................25
7.15. No Waiver...................................................................25
EXHIBITS
Exhibit A - Form of Joinder Agreement
SCHEDULES
Schedule A - TMHC Founders, ▇▇▇▇▇▇▇ Founders and Investors
ii
STOCKHOLDERS AGREEMENT
This
STOCKHOLDERS AGREEMENT (the "AGREEMENT") is made as of March 31, 2005,
by and among CMH Holdings, Inc., a Delaware corporation ("NEW HOLDINGS"), the
Persons identified on SCHEDULE A hereto as the "TMHC Founders" (the "TMHC
FOUNDERS"), the persons identified on SCHEDULE A hereto as the "▇▇▇▇▇▇▇
Founders" (the "▇▇▇▇▇▇▇ FOUNDERS" and, collectively with the TMHC Founders, the
"FOUNDERS," and each, individually, a "FOUNDER"), the Persons identified on
SCHEDULE A hereto as investors (collectively, the "INVESTORS," and each,
individually, an "INVESTOR"), and any other stockholder or option holder who
from time to time becomes party to this Agreement by execution of a Joinder
Agreement in substantially the form attached hereto as EXHIBIT A (the "JOINDER
AGREEMENT"). For the purpose of this Agreement, a stockholder or an option
holder who joins this Agreement pursuant to a Joinder Agreement shall be
included in the term "Founder" or "Investor" as specified in such Joinder
Agreement.
WHEREAS, prior to the date hereof, certain Investors and the TMHC Founders
were the holders of capital stock of TMHC Holdings, Inc., a Delaware corporation
("TMHC"), and certain Investors and the ▇▇▇▇▇▇▇ Founders were the holders of
capital stock of ▇▇▇▇▇▇▇ Holdings, Inc., a Delaware corporation ("▇▇▇▇▇▇▇");
WHEREAS, on the date hereof, New Holdings, ▇▇▇▇▇▇▇, TMHC, the Investors and
the Founders are entering into a certain Contribution and Share Exchange
Agreement (the "SHARE EXCHANGE AGREEMENT"), pursuant to which, among other
things, the Investors and the Founders are exchanging their shares of TMHC
capital stock and ▇▇▇▇▇▇▇ capital stock, as applicable, for shares of Common
Stock and Convertible Preferred Stock (each as defined below) of New Holdings;
WHEREAS, TMHC, the TMHC Founders and certain of the Investors are parties
to a certain
Stockholders Agreement, dated as of May 24, 2004 (the "PRIOR TMHC
AGREEMENT"), and, in connection with the Share Exchange Agreement, the parties
thereto desire to terminate the Prior TMHC Agreement in its entirety and enter
into this Agreement for purposes of setting forth certain mutual agreements and
understandings among them;
WHEREAS, ▇▇▇▇▇▇▇, the ▇▇▇▇▇▇▇ Founders and certain of the Investors are
parties to a certain
Stockholders Agreement, dated as of August 2, 2004 (the
"PRIOR ▇▇▇▇▇▇▇ AGREEMENT"), and, in connection with the Share Exchange
Agreement, the parties thereto desire to terminate the Prior ▇▇▇▇▇▇▇ Agreement
in its entirety and enter into this Agreement for purposes of setting forth
certain mutual agreements and understandings among them; and
WHEREAS, it is a condition precedent to each of the parties' obligations
under the Share Exchange Agreement that this Agreement be executed by the
parties hereto, and the parties are willing to execute this Agreement and be
bound by the provisions hereof; and
WHEREAS, the parties hereto desire to agree upon certain terms regarding
their rights and obligations with respect to the securities of New Holdings, now
or hereafter outstanding and held by them.
NOW, THEREFORE, in consideration of the premises, as an inducement to the
Founders and the Investors to consummate the transactions contemplated by the
Share Exchange Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, New Holdings, the
Founders and the Investors hereby covenant and agree with each other as follows:
SECTION I. DEFINITIONS
1.1. CONSTRUCTION OF TERMS. As used herein, the masculine, feminine or
neuter gender, and the singular or plural number, shall be deemed to be or to
include the other genders or number, as the case may be, whenever the context so
indicates or requires. Any reference to "day" shall mean a calendar day unless
indicated otherwise.
1.2. TERMS NOT DEFINED. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Share Exchange
Agreement.
1.3. NUMBER OF SHARES OF STOCK. Whenever any provision of this
Agreement calls for any calculation based on a number of shares of capital stock
issued and outstanding or held by a Person, the number of shares deemed to be
issued and outstanding or held by that Person, unless specifically stated
otherwise, shall be the total number of shares of Common Stock then issued and
outstanding and owned by such Person, plus, without duplication, the total
number of shares of Common Stock issuable upon the conversion of any Convertible
Preferred Stock (but not shares of Redeemable Preferred Stock issuable upon
conversion of any Convertible Preferred Stock) then issued and outstanding and
owned by such Person.
1.4. DEFINED TERMS. The following capitalized terms, as used in this
Agreement, shall have the meanings set forth below.
"AFFILIATE" shall mean, with respect to any Person (as defined below), any
other Person which, directly or indirectly, controls, is controlled by or is
under common control with such Person, including, without limitation, any
partner, officer, director, member or employee of such Person and, with respect
to any Person that is a venture capital fund, any investment fund now or
hereafter managed by, or which is controlled by or under common control with,
one or more general partners of such Person.
"BOARD OF DIRECTORS" shall mean the board of directors of New Holdings.
"CHARTER" shall mean the amended and restated certificate of incorporation
of New Holdings in effect as of the date hereof, as amended from time to time.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMISSION" shall mean the United States Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act and the Exchange Act.
"COMMON STOCK" shall mean, collectively, (a) the common stock, par value
$0.01 per share, of New Holdings, (b) the Class B common stock, par value $0.01
per share, of New
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Holdings, and (c) any other common equity securities issued by New Holdings,
and, in each case, any other shares of stock issued or issuable with respect
thereto (whether by way of a stock dividend or stock split or in exchange for or
upon conversion of such shares or otherwise in connection with a combination of
shares, recapitalization, merger, consolidation or other corporate
reorganization).
"CONVERTIBLE PREFERRED STOCK" shall mean, collectively, (a) the Series A
convertible preferred stock, par value $0.01 per share, of New Holdings, and (b)
the Series B convertible preferred stock, par value $0.01 per share, of New
Holdings, and, in each case, any other shares of stock issued or issuable with
respect thereto (whether by way of a stock dividend or stock split or in
exchange for or upon conversion of such shares or otherwise in connection with a
combination of shares, recapitalization, merger, consolidation or other
corporate reorganization).
"DIRECTOR" shall mean a member of the Board of Directors.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended
from time to time, or any similar successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
"MAJORITY INTEREST" shall mean Investors holding not less than a majority
of the outstanding Shares held by all Investors, calculated in accordance with
Section 1.3 hereof.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the assets,
liabilities, condition (financial or other), business, results of operations or
prospects of a Person.
"PERSON" shall mean any individual, corporation, joint venture, trust,
unincorporated organization, limited liability company, partnership, government
and any agency or political subdivision thereof.
"PREFERRED STOCK" shall mean the Redeemable Preferred Stock and the
Convertible Preferred Stock.
"PROCEEDING" shall mean any complaint, lawsuit or similar legal action
filed in any court and any investigation, formal or informal, by any regulatory
or self-regulatory authority or any other Person.
"QPO" shall have the meaning set forth in the Charter.
"REDEEMABLE PREFERRED STOCK" shall mean, collectively, (a) the Series A
redeemable preferred stock, par value $0.01 per share, of New Holdings, and (b)
the Series B redeemable preferred stock, par value $0.01 per share, of New
Holdings, and, in each case, any other shares of stock issued or issuable with
respect thereto (whether by way of a stock dividend or stock split or in
exchange for or in replacement of such shares or otherwise in connection with a
combination of shares, recapitalization, merger, consolidation or other
corporate reorganization).
"RESTRICTED PERIOD" shall mean the period that commences on the date hereof
and ends on August 2, 2007.
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"SECURITIES" shall mean the Convertible Preferred Stock and the Common
Stock.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended from
time to time, or any similar successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
"SHARES" shall mean, at any time, (i) shares of Common Stock, (ii) shares
of Preferred Stock, and (iii) any other equity securities now or hereafter
issued by New Holdings, together with any options thereon and any other shares
of stock issued or issuable with respect thereto (whether by way of a stock
dividend, stock split or in exchange for or upon conversion of such shares or
otherwise in connection with a combination of shares, recapitalization, merger,
consolidation or other corporate reorganization). At all times, the number of
Shares deemed issued and outstanding or held or to be voted by any Person shall
be calculated in accordance with Section 1.3.
"STOCK OPTION PLAN" means New Holdings' 2005 Stock Option and Grant Plan,
as amended from time to time.
"TRANSFER" means any direct or indirect transfer, donation, sale,
assignment, pledge, hypothecation, grant of a security interest in or other
disposal or attempted disposal of all or any portion of a security, any interest
or rights in a security, or any rights under this Agreement. "TRANSFERRED" means
the accomplishment of a Transfer, and "Transferee" means the recipient of a
Transfer.
