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EXHIBIT 10.1
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STOCKHOLDERS AGREEMENT
CUSTOMERONE HOLDING CORPORATION
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Dated as of October 1, 1998
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TABLE OF CONTENTS
1. INTERPRETATION..........................................................................................1
1.1 Definitions....................................................................................1
1.2 Rules of Construction..........................................................................9
2. CORPORATE GOVERNANCE...................................................................................10
2.1 Board.........................................................................................10
(a) Board Representation.................................................................10
(b) Vacancies............................................................................10
(c) Termination of Rights................................................................11
(d) Costs and Expenses...................................................................11
(e) Election of Designees................................................................11
2.2 Other Activities of the Stockholders; Fiduciary Duties........................................11
2.3 Grant of Proxy................................................................................12
3. ISSUANCE OF SECURITIES.................................................................................12
3.1 Issuances of Capital Stock or Common Stock Equivalents........................................12
3.2 Issuances of Employee Incentive Securities....................................................12
3.3 Preemptive Rights.............................................................................12
(a) Rights to Participate in Future Sales................................................12
(b) Offer Notice.........................................................................13
(c) Exercise.............................................................................13
(d) Second Round Subscribers.............................................................13
(e) Exceptions to Preemptive Rights......................................................14
4. TRANSFERS OF SECURITIES AND LIMITATIONS ON TRANSFERS...................................................14
4.1 Restrictions on Transfer......................................................................14
4.2 Restrictive Legends...........................................................................14
(a) Securities Act Legend................................................................14
(b) Other Legends........................................................................15
4.3 Notice of Proposed Transfers..................................................................15
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4.4 Termination of Certain Restrictions...........................................................16
4.5 Exempt Transfers..............................................................................16
(a) Transfers to an Affiliate............................................................16
(b) Pledges..............................................................................17
(c) Sales to Onex Management.............................................................17
(d) Public Offerings.....................................................................17
(e) Transfer to Berczi...................................................................17
4.6 Sales by Minority Stockholders................................................................17
4.7 Sales by Onex.................................................................................17
4.8 Onex Rights of First Refusal..................................................................17
(a) Rights of First Refusal..............................................................17
(b) Sale Notice..........................................................................18
(c) Exercise Notice......................................................................18
(d) Failure to Exercise..................................................................18
(e) Offers Irrevocable...................................................................18
4.9 Tag Along Rights..............................................................................19
(a) Tag Along Rights.....................................................................19
(b) Notice...............................................................................19
(c) Exercise.............................................................................19
(d) Failure to Exercise..................................................................19
4.10 Drag Along Rights.............................................................................20
(a) Drag Along Rights....................................................................20
(b) Notice...............................................................................20
(c) Implementation.......................................................................20
(d) Proxy................................................................................20
4.11 Involuntary Transfers.........................................................................21
(a) Termination of Employment............................................................21
(b) Death, Disability or Retirement......................................................22
(c) Event of Default.....................................................................23
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(d) Determination of Fair Market Value...................................................23
4.12 General Provisions Relating to Certain Sales of Securities....................................24
(a) Definitions..........................................................................24
(b) Closing..............................................................................25
(c) Deliveries at Closing................................................................25
(d) Failure to Make Deliveries...........................................................25
(e) Deemed Transfer......................................................................25
(f) Seller Entitled to Purchase Price....................................................26
(g) Pledged Securities...................................................................26
(h) Power of Attorney....................................................................26
4.13 All Stockholders to be Bound..................................................................26
4.14 Certain Events Not Deemed Transfers...........................................................27
4.15 Transfer and Exchange.........................................................................27
4.16 Replacement Securities........................................................................27
5. PUBLIC OFFERINGS.......................................................................................27
5.1 Qualified IPO.................................................................................27
5.2 Secondary Offering in Connection with Qualified IPO...........................................27
5.3 Piggyback Registrations.......................................................................28
(a) Right to Piggyback...................................................................28
(b) Priority on Registrations............................................................28
5.4 Holdback Agreement............................................................................29
5.5 Registration Procedures.......................................................................29
5.6 Suspension of Dispositions....................................................................33
5.7 Registration Expenses.........................................................................33
5.8 Indemnification...............................................................................34
5.9 Further Assurances............................................................................37
6. OPTION BY CERTAIN UNACCREDITED STOCKHOLDERS............................................................37
6.1 Grant of Option...............................................................................37
6.2 Option Transaction............................................................................38
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6.3 Exercise of Option............................................................................38
6.4 Closing.......................................................................................38
6.5 Exercise Price................................................................................39
6.6 Assignment of Option..........................................................................39
7. CONFIDENTIALITY, NON-COMPETITION AND NON-SOLICITATION..................................................39
7.1 Acknowledgement...............................................................................39
7.2 Covenants.....................................................................................39
(a) Covenants of Stockholders............................................................39
(b) Covenants of ▇▇▇▇▇▇▇▇................................................................40
7.3 Exceptions....................................................................................41
(a) Disclosure by Onex...................................................................41
(b) Acquisition of Public Securities.....................................................41
7.4 Reasonable Restrictions.......................................................................41
8. MISCELLANEOUS..........................................................................................41
8.1 Implementation................................................................................41
8.2 Notices.......................................................................................41
8.3 Successors and Assigns........................................................................42
8.4 Remedies......................................................................................42
8.5 Termination...................................................................................42
8.6 Legal Holidays................................................................................42
8.7 Governing Law.................................................................................43
8.8 Severability..................................................................................43
8.9 No Waivers; Amendments........................................................................43
(a) No Waivers...........................................................................43
(b) Amendment and Waiver.................................................................43
8.10 Currency......................................................................................43
8.11 Sections and Headings.........................................................................43
8.12 Entire Agreement..............................................................................43
8.13 Duplicate Originals...........................................................................43
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8.14 Time of Essence...............................................................................44
8.15 Number and Gender.............................................................................44
8.16 Ceasing to be a Party.........................................................................44
8.17 Change in Securities..........................................................................44
8.18 Securities Subsequently Acquired..............................................................44
8.19 Registration of Securities....................................................................44
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STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "Stockholders Agreement")
dated as of October 1, 1998, is entered into by and among CustomerONE Holding
Corporation, a Delaware corporation (including its successors, the
"Corporation"), and the securityholders listed on the signature pages hereof.
RECITALS
WHEREAS, the Corporation was incorporated under the DGCL by a
certificate of incorporation dated September 25, 1998 (as the same may be
amended from time to time, the "Certificate");
WHEREAS, the authorized capital stock of the Corporation
consists of 110,000,000 shares of capital stock, consisting of 10,000,000 shares
of Preferred Stock, and 100,000,000 shares of Common Stock, and
WHEREAS, as of the date hereof the Stockholders collectively
own all the outstanding shares of Common Stock of the Corporation as enumerated
in Schedule A.
NOW, THEREFORE, in consideration of the premises, mutual
covenants and agreements hereinafter contained and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. INTERPRETATION
1.1 Definitions.
"ACCREDITED INVESTOR" shall mean an "Accredited Investor," as
defined in Regulation D, or any successor rule then in effect.
"ACCREDITED OFFEREE" shall have the meaning provided in
Section 3.3(a).
"ADVICE" shall have the meaning provided in Section 5.6.
"AFFILIATE" shall mean, with respect to any Person, any Person
who, directly or indirectly, controls, is controlled by or is under
common control with that Person. For purposes of this definition,
"control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise.
"AFFILIATED SUCCESSOR" shall have the meaning provided in
Section 3.3(a).
"BERCZI" shall mean ▇▇▇▇▇ ▇▇▇▇▇▇.
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"BOARD" shall mean the Board of Directors of the Corporation.
"BUSINESS DAY" shall mean a day that is not a Legal Holiday.
"BYLAWS" shall mean the Bylaws of the Corporation as in effect
from time to time.
"CALL RIGHT" shall have the meaning provided in Section
4.11(c).
"CAUSE" shall mean (i) the willful refusal of a Management
Stockholder to perform in any material respect the duties or
responsibilities to the Corporation as assigned by an authorized
officer of the Corporation, or willful disregard in any material
respect of any financial or other budgetary limitations established in
good faith by the Board; (ii) the willful engaging by a Management
Stockholder in conduct that causes material injury, monetarily or
otherwise, to the Corporation, including, but not limited to,
misappropriation or conversion of assets of the Corporation (other than
nonmaterial assets), unless such actions were approved by the Board or
the Chief Executive Officer of the Corporation; (iii) conviction of or
entry of a plea of nolo contendere to a felony; or (iv) a material
breach of any agreement between a Management Stockholder and the
Corporation by such Management Stockholder engaging in violation of the
restrictive covenants in such agreement. No act or failure to act by a
Stockholder shall be deemed "willful" if done, or omitted to be done,
by him in good faith and with the reasonable belief that his action or
omission was in the best interest of the Corporation.
"CERTIFICATE" shall have the meaning provided in the Recitals
hereof.
"COMMON STOCK" shall mean shares of the Common Stock, $0.01
par value per share, of the Corporation, and any capital stock into
which such Common Stock thereafter may be changed.
"COMMON STOCK EQUIVALENTS" shall mean, without duplication
with any other Common Stock or Common Stock Equivalents, any rights,
warrants, options, convertible securities or indebtedness, exchangeable
securities or indebtedness, or other rights, exercisable for or
convertible or exchangeable into, directly or indirectly, Common Stock
of the Corporation and securities convertible or exchangeable into
Common Stock of the Corporation, whether at the time of issuance or
upon the passage of time or the occurrence of some future event.
"CONFIDENTIAL INFORMATION" shall have the meaning provided in
Section 7.1.
"CORPORATION" shall have the meaning provided in the
introductory paragraph hereof.
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"CUSTOMERONE CORPORATION" shall mean CustomerONE Corporation,
a Delaware corporation that is a Subsidiary of the Corporation.
"DATE OF CLOSING" shall have the meaning provided in Section
4.12(b).
"DEFAULTING STOCKHOLDER" shall have the meaning provided in
Section 4.11(c).
"DGCL" shall mean the General Corporation Law of the State of
Delaware.
"DRAG ALONG RIGHTS" shall mean the rights of Onex pursuant to
Section 4.10.
"DRAG SALE" shall have the meaning provided in Section 4.10.
"EMPLOYEE INCENTIVE SECURITIES" shall mean any shares of
Common Stock, Common Stock Equivalents or other securities of the
Corporation or any Subsidiary of the Corporation that may be issued
from time to time to directors, officers, employees or consultants of
the Corporation or any of its Subsidiaries in compliance with Section
3.2.