SECTION II. REPRESENTATIONS AND WARRANTIES
2.1. REPRESENTATIONS AND WARRANTIES OF THE FOUNDERS. Each of the
Founders, individually and not jointly, hereby represents, warrants and
covenants to New Holdings and the Investors as follows: (a) such Person has full
authority, power and capacity to enter into this Agreement and perform its
obligations hereunder; (b) this Agreement constitutes the valid and binding
obligation of such Person enforceable against it in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies and (iii) to the extent the indemnification provisions may be limited
by applicable federal or state securities laws; and (c) the execution, delivery
and performance by such Person of this Agreement (i) does not and will not
violate any laws, rules or regulations of the United States or any state or
other jurisdiction applicable to such Person, or require such Person to obtain
any approval, consent or waiver of, or to make any filing with, any other Person
that has not been obtained or made and (ii) does not and will not result in a
breach of, constitute a default under, accelerate any obligation under, or give
rise to a right of termination of, any indenture or loan or credit agreement or
any other material agreement, contract, instrument, mortgage, lien, lease,
permit, authorization, order, writ, judgment, injunction, decree, determination
or arbitration award to which such Person is a party or by which the property of
such Person is bound or affected, or result in the creation or imposition of any
mortgage, pledge, lien, security interest or other charge or encumbrance on any
of the assets or properties of such Person.
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2.2. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each of the
Investors, separately and not jointly, hereby represents, warrants and covenants
to New Holdings and the Founders as follows: (a) such Investor has full
authority, power and capacity to enter into this Agreement and perform its
obligations hereunder; (b) this Agreement constitutes the valid and binding
obligation of such Investor enforceable against it in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies and (iii) to the extent the indemnification provisions may be limited
by applicable federal or state securities laws; and (c) the execution, delivery
and performance by such Investor of this Agreement (i) does not and will not
violate any laws, rules or regulations of the United States or any state or
other jurisdiction applicable to such Investor, or require such Investor to
obtain any approval, consent or waiver of, or to make any filing with, any
Person that has not been obtained or made and (ii) does not and will not result
in a breach of, constitute a default under, accelerate any obligation under, or
give rise to a right of termination of, any indenture or loan or credit
agreement or any other material agreement, contract, instrument, mortgage, lien,
lease, permit, authorization, order, writ, judgment, injunction, decree,
determination or arbitration award to which such Investor is a party or by which
the property of such Investor is bound or affected, or result in the creation or
imposition of any mortgage, pledge, lien, security interest or other charge or
encumbrance on any of the assets or properties of such Investor.
2.3. REPRESENTATIONS AND WARRANTIES OF NEW HOLDINGS. New Holdings
hereby represents, warrants and covenants to the Investors and the Founders as
follows: (a) New Holdings has full authority, power and capacity to enter into
this Agreement and perform its obligations hereunder; (b) this Agreement
constitutes the valid and binding obligation of New Holdings enforceable against
it in accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies, and (iii) to the extent the indemnification provisions
may be limited by applicable federal or state securities laws; and (c) the
execution, delivery and performance by New Holdings of this Agreement (i) does
not and will not violate any laws, rules or regulations of the United States or
any state or other jurisdiction applicable to New Holdings, or require New
Holdings to obtain any approval, consent or waiver of, or to make any filing
with, any Person that has not been obtained or made and (ii) does not and will
not result in a breach of, constitute a default under, accelerate any obligation
under, or give rise to a right of termination of, any indenture or loan or
credit agreement or any other material agreement, contract, instrument,
mortgage, lien, lease, permit, authorization, order, writ, judgment, injunction,
decree, determination or arbitration award to which New Holdings is a party or
by which the property of New Holdings is bound or affected, or result in the
creation or imposition of any mortgage, pledge, lien, security interest or other
charge or encumbrance on any of the assets or properties of New Holdings.
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SECTION III. RESTRICTIONS ON TRANSFER AND ISSUANCE; RIGHT OF FIRST OFFER;
CO-SALE PROVISIONS; DRAG ALONG
3.1. RESTRICTIONS ON TRANSFER AND ISSUANCE.
(a) Until the expiration of the Restricted Period, no ▇▇▇▇▇▇▇
Founder may Transfer any of his, her or its Shares except pursuant to Transfers
described in and carried out in accordance with subsections (a) or (b) of
Section 3.2, Section 3.5 or Section 3.6. Following the expiration of the
Restricted Period, each of the ▇▇▇▇▇▇▇ Founders agrees that such ▇▇▇▇▇▇▇ Founder
will not, without the prior written consent of a Majority Interest, Transfer all
or any portion of the Shares now owned or hereafter acquired by such Founder,
except in connection with, and strictly in compliance with, the provisions of
this Section III.
(b) Each of the TMHC Founders agrees that such TMHC Founder
will not, without the prior written consent of a Majority Interest, Transfer all
or any portion of the Shares now owned or hereafter acquired by such Founder,
except in connection with, and strictly in compliance with, the provisions of
this Section III.
3.2. PERMITTED TRANSFERS. Notwithstanding anything herein to the
contrary, the provisions of Sections 3.3 and 3.4 shall not apply to either of
the Transfers listed below; PROVIDED that, in each case the Transferee shall
either be an original party to this Agreement or shall have entered into a
Joinder Agreement in substantially the form attached hereto as EXHIBIT A
providing that all Shares so Transferred shall continue to be subject to all
provisions of this Agreement as if such Shares were still held by the Founder
effecting such Transfer, except that no further Transfer shall thereafter be
permitted hereunder except in compliance with Sections 3.3 and 3.4:
(a) Transfers by any Founder to the spouse, children or
siblings of such Founder or to a trust, family limited partnership, or other
estate planning vehicle for the exclusive benefit of any such Founder, spouse,
children or siblings; and
(b) Transfers upon the death of any Founder to such Founder's
heirs, executors or administrators or to a trust under such Founder's will, or
Transfers between such Founder and such Founder's guardian or conservator.
Notwithstanding anything to the contrary in this Agreement, if a Transferee that
is a party to a Transfer described in this Section 3.2 fails to execute a
Joinder Agreement, such Transferee shall take any Shares so Transferred subject
to all provisions of this Agreement as if such Shares were still held by the
Founder making such Transfer, whether or not they so agree in writing.
3.3. RIGHT OF FIRST OFFER. Subject to Section 3.2, if at any time any
TMHC Founder or, following the Restricted Period any ▇▇▇▇▇▇▇ Founder proposes to
Transfer all or any portion of the Shares held by such Founder to any other
Person, such Founder (a "SELLER") may, subject to the provisions of Section 3.4
hereof, Transfer such Shares pursuant to and in accordance with the following
provisions of this Section 3.3:
(a) OFFER NOTICE. The Seller shall give written notice (the
"OFFER NOTICE") to New Holdings and each of the Investors and non-selling
Founders (the "OFFEREES") stating,
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among other things, that the Seller desires to make such Transfer, the number
and type of Shares proposed to be Transferred and the price per Share in cash at
which the Seller proposes to effect such Transfer (a "SELLER OFFER"). The Offer
Notice shall constitute an irrevocable offer to sell all, but not less than all,
of the Shares which are the subject of the Seller Offer (the "OFFERED SHARES")
to the Offerees, on the basis described below, at a purchase price in cash equal
to the price contained in, and on the same terms and conditions described in the
Offer Notice.
(b) OFFEREES' OPTION. At any time within twenty five (25) days
after receipt by the Offerees of the Offer Notice (the "OFFEREE OPTION PERIOD"),
each Offeree or its Affiliates, including future funds that have affiliated but
not identical general partners, may elect to accept the offer to purchase with
respect to all, but not less than all, of the Offered Shares and shall give
written notice of such election (the "OFFEREE ACCEPTANCE NOTICE") to the Seller
and each other Offeree within the Offeree Option Period, which notice shall
indicate the maximum number of Offered Shares that the Offeree is willing to
purchase, including the number of Offered Shares it would purchase if one or
more other Offerees do not elect to purchase their Pro Rata Fractions (as
defined in paragraph (c) below). An Offeree Acceptance Notice shall constitute a
valid, legally binding and enforceable agreement for the sale and purchase of
the Offered Shares covered by such Offeree Acceptance Notice. The closing for
the purchase of Offered Shares by the Offerees under this Section 3.3(b) shall
take place at the offices of New Holdings no later than the later of (i) fifteen
(15) days following the expiration of the Offeree Option Period or (ii) the
satisfaction of any governmental approval or filing requirements, or on such
other date or at such other place as may be agreed to by the Seller and such
purchasing Offerees. The Seller shall notify the Offerees promptly if any
Offeree fails to offer to purchase all of its Pro Rata Fraction (as defined
below).
(c) ALLOCATION OF OFFERED SHARES AMONG OFFEREES. Upon the
expiration of the Offeree Option Period, the number of Offered Shares to be
purchased by each Offeree shall be determined as follows: (i) first, there shall
be allocated to each Offeree electing to purchase a number of Offered Shares
equal to the lesser of (A) the number of Offered Shares as to which such Offeree
accepted the offer to purchase, as set forth in its respective Offeree
Acceptance Notice and (B) such Offeree's Pro Rata Fraction (as defined below),
and (ii) second, the balance, if any, not allocated under clause (i) above,
shall be allocated to those Offerees who within the Offeree Option Period
delivered an Offeree Acceptance Notice that accepted the offer to purchase with
respect to a number of Offered Shares that exceeded their respective Pro Rata
Fractions, in each case on a PRO RATA basis in proportion to the number of
Shares held by each such Offeree up to the amount of such excess. As used
herein, an Offeree's "PRO RATA FRACTION" shall be equal to the product obtained
by multiplying the total number of Offered Shares by a fraction, the NUMERATOR
of which is the total number of Shares owned by such Offeree, and the
DENOMINATOR of which is the total number of Shares held by all Offerees, in each
case calculated as of the date of the Offer Notice.
(d) SALE TO THIRD PARTY. If the Offerees do not elect to
exercise the rights to purchase under this Section 3.3 with respect to all, and
not less than all, of the Offered Shares proposed to be sold, the Seller may
sell all or a portion of the Offered Shares to any other Person (a "BUYER") on
the terms and conditions set forth in the Offer Notice, subject to the
provisions of Section 3.4. If the Seller's sale to a Buyer is not consummated in
accordance with the terms of Section 3.4, the Seller's rights under this Section
3.3(d) shall be deemed to lapse, and any
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Transfers of Shares by the Seller shall be in violation of the provisions of
this Agreement unless the Seller sends a new Offer Notice and once again
complies with the provisions of this Section 3.3 with respect to such proposed
Transfer.
3.4. CO-SALE OPTION OF ELIGIBLE INVESTORS. If, at any time following
the Restricted Period, a Seller provides an Offer Notice to sell Offered Shares
and the Investors do not elect to exercise the rights to purchase under Section
3.3 with respect to all of the Offered Shares proposed to be sold, the Seller
may sell all or a portion of such Offered Shares to a Buyer on the terms and
conditions set forth in the Offer Notice, subject to the provisions of this
Section 3.4:
(a) CO-SALE NOTICE. As soon as practicable following the
expiration of the Investor Option Period, and in no event later than five (5)
days thereafter, the Seller shall provide notice (the "CO-SALE NOTICE") to each
of the Investors and to each Founder who is not the Seller (the "ELIGIBLE
INVESTORS") of each such Eligible Investor's right to participate in a Transfer
of Offered Shares to a Buyer (a "SELLER TRANSFER") on a PRO RATA basis with the
Seller (the "CO-SALE OPTION"). To the extent one or more such Eligible Investors
exercise their Co-Sale Option in accordance with this Section 3.4, the number of
Shares that the Seller may Transfer pursuant to the Seller Transfer shall be
correspondingly reduced.
(b) INVESTOR ACCEPTANCE. Each of the Eligible Investors shall
have the right to exercise its Co-Sale Option by giving written notice (the
"CO-SALE ACCEPTANCE NOTICE") to the Seller within ten (10) days after receipt by
such Eligible Investor of the Co-Sale Notice (the "CO-SALE ELECTION PERIOD").
Each Co-Sale Acceptance Notice shall set forth the maximum number of Shares
subject thereto which the Eligible Investor wishes to sell, including the number
of Shares it would sell if one or more other Eligible Investors do not elect to
participate in the sale on the terms and conditions stated in the Offer Notice.
Any Eligible Investor holding Preferred Stock shall be permitted to sell to the
proposed Buyer in connection with any exercise of the Co-Sale Option, at its
option, (i) shares of Common Stock and/or shares of Common Stock and Redeemable
Preferred Stock acquired upon conversion of Convertible Preferred Stock, or (ii)
shares of Convertible Preferred Stock; PROVIDED, that in the case of (A) the
sale of Convertible Preferred Stock, the Buyer shall pay for each such share the
greater of (1) the full liquidation preference of each such share of Convertible
Preferred Stock and (2) the sum of the liquidation preference of each share of
Redeemable Preferred Stock issuable upon conversion of such share of Convertible
Preferred Stock and the relevant price per share of the underlying shares of
Common Stock, and (B) the sale of Redeemable Preferred Stock, the Buyer shall
pay for each such share the full liquidation preference of each such share of
Redeemable Preferred Stock. Anything herein to the contrary notwithstanding, in
the event the Investors do not elect to exercise their respective Co-Sale
Options, then no Founder shall be entitled to exercise its Co-Sale Option
hereunder.
(c) ALLOCATION OF SHARES. Each Eligible Investor shall have the
right to sell pursuant to the Seller Transfer that portion of its Shares which
is equal to or less than the product obtained by multiplying (i) in the case of
a Seller Transfer by a TMHC Founder, (A) the product of (1) the total number of
Shares offered by the Seller for sale to the Buyer subject to the Seller
Transfer, multiplied by (2) .085, multiplied by (B) a fraction, the NUMERATOR of
which is the total number of Shares owned by such Eligible Investor and the
DENOMINATOR of which is the total number of Shares held by all Eligible
Investors and the Seller, in each case, as of the date of the
8
Offer Notice, subject to increase as hereinafter provided, and (ii) in the case
of a Seller Transfer by any other Founder, (A) the total number of Shares
offered by the Seller for sale to the Buyer subject to the Seller Transfer by
(B) a fraction, the NUMERATOR of which is the total number of Shares owned by
such Eligible Investor and the DENOMINATOR of which is the total number of
Shares held by all Eligible Investors and the Seller. If any Eligible Investor
does not elect to sell the full amount of such Shares which such Eligible
Investor is entitled to sell pursuant to this Section 3.4, then any other
Investors who have elected to sell Shares shall have the right to sell, on a PRO
RATA basis (based on the number of Shares held by each such Investor) with any
other Investors and up to the maximum number of Shares stated in each such
Investor's Co-Sale Acceptance Notice, any Shares not elected to be sold by such
Eligible Investor.
(d) CO-SALE CLOSING. Within ten (10) calendar days after the
end of the Co-Sale Election Period, the Seller shall promptly notify each
participating Eligible Investor of the number of Shares held by such Eligible
Investor that will be included in the sale and the date on which the Seller
Transfer will be consummated, which shall be no later than the later of (i)
sixty (60) calendar days after the end of the Co-Sale Election Period and (ii)
the date of the satisfaction of any governmental approval or filing
requirements, if any. Each participating Eligible Investor may effect its
participation in any Seller Transfer hereunder by delivering to the Buyer, or to
the Seller for delivery to the Buyer, one or more instruments or certificates,
properly endorsed for transfer, representing the Shares it elects to sell
pursuant thereto. At the time of consummation of the Seller Transfer, the Seller
and the participating Investors shall cause the Buyer to remit directly to each
participating Eligible Investor that portion of the sale proceeds to which the
participating Eligible Investor is entitled by reason of its participation in
the Seller Transfer. No Shares may be purchased by the Buyer from the Seller
unless the Buyer simultaneously purchases from the participating Eligible
Investors all of the Shares that they have elected to, and are entitled to, sell
pursuant to this Section 3.4.
(e) SALE TO THIRD PARTY. Any Shares held by a Seller that are
the subject of a Seller Transfer and that the Seller desires to Transfer to a
Buyer in compliance with this Section 3.4, may be sold to such Buyer only during
the period specified in Section 3.4(d) and only on terms no more favorable to
the Seller than those contained in the Offer Notice. Promptly after such
Transfer, the Seller shall notify New Holdings and the Investors of the
consummation thereof and shall furnish such evidence of the completion and time
of completion of the Transfer and of the terms thereof as may reasonably be
requested by a Majority Interest. Prior to the effectiveness of any Transfer to
a Buyer hereunder, such Buyer shall have entered into a Joinder Agreement in
substantially the form attached hereto as EXHIBIT A, and such Buyer shall have
all the rights and obligations hereunder as if such Buyer were a Founder. If the
Seller Transfer is not consummated within the period required by this Section
3.4 or the Buyer fails timely to remit to each participating Investor its
respective portion of the sale proceeds, the Seller Transfer shall be deemed to
lapse, and any Transfer of Shares pursuant to such Seller Transfer shall be in
violation of the provisions of this Agreement unless the Seller sends a new
Offer Notice with respect to such Offered Shares and once again complies with
the provisions of Section 3.3 and Section 3.4 with respect to such Seller
Transfer.
3.5. CO-SALE OPTION OF PARTICIPATING STOCKHOLDERS. If any one or more
of the Investors entertains a bona fide offer from a Buyer who is not an
investment fund controlled by or under common control with of such Investor(s)
(a "TRANSACTION OFFER") to purchase all or
9
any portion of the Shares held by such Investor(s), such Investor(s)
(collectively, a "TRANSFERRING INVESTOR") may sell such Shares to the Buyer on
the terms and conditions of the Transaction Offer, subject to the provisions of
this Section 3.5:
(a) CO-SALE NOTICE. The Transferring Investor shall provide
notice to each Founder and each other Investor (the "STOCKHOLDER CO-SALE
NOTICE") of his, her or its right to participate in the Transaction Offer on a
PRO RATA basis with the Transferring Investor (the "STOCKHOLDER CO-SALE
OPTION"). If one or more of the Founders or other Investors (each, a
"PARTICIPATING STOCKHOLDER") exercise their Stockholder Co-Sale Option in
accordance with this Section 3.5, the number of Shares that the Transferring
Investor may Transfer in the Transaction Offer shall be correspondingly reduced.