"EVENT OF DEFAULT" shall mean, with respect to any
Stockholder, any one of the following:
(i) the Stockholder Transfers any or all of its Common
Stock in contravention of the provisions of this Stockholders
Agreement;
(ii) the Stockholder is the subject of any Insolvency
Proceeding;
(iii) if the Stockholder is a corporation, limited
liability company or limited partnership, such Stockholder passes or
purports to pass, or takes or purports to take, any proceeding with
respect to the surrender of its charter, its dissolution, liquidation
or winding up or loses its charter by expiration, forfeiture or
otherwise;
(iv) the Stockholder breaches any material provision of
this Stockholders Agreement, and such breach has not been cured within
10 Business Days of the Stockholder receiving written notice thereof
from the Corporation; or
(v) if the Stockholder is an individual, any application
is made in any other jurisdiction pursuant to which such Stockholder's
spouse has requested the Transfer of all or any portion of the shares
of Common Stock owned by such Stockholder to such spouse or any other
person.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated by the SEC
thereunder.
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"EXCLUDED REGISTRATION" shall mean a registration under the
Securities Act of (i) securities registered on Form S-8 or any similar
successor form and (ii) securities registered to effect the acquisition
of or combination with another Person.
"EXEMPT TRANSFER" shall have the meaning provided in Section
4.5.
"EXERCISE NOTICE" shall have the meaning provided in Section
3.3(c).
"EXERCISE PERIOD" shall have the meaning provided in Section
4.8(b).
"FULLY-DILUTED COMMON STOCK" shall mean, at any time, the then
outstanding Common Stock of the Corporation plus (without duplication)
all shares of Common Stock issuable, whether at such time or upon the
passage of time or the occurrence of future events, upon the exercise,
conversion, or exchange of all then outstanding Common Stock
Equivalents.
"INSOLVENCY PROCEEDING" shall mean, with respect to any
Stockholder, the occurrence of any of the following:
(i) such Stockholder
(A) making a general assignment for the benefit
of creditors or becoming insolvent or unable
to meet its obligations as they generally
become due,
(B) filing a petition for voluntary liquidation
or bankruptcy,
(C) commencing any case or proceeding under
applicable insolvency or bankruptcy laws now
or hereafter existing (including Title 11 of
the United States Code or similar U.S.
federal or state law for the relief of
debtors, the Bankruptcy and Insolvency Act
(Canada) and, with respect to any
Stockholder that is a Canadian corporation,
the Companies' Creditors Arrangement Act
(Canada)),
(D) consenting to the appointment of any
receiver, receiver-manager, administrator,
custodian, liquidator or trustee of all or
any part of such Stockholder's assets or
property,
(E) taking any action for the purpose of
effecting any of the foregoing, or
(F) being adjudicated as bankrupt or insolvent;
or
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(ii) if any petition for any proceedings in bankruptcy or
liquidation or for the winding up, reorganization or readjustment of
the indebtedness of such Stockholder shall be filed, or any case or
proceeding shall be commenced in respect of such Stockholder under any
applicable bankruptcy or insolvency laws now or hereafter existing or
any receiver, receiver-manager, administrator, custodian, liquidator or
trustee is appointed for such Stockholder or for all or any part of
such Stockholder's assets or property, or any order for relief or for
the winding up, dissolution or liquidation of such Stockholder shall be
entered in any judicial proceeding, and such proceeding or appointment
is not dismissed or discharged, as the case may be, within 30 days of
the filing thereof or such appointment.
"INSPECTORS" shall have the meaning provided in Section 5.5.
"JOINDER AGREEMENT" shall mean an agreement, substantially in
the form of Schedule B hereto, executed by transferees of
securityholders making such transferee a party to this Stockholders
Agreement.
"LEGAL HOLIDAY" shall have the meaning provided in Section
8.6.
"LIQUIDITY DEADLINE" shall have the meaning provided in
Section 4.6.
"LIQUIDITY TRANSACTION" shall mean a transaction of the nature
described in Section 4.6.
"MANAGEMENT STOCKHOLDER(S)" shall mean any person who is or
becomes an officer or employee of CustomerONE Corporation or any
Subsidiary thereof and becomes a Stockholder at any time after the date
of this Stockholders Agreement.
"MANDATORY OFFER" shall have the meaning provided in Section
4.11(a).
"MINORITY DESIGNEE" shall have the meaning provided in Section
2.1(a).
"MINORITY STOCKHOLDERS" shall mean all of the Stockholders
other than Onex and any member of the Onex Group.
"NASD" shall have the meaning provided in Section 5.7.
"OFFER" shall have the meaning provided in Section 4.8(b).
"OFFER NOTICE" shall have the meaning provided in Section
3.3(b).
"OFFERED SECURITIES" shall have the meaning provided in
Section 3.3(a).
"ONEX" shall mean Onex CustomerOne LLC.
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"ONEX GROUP" shall mean Onex and its Affiliates and its and
their respective officers, directors, and employees (and members of
their respective families and trusts for the primary benefit of such
family members).
"ONEX GROUP DESIGNEE" shall have the meaning provided in
Section 2.1(a).
"ONEX MANAGEMENT" shall mean, collectively, Onex, its
Affiliates, its and their directors, officers and employees and any
members of their immediate families and trusts established for their or
their families' benefit.
"ONEX SALE NOTICE" shall have the meaning provided in Section
4.9(b).
"OPTION" shall have the meaning provided in Section 6.1.
"OPTION SECURITIES" shall have the meaning provided in Section
6.1.
"OPTION TRANSACTION" shall have the meaning provided in
Section 6.2.
"PERSON" or "PERSON" shall mean any individual, corporation,
partnership, limited liability company, joint venture, association,
joint-stock company, trust, unincorporated organization or government
or other agency or political subdivision thereof.
"PREEMPTIVE RIGHTS" shall mean the respective rights of the
Stockholders pursuant to Section 3.3(a) to subscribe for and purchase
Offered Securities issued from time to time.
"PREEMPTIVE RIGHTS OFFER" shall have the meaning provided in
Section 3.3(a).
"PREEMPTIVE RIGHTS TRANSACTION" shall have the meaning
provided in Section 3.3(a).
"PREFERRED STOCK" shall mean shares of the Preferred Stock,
$0.01 par value per share, of the Corporation, and any capital stock
into which such Preferred Stock thereafter may be changed.
"PROPORTIONATE INTEREST" of any Stockholder at any relevant
time shall mean the percentage then held by such Stockholder of the
Fully-Diluted Common Stock then outstanding.
"PURCHASER" shall have the meaning provided in Section
4.12(a).
"PURCHASE PRICE" shall have the meaning provided in Section
4.12(c).
"PURCHASED SECURITIES" shall have the meaning provided in
Section 4.12(a).
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"QUALIFIED IPO" shall mean a firm commitment underwritten
public offering of Common Stock or other equity securities pursuant to
a prospectus, registration statement or similar document under the
Securities Act or equivalent laws of appropriate jurisdictions where
both (i) the proceeds (prior to deducting any underwriters' discounts
and commissions) equal or exceed Fifty Million Dollars ($50,000,000)
and (ii) such shares of Common Stock or equity securities are listed on
at least one of The Toronto Stock Exchange, The Montreal Exchange, the
New York Stock Exchange or the American Stock Exchange or authorized to
be quoted and/or listed on the Nasdaq Stock Market, together with such
other stock exchange or exchanges as may be approved by the Board.
"RECORDS" shall have the meaning provided in Section 5.5.
"REGISTRABLE SHARES" shall mean, at any time, the Common Stock
of the Corporation owned by the Onex Group or the Stockholders, whether
owned on the date hereof or acquired hereafter; provided, however, that
Registrable Shares shall not include any shares (i) the sale of which
has been registered pursuant to the Securities Act and which shares
have been sold pursuant to such registration or (ii) which have been
sold pursuant to Rule 144 of the SEC under the Securities Act.
"REGISTRATION EXPENSES" shall have the meaning provided in
Section 5.7.
"REGULATION D" shall mean Regulation D promulgated under the
Securities Act by the SEC.
"REPRESENTATIVES" shall have the meaning provided in Section
7.1.
"REQUESTING STOCKHOLDER" shall have the meaning provided in
Section 5.3(a).
"REQUIRED STOCKHOLDERS" shall mean Stockholders who then own
of record more than 66-2/3% of the aggregate number of shares of Common
Stock subject to this Stockholders Agreement.
"RETIREMENT" shall mean, with respect to any Management
Stockholder, that (i) such Management Stockholder has reached
retirement age and has retired as an employee of CustomerONE
Corporation or any subsidiary thereof in accordance with the
established practices and policies of CustomerONE Corporation regarding
the retirement of its employees or (ii) such Management Stockholder has
accepted an offer to retire as an employee of CustomerONE Corporation
or any Subsidiary thereof.
"RETIREMENT DATE" shall have the meaning provided in Section
4.11(b).
"RETIRING MANAGEMENT STOCKHOLDERS" shall have the meaning
provided in Section 4.11(b).
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"RIGHTS OF FIRST REFUSAL" shall mean the rights granted to
Onex pursuant to Section 4.8.
"SALE NOTICE" shall have the meaning provided in Section
4.8(b).
"▇▇▇▇▇▇▇▇" shall mean ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
"SEC" shall mean the Securities and Exchange Commission.
"SECOND ROUND SECURITIES" shall have the meaning provided in
Section 3.3(d).
"SECOND ROUND SUBSCRIBERS" shall have the meaning provided in
Section 3.3(d).
"SECURITY" or "SECURITIES" shall mean the Common Stock and any
other securities governed by the provisions of this Stockholders
Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated by the SEC
thereunder.
"SELLER" shall have the meaning provided in Section 4.12(a).
"SELLER AFFILIATES" shall have the meaning provided in Section
5.8(a).
"SELLING PARTY" shall have the meaning provided in Section
4.11(d).
"SELLING MANAGEMENT STOCKHOLDER" shall have the meaning
provided in Section 4.11(a).
"SELLING STOCKHOLDER" shall have the meaning provided in
Section 4.8(a).
"STOCKHOLDER(S)" shall mean (i) a securityholder listed on the
signature page hereof and (ii) any direct or indirect transferee of any
such securityholder who becomes a party to this Stockholders Agreement
pursuant to a Joinder Agreement in substantially the form of Schedule B
hereto.
"STOCKHOLDERS AGREEMENT" shall mean this Stockholders
Agreement, as such from time to time may be amended.
"SUBJECT SECURITIES" shall have the meaning provided in
Section 4.8(a).
"SUBSIDIARY" of any Person shall mean (i) a corporation a
majority of whose outstanding shares of capital stock or other equity
interests with voting power, under ordinary circumstances, to elect
directors, is at the time, directly or indirectly, owned by such
Person, by one or more subsidiaries of such Person or by such Person
and one or more subsidiaries of such Person, and (ii) any other Person
(other than a corporation) in which such Person, a subsidiary of such
Person or such Person and one or more subsidiaries of such Person,
directly or
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indirectly, at the date of determination thereof, has (x) at least a
majority ownership interest or (y) the power to elect or direct the
election of the directors or other governing body of such Person.
"SUSPENSION NOTICE" shall have the meaning provided in Section
5.6.
"TAG ALONG EXERCISE PERIOD" shall have the meaning provided in
Section 4.9(b).
"TAG ALONG OFFER" shall have the meaning provided in Section
4.9(a).
"TAG ALONG PROPORTION" shall have the meaning provided in
Section 4.9(a).