The Stockholder Co-Sale Notice shall be accompanied by a true copy of the
Transaction Offer (which shall identify the Buyer and all relevant information
in connection therewith).
(b) ACCEPTANCE. Each Founder and each other Investor shall have
the right to exercise his, her or its Stockholder Co-Sale Option by giving
written notice of such exercise (the "STOCKHOLDER CO-SALE ACCEPTANCE NOTICE") to
the Transferring Investor within ten (10) days after receipt by such Founder or
other Investor of the Stockholder Co-Sale Notice (the "STOCKHOLDER CO-SALE
ELECTION PERIOD"). Each Stockholder Co-Sale Acceptance Notice shall indicate the
maximum number of Shares subject thereto which the Participating Stockholder
wishes to sell, including the number of Shares it would sell if one or more
other Founders or other Investors do not elect to participate in the sale on the
terms and conditions stated in the Offer Notice. Notwithstanding any such
exercise of the Stockholder Co-Sale Option, any Investor holding Preferred Stock
shall be permitted to sell to the proposed Buyer in connection with any exercise
of the Stockholder Co-Sale Option, at its option, (i) shares of Common Stock
and/or shares of Common Stock and Redeemable Preferred Stock acquired upon
conversion of Convertible Preferred Stock, or (ii) shares of Convertible
Preferred Stock; PROVIDED, that in the case of (A) the sale of Convertible
Preferred Stock, the Buyer shall pay for each such share the greater of (1) the
full liquidation preference of each such share of Convertible Preferred Stock
and (2) the sum of the liquidation preference of each share of Redeemable
Preferred Stock issuable upon conversion of such share of Convertible Preferred
Stock and the relevant price per share of the underlying shares of Common Stock,
and (B) the sale of Redeemable Preferred Stock, the Buyer shall pay for each
such share the full liquidation preference of each such share of Redeemable
Preferred Stock.
(c) ALLOCATION OF SHARES. Each Participating Stockholder shall
have the right to sell pursuant to the Transaction Offer that portion of its
Shares which is equal to or less than the product obtained by multiplying the
total number of Shares offered for sale by the Transferring Investor to the
Buyer subject to the Transaction Offer by a fraction, the NUMERATOR of which is
the total number of Shares owned by such Participating Stockholder and the
denominator of which is the total number of Shares held by all Participating
Stockholders and the Transferring Investor, in each case, as of the date of the
Stockholder Co-Sale Notice, subject to increase as hereinafter provided. If any
Participating Stockholder does not elect to sell the full amount of such Shares
which such Participating Stockholder is entitled to sell pursuant to this
Section 3.5, then any Participating Stockholders who have elected to sell Shares
shall have the right to sell, on a PRO RATA basis (based on the number of Shares
held by each such Participating Stockholder) with any other Participating
Stockholders and up to the maximum number of
10
Shares stated in each such Participating Stockholder's Stockholder Co-Sale
Acceptance Notice, any Shares not elected to be sold by such Participating
Stockholder.
(d) CO-SALE CLOSING. Within ten (10) calendar days after the
end of the Stockholder Co-Sale Election Period, the Transferring Investor shall
promptly notify each Participating Stockholder of the number of Shares held by
such Participating Stockholder that will be included in the sale and the date on
which the Transaction Offer will be consummated, which shall be no later than
the later of (i) sixty (60) calendar days after the end of the Stockholder
Co-Sale Election Period and (ii) the date of the satisfaction of any
governmental approval or filing requirements, if any. Each Participating
Stockholder may effect its participation in any Transaction Offer hereunder by
delivering to the Buyer, or to the Transferring Investor for delivery to the
Buyer, one or more instruments or certificates, properly endorsed for transfer,
representing the Shares it elects to sell pursuant thereto. At the time of
consummation of the Transaction Offer, the Transferring Investor and the
Participating Stockholders shall cause the Buyer to remit directly to each
Participating Stockholder that portion of the sale proceeds to which the
Participating Stockholder is entitled by reason of its participation in the
Transaction Offer. No Shares may be purchased by the Buyer from the Transferring
Investor unless the Buyer simultaneously purchases from the Participating
Stockholders all of the Shares that they have elected to sell pursuant to this
Section 3.5.
(e) SALE TO THIRD PARTY. Any Shares held by a Transferring
Investor that are the subject of a Transaction Offer and that the Transferring
Investor desires to Transfer to a Buyer in compliance with this Section 3.5, may
be sold to such Buyer only during the period specified in Section 3.5(d) and
only on terms no more favorable to the Transferring Investor than those set
forth in the Stockholder Co-Sale Notice. Promptly after such Transfer, the
Transferring Investor shall notify New Holdings and the Founders and other
Investors of the consummation thereof and shall furnish such evidence of the
completion and time of completion of the Transfer and of the terms thereof as
may reasonably be requested by the holders of a majority of the outstanding
Shares of the Participating Stockholders. Prior to the effectiveness of any
Transfer to a Buyer hereunder, such Buyer shall have entered into a Joinder
Agreement in substantially the form attached hereto as EXHIBIT A, and such Buyer
shall have all the rights and obligations hereunder as if such Buyer were an
Investor. If the Transaction Offer is not consummated within the period required
by this Section 3.5 or the Buyer fails timely to remit to each Participating
Stockholder its respective portion of the sale proceeds, the Transaction Offer
shall be deemed to lapse, and any Transfer of Shares pursuant to such
Transaction Offer shall be in violation of the provisions of this Agreement
unless the Transferring Investor sends a new Stockholder Co-Sale Notice with
respect to such Shares and once again complies with the provisions of Section
3.5 with respect to such Transaction Offer.
3.6. DRAG ALONG.
(a) In the event of a Sale Event (as defined below), each
Founder and Investor shall be obligated to and shall, upon the written request
of a Majority Interest: (i) sell, transfer and deliver, or cause to be sold,
transferred and delivered, to the Third Party Buyer (as defined below) a PRO
RATA portion of his, her or its Shares on the same terms applicable to the
Majority Interest (with any consideration payable in connection with such Sale
Event to be distributed among the holders of capital stock in a manner that
follows the relative rights and preferences of
11
the Shares as provided in the Charter), and/or (ii) execute and deliver such
instruments of conveyance and transfer and take such other action, including
voting such Shares in favor of any Sale Event proposed by the Majority Interest
and executing any purchase agreements, merger agreements, indemnity agreements,
escrow agreements or related sale documents, as such Majority Interest and the
Third Party Buyer may reasonably require in order to carry out the terms and
provisions of this Section 3.6 (the "DRAG-ALONG RIGHT"); PROVIDED that the terms
of any such indemnity agreement or escrow agreement impose substantially
equivalent obligations on each of the Founders and the Investors PRO RATA in
proportion to their respective ownership of the Shares; PROVIDED FURTHER, that,
in connection with a Sale Event, (i) Madison Capital Funding LLC ("MADISON") and
▇▇▇▇▇▇ Family Holdings LLC ("▇▇▇▇▇▇") shall be required to make representations
and warranties only with respect to title to and ownership of their respective
Shares, their respective authority to enter into the Sale Event and the
enforceability against Madison and ▇▇▇▇▇▇, respectively, of any agreements
entered into by Madison or ▇▇▇▇▇▇, as applicable, in connection with such Sale
Event and (ii) each of Madison's and ▇▇▇▇▇▇'▇ allocable portion of any liability
related to any such Sale Event shall be equal to the lesser of (A) their
respective PRO RATA portions of any amounts actually paid to any indemnified
party in connection therewith and (B) the proceeds received by Madison and
▇▇▇▇▇▇, respectively, in any such Sale Event.
(b) For purposes of this Section 3.6:
(i) a "SALE EVENT" shall mean a bona fide negotiated
transaction with a Third Party Buyer in which the Majority Interest have
determined (A) to sell their Shares to such Third Party Buyer in a
transaction that will result in a majority of the voting power of New
Holdings immediately prior to such transaction being transferred to such
Third Party Buyer, (B) to sell or otherwise dispose of all or substantially
all of the assets of New Holdings to such Third Party Buyer, or (C) to
cause New Holdings to merge with or into, or consolidate with, such Third
Party Buyer; and
(ii) A "THIRD PARTY BUYER" shall mean the buyer or buyers
in Section 3.6(b)(i)(A) or (B), and the surviving entity in Section
3.6(b)(i)(C), in each case, which is not Affiliated with the Investors.
(c) Not less than twenty (20) days prior to the date proposed
for the closing of any Sale Event, the Majority Interest shall give notice to
each of the Founders and Investors setting forth in reasonable detail the name
or names of the Third Party Buyer, the terms and conditions of the Sale Event,
including the purchase price, and the proposed closing date.
3.7. CONTEMPORANEOUS TRANSFERS. If two or more Founders or Investors
propose concurrent Transfers that are subject to this Section III, then the
relevant provisions of Section 3.3 and Section 3.4, as applicable, shall apply
separately to each such proposed Transfer.
3.8. EFFECT OF PROHIBITED TRANSFERS. If any Transfer by any Founder or
Investor is made or attempted contrary to the provisions of this Agreement, (a)
such purported Transfer shall be void AB INITIO, (b) New Holdings and the other
parties hereto shall have, in addition to any other legal or equitable remedies
which they may have, the right to enforce the provisions of this Agreement by
actions for specific performance (to the extent permitted by law), and (c) New
12
Holdings shall have the right to refuse to recognize any Transferee of such
Founder or Investor for any purpose.