"TAG ALONG RIGHTS" shall mean the respective rights of the
Stockholders (other than Onex) pursuant to Section 4.9.
"TAG SALE" shall have the meaning provided in Section 4.9.
"TERMINATION DATE" shall have the meaning provided in Section
4.11(a).
"THIRD PARTY OFFER" shall have the meaning provided in Section
4.8(a).
"THIRD PARTY PURCHASER" shall mean, in relation to any
Stockholder, a Person with whom such Stockholder deals at arm's length
and to whom such Stockholder proposes to sell, or from whom such
Stockholder has received a bona fide offer to purchase, any shares of
Common Stock or other securities governed by this Stockholder
Agreement.
"TIME OF CLOSING" shall have the meaning provided in Section
4.12(b).
"TRANSFER" shall mean any disposition of any Security or any
interest therein that would constitute a "sale" thereof within the
meaning of the Securities Act.
"TRANSFER NOTICE" shall have the meaning provided in Section
4.3.
"UNACCREDITED STOCKHOLDER" shall have the meaning provided in
Section 6.2.
"VALUATION NOTICE" shall have the meaning provided in Section
4.11(d).
"VALUATOR" shall mean an independent third party reasonably
experienced in valuing like businesses.
1.2 Rules of Construction. Unless the context otherwise requires
(a) a term has the meaning assigned to it;
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(b) "or" is not exclusive;
(c) words in the singular include the plural, and words in the
plural include the singular;
(d) provisions apply to successive events and transactions;
and
(e) "herein," "hereof" and other words of similar import refer
to this Stockholders Agreement as a whole and not to any particular
Article, Section or other subdivision.
2. CORPORATE GOVERNANCE
2.1 Board.
(a) Board Representation. Subject to Section 2.1(c), the Board
shall consist of (i) such number of individuals as may be designated from time
to time by the Minority Stockholders that equals the greater of (a) one and (b)
twenty percent (20%) of the total number of directors (rounded, as appropriate,
to the nearest whole number) (the "Minority Designee") and (ii) such individuals
as may be designated from time to time by the Onex Group (an "Onex Group
Designee"). The Minority Stockholders shall be entitled to designate a director
or directors as provided in clause (i) above only for so long as the Minority
Stockholders collectively own more than five percent (5%) of the shares of
Fully-Diluted Common Stock then outstanding; thereafter, Onex shall be entitled
to designate all of the directors of the Corporation, subject to Section 2.1(c).
Each Minority Designee shall be a Minority Stockholder.
(b) Vacancies. If, prior to his or her election to the Board
pursuant to Section 2.1(a), any Minority Designee or Onex Group Designee shall
be unable or unwilling to serve as a director of the Corporation, the Minority
Stockholders or Onex Group, as applicable, shall be entitled to designate a
replacement who shall then be a Minority Designee or an Onex Group Designee, as
applicable, for purposes of this Article 2. If, following an election to the
Board pursuant to Section 2.1(a), any Minority Designee or Onex Group Designee
shall resign or be removed or be unable to serve for any reason prior to the
expiration of his or her term as a director of the Corporation, the Minority
Stockholders or the Onex Group, as applicable, shall, within thirty (30) days of
such event, notify the Board in writing of a replacement Minority Designee or
Onex Group Designee, as applicable, and either (i) the Stockholders shall vote
their shares of Common Stock, at any regular or special meeting called for the
purpose of filling positions on the Board or in any written consent executed in
lieu of such a meeting of stockholders, and shall take all such other actions
necessary to ensure the election to the Board of such replacement Minority
Designee or Onex Group Designee to fill the unexpired term of the Minority
Designee or Onex Group Designee who such new Minority Designee or Onex Group
Designee, as applicable, is replacing or (ii) the Board shall elect such
replacement Minority Designee or Onex Group Designee to fill the unexpired term
of the Minority Designee or the Onex Group Designee who such new Minority
Designee or Onex Group Designee, as applicable, is replacing. If Stockholders
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holding a majority of the shares of Common Stock held by the Minority
Stockholders or the Onex Group, as applicable, request that any Minority
Designee or any Onex Group Designee, as applicable, be removed as a Director
(with or without cause) by written notice thereof to the Corporation, then the
Corporation shall take all actions necessary to effect, and each of the
Stockholders shall vote all his, her or its capital stock in favor of, such
removal upon such request.
(c) Termination of Rights. The right of the Minority
Stockholders and the Onex Group to designate directors under Section 2.1(a), and
the obligation of the Stockholders to vote their shares as provided herein,
shall terminate upon the first to occur of (i) the termination or expiration of
this Stockholders Agreement or this Article 2, (ii) such time as the holders of
a majority of the shares of Common Stock held by the Minority Stockholders or
the Onex Group elects in writing to terminate their respective rights under this
Article 2, or (iii) such time as the Onex Group ceases to own at least fifteen
percent (15%) of the shares of Fully-Diluted Common Stock then outstanding.
(d) Costs and Expenses. The Corporation will pay all
reasonable out-of-pocket expenses incurred by the designees of the Minority
Stockholders and the Onex Group in connection with their participation in
meetings of the Board (and committees thereof) of the Corporation and the Boards
of Directors (and committees thereof) of the Subsidiaries of the Corporation.
(e) Election of Designees. Each Stockholder shall vote his,
her or its shares of Common Stock or Common Stock Equivalents entitled to vote
for the election of directors at any regular or special meeting of stockholders
of the Corporation or in any written consent executed in lieu of such a meeting
of stockholders and shall take all other actions necessary to give effect to the
agreements contained in this Stockholders Agreement (including without
limitation the election of persons designated by the Minority Stockholders and
the Onex Group to be elected as directors as described in the preceding
sentences) and to ensure that the Certificate of Incorporation and Bylaws as in
effect immediately following the date hereof do not, at any time thereafter,
conflict in any respect with the provisions of this Stockholders Agreement. In
order to effectuate the provisions of this Article 2, each Stockholder hereby
agrees that when any action or vote is required to be taken by such Stockholder
pursuant to this Stockholders Agreement, such Stockholder shall use his, her or
its best efforts to call, or cause the appropriate officers and directors of the
Corporation to call, a special or annual meeting of stockholders of the
Corporation, as the case may be, or execute or cause to be executed a consent in
writing in lieu of any such meetings pursuant to Section 228(a) of the DGCL.
2.2 Other Activities of the Stockholders; Fiduciary Duties. It is understood and
accepted that the Stockholders and their Affiliates have interests in other
business ventures which may be in conflict with the activities of the
Corporation and its Subsidiaries and that, subject to applicable law and the
provisions of Article 7 hereof, nothing in this Stockholders Agreement shall
limit the current or future business activities of the Stockholders whether or
not such activities are competitive with those of the Corporation and its
Subsidiaries. Nothing in this Stockholders Agreement, express or implied, shall
relieve any officer or director of the Corporation or any of its Subsidiaries,
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or any Stockholder, of any fiduciary or other duties or obligations they may
have to the Corporation's stockholders.
2.3 Grant of Proxy. Each Stockholder hereby constitutes and appoints Onex, with
full power of substitution, as its true and lawful proxy and attorney-in-fact to
vote any and all shares of any class or series of capital stock of the
Corporation or any Subsidiary of the Corporation held by such Stockholder in
accordance with the provisions of Sections 2.1 of this Stockholders Agreement.
Each Stockholder acknowledges that the proxy granted hereby is irrevocable,
being coupled with an interest, and that such proxy will continue until the
termination of such Stockholder's obligation to vote any shares in accordance
with this Article 2.
3. ISSUANCE OF SECURITIES
3.1 Issuances of Capital Stock or Common Stock Equivalents. The Corporation may,
at any time and from time to time with the approval of the Board, issue shares
of capital stock, including Common Stock, or any Common Stock Equivalents,
including, without limitation: (a) any Employee Incentive Securities issued from
time to time pursuant to Section 3.2; (b) any shares of Common Stock issued from
time to time upon the conversion, exchange or exercise of any Common Stock
Equivalents, including, without limitation, any Employee Incentive Securities
which are Common Stock Equivalents; or (c) any shares of Common Stock or Common
Stock Equivalents issued in connection with a Qualified IPO.
3.2 Issuances of Employee Incentive Securities. The Corporation or any
Subsidiary of the Corporation may issue Employee Incentive Securities pursuant
to employee benefit or similar plans or arrangements of the Corporation and/or
its Subsidiaries and with the approval of the Board and pursuant to the DGCL.
3.3 Preemptive Rights.
(a) Rights to Participate in Future Sales. Subject to Section
3.3(e), in the event that the Corporation or any Affiliated Successor (as
hereinafter defined) proposes to issue or sell (a "Preemptive Rights
Transaction") any shares of Common Stock, Common Stock Equivalents or other
generally voting equity securities (the "Offered Securities"), the Corporation
shall first offer (the "Preemptive Rights Offer") to each Stockholder who
certifies (to the reasonable satisfaction of the Corporation) that such
Stockholder is an Accredited Investor (an "Accredited Offeree"), at the same
price and for the same consideration to be paid by the proposed purchaser, that
proportion of the Offered Securities which equals that Accredited Offeree's
Proportionate Interest at the time the Board determines to issue such Offered
Securities. As used herein, the term "Affiliated Successor" shall mean a
successor entity to the Corporation (whether by merger, consolidation,
reorganization, or otherwise) in which the Onex Group owns at least the same
percentage of the fully-diluted common stock of such entity (after giving effect
to the merger, consolidation, reorganization, or other transaction) as the Onex
Group owns of the Fully-Diluted Common Stock of the Corporation.
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(b) Offer Notice. The Corporation shall, no later than twenty
(20) days prior to the consummation of a Preemptive Rights Transaction, give
notice in writing (the "Offer Notice") to each Stockholder of such Preemptive
Rights Transaction. The Offer Notice shall describe the proposed Preemptive
Rights Transaction (including, the price at which the Offered Securities are to
be issued and the date (which shall be not less than fifteen (15) nor more than
sixty (60) days after the later of the date of the initial Offer Notice and a
supplemental Offer Notice, if any) on which the purchase of any securities taken
up under the Preemptive Rights is to be completed), identify the proposed
purchaser, identify the respective Proportionate Interests of the Stockholders,
and contain the Preemptive Rights Offer. If any such information is not then
known to the Corporation, or has not then been determined by the Corporation,
such information shall be included in a supplemental Offer Notice delivered to
the Stockholders promptly after the Corporation becomes aware of such
information or makes such determination. The Corporation shall also provide to
each Stockholder, with the Offer Notice, the audited financial statements of the
Corporation for its most recently ended fiscal year (as well as for any previous
year for which audited financial statements of the Corporation are available),
any quarterly financial statements prepared by the Corporation for its current
fiscal year and the profit plan or budget of the Corporation for the current
fiscal year. The Corporation will provide to the Stockholder any other materials
or information relating to the Corporation which are requested by any
Stockholder and, in the determination of the Corporation, acting reasonably, are
relevant to the determination of the value of the Offered Securities proposed to
be issued.
(c) Exercise. Any Stockholder may exercise its Preemptive
Right by giving notice (an "Exercise Notice") to the Corporation within ten (10)
days after the Offer Notice (or any supplement thereto) is sent by the
Corporation by registered mail to the Stockholder. The Exercise Notice shall
specify the number of shares of Offered Securities, as the case may be, that the
Stockholder wishes to purchase and shall irrevocably bind the Stockholder to
purchase such securities at the price and on the date specified in the Offer
Notice. If any such Stockholder fails to accept such offer by written notice
within ten (10) days after the Offer Notice was sent by the Corporation by
registered mail to the Stockholder, the Corporation or such Affiliated Successor
may proceed with the proposed issue or sale of the Offered Securities, free of
any right on the part of such Stockholder under this Section 3.3 in respect
thereof.
(d) Second Round Subscribers. In the event that one or more
Stockholders fail to give a properly completed Exercise Notice in respect of all
or part of the Offered Securities offered to it, him or her pursuant to Section
3.3(a), the Offered Securities not subscribed for (the "Second Round
Securities") shall be allocated among those Accredited Offerees (if any)
("Second Round Subscribers") who indicate in their respective Exercise Notices a
desire to subscribe for more than their Proportionate Interest of the total
Offered Securities offered pursuant to Section 3.3(a) up to any maximum number
set out in the Exercise Notice. If the number or amount of Second Round
Securities is less than the number or amount desired to be taken up by Second
Round Subscribers, the Second Round Securities shall be allocated among the
Second Round Subscribers on a pro rata basis (such that all the Second Round
Securities are allocated) according to their respective Proportionate Interests
(rounded, as appropriate,
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to the nearest whole number). In the event that not all Second Round Securities
are taken up and purchased by the Stockholders, the Corporation may issue such
Second Round Securities not so subscribed for at a price not less than that set
out in the Offer Notice to such Persons as the Board may determine in its
discretion, subject to compliance with Section 4.11.
(e) Exceptions to Preemptive Rights. The Corporation may,
subject to compliance with Section 4.11, issue any of the following securities
without triggering the Preemptive Rights: (i) issuances or sales of Employee
Incentive Securities, (ii) issuances or sales of Common Stock or Common Stock
Equivalents upon exercise of any Common Stock Equivalent which, when issued, was
subject to or exempt from the Preemptive Rights under this Section 3.3, (iii)
securities distributed or set aside ratably to all holders of Common Stock (or
any class or series thereof) on a per share equivalent basis, (iv) issuances or
sales of Common Stock or equity securities in a Qualified IPO approved in
accordance with Section 5.1, (v) shares of Common Stock or Common Stock
Equivalents issued in connection with a merger or consolidation or other
business combination of the Corporation or a Subsidiary of the Corporation into
or with another entity or an acquisition by the Corporation or a Subsidiary of
the Corporation of another business or corporation, (vi) issuances of Common
Stock by the Corporation in payment of all or any portion of the principal of,
or interest or premium on, any indebtedness of the Corporation or any of its
Subsidiaries, (vii) issuances of shares of Preferred Stock of the Corporation
that are not Common Stock Equivalents, or (viii) issuances of Common Stock
Equivalents that are attached to or otherwise issued in connection with
indebtedness of the Corporation.
4. TRANSFERS OF SECURITIES AND LIMITATIONS ON TRANSFERS
4.1 Restrictions on Transfer. The Securities shall not be Transferred or
otherwise conveyed, assigned or hypothecated before satisfaction of (i) the
conditions specified in Sections 4.1, 4.2, and 4.3, which conditions are
intended to ensure compliance with the provisions of the Securities Act with
respect to the Transfer of any Security and (ii) if applicable, Sections 4.8,
4.9, 4.10, 4.11, 4.12 and 4.15. Any purported Transfer in violation of this
Article 4 shall be void ab initio and of no force or effect. Other than
Transfers to the public pursuant to an effective registration statement or sales
to the public pursuant to Rule 144 under the Securities Act otherwise permitted
hereunder, each Stockholder will cause any proposed transferee of any Security
or any interest therein held by it to agree to take and hold such securities
subject to the provisions and upon the conditions specified in this Stockholders
Agreement.
4.2 Restrictive Legends.
(a) Securities Act Legend. Except as otherwise provided in
Section 4.4, each Security held by a Stockholder, and each Security issued to
any subsequent transferee of such Security, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT TO THE
SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE OFFERED,
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT PURSUANT
TO (i) A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS
EFFECTIVE UNDER SUCH ACT, (ii) RULE 144 UNDER SUCH ACT, OR (iii) ANY OTHER
EXEMPTION FROM REGISTRATION UNDER SUCH ACT.
Notwithstanding the prior provisions, in the event that any
Stockholder is not a resident of the United States, the legend stamped or
otherwise imprinted on such Security shall be in substantially the following
form:
THE SECURITIES COVERED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE
SECURITIES LAWS OF OTHER JURISDICTIONS AND MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, "U.S. PERSONS" (AS
DEFINED IN REGULATION S PROMULGATED UNDER THE SECURITIES ACT) EXCEPT IN
ACCORDANCE WITH REGULATIONS UNDER THE SECURITIES ACT, PURSUANT TO REGISTRATION
OF THE SECURITIES UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
(b) Other Legends. Except as otherwise permitted by the last
sentence of Section 4.1, each Security issued to each Stockholder or a
subsequent transferee shall include a legend in substantially the following
form:
THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFER, VOTING
AND OTHER TERMS AND CONDITIONS SET FORTH IN THE STOCKHOLDERS AGREEMENT DATED AS
OF OCTOBER 1, 1998, A COPY OF WHICH MAY BE OBTAINED FROM CUSTOMERONE HOLDING
CORPORATION AT ITS PRINCIPAL EXECUTIVE OFFICES.
4.3 Notice of Proposed Transfers. Prior to any Transfer or attempted Transfer of
any Security, the Stockholder of such Security shall (i) give ten (10) days'
prior written notice (a "Transfer Notice") to the Corporation of such
Stockholder's intention to effect such Transfer, describing the manner and
circumstances of the proposed Transfer, and (ii) either (A) provide to the
Corporation an opinion reasonably satisfactory to the Corporation from counsel
who shall be reasonably satisfactory to the Corporation (or supply such other
evidence reasonably satisfactory to the Corporation) that the proposed Transfer
of such Security may be effected without registration under the Securities Act,
or (B) certify to the Corporation that the Stockholder reasonably believes the
proposed transferee is a "qualified institutional buyer" and that such
Stockholder has taken reasonable steps to make the proposed transferee aware
that such Stockholder may rely on Rule 144A under the Securities Act in
effecting such Transfer. After receipt of the
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Transfer Notice and opinion (if required), the Corporation shall, within five
(5) days thereof, so notify the Stockholder of such Security and such
Stockholder shall thereupon be entitled to Transfer such Security in accordance
with the terms of the Transfer Notice. Each Security issued upon such Transfer
shall bear the appropriate restrictive legend set forth in Section 4.2(a),
unless in the opinion of such counsel such legend is not required in order to
ensure compliance with the Securities Act. The Stockholder of the Security
giving the Transfer Notice shall not be entitled to Transfer such Security until
receipt of the notice from the Corporation under this Section 4.3.
4.4 Termination of Certain Restrictions. Notwithstanding the foregoing
provisions of this Section 4, the restrictions imposed by Section 4.2(a) upon
the transferability of the Securities and the legend requirements of Section
4.2(a) shall terminate as to any Security (i) when and so long as such Security
shall have been effectively registered under the Securities Act and disposed of
pursuant thereto or (ii) when the Corporation shall have received an opinion of
counsel reasonably satisfactory to it that such Security may be transferred
without registration thereof under the Securities Act and that such legend may
be removed. Whenever the restrictions imposed by Section 4.2(a) shall terminate
as to any Security, the Stockholder thereof shall be entitled to receive from
the Corporation, at the Corporation's expense, a new Security not bearing the
restrictive legend set forth in Section 4.2(a).
4.5 Exempt Transfers. Any transaction described below in this Section is an
"Exempt Transfer" which shall not be subject to the restrictions set out in
Section 4.1 and may be effected without triggering Rights of First Refusal, Tag
Along Rights or Drag Along Rights.
(a) Transfers to an Affiliate. A Stockholder may Transfer all
or part of the Common Stock or Common Stock Equivalents held by it from time to
time to an Affiliate of the transferring Stockholder; provided, however, that
prior to such Transfer:
(i) such transferee (if not already a party to this
Stockholders Agreement) shall agree to be bound by this Stockholders
Agreement in accordance with Section 4.13;
(ii) such transferee shall execute such documents as the
Corporation, acting reasonably, may consider necessary to ensure that,
in the event such transferee ceases for any reason to be an Affiliate
of such transferor, such transferee shall be legally bound to Transfer
to such transferor all Common Stock and Common Stock Equivalents then
held by such transferee; and
(iii) such transferor shall agree, in form and content
satisfactory to the Corporation, acting reasonably, that as long as
such transferee holds any Common Stock or Common Stock Equivalents,
such transferor shall guarantee and be responsible for the performance
and observance by such transferee of all of its obligations under this
Stockholders Agreement.
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(b) Pledges. A Stockholder may pledge or otherwise grant a
security interest in all or part of the Common Stock and Common Stock
Equivalents held by it from time to time in favor of a bank, trust company or
other similar financial institution to secure bona fide indebtedness of such
Stockholder, provided, however, that, prior thereto, such bank, trust company or
financial institution acknowledges, in form and content satisfactory to the
Corporation, acting reasonably, that the securities subject to such pledge or
security interest and all rights of such bank, trust company or financial
institution, as the case may be, in respect thereof shall be subject in all
respects to the provisions of this Stockholders Agreement.
(c) Sales to Onex Management. Onex may Transfer a portion of
the Common Stock held by it at any time or from time to time to any person
forming part of the Onex Management, and any members of the Onex Management may
transfer Common Stock to any other member of Onex Management or to Onex;
provided, however, that prior to such Transfer, the transferee (if not already a
party to this Stockholders Agreement) shall agree to be bound by this
Stockholders Agreement in accordance with Section 4.13.
(d) Public Offerings. Any Stockholder may sell all or any part
of the Common Stock or Common Stock Equivalents held by it, him or her pursuant
to a registered public offering of such Common Stock or Common Stock
Equivalents, subject to the terms of Section 5.
(e) Transfer to Berczi. Onex may Transfer any shares of Common
Stock to Berczi pursuant to the employment stock purchase agreement dated June
30, 1998 between Berczi and Onex.
4.6 Sales by Minority Stockholders. It is the intention of the Stockholders that
the Corporation will use commercially reasonable efforts to pursue a transaction
or transactions that will enhance liquidity opportunities for holders of Common
Stock who so desire it, whether through a private sale of Common Stock, a
private sale of the assets of the Corporation, a Qualified IPO of Common Stock,
a recapitalization or otherwise (a "Liquidity Transaction"), on or prior to
April 28, 2003 (the "Liquidity Deadline"). In the event that a Liquidity
Transaction has not occurred and no bona fide opportunity to participate in a
Liquidity Transaction has been presented to the Minority Stockholders on or
prior to the Liquidity Deadline, the Minority Stockholders shall have the right
to solicit and accept Third Party Offers, subject to the Rights of First Refusal
in favor of Onex contained in Section 4.8 and the provisions of Section 4.13.