3.9. ASSIGNMENT OF RIGHTS. Subject to Section 7.11 hereof, each
Investor shall have the right to assign its rights under this Section III to any
Transferee of such Investor's Securities, and any such Transferee shall be
deemed within the definition of an "Investor" for purposes of this Section III.
SECTION IV. RIGHTS TO PURCHASE
4.1. RIGHT TO PARTICIPATE IN CERTAIN SALES OF ADDITIONAL SECURITIES.
New Holdings agrees that it will not sell or issue or agree to sell or issue:
(a) any shares of capital stock or other equity interests of New Holdings, (b)
any securities convertible into or exercisable or exchangeable for capital stock
or other equity interests of New Holdings, or (c) any options, warrants or
rights carrying any rights to purchase capital stock or other equity interests
of New Holdings, unless New Holdings first submits a written notice to each
Founder and each Investor identifying the terms of the proposed sale (including
price, number or aggregate principal amount of securities and all other material
terms), and offers to each such Person who is an "accredited investor," as such
term is defined in Rule 501 under the Securities Act (an "ELIGIBLE PERSON"), the
opportunity to purchase its Pro Rata Allotment (as hereinafter defined) of the
securities (subject to increase for over-allotment if some Eligible Persons do
not fully exercise their rights) on terms and conditions, including price, not
less favorable than those on which New Holdings proposes to sell such securities
to a third party or parties (a "PRE-EMPTIVE RIGHT NOTICE"). Such Pre-Emptive
Right Notice shall set forth: (i) the proposed commencement date for such sale;
(ii) the number and description of the securities to be offered pursuant to such
sale; (iii) the purchase price for such securities; and (iv) other material
terms of the sale. New Holdings' offer pursuant to this Section 4.1 shall remain
open and irrevocable for a period of twenty (20) days following receipt by the
Eligible Persons of such written notice.
4.2. ELIGIBLE PERSON ACCEPTANCE. Each of the Eligible Persons shall
have the right to purchase its Pro Rata Allotment by giving written notice of
such intent to participate (the "PRE-EMPTIVE RIGHT ACCEPTANCE NOTICE") to New
Holdings within twenty (20) days after receipt by such Eligible Person of the
Pre-Emptive Right Notice (the "PRE-EMPTIVE RIGHT ACCEPTANCE ELECTION PERIOD").
Each Pre-Emptive Right Acceptance Notice shall set forth the maximum number of
Shares subject thereto which the Eligible Person wishes to buy, including the
number of Shares it would buy if one or more other Eligible Persons do not elect
to participate in the sale on the terms and conditions stated in the Pre-Emptive
Right Notice.
4.3. CALCULATION OF PRO RATA ALLOTMENT. Each Eligible Person's "PRO
RATA ALLOTMENT" of such securities shall be the proportion of such securities
offered that is necessary to maintain such Eligible Person's existing percentage
of ownership in New Holdings, as of the date of such offer, on a fully diluted
common stock equivalent basis. If one or more Eligible Persons do not elect to
purchase their respective Pro Rata Allotment, each of the electing Eligible
Persons may purchase such shares of each such non-electing Eligible Person's
allotments (taking into account the maximum amount each is wishing to purchase)
on a pro rata basis, based upon
13
the relative holdings of Shares of each of the electing Eligible Persons in the
case of over-subscription.
4.4. SALE TO THIRD PARTY. Any securities so offered that are not
purchased by the Eligible Persons pursuant to the offer set forth in Section 4.1
above may be sold by New Holdings, but only on terms and conditions not more
favorable to the purchaser than those set forth in the Pre-Emptive Rights
Notice, at any time within sixty (60) days following the termination of the
above-referenced 20-day period, but may not be sold to any other Person or on
terms and conditions, including price, that are more favorable to the purchaser
than those set forth in such Pre-Emptive Rights Notice or after such 60-day
period without renewed compliance with this Section IV.
4.5. EXCEPTIONS TO PRE-EMPTIVE RIGHTS. Notwithstanding the foregoing,
the rights granted to Eligible Persons under this Section IV shall be
inapplicable with respect to (i) the issuance of shares of Common Stock (as
appropriately adjusted for any stock split, combination, reorganization,
recapitalization, reclassification, stock distribution, stock dividend or
similar event) issued or issuable in connection with, or upon the exercise of,
options or other awards granted or to be granted to employees, officers or
directors of New Holdings pursuant to the Stock Option Plan, including shares of
Common Stock issued in replacement of shares of such Common Stock repurchased or
issuable upon the exercise of any options to purchase shares of such Common
Stock, to the extent permitted under the Stock Option Plan, (ii) securities
issued as a result of any stock split, stock dividend, reclassification or
reorganization or similar event with respect to the Shares, (iii) shares of
Common Stock or Redeemable Preferred Stock issued upon conversion of, or as a
dividend on, the Convertible Preferred Stock, or (iv) securities issued as
consideration for the arm's length purchase of stock or assets in any
acquisition or merger that is approved by a Majority Interest.
4.6. ASSIGNMENT OF RIGHTS. Subject to Section 7.11 hereof, each
Eligible Person shall have the right to assign its rights under this Section IV
to any Transferee of such Eligible Person's Shares who is an "accredited
investor" as such term is defined in Rule 501 of the Securities Act, and shall
further have the right to assign and transfer such Eligible Person's right to
accept any particular offer under Section 4.1 hereof to any Person who is an
"accredited investor" as such term is defined in Rule 501 under the Securities
Act, and any such Transferee shall be deemed within the definition of an
"Eligible Person" for purposes of this Section IV.
SECTION V. BOARD REPRESENTATION
5.1. BOARD COMPOSITION. Each Founder and each Investor agrees to
exercise his, her or its voting rights pursuant to Article IV, Section A, B or C
of the Charter, as applicable, by voting all of his, her or its Shares having
voting power (and any other Shares over which he, she or it exercises voting
control), in connection with the election of the Board of Directors and to take
such other actions as are necessary to elect and continue in office as Directors
of New Holdings (a) one (1) Person nominated by the Persons holding a majority
of the Shares held by all TMHC Founders, who shall initially be ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, and (b) one (1) Person nominated by the Persons holding a majority of the
Shares held by all ▇▇▇▇▇▇▇ Founders, who shall initially be ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
The Founders and Investors, as applicable may, in their discretion,
14
determine not to nominate and have elected one or more such nominees as provided
herein from time to time, and during any such period the Board of Directors
nonetheless shall be deemed to be duly constituted.
5.2. REMOVAL; VACANCIES. Each Founder and each Investor agrees to vote
all of his, her or its Shares having voting power (and any other Shares over
which he, she or it exercises voting control), or take any other action
necessary for the removal of any Director upon the request of the Persons then
entitled to nominate such Director as set forth in Section 5.1 above, and for
the election to the Board of Directors of a substitute nominee designated by
such party in accordance with the provisions of Section 5.1. Each Founder and
Investor further agrees to vote all of his, her or its Shares having voting
power (and any other Shares over which he, she or it exercises voting control)
in such manner or take any other action as shall be necessary or appropriate to
ensure that any vacancy on the Board of Directors with respect to any Person
nominated under Section 5.1 above occurring for any reason shall be filled only
in accordance with the provisions of Section 5.1.
SECTION VI. COVENANTS OF NEW HOLDINGS
New Holdings covenants and agrees with (i) each Investor, (ii) with respect
to Sections 6.1, 6.2, 6.4(b), 6.6, 6.7, 6.8, 6.10, and 6.11 only, each Founder
until such time as such Founder holds less than 50% of such Founder's originally
issued shares of capital stock of New Holdings, determined on an as-converted
basis, and less than 2.5% of the shares of capital stock of New Holdings,
determined on an as converted basis, (iii) with respect to Section 6.13 only,
each TMHC Founder, and (iv) with respect to Section 6.14 only, each ▇▇▇▇▇▇▇
Founder, that:
6.1. FINANCIAL STATEMENTS, REPORTS, ETC. New Holdings shall furnish to
each Investor and to each Founder the following reports:
(a) ANNUAL FINANCIAL STATEMENTS. Within ninety (90) days after
the end of each fiscal year of New Holdings, a consolidated balance sheet of New
Holdings and its subsidiaries as of the end of such fiscal year and the related
consolidated statements of income, stockholders' equity and cash flows for the
fiscal year then ended, prepared in accordance with generally accepted
accounting principles and certified by a firm of independent public accountants
of recognized national standing selected by the Board of Directors of New
Holdings;
(b) QUARTERLY FINANCIAL STATEMENTS. Within forty-five (45) days
after the end of each fiscal quarter of New Holdings, a consolidated balance
sheet of New Holdings and its subsidiaries and the related consolidated
statements of income, stockholders' equity and cash flows for the fiscal quarter
then ended, unaudited but prepared in accordance with generally accepted
accounting principles and certified by the chief financial officer of New
Holdings, such consolidated balance sheet to be as of the end of such quarter
and such consolidated statements of income, stockholders' equity and cash flows
to be for such quarter and for the period from the beginning of the fiscal year
to the end of such quarter, in each case with comparative statements for the
prior fiscal year; and
(c) MONTHLY FINANCIAL STATEMENTS. Within twenty-five (25) days
after the end of each month in each fiscal year (other than the last month in
each fiscal year), a consolidated
15
balance sheet of New Holdings and its subsidiaries and the related consolidated
statements of income, stockholders' equity and cash flows for the monthly period
then ended, unaudited but prepared in accordance with generally accepted
accounting principles and certified by the chief financial officer of New
Holdings, such consolidated balance sheet to be as of the end of such month and
such consolidated statements of income, stockholders' equity and cash flows to
be for such month and for the period from the beginning of the fiscal year to
the end of such month, in each case with comparative statements for the prior
fiscal year;
(d) BUDGET. No later than thirty (30) days prior to the start
of each fiscal year, consolidated capital and operating expense budgets, cash
flow projections and income and loss projections for New Holdings and its
subsidiaries in respect of such fiscal year, all itemized in reasonable detail
and prepared on a monthly basis, and, promptly after preparation, any revisions
to any of the foregoing;
(e) ACCOUNTANT'S LETTERS. Promptly following receipt by New
Holdings, each audit response letter, accountant's management letter and other
written report submitted to New Holdings by its independent public accountants
in connection with an annual or interim audit of the books of New Holdings or
any of its subsidiaries;
(f) NOTICES. Promptly after the commencement thereof, notice
of all actions, suits, claims, proceedings, investigations and inquiries that
could have a Material Adverse Effect with respect to New Holdings or any of its
subsidiaries; and
(g) OTHER INFORMATION. Promptly, from time to time, such other
information regarding the business, prospects, financial condition, operations,
property or affairs of New Holdings and its subsidiaries as such Investor
reasonably may request.