4.7 Sales by Onex. Subject to Sections 4.9 and 4.13, Onex shall be entitled to
sell all or any portion of the Common Stock or Common Stock Equivalents owned by
it to any Third Party Purchaser.
4.8 Onex Rights of First Refusal.
(a) Rights of First Refusal. If any Minority Stockholder (a
"Selling Stockholder") wishes to Transfer to a Third Party Purchaser all or any
portion of the
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Common Stock or Common Stock Equivalents then held by it, him or her (the
"Subject Securities") and such Minority Stockholder is then entitled to so
Transfer its Common Stock or Common Stock Equivalents pursuant to this Article
4, other than by way of an Exempt Transfer, the Selling Stockholder must first
offer the Subject Securities to Onex on the terms set out in this Section 4.8.
Prior to so offering the Subject Securities to Onex, the Selling Stockholder
shall obtain from such Third Party Purchaser a legally binding offer (a "Third
Party Offer") in writing to purchase from the Selling Stockholder the Subject
Securities, which offer must provide that (i) the entire purchase price for the
Subject Securities shall be payable in cash at closing and there shall be no
other consideration for the Subject Securities, (ii) no property is to be
transferred by the Selling Stockholder other than such Subject Securities and
(iii) there are no conditions to the completion of such purchase other than the
continuing accuracy of any customary representations and warranties required to
be given by such Selling Stockholder.
(b) Sale Notice. The Selling Stockholder shall give notice (a
"Sale Notice") to Onex of any proposed sale to a Third Party Purchaser, which
notice shall contain a copy of the Third Party Offer and set out, in reasonable
detail, information regarding the identity and financial strength of the Third
Party Purchaser. The Sale Notice shall also contain an offer (the "Offer") to
sell the Subject Securities to Onex on the same terms (including the same
covenants, representations, warranties, indemnities and consideration per share
of Common Stock or Common Stock Equivalents, as the case may be) and conditions,
mutatis mutandis, as contained in the Third Party Offer. The Offer shall be
irrevocable and shall be open for acceptance by Onex during the period (the
"Exercise Period") specified in the Sale Notice, which period shall not end less
than twenty-one (21) days after the date on which the Sale Notice is received by
Onex.
(c) Exercise Notice. If Onex wishes to accept the Offer, it
shall give notice thereof (an "Exercise Notice") to the Selling Stockholder on
or before the last day of the Exercise Period. If Onex so delivers an Exercise
Notice, the Selling Stockholder shall be bound to sell the Subject Securities to
Onex, and Onex shall be bound to purchase the Subject Securities, for the
consideration and on the other terms and conditions specified in this Section
4.8.
(d) Failure to Exercise. If an Exercise Notice is not
delivered to the Selling Stockholder in accordance with Section 4.8(c), the
Selling Stockholder may sell all (but not less than all) the Subject Securities
to the Third Party Purchaser for the consideration and on the other terms and
subject to the conditions specified in the Third Party Offer; provided, however,
such sale is completed within thirty (30) days following the expiry of the
Exercise Period, failing which the Selling Stockholder may not sell the Subject
Securities to a Third Party Purchaser without again offering the Subject
Securities to Onex in accordance with this Section 4.8.
(e) Offers Irrevocable. All offers made by any Selling
Stockholder to Onex pursuant to this Section 4.8 shall be irrevocable during the
Exercise Period.
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4.9 Tag Along Rights.
(a) Tag Along Rights. If at any time Onex proposes to sell (a
"Tag Sale"), other than by way of an Exempt Transfer, to a Third Party
Purchaser, Onex may complete such sale to the Third Party Purchaser only if the
Third Party Purchaser extends an offer (a "Tag Along Offer") to each of the
Minority Stockholders so that each Minority Stockholder shall have the option to
sell to the Third Party Purchaser up to the same percentage of such Minority
Stockholder's Fully-Diluted Common Stock as the shares being sold by Onex
represent of its Fully-Diluted Common Stock (the "Tag Along Proportion") on the
same terms (including the same covenants, representations, warranties,
indemnities and consideration per share of Common Stock or Common Stock
Equivalent, as the case may be) and conditions, mutatis mutandis, as those
specified in the Onex Sale Notice delivered pursuant to Section 4.9(b);
provided, however, that, if the consideration to be received by Onex includes
any securities, only co-sellers who have certified to the reasonable
satisfaction of Onex that they are Accredited Investors shall be entitled to
participate in such Transfer, unless the transferee consents otherwise.
(b) Notice. Onex shall forthwith give notice (an "Onex Sale
Notice") to the Minority Stockholders of any proposed sale to a Third Party
Purchaser, which notice shall set out, in reasonable detail, (i) information
regarding the identity of the Third Party Purchaser and the consideration and
other material terms and conditions of such sale, (ii) a description of the Tag
Along Rights arising in connection with such sale and (iii) any other
information required by this Section 4.9, and shall contain an offer from the
Third Party Purchaser to purchase up to the Tag Along Proportion of such
Minority Stockholder's Common Stock on the same terms (including the same
covenants, representations, warranties, indemnities and consideration per share
of Common Stock or Common Stock Equivalent, as the case may be) and conditions,
mutatis mutandis, as set out in the Onex Sale Notice. The offer from the Third
Party Purchaser shall be irrevocable and shall be open for acceptance by the
Minority Stockholders during the period specified in the Onex Sale Notice (the
"Tag Along Exercise Period"), which period shall not end less than twenty-one
(21) days after the date on which the Onex Sale Notice is given to the Minority
Stockholders.
(c) Exercise. A Minority Stockholder may irrevocably exercise
its Tag Along Right by giving notice to Onex prior to the expiry of the Tag
Along Exercise Period, in which case such Minority Stockholder shall be
obligated to sell to the Third Party Purchaser the number of shares of Common
Stock which it has indicated in such notice it wishes to sell. The closing of
each such sale shall be conditional on the closing of the sale of Common Stock
by Onex and each Minority Stockholder that elects to exercise its Tag Along
Rights, which condition may not be waived without the consent of all Minority
Stockholders.
(d) Failure to Exercise. If any Minority Stockholder does not
exercise its, his or her Tag Along Right by delivering the notice contemplated
by Section 4.9(c), or exercises its Tag Along Right with respect to less than
the Tag Along Proportion of its, his or her Common Stock, Onex and those
Minority Stockholders who elect to sell more than their respective Tag Along
Proportion of Common Stock shall be entitled to sell
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additional shares of Common Stock to the Third Party Purchaser; provided,
however, that (i) no Stockholder shall be entitled to sell more than the maximum
number of shares of Common Stock specified in its election and (ii) if the total
number of shares of Common Stock which Onex and all Minority Stockholders that
exercise their Tag Along Rights wish to sell exceeds the total number of shares
of Common Stock which the Third Party Purchaser has offered to purchase, the
option to sell additional shares of Common Stock to the Third Party Purchaser
shall be allocated among Onex and such Minority Stockholders on a pro rata basis
according to their respective percentages then held of Fully-Diluted Common
Stock.
4.10 Drag Along Rights.
(a) Drag Along Rights. Subject as provided below in this
Section 4.10(a), if at any time Onex proposes to sell or otherwise transfer,
including by way of merger, consolidation or otherwise, Common Stock held by
members of the Onex Group to a Third Party Purchaser (a "Drag Sale"), Onex may,
by giving notice to the Minority Stockholders, require each such Minority
Stockholder to sell a stated portion of its Common Stock at the same time for
the same consideration per share and otherwise on the same terms (including
covenants, representations, warranties and indemnities) and conditions, mutatis
mutandis, so that each Stockholder (including Onex and any other member of the
Onex Group) shall be obligated to sell up to its Proportionate Interest of
Fully-Diluted Common Stock to be sold to such Third Party Purchaser (or such
lower portion thereof to which the Drag Along Rights apply).
(b) Notice. If at any time Onex intends to exercise its rights
pursuant to Section 4.10(a), it shall give written notice thereof to the
Minority Stockholders. The notice shall set out, in reasonable detail, (i)
information concerning the identity of the Third Party Purchaser, (ii) a
description of the material terms and conditions of any proposed sale and (iii)
the portion of each Minority Stockholder's Common Stock which shall be subject
to the Drag Along Rights.
(c) Implementation. Any Minority Stockholder that is required
to sell all or any part of its Common Stock pursuant to the exercise by Onex of
its Drag Along Rights shall be required to make customary representations or
warranties in favor of the Third Party Purchaser, including the same
representations and warranties as to the Corporation and its business and
affairs as are being made by Onex in favor of such Third Party Purchaser.
(d) Proxy. In the event Onex exercises its Drag Along Rights
in connection with a transaction that requires a vote of the stockholders of the
Corporation or any Subsidiary to approve, including a merger, consolidation,
sale of substantially all of the assets of the Corporation or other similar
transaction, any Minority Stockholder that is required to sell all or any part
of its Common Stock or Common Stock Equivalents pursuant to the exercise by Onex
of its Drag Along Rights shall vote any and all shares of any class or series of
capital stock of the Corporation or any Subsidiary of the Corporation held by
such Stockholder as Onex votes thereon. Each Minority Stockholder hereby
constitutes and appoints Onex, with full power of substitution, as its true and
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lawful proxy and attorney-in-fact to vote any and all shares of any class or
series of capital stock of the Corporation or any Subsidiary of the Corporation
held by such Minority Stockholder in accordance with the provisions of this
Section 4.10(d). Each Minority Stockholder acknowledges that the proxy granted
hereby is irrevocable, being coupled with an interest, and that such proxy will
continue until the termination of such holder's obligation to vote any shares in
accordance with this Section 4.10(d).
4.11 Involuntary Transfers.
(a) Termination of Employment.
(i) If any Management Stockholder ceases to be an
employee of either the Corporation or any Subsidiary for any reason
(other than by reason of the death, disability or Retirement of such
Management Stockholder), the Management Stockholder and any Affiliate
of such Management Stockholder (collectively, the "Selling Management
Stockholder") shall offer to sell all (but not less than all) of the
Common Stock then held by the Selling Management Stockholder to the
Corporation by giving written notice of such offer (the "Mandatory
Offer") to the Corporation within ninety (90) days of the termination
of such Management Stockholder's employment (the "Termination Date").
If the Mandatory Offer has not been delivered by the Selling Management
Stockholder within such ninety (90)-day period, the Mandatory Offer
shall be deemed to have been delivered to the Corporation at the time
of the expiry of such ninety (90)-day period.
(ii) The Corporation shall notify the Selling Management
Stockholder of its acceptance or rejection of the Mandatory Offer
within thirty (30) days of the delivery or deemed delivery thereof. If
such notice has not been received by the Selling Management Stockholder
within such thirty (30)-day period, the Mandatory Offer shall be deemed
to be revoked (and not accepted by the Corporation) unless extended in
writing by the Selling Management Stockholder. If the Mandatory Offer
is accepted by the Corporation, the sale to the Corporation of the
Common Stock held by the Selling Management Stockholder shall be
completed on the tenth Business Day following the expiry of the
above-noted thirty (30)-day period.
(iii) Except as provided in Section 4.11(a)(ii), the
delivery or the deemed delivery of the Mandatory Offer by the Selling
Management Stockholder shall be binding and irrevocable and, if
accepted, shall require the Selling Management Stockholder to sell and
the Corporation (subject as provided below) to purchase the Common
Stock beneficially owned by the Selling Management Stockholder at a
price equal to its fair market value (as at the end of the month
preceding the month in which the Termination Date occurred).
Notwithstanding the foregoing, the Corporation shall not be required to
complete, or to cause the completion of, any such purchase unless it
has obtained all necessary waivers or consents from third parties
required to complete such
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purchase and such purchase is not prohibited by the DGCL or any other
applicable law.
(iv) In the case of any purchase and sale of Common Stock
pursuant to this Section 4.11(a), the purchase price for the Common
Stock beneficially owned by the Selling Management Stockholder shall be
paid by the Corporation in cash on the date of completion of such
purchase and sale.
(v) If the Corporation shall not be required to complete
any purchase provided for in Section 4.11(a) because it has not
obtained all necessary waivers or consents or is prohibited by the DGCL
or any other applicable law, it shall use all reasonable efforts to
obtain such consents or to satisfy such prohibition, as the case may
be, and such purchase and sale shall be completed on the seventh
Business Day after such consents are obtained or prohibitions
satisfied.
(b) Death, Disability or Retirement.
(i) In the event of the death, disability, retirement or
dismissal without Cause of a Management Stockholder, such Management
Stockholder or his legal personal representative(s), as the case may be
(in any case, the "Retiring Management Stockholder"), shall be entitled
to require the Corporation to purchase for cancellation from the
Retiring Management Stockholder any or all the Common Stock then
beneficially owned by the Retiring Management Stockholder by giving
written notice to the Corporation to such effect within 180 days of the
date (the "Retirement Date") of such Retiring Management Stockholder's
death, disability, Retirement or dismissal without Cause, as the case
may be; provided, however, that the Corporation shall not be required
to complete such purchase unless it has obtained all necessary waivers
or consents from third parties required to complete such purchase and
such purchase is not prohibited by the DGCL or any other applicable
law.
(ii) Any purchase and sale of Common Stock pursuant to
this Section 4.11(b) shall take place at a price equal to the fair
market value of the Common Stock as at the end of the month preceding
the date notice is first given by the Retiring Management Stockholder
pursuant to Section 4.11(b)(i) and shall, subject to Section
4.11(b)(i), be completed ninety (90) days following the date of the
receipt by the Corporation of such notice or on such other date as the
Corporation and the Retiring Management Stockholder may mutually agree.
(iii) The purchase price for any Common Stock purchased
by the Corporation pursuant to this Section 4.11(b) shall be payable in
cash on the date of completion of such purchase and sale.
(iv) If the Corporation shall not be required to complete
any purchase provided for in this Section 4.11(b) because it has not
obtained all necessary waivers or consents or is prohibited by the DGCL
or any other
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applicable law, it shall use all reasonable efforts to obtain such
consents or to satisfy such prohibition, as the case may be, and such
purchase and sale shall be completed on the fifth Business Day after
such consents are obtained or prohibitions satisfied.
(v) If, at the time of the first anniversary of the date
on which any purchase and sale pursuant to this Section 4.11(b) would
otherwise have been required to be completed, the Corporation has not
purchased the Common Stock beneficially owned by the Retiring
Management Stockholder, each of the other Stockholders shall have the
right (but not the obligation) to purchase such Common Stock based on
their Proportionate Interest in Fully-Diluted Common Stock in the
manner and on the terms provided in Section 3.3(a), mutatis mutandis.
If all the Common Stock beneficially owned by the Retiring Management
Stockholder is not purchased by the other Stockholders within sixty
(60) days of such anniversary, the Retiring Management Stockholder
shall have the right to sell such Common Stock to any Third Party
Purchaser; provided, however that such Third Party Purchaser shall
comply with Section 4.13.
(c) Event of Default. Each Stockholder acknowledges that the
occurrence of any Event of Default with respect to any Stockholder (the
"Defaulting Stockholder") will result in immediate and irreparable harm to the
other Stockholders and the Corporation. Accordingly, upon the occurrence of any
such Event of Default, the Corporation shall have the right (the "Call Right")
to purchase for cancellation any or all of the securities of the Corporation
held by such Stockholder or any Affiliate of such Stockholder. The Corporation
may exercise the Call Right, by giving written notice to such Stockholder, at
any time within ninety (90) days after the Corporation first becomes aware of
such Event of Default. Upon the giving of any such notice, the Defaulting
Stockholder and each Affiliate (if any) of such Stockholder shall be obliged to
sell and the Corporation shall be obliged to purchase or cause to be purchased
the securities of the Corporation in respect of which the Call Right was
exercised at a price equal to, in the case of an Event of Default referred to in
clauses (i), (ii), (iii) or (iv) of the definition of "Event of Default"
enumerated in Section 1.1, ninety percent (90%) of their fair market value and,
in the case of an Event of Default referred to in clause (v) of the definition
of "Event of Default" enumerated in Section 1.1, their fair market value (in any
case as at the end of the month immediately preceding such breach and otherwise
determined as provided in Section 4.11(d)). In the event that the Corporation
exercises the Call Right pursuant to this Section 4.11(c), each of the other
Stockholders hereby waives any and all of its rights under any applicable law or
otherwise to sell to the Corporation, or receive a pro rata offer from the
Corporation for, any or all of its shares of Common Stock.
(d) Determination of Fair Market Value.
(i) On or prior to the earlier of the date which is ten
(10) days prior to the completion of any purchase and sale pursuant to
this Section 4.11, the Corporation shall by notice in writing (the
"Valuation Notice") advise the Selling Management Stockholder, Retiring
Management Stockholder or Defaulting Stockholder (in any case, the
"Selling Party" for purposes of this Section 4.11(d),
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as the case may be, of the fair market value of the Common Stock
beneficially owned by the Selling Party, as determined by the Board.
(ii) If the Selling Party objects to the fair market
value set out in the Valuation Notice, the Selling Party shall by
notice in writing inform the Corporation of such objection within five
(5) Business Days of the receipt by the Selling Party of the Valuation
Notice. The Corporation and the Selling Party shall, within ten (10)
Business Days after the receipt by the Corporation of notice of the
objection of the Selling Party, each make a determination of the fair
market value of the Common Stock beneficially owned by the Selling
Party as at the relevant date (determined in accordance with Section
4.11(a), (b) or (c), as the case may be) and provide a copy of such
determination to the other party. For the purpose of making the
determination contemplated by this Section 4.11(d)(ii), the Corporation
shall provide to the Selling Party, if requested to do so, the audited
financial statements of the Corporation for its most recently ended
fiscal year (as well as for any previous year for which audited
financial statements of the Corporation are available), any quarterly
financial statements prepared by the Corporation for its current fiscal
year and the profit plan or budget of the Corporation for the current
fiscal year. The Corporation will provide to the Selling Party any
other materials or information relating to the Corporation which are
requested by the Selling Party and, in the determination of the
Corporation, acting reasonably, are relevant to the determination of
fair market value.
(iii) If the lower of the two valuations provided by the
parties in accordance with Section 4.11(d)(ii) is at least ninety
percent (90%) of the higher of the two valuations, the fair market
value of the Common Stock beneficially owned by the Selling Party shall
be deemed to be the simple arithmetic average of the two valuations.
Otherwise, the Corporation and the Selling Party shall forthwith
jointly appoint a Valuator and such Valuator shall be instructed to
select within fifteen (15) Business Days after its appointment one of
the two valuations, in which event the valuation so selected shall be
deemed to be the fair market value of the Selling Party's Common Stock.
If the Corporation and the Selling Party fail to so jointly appoint a
Valuator within five (5) Business Days of both parties making their
valuations available to the other, either party shall be entitled to
apply to a court of competent jurisdiction in the State of New York to
have such court appoint a Valuator. If the Selling Party fails to
complete its valuation within the time period specified above, the fair
market value of such Common Stock shall be deemed to be that determined
by the Corporation. The fees and expenses of the Valuator jointly
appointed in accordance with the foregoing shall be paid by the party
whose valuation is not selected by such Valuator. The fair market value
of any Common Stock determined in accordance with the provisions of
this Section 4.11(d) shall be final and binding for all purposes.
4.12 General Provisions Relating to Certain Sales of Securities.
(a) Definitions. In this Section 4.12, the term "Purchased
Securities" means any shares of Common Stock or Common Stock Equivalents to be
purchased from
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a Stockholder by Onex pursuant to the Rights of First Refusal or by the
Corporation pursuant to Section 4.11(a), (b) or (c) and the terms "Seller" and
"Purchaser" mean, respectively, the seller and the purchaser of such Purchased
Securities.
(b) Closing. The closing of the purchase and sale of the
Purchased Securities shall, in the absence of a contrary agreement between the
Seller and Purchaser, occur at the offices of counsel to the Corporation at such
time and on the closing date specified in the sale notice. Such date and time
are referred to as the "Date of Closing" and the "Time of Closing,"
respectively.
(c) Deliveries at Closing. At the Time of Closing on the Date
of Closing, subject to the other provisions of this Stockholders Agreement: (1)
the Purchaser shall pay to the Seller the aggregate purchase price (the
"Purchase Price") payable for the Purchased Securities by delivery of a bank
draft or certified check drawn on a Canadian chartered bank if by Onex or
otherwise a federally chartered U.S. bank; (2) the Seller shall deliver to the
Purchaser: (A) a receipt for payment of the Purchase Price; (B) the certificates
or instruments representing the Purchased Securities, duly endorsed for
transfer, or an affidavit or other evidence, satisfactory to the Corporation, to
the effect that the certificate representing such Purchased Securities has been
lost, destroyed or wrongfully taken; and (C) a written warranty from the Seller
that: (i) the Seller is the sole beneficial owner of the Purchased Securities,
free and clear of all liens, charges, pledges, security interests, adverse
claims or other encumbrances; and (ii) there are no contractual or other
restrictions on the transfer of the Purchased Securities which have not been
complied with; and (3) the Seller shall deliver to the Corporation, if the
Seller is selling all of its securities of the Corporation, a written release by
the Seller and each of its nominees, if any, of all claims against the
Corporation and its Subsidiaries with respect to any matter up to and including
the Date of Closing in the Seller's capacity as a director, officer, employee or
Stockholder of the Corporation or any of its Subsidiaries.