6.2. INSPECTION, CONSULTATION AND ADVICE. (a) New Holdings shall permit
and cause each of its subsidiaries, if any, to permit each Investor and Founder
and such persons as each Investor or Founder may designate, at such Investor's
or Founder's expense, to visit and inspect any of the properties of New Holdings
and its subsidiaries, examine their books and take copies and extracts
therefrom, discuss the affairs, finances and accounts of New Holdings and its
subsidiaries with their officers, employees and public accountants (and New
Holdings hereby authorizes said accountants to discuss with such Investor, such
Founder and such designees such affairs, finances and accounts), and consult
with and advise the management of New Holdings and its subsidiaries as to their
affairs, finances and accounts, all at reasonable times and upon reasonable
notice during normal business hours. The foregoing shall be in addition to, and
not in lieu of, the Investors' and Founder's rights under applicable law.
6.3. KEY PERSON INSURANCE. New Holdings shall, or shall cause its
applicable subsidiaries to, maintain, "key person" term life insurance policies
on the lives of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, in
amounts which are satisfactory to the Investors, which policies shall name as a
beneficiary New Holdings or such subsidiary of New Holdings as New Holdings
shall direct.
16
6.4. DIRECTORS AND OFFICERS' INSURANCE; CHARTER AND BYLAWS.
(a) The New Holdings shall, as promptly as practicable
following the date hereof, obtain and maintain directors and officers' liability
insurance coverage of at least $5,000,000 per occurrence, to the fullest extent
permitted by law covering, among other things, violations of federal or state
securities laws. New Holdings shall use its reasonable best efforts prior to any
initial public offering of New Holdings' capital stock to increase its
directors' and officers' liability insurance to at least $15,000,000 per
occurrence, including coverage of claims under the Securities Act and the
Exchange Act.
(b) New Holdings shall at all times maintain provisions in its
bylaws and the Charter indemnifying all directors against liability and
absolving all directors from liability to New Holdings and its stockholders to
the maximum extent permitted under the laws of the State of Delaware.
(c) New Holdings shall not take any action prohibited by
Article IV, Section A.8 of the Charter.
(d) New Holdings shall at all times provide the Founders with
written notice prior to the effective date of any action by written consent of
stockholders to which the Founders are not a party.
6.5. COMPENSATION OF DIRECTORS AND INVESTORS. New Holdings shall (i)
pay each non-employee Director annual compensation for such person's service as
a Director of New Holdings in an amount, if any, consistent with the amount paid
by New Holdings to any other non-employee Director of New Holdings, and (ii) pay
or promptly reimburse in full all of its directors for all of their reasonable
out-of-pocket expenses incurred in attending each meeting of the Board of
Directors or any committee thereof. New Holdings shall also pay or promptly
reimburse the Investors for reasonable direct costs associated with any other
work done on behalf of New Holdings.
6.6. EMPLOYEE AGREEMENTS. New Holdings shall obtain, and shall cause
its subsidiaries, if any, to obtain, noncompetition, confidential Information
and inventions assignment agreements in a form acceptable to the Board of
Directors from all future officers and employees and any consultants who may
have access to confidential information of New Holdings or any of its
subsidiaries, upon commencement of their employment or consulting arrangement
with New Holdings or any of its subsidiaries.
6.7. LOCK-UP AGREEMENTS. New Holdings will obtain agreements in writing
that are consistent with the provisions of Section 7.14 of this Agreement from
each future holder of capital stock or options of New Holdings as a condition to
any such issuance of capital stock or grant of options.
6.8. MATERIAL ADVERSE CHANGE. New Holdings will promptly advise the
Investors and Founders of any event which could be reasonably likely to have a
Material Adverse Effect, and of each lawsuit or proceeding commenced or, if
known by New Holdings, threatened against New Holdings or any subsidiary which,
if adversely determined, in the reasonable judgment of New Holdings, is
reasonably likely to have a Material Adverse Effect.
17
6.9. INDEMNIFICATION.
(a) Without limitation of any other provision of this
Agreement, New Holdings, on its own behalf and on behalf of its subsidiaries,
successors and assigns, agrees to defend, indemnify and hold harmless, and shall
cause its subsidiaries to defend, indemnify and hold harmless, each Investor and
such Investor's respective Affiliates and direct and indirect partners
(including partners of partners and stockholders and members of partners),
members, stockholders, directors, officers, employees and agents and each person
who controls any of them within the meaning of Section 15 of the Securities Act,
or Section 20 of the Exchange Act (collectively, the "INVESTOR INDEMNIFIED
PARTIES" and, individually, an "INVESTOR INDEMNIFIED PARTY") from and against
any and all damages, liabilities, losses, taxes, fines, penalties, diminution in
value, reasonable costs and expenses (including, without limitation, reasonable
fees of a single counsel representing all the Investor Indemnified Parties or,
if the representation of all the Investor Identified Parties by the same counsel
would be inappropriate under applicable standards of professional conduct, then
as many counsel as may be needed under such standards of professional conduct to
represent all of the Investor Indemnified Parties), as the same are incurred, of
any kind or nature whatsoever (whether or not arising out of third-party claims
and including all amounts paid in investigation, defense or settlement of the
foregoing and consequential damages) ("LOSSES") sustained or suffered by any
such Investor Indemnified Party, which may be based upon, relating to, arising
out of, or by reason of (i) any breach of any covenant or agreement made by New
Holdings in this Agreement or in any other agreement between New Holdings and
any of its subsidiaries and the Investors (other than the Share Exchange
Agreement), or (ii) any third party or governmental claims relating in any way
to such Investor Indemnified Party's status as a security holder, creditor,
director, agent, representative or controlling person of New Holdings or
otherwise relating to such Investor Indemnified Party's involvement with New
Holdings or its subsidiaries (including, without limitation, any and all Losses
under the Securities Act, the Exchange Act or other federal or state statutory
law or regulation, at common law or otherwise, which relate directly or
indirectly to the registration, purchase, sale or ownership of any securities of
New Holdings or to any fiduciary obligation owed with respect thereto),
including, without limitation, in connection with any third party or
governmental action or claim relating to any action taken or omitted to be taken
or alleged to have been taken or omitted to have been taken by any Investor
Indemnified Party as security holder, director, agent, representative or
controlling person of New Holdings or otherwise, alleging so-called control
person liability or securities law liability; PROVIDED, HOWEVER, that New
Holdings will not be liable to any Investor Indemnified Party to the extent that
such Losses arise from and are based on (A) an untrue statement or omission or
alleged untrue statement or omission in a registration statement or prospectus
which is made in reliance on and in conformity with written information
furnished to New Holdings by or on behalf of such Investor Indemnified Party, or
(B) conduct by such Investor Indemnified Party which is found to constitute
fraud or willful misconduct in a non-appealable, final judgment.
(b) If the indemnification provided for in Section 6.9(a) above
for any reason is held by a court of competent jurisdiction to be unavailable to
an Investor Indemnified Party in respect of any Losses referred to therein, then
New Holdings, in lieu of indemnifying such Investor Indemnified Party
thereunder, shall contribute to the amount paid or payable by such Investor
Indemnified Party as a result of such Losses (i) in such proportion as is
appropriate to reflect the relative benefits received by New Holdings and the
Investors, or (ii) if the allocation
18
provided by clause (i) above is not permitted by applicable law in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of New Holdings and the
Investors in connection with the action or inaction which resulted in such
Losses, as well as any other relevant equitable considerations. The relative
fault of New Holdings and the Investors shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by New Holdings and the Investors and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
(c) Each of New Holdings and the Investors agrees that it would
not be just or equitable if contribution pursuant to Section 6.9(b) were
determined by PRO RATA or PER CAPITA allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in Section 6.9(b).
(d) New Holdings agrees to pay and hold the Investors harmless
against liability for payment of all reasonable out-of-pocket costs and expenses
incurred by them in connection with their ongoing investment in New Holdings,
including, without limitation, the fees and disbursements of counsel and other
professionals in connection with any modification, waiver, consent or amendment
requested in connection with this Agreement, the Share Exchange Agreement or any
other agreement between New Holdings and the Investors.
6.10. AMENDMENTS TO CERTIFICATE OF INCORPORATION. Except as contemplated
by Section 6.14 and the terms of the ▇▇▇▇▇▇▇ Contribution Agreement (as defined
below), New Holdings shall not (a) amend, modify, alter or repeal (whether by
merger, consolidation, operation of law or otherwise) any provision of the
Charter that would have the effect of increasing the liquidation preference,
dividend rate or redemption price of the Convertible Preferred Stock or
Redeemable Preferred Stock, or (b) change the voting rights of the Convertible
Preferred Stock or Redeemable Preferred Stock with regard to the election of
Directors or otherwise, in each case without the prior affirmative vote or
written consent of the holders of a majority of the Shares held by the Founders.
6.11. RELATED PARTY TRANSACTIONS. In connection with any share exchange,
recapitalization, merger, consolidation, or corporate reorganization with
another Person that is an Affiliate of an Investor, New Holdings shall, if
requested in writing by the holders of a majority of the Shares held by the
Founders, obtain an opinion from a recognized, independent investment banking
firm as to the fairness, from a financial point of view, of the consideration to
be issued or paid by New Holdings to such other Person, or the consideration to
be received by New Holdings or its stockholders from such other Person, in
connection with any such transaction.
6.12. MANAGEMENT COMPENSATION. The determination of the compensation of
the officers of New Holdings and its subsidiaries (including, without
limitation, any grants of capital stock, options to purchase capital stock or
other equity incentives) and any changes thereto will be made by the Board of
Directors or the compensation committee of the Board of Directors. Any grants of
capital stock or options to employees, officers, directors or consultants of New
Holdings and its subsidiaries will be made pursuant to the Stock Option Plan or
any other equity incentive plan approved by the Board of Directors, and will be
conditioned upon the grantee
19
agreeing to be bound by the terms of an option and/or stock agreement approved
by the Board of Directors or such compensation committee.
6.13. SPECIAL BONUS TO TMHC FOUNDERS. Concurrently with the execution
of this Agreement, TMHC is paying to each TMHC Founder a one-time bonus equal to
(i) for ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, $209,243, and (ii) for ▇▇▇▇▇▇ ▇▇▇▇▇, $15,767. There
shall be deducted from the amounts payable to each such TMHC Founder pursuant to
the foregoing sentence all amounts legally required to be withheld by New
Holdings pursuant to applicable federal, state and local tax laws and
regulations.
6.14. SPECIAL PROVISIONS RELATING TO ▇▇▇▇▇▇▇ CONTRIBUTION AGREEMENT.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Services, Inc. (formerly known as ▇▇▇▇▇▇▇ GRP, Inc.), a
Delaware corporation and a wholly owned subsidiary of ▇▇▇▇▇▇▇ (the "COMPANY"),
the ▇▇▇▇▇▇▇ Founders and certain of the Investors (the "▇▇▇▇▇▇▇ INVESTORS") are
parties to a certain Contribution and Asset Transfer Agreement, dated as of June
29, 2004, as amended (the "▇▇▇▇▇▇▇ CONTRIBUTION AGREEMENT"). In connection with
the consummation of the Share Exchange Agreement, the parties to the ▇▇▇▇▇▇▇
Contribution Agreement hereby agree to the following provisions relating to the
▇▇▇▇▇▇▇ Contribution Agreement, which provisions are expressly acknowledged and
agreed to by all of the parties to this Agreement (capitalized terms used in the
following sections and not defined shall have the meanings given them in the
▇▇▇▇▇▇▇ Contribution Agreement).
(a) Anything in Section 1.3(d), Section 1.15(c) or Section 1.15
(f) of the ▇▇▇▇▇▇▇ Contribution Agreement to the contrary notwithstanding, the
Escrow Deposit, together with any interest or other income earned thereon or any
applicable portion thereof, to the extent it is to be applied, pursuant to the
terms of the ▇▇▇▇▇▇▇ Contribution Agreement, to the payment of any Contingent
Payments or other payments owed to the ▇▇▇▇▇▇▇ Founders thereunder, shall be
treated as being distributed to New Holdings (rather than ▇▇▇▇▇▇▇) and
thereafter contributed by New Holdings to ▇▇▇▇▇▇▇, and by ▇▇▇▇▇▇▇ to the
Company, for purposes of enabling the Company to make the required Contingent
Payments or other payments. In the manner provided in Section 1.3(d) of the
▇▇▇▇▇▇▇ Contribution Agreement, such amounts shall be treated as an additional
contribution by the ▇▇▇▇▇▇▇ Investors to the capital of New Holdings without any
increase or decrease in the ▇▇▇▇▇▇▇ Investors' or the ▇▇▇▇▇▇▇ Founders'
respective interests in New Holdings; provided, that such contribution shall
increase the ▇▇▇▇▇▇▇ Investors' tax basis in their interests in New Holdings and
shall increase the preferences associated with the Convertible Preferred Stock
and Redeemable Preferred to be held by the ▇▇▇▇▇▇▇ Investors in accordance with
the terms of the Share Exchange Agreement and the Certificate of Incorporation.
(b) Anything in Section 1.15(d) or Section 1.15(f) of the
▇▇▇▇▇▇▇ Contribution Agreement to the contrary notwithstanding, in the event any
amounts from the Company Account and/or the Escrow Account are returned to the
▇▇▇▇▇▇▇ Investors, such amounts shall proportionately reduce the preferences
associated with the Convertible Preferred Stock and Redeemable Preferred to be
held by the ▇▇▇▇▇▇▇ Investors in accordance with the terms of the Share Exchange
Agreement and the Certificate of Incorporation.
(c) Section 1.15(d) of the ▇▇▇▇▇▇▇ Contribution Agreement is
hereby amended by adding to the end of such section the following:
20
"Anything in this Section 1.15(d) to the contrary
notwithstanding, in the event New Holdings consummates a QPO (as such term is
defined in the Certificate of Incorporation of New Holdings adopted in
connection with the consummation of the Share Exchange Agreement) (as defined
below) prior to December 31, 2005, then, in satisfaction of all obligations of
the Company with respect to the payment of the Third Contingent Payment and the
Fourth Contingent Payment, New Holdings shall issue to the Founding Stockholders
shares of New Holdings Series B Redeemable Preferred Stock, which shares of New
Holdings Series B Redeemable Preferred Stock will have an aggregate liquidation
preference equal to $11,250,000 and will otherwise be identical in all respects
to the shares of New Holdings Series B Redeemable Preferred Stock issued or
issuable to the Investors, with the actual number of share issued to depend upon
the liquidation preference then in effect, if applicable. Capitalized terms used
in the foregoing sentence that are not defined in the Agreement shall have the
meanings given them in that certain Contribution and Share Exchange Agreement,
dated as of March 31, 2005, by and among New Holdings, Holdings, the Founding
Stockholders and the other parties named therein (the "SHARE EXCHANGE
AGREEMENT")."
(d) Section 1.15(f) of the ▇▇▇▇▇▇▇ Contribution Agreement is
hereby amended by deleting the last sentence thereof and inserting as the final
three sentences of such Section the following:
"In addition, if, prior to the date upon which any
Contingent Payment is due under Section 1.15(c) above, New Holdings consummates
a QPO (as such term is defined in the Certificate of Incorporation of New
Holdings adopted in connection with the consummation of the Share Exchange
Agreement), then the Company shall pay to ▇▇▇▇▇▇▇, on behalf of ▇▇▇▇▇▇▇, the
▇▇▇▇▇▇▇ Subsidiaries and the Founding Stockholders, at the closing of such QPO
an aggregate amount equal to (x) the First Contingent Payment plus the Second
Contingent Payment, minus (y) any Contingent Payments previously made under this
Section 1.15. Upon any such payments made pursuant to this Section 1.15(f), New
Holdings, Holdings and the Company shall have no further obligations to make,
and none of ▇▇▇▇▇▇▇, the ▇▇▇▇▇▇▇ Subsidiaries or the Founding Stockholders shall
have any right to receive, Contingent Payments under this Section 1.15 or any
other provisions of this Agreement (including, without limitation, the Third
Contingent Payment, the Fourth Contingent Payment or the Catch-Up Contingent
Payment). Capitalized terms used in this Section 1.5(f) that are not defined in
the Agreement shall have the meanings given them in the Share Exchange
Agreement."
SECTION VII. MISCELLANEOUS PROVISIONS
7.1. RELIANCE. Each of the parties hereto agrees that each covenant and
agreement made by it in this Agreement or in any certificate, instrument or
other document delivered pursuant to this Agreement is material, shall be deemed
to have been relied upon by the other parties and shall remain operative and in
full force and effect after the date hereof regardless of any investigation by
any other party. This Agreement shall not be construed to confer any right or
benefit upon any Person other than the parties hereto and their respective
successors and permitted assigns to the extent contemplated herein.