(d) Failure to Make Deliveries. If the Seller is not present
at the Time of Closing or is present but fails for any reason to deliver to the
Purchaser and to the Corporation the documents referred to in Sections 4.12(c),
the Purchaser may deposit the Purchase Price into a special account at a branch
of the Corporation's banker in the name of the Seller. Such deposit shall
constitute valid payment of the Purchase Price even though the Seller may have
voluntarily encumbered or disposed of any of the Purchased Securities and
notwithstanding the fact that the certificates or instruments representing the
Purchased Securities may have been delivered to any pledgee, transferee or other
person.
(e) Deemed Transfer. If, pursuant to Section 4.12(d), the
Purchase Price is deposited with the Corporation's bankers in the name of the
Seller, from and after the date of such deposit, and even though the
certificates or instruments representing the Purchased Securities have not been
delivered to the Purchaser, the purchase and sale of the Purchased Securities
shall be deemed to have been fully completed and all right, title, benefit and
interest, both at law and in equity, in and to the Purchased Securities shall be
conclusively deemed to have been transferred and assigned to and become vested
in the Purchaser and all right, title, benefit and interest, both at law and in
equity, of the Seller
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or of any transferee, assignee or any other person claiming any interest, legal
or equitable, therein or thereto through the Seller shall cease.
(f) Seller Entitled to Purchase Price. The Seller shall be
entitled to receive the Purchase Price so deposited, without interest, upon
delivery to the Purchaser and the Corporation of the documents required to be
delivered by it pursuant to Section 4.12(c).
(g) Pledged Securities. Where the Seller is unable to deliver
the certificates or instruments representing the Purchased Securities because
the Purchased Securities have been pledged as security for bona fide
indebtedness of the Seller, the Purchaser may, instead of paying the amount of
the Purchase Price into a special bank account as provided in Section 4.12(d),
pay all or a portion of the Purchase Price to the credit of the Seller to
discharge the indebtedness secured thereby and to obtain a release of the
relevant security interest. Any such payment by the Purchaser shall constitute a
complete discharge of the Purchaser's obligation to pay to the Seller all or the
relevant portion, as the case may be, of the Purchase Price. If the Purchaser
pays only a portion of the Purchase Price to a creditor of the Seller pursuant
to this Section 4.12(g), the Purchaser shall be entitled to deposit an amount
equal to the balance of the Purchase Price into a special bank account in
accordance with the provisions of Section 4.12(d) and the provisions of Section
4.12(d) shall apply, mutatis mutandis, to the portion of the Purchase Price so
deposited. If, following any payment by the Purchaser to a creditor of the
Seller pursuant to this Section 4.12(g), the balance, if any, of the Purchase
Price is either paid to the Seller or deposited in a special bank account as
provided in Section 4.10(d), then, from and after the date of the last to occur
of such payment and such deposit, and even though the certificates or
instruments representing the Purchased Securities may not have been delivered to
the Purchaser, the purchase and sale of the Purchased Securities shall be deemed
to have been fully completed and all right, title, benefit and interest, both at
law and in equity, in and to the Purchased Securities shall be conclusively
deemed to have been transferred and assigned to and become vested in the
Purchaser and all right, title, benefit and interest, both at law and in equity,
of the Seller or of any transferee, assignee or any other person claiming any
interest, legal or equitable, therein or thereto through the Seller shall cease.
(h) Power of Attorney. The Seller hereby irrevocably
constitutes and appoints any person who at such time is a director or officer of
the Corporation as the true and lawful attorney-in-fact and agent for, in the
name of and on behalf of the Seller to execute and deliver all such assignments,
transfers, instruments and other documents as may be necessary effectively to
transfer and assign the Purchased Securities, or any portion thereof, to the
Purchaser on the books of the Corporation. Such appointment and power of
attorney, being coupled with an interest, shall not be revoked by the
insolvency, bankruptcy or incapacity of the Seller and the Seller hereby
ratifies and confirms and agrees to ratify and confirm all that such attorney
may lawfully do or cause to be done by virtue of the provisions of this Section
4.12.
4.13 All Stockholders to be Bound. No Person shall become a holder of Common
Stock or Common Stock Equivalents without first having executed and delivered to
the
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Corporation an agreement, substantially in the form and on the terms of Schedule
B, by which such person agrees to be bound by this Stockholders Agreement. Any
person who so agrees to be bound by this Stockholders Agreement shall thereafter
be regarded for all purposes as a party to this Stockholders Agreement and shall
be entitled to all the rights and shall be subject to all the obligations of a
Stockholder hereunder.
4.14 Certain Events Not Deemed Transfers. In no event shall any exchange,
reclassification, or other conversion of shares into any cash, securities, or
other property pursuant to a merger or consolidation of the Corporation or any
Subsidiary with, or any sale or transfer by the Corporation or any Subsidiary of
all or substantially all its assets to, any Person constitute a Tag Sale of
shares of Common Stock by the Onex Group for purposes of Section 4.9. In
addition, Section 4.9 shall not apply to any transfer, sale, or disposition of
shares of Common Stock solely among members of the Onex Group.
4.15 Transfer and Exchange. When Securities are presented to the Corporation
with a request to register the transfer of such Securities or to exchange such
Securities for Securities of other authorized denominations, the Corporation
shall register the transfer or make the exchange as requested if the
requirements of this Stockholders Agreement for such transaction are met;
provided, however, that the Securities surrendered for transfer or exchange
shall be duly endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Corporation, duly executed by the Stockholder thereof
or its attorney and duly authorized in writing. No service charge shall be made
for any registration of transfer or exchange, but the Corporation may require
payment of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith.
4.16 Replacement Securities. If a mutilated Security is surrendered to the
Corporation or if the Stockholder of a Security claims and submits an affidavit
or other evidence, satisfactory to the Corporation, to the effect that the
Security has been lost, destroyed or wrongfully taken, the Corporation shall
issue a replacement Security if the Corporation's requirements are met. If
required by the Corporation, such Stockholder must provide an indemnity bond, or
other form of indemnity, sufficient in the judgment of the Corporation to
protect the Corporation against any loss which may be suffered. The Corporation
may charge such Stockholder for its reasonable out-of-pocket expenses in
replacing a Security which has been mutilated, lost, destroyed, or wrongfully
taken.
5. PUBLIC OFFERINGS
5.1 Qualified IPO. At any time, the Corporation may offer its Common Stock or
Common Stock Equivalents to the public in a Qualified IPO with the approval of
the Board.
5.2 Secondary Offering in Connection with Qualified IPO. In connection with a
Qualified IPO by the Corporation, the Corporation will use its reasonable best
efforts to effect the qualification or registration under applicable securities
laws of the Common Stock or Common Stock Equivalents, as applicable to the
Qualified IPO, held by Stockholders to the extent required to permit the
distribution of such shares of Common
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Stock or Common Stock Equivalents by way of a secondary offering concurrently
with such Qualified IPO and shall prepare and file such registration statements,
prospectuses, amendments and other documents as may be required to effect such
secondary offering; provided, however, that: (a) the Corporation will only be
required to effect the qualification or registration for distribution of such
number of shares of Common Stock or Common Stock Equivalents pursuant to this
Section 5.2 which, in the written opinion of the underwriters for the Qualified
IPO of the Corporation, after consultation with the Corporation and the
Stockholders, would not adversely affect such Qualified IPO and, in any event,
only to the extent permitted under applicable securities laws and under any
requirements imposed by the SEC or any securities regulatory authorities or any
stock exchanges on which the Common Stock or Common Stock Equivalents are to be
listed; and (b) to the extent that the number of shares of Common Stock or
Common Stock Equivalents which Stockholders wish to sell through a secondary
offering pursuant to this Section 5.2 is greater than the number of shares of
Common Stock or Common Stock Equivalents to be so sold in accordance with
Section 5.2, then the number of shares of Common Stock or Common Stock
Equivalents which each holder of Common Stock or Common Stock Equivalents will
be entitled to sell under the secondary offering shall be calculated on a pro
rata basis, based upon each such Stockholder's Proportionate Interest.
5.3 Piggyback Registrations.
(a) Right to Piggyback. In connection with a registered public offering
of Common Stock (other than pursuant to an Excluded Registration) under the
Securities Act for sale to the public (whether for the account of the
Corporation or the account of any securityholder of the Corporation) and in the
event that the form of registration statement to be used permits the
registration of Registrable Shares, the Corporation shall give prompt written
notice to each Stockholder of Registrable Shares (which notice shall be given
not less than thirty (30) days prior to the effective date of the Corporation's
registration statement), which notice shall offer each such Stockholder the
opportunity to include any or all of his, her or its Registrable Shares in such
registration statement, subject to the limitations contained in Section 5.3(b).
Each Stockholder who desires to have his, her or its Registrable Shares included
in such registration statement (each a "Requesting Stockholder") shall so advise
the Corporation in writing (stating the number of shares desired to be
registered) within twenty (20) days after the date of such notice from the
Corporation. Any Stockholder shall have the right to withdraw such Stockholder's
request for inclusion of such Stockholder's Registrable Shares in any
registration statement pursuant to this Section 5.3(a) by giving written notice
to the Corporation of such withdrawal. Subject to Section 5.3(b) below, the
Corporation shall include in such registration statement all such Registrable
Shares so requested to be included therein; provided, however, that the
Corporation may at any time withdraw or cease proceeding with any such
registration if it shall at the same time withdraw or cease proceeding with the
registration of all other equity securities originally proposed to be
registered.
(b) Priority on Registrations. If the managing underwriter advises the
Corporation that the inclusion of Registrable Shares in the registration
statement would cause a material adverse effect, the Corporation will be
obligated to include in such
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registration statement, as to each Requesting Stockholder, only a portion of the
shares such Stockholder has requested be registered equal to the ratio which
such Stockholder's requested shares bears to the total number of shares
requested to be included in such registration statement by all Persons other
than the Corporation (including Requesting Stockholders) who have requested
(pursuant to contractual registration rights) that their shares be included in
such registration statement. If as a result of the provisions of this Section
5.3(b) any Stockholder shall not be entitled to include all Registrable
Securities in a registration that such Stockholder has requested to be so
included, such Stockholder may withdraw such Stockholder's request to include
Registrable Shares in such registration statement. No Person may participate in
any registration statement hereunder unless such Person (x) agrees to sell such
person's Registrable Shares on the basis provided in any underwriting
arrangements approved by the Corporation and (y) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements, and
other documents, each in customary form, reasonably required under the terms of
such underwriting arrangements; provided, however, that no such Person shall be
required to make any representations or warranties in connection with any such
registration other than representations and warranties as to (i) such Person's
ownership of his, her or its Registrable Shares to be sold or transferred free
and clear of all liens, claims, and encumbrances, (ii) such Person's power and
authority to effect such transfer, and (iii) such matters pertaining to
compliance with securities laws as may be reasonably requested; provided
further, however, that the obligation of such Person to indemnify pursuant to
any such underwriting arrangements shall be several, not joint and several,
among such Persons selling Registrable Shares, and the liability of each such
Person will be in proportion to, and on the condition that such liability will
be limited to, the net amount received by such Person from the sale of his, her
or its Registrable Shares pursuant to such registration.