21
7.2. LEGEND ON SHARES. New Holdings, the Founders and the Stockholders
acknowledge and agree that in addition to any other legend on the certificates
representing Shares that may be held by them, substantially the following legend
shall be typed on each certificate evidencing any of the Shares held at any time
by any party to this Agreement:
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE PROVISIONS OF A CERTAIN
STOCKHOLDERS AGREEMENT, DATED AS OF MARCH 31, 2005, INCLUDING CERTAIN
RESTRICTIONS ON TRANSFER SET FORTH THEREIN. A COMPLETE AND CORRECT COPY OF SUCH
AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF HOLDINGS AND
WILL BE FURNISHED UPON WRITTEN REQUEST AND WITHOUT CHARGE.
7.3. AMENDMENT AND WAIVER; ACTIONS OF THE BOARD. Any party may waive
in writing any provision hereof intended for its benefit. No failure or delay on
the part of any party hereto in exercising any right, power or remedy hereunder
shall operate as a waiver thereof. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to any
party hereto at law or in equity or otherwise. This Agreement may be amended
with the prior written consent of New Holdings, a Majority Interest, the ▇▇▇▇▇▇▇
Founders holding a majority of the Shares held by all ▇▇▇▇▇▇▇ Founders and the
TMHC Founders holding a majority of the Shares held by all TMHC Founders;
PROVIDED, HOWEVER, that any proposed amendment that, by its terms, could
reasonably be expected to adversely affect the rights of any Investor or Founder
in a manner different from other Investors or Founders hereunder shall require
the prior written consent of such adversely affected Investor or Founder. Any
consent given as provided in the preceding sentence shall be binding on all
Investors and Founders.
7.4. NOTICES. All notices, requests, demands and other communications
provided for hereunder shall be in writing and mailed (by first class registered
or certified mail, postage prepaid), telegraphed, sent by express overnight
courier service or electronic facsimile transmission (with a copy by mail), or
delivered to the applicable party at the addresses indicated below:
If to New Holdings:
▇/▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Investors:
TA Associates, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
22
TA Associates, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Madison Capital Funding LLC
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ Account Manager
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ Family Holdings LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to a Founder:
At such Founder's address for notice as set forth in on the
signature pages hereto:
or, as to each of the foregoing, at such other address as shall be designated by
the applicable party in a written notice to other parties complying as to
delivery with the terms of this Section 7.4. All such notices, requests, demands
and other communications shall be deemed effective as follows: (i) two days
after being deposited in the mails, or (ii) one day after being deposited with
an express overnight courier service or sent by electronic facsimile
transmission, addressed as aforesaid.
7.5. HEADINGS. The Section headings used or contained in this Agreement
are for convenience of reference only and shall not affect the construction of
this Agreement. The parties have participated jointly in the negotiation and
drafting of this Agreement and the other agreements, documents and instruments
executed and delivered in connection herewith with counsel sophisticated in
investment transactions. If an ambiguity or question of intent or interpretation
arises, this Agreement and the agreements, documents and instruments executed
and delivered in connection herewith shall be construed as if drafted jointly by
the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement and the agreements, documents and instruments executed and delivered
in connection herewith.
7.6. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.7. REMEDIES; SEVERABILITY. It is specifically understood and agreed
that any breach of the provisions of this Agreement by any Person subject hereto
will result in irreparable injury to the other parties hereto, that the remedy
at law alone will be an inadequate remedy for such
23
breach, and that, in addition to any other legal or equitable remedies which
they may have, such other parties may enforce their respective rights by actions
for specific performance (to the extent permitted by law) and New Holdings may
refuse to recognize any unauthorized Transferee as one of its stockholders for
sany purpose, including, without limitation, for purposes of dividend and voting
rights, until the relevant party or parties have complied with all applicable
provisions of this Agreement.
If one or more of the provisions contained herein, or the application
thereof in any circumstances, is held invalid, illegal or unenforceable in any
respect for any reason by a court of competent jurisdiction, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
7.8. ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter, including, without limitation, the Prior ▇▇▇▇▇▇▇ Agreement and the Prior
TMHC Agreement, which agreements are hereby terminated.
7.9. ADJUSTMENTS. All references to share prices and amounts herein
shall be equitably adjusted to reflect stock splits, stock dividends,
recapitalizations and similar changes affecting the capital stock of New
Holdings.
7.10. LAW GOVERNING. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York (without giving effect to
principles of conflicts of laws).
7.11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the respective successors and permitted assigns of the
parties hereto as contemplated herein, and any successor to New Holdings by way
of merger or otherwise shall specifically agree to be bound by the terms hereof
as a condition of such succession. The rights of the Investors hereunder shall
be binding upon and inure to the benefit of their Transferees of their
Securities as contemplated herein. This Agreement may not be assigned by any
Investor or Founder except as provided herein without the prior written consent
of New Holdings and a Majority Interest, and without such prior written consent
any attempted assignment shall be null and void.
7.12. DISPUTE RESOLUTION. All disputes, claims, or controversies arising
out of or relating to this Agreement, or any other agreement executed and
delivered pursuant to this Agreement, or the negotiation, validity or
performance hereof and thereof or the transactions contemplated hereby or
thereby, that are not resolved by mutual agreement shall be resolved in
accordance with the provisions set forth in Sections 5.7 and 5.8 of the Share
Exchange Agreement.
7.13. TERMINATION. Sections III, IV, V and VI shall terminate upon the
earlier to occur of a QPO or a Liquidity Event (as defined in the Charter);
PROVIDED, that the covenants set forth
24
in Section 6.4 and Section 6.5 hereof shall continue for so long as any
representative of an Investor is a member of the Board of Directors, and the
covenants set forth in Section 6.9 hereof shall continue for so long as any
Investor holds any Shares or until the expiration of the applicable statute of
limitations, if later.
7.14. STOCKHOLDER LOCK-UP. Each Founder hereby agrees, if so requested
by New Holdings and an underwriter of New Holdings' capital stock in connection
with any public offering of capital stock of New Holdings, not to directly or
indirectly offer, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant for the sale of or otherwise dispose of or transfer any Shares held by
it for such period, not to exceed one hundred eighty (180) days following the
consummation of New Holdings' initial public offering of Common Stock or (b)
ninety (90) days following the consummation of any other public offering of
Common Stock, as such underwriter shall specify reasonably and in good faith.
7.15. NO WAIVER. No provision of this Agreement shall be construed to
limit, waive, amend or alter the terms and provisions of the Credit Agreement
(the "CREDIT AGREEMENT"), dated as of August 2, 2004, among the Company, the
Lenders (as defined therein) and Madison and the other Loan Documents (as
defined in the Credit Agreement) or any rights or remedies available to Madison
and its Affiliates thereunder. This restriction shall terminate only at such
time as the Company and its Affiliates shall have paid in full any and all
Obligations (as defined in the Credit Agreement) pursuant to the terms of the
Credit Agreement and the other Loan Documents and no disputes remain outstanding
between the Company and Madison and its Affiliates with respect thereto.
[SIGNATURE PAGE FOLLOWS]
25
IN WITNESS WHEREOF, the parties hereto have caused this
Stockholders
Agreement to be duly executed as of the date first set forth above.
NEW HOLDINGS:
CMH HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
FOUNDERS:
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
Address For Notice:
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/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
Address For Notice:
-------------------------------------------
-------------------------------------------
-------------------------------------------
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address For Notice:
-------------------------------------------
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/s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
Address For Notice:
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/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇
Address For Notice:
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BNS FAMILY IRREVOCABLE GRANTOR TRUST
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Authorized Person
Address For Notice:
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-------------------------------------------
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▇▇▇▇▇▇▇ CHARITABLE REMAINDER UNITRUST
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Authorized Person
Address For Notice:
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INVESTORS:
TA IX L.P.
By: TA Associates IX LLC, its General Partner
By: TA Associates, Inc., its Manager
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Managing Director
TA/ATLANTIC AND PACIFIC IV L.P.
By: TA Associates AP IV L.P., its General Partner
By: TA Associates, Inc., its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Managing Director
TA STRATEGIC PARTNERS FUND A L.P.
By: TA Associates SPF L.P., its General Partner
By: TA Associates, Inc., its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Managing Director
TA STRATEGIC PARTNERS FUND B L.P.
By: TA Associates SPF L.P., its General Partner
By: TA Associates, Inc., its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Managing Director
TA INVESTORS II, L.P.
By: TA Associates, Inc., its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Managing Director
TA SUBORDINATED DEBT FUND, L.P.
By: TA Associates SDF LLC, its General Partner
By: TA Associates, Inc., its Manager
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Managing Director
MADISON CAPITAL FUNDING LLC
By: /s/ ▇▇▇▇▇ ▇. Carpsay
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Name: ▇▇▇▇▇ ▇. Carpsay
Its: Managing Director
▇▇▇▇▇▇ FAMILY HOLDINGS LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name:
Its:
ACKNOWLEDGED AND AGREED FOR
PURPOSES OF SECTION 6.14
▇▇▇▇▇▇▇ HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇ SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and CEO