5.4 Holdback Agreement. Unless the managing underwriter otherwise agrees, each
of the Corporation and the Stockholders agrees (and the Corporation agrees, in
connection with any underwritten registration, to use its reasonable efforts to
cause its Affiliates to agree) not to effect any public sale or private offer or
distribution of any Common Stock or Common Stock Equivalents during the ten (10)
business days prior to the effectiveness under the Securities Act of any
underwritten registration and during such time period after the effectiveness
under the Securities Act of any underwritten registration (not to exceed one
hundred eighty (180) days) (except, if applicable, as part of such underwritten
registration) as the Corporation and the managing underwriter may agree.
5.5 Registration Procedures. Whenever any Stockholder has requested that any
Registrable Shares be registered pursuant to this Stockholders Agreement, the
Corporation will use its commercially reasonable efforts to effect the
registration and the sale of such Registrable Shares in accordance with the
intended method of disposition thereof, and pursuant thereto the Corporation
will as expeditiously as possible:
(i) prepare and file with the SEC a registration
statement on any appropriate form under the Securities Act with respect
to such Registrable Shares and use its commercially reasonable efforts
to cause such registration statement to become effective;
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(ii) prepare and file with the SEC such amendments,
post-effective amendments, and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of
not less than one hundred eighty (180) days (or such lesser period as
is necessary for the underwriters in an underwritten offering to sell
unsold allotments) and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in
such registration statement;
(iii) furnish to each seller of Registrable Shares and
the underwriters of the securities being registered such number of
copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement
(including each preliminary prospectus), any documents incorporated by
reference therein and such other documents as such seller or
underwriters may reasonably request in order to facilitate the
disposition of the Registrable Shares owned by such seller or the sale
of such securities by such underwriters (it being understood that,
subject to Section 5.6 and the requirements of the Securities Act and
applicable state securities laws, the Corporation consents to the use
of the prospectus and any amendment or supplement thereto by each
seller and the underwriters in connection with the offering and sale of
the Registrable Shares covered by the registration statement of which
such prospectus, amendment or supplement is a part);
(iv) use its commercially reasonable efforts to register
or qualify such Registrable Shares under such other securities or blue
sky laws of such jurisdictions as the managing underwriter reasonably
requests (or, in the event the registration statement does not relate
to an underwritten offering, as the holders of a majority of such
Registrable Shares may reasonably request); use its commercially
reasonable efforts to keep each such registration or qualification (or
exemption therefrom) effective during the period in which such
registration statement is required to be kept effective; and do any and
all other acts and things which may be reasonably necessary or
advisable to enable each seller to consummate the disposition of the
Registrable Shares owned by such seller in such jurisdictions;
provided, however, that the Corporation will not be required to (A)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph or (B)
consent to general service of process in any such jurisdiction;
(v) promptly notify each seller and each underwriter and
(if requested by any such Person) confirm such notice in writing (A)
when a prospectus or any prospectus supplement or post-effective
amendment has been filed and, with respect to a registration statement
or any post-effective amendment, when the same has become effective,
(B) of the issuance by any state securities or other regulatory
authority of any order suspending the qualification or exemption from
qualification of any of the Registrable Shares under state securities
or "blue sky" laws or the initiation of any proceedings for that
purpose,
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and (C) of the happening of any event which makes any statement made in
a registration statement or related prospectus untrue or which requires
the making of any changes in such registration statement, prospectus or
documents so that they will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading,
and, as promptly as practicable thereafter, prepare and file with the
SEC and furnish a supplement or amendment to such prospectus so that,
as thereafter deliverable to the purchasers of such Registrable Shares,
such prospectus will not contain any untrue statement of a material
fact or omit a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading;
(vi) make generally available to the Corporation's
securityholders an earnings statement satisfying the provisions of
Section 11(a) of the Securities Act no later than thirty (30) days
after the end of the twelve (12) month period beginning with the first
day of the Corporation's first fiscal quarter commencing after the
effective date of a registration statement, which earnings statement
shall cover said twelve (12) month period, and which requirement will
be deemed to be satisfied if the Corporation timely files complete and
accurate information on Forms 10-Q, 10-K and 8-K under the Exchange Act
and otherwise complies with Rule 158 under the Securities Act;
(vii) if requested by the managing underwriter or any
seller promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter
or any seller reasonably requests to be included therein, including,
without limitation, with respect to the Registrable Shares being sold
by such seller, the purchase price being paid therefor by the
underwriters and with respect to any other terms of the underwritten
offering of the Registrable Shares to be sold in such offering, and
promptly make all required filings of such prospectus supplement or
post-effective amendment;
(viii) as promptly as practicable after filing with the
SEC of any document which is incorporated by reference into a
registration statement (in the form in which it was incorporated),
deliver a copy of each such document to each seller;
(ix) cooperate with the sellers and the managing
underwriter to facilitate the timely preparation and delivery of
certificates (which shall not bear any restrictive legends unless
required under applicable law) representing securities sold under any
registration statement, and enable such securities to be in such
denominations and registered in such names as the managing underwriter
or such sellers may request and keep available and make available to
the Corporation's transfer agent prior to the effectiveness of such
registration statement a supply of such certificates;
(x) promptly make available for inspection by any seller,
any underwriter participating in any disposition pursuant to any
registration statement,
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and any attorney, accountant or other agent or representative retained
by any such seller or underwriter (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and
properties of the Corporation (collectively, the "Records"), as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Corporation's officers, directors and
employees to supply all information requested by any such Inspector in
connection with such registration statement; provided, however, that,
unless the disclosure of such Records is necessary to avoid or correct
a misstatement or omission in the registration statement or the release
of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction, the Corporation shall not be required
to provide any information under this subparagraph (x) if (A) the
Corporation believes, after consultation with counsel for the
Corporation, that to do so would cause the Corporation to forfeit an
attorney-client privilege that was applicable to such information or
(B) if either (1) the Corporation has requested and been granted from
the SEC confidential treatment of such information contained in any
filing with the SEC or documents provided supplementally or otherwise
or (2) the Corporation reasonably determines in good faith that such
Records are confidential and so notifies the Inspectors in writing
unless prior to furnishing any such information with respect to (A) or
(B) such Stockholder of Registrable Securities requesting such
information agrees to enter into a confidentiality agreement in
customary form and subject to customary exceptions; and provided
further, however, that each Stockholder of Registrable Securities
agrees that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the
Corporation and allow the Corporation, at its expense, to undertake
appropriate action and to prevent disclosure of the Records deemed
confidential;
(xi) furnish to each seller and underwriter a signed
counterpart of (A) an opinion or opinions of counsel to the
Corporation, and (B) a comfort letter or comfort letters from the
Corporation's independent public accountants, each in customary form
and covering such matters as are negotiated with the managing
underwriter;
(xii) cause the Registrable Shares included in any
registration statement to be (A) listed on each securities exchange, if
any, on which similar securities issued by the Corporation are then
listed, or (B) authorized to be quoted and/or listed (to the extent
applicable) on the NASD. Automated Quotation System or the Nasdaq Stock
Market if the Registrable Shares so qualify;
(xiii) provide a CUSIP number for the Registrable Shares
included in any registration statement not later than the effective
date of such registration statement;
(xiv) cooperate with each seller and each underwriter
participating in the disposition of such Registrable Shares and their
respective counsel in connection with any filings required to be made
with the NASD;
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(xv) during the period when the prospectus is required to
be delivered under the Securities Act, promptly file all documents
required to be filed with the SEC pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act;
(xvi) notify each seller of Registrable Shares promptly
of any request by the SEC for the amending or supplementing of such
registration statement or prospectus or for additional information;
(xvii) prepare and file with the SEC promptly any
amendments or supplements to such registration statement or prospectus
which, in the opinion of counsel for the Corporation or the managing
underwriter, is required in connection with the distribution of the
Registrable Shares;
(xviii) enter into such agreements (including
underwriting agreements in the managing underwriter's customary form)
as are customary in connection with an underwritten registration; and
(xix) advise each seller of such Registrable Shares,
promptly after it shall receive notice or obtain knowledge thereof, of
the issuance of any stop order by the SEC suspending the effectiveness
of such registration statement or the initiation or threatening of any
proceeding for such purpose and promptly use its best efforts to
prevent the issuance of any stop order or to obtain its withdrawal at
the earliest possible moment if such stop order should be issued.
5.6 Suspension of Dispositions. Each Stockholder agrees by acquisition of any
Registrable Shares that, upon receipt of any notice (a "Suspension Notice") from
the Corporation of the happening of any event of the kind described in Section
5.5(v)(C) such Stockholder will forthwith discontinue disposition of Registrable
Shares until such Stockholder's receipt of the copies of the supplemented or
amended prospectus, or until it is advised in writing (the "Advice") by the
Corporation that the use of the prospectus may be resumed, and has received
copies of any additional or supplemental filings which are incorporated by
reference in the prospectus, and, if so directed by the Corporation, such
Stockholder will deliver to the Corporation all copies, other than permanent
file copies then in such Stockholder's possession, of the prospectus covering
such Registrable Shares current at the time of receipt of such notice. In the
event the Corporation shall give any such notice, the time period regarding the
effectiveness of registration statements set forth in Section 5.5(ii) hereof
shall be extended by the number of days during the period from and including the
date of the giving of the Suspension Notice to and including the date when each
seller of Registrable Shares covered by such registration statement shall have
received the copies of the supplemented or amended prospectus or the Advice. The
Corporation shall use its commercially reasonable efforts and take such actions
as are reasonably necessary to render the Advice as promptly as practicable.
5.7 Registration Expenses. All expenses incident to the Corporation's
performance of or compliance with this Article 5 including, without limitation,
all registration and filing
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fees, all fees and expenses associated with filings required to be made with the
National Association of Securities Dealers, Inc. ("NASD") (including, if
applicable, the fees and expenses of any "qualified independent underwriter" as
such term is defined in Schedule E of the By-Laws of the NASD, and of its
counsel), as may be required by the rules and regulations of the NASD, fees and
expenses of compliance with securities or "blue sky" laws (including reasonable
fees and disbursements of counsel in connection with "blue sky" qualifications
of the Registrable Shares), rating agency fees, printing expenses (including
expenses of printing certificates for the Registrable Shares in a form eligible
for deposit with Depository Trust Corporation and of printing prospectuses if
the printing of prospectuses is requested by a holder of Registrable Shares),
messenger and delivery expenses, the Corporation's internal expenses (including
without limitation all salaries and expenses of its officers and employees
performing legal or accounting duties), the fees and expenses incurred in
connection with any listing of the Registrable Shares, fees and expenses of
counsel for the Corporation and its independent certified public accountants
(including the expenses of any special audit or "cold comfort" letters required
by or incident to such performance), securities acts liability insurance (if the
Corporation elects to obtain such insurance), the fees and expenses of any
special experts retained by the Corporation in connection with such
registration, and the fees and expenses of other persons retained by the
Corporation and reasonable fees and expenses of one firm of counsel for the
sellers (which shall be selected by the holders of a majority of the Registrable
Shares being included in any particular registration statement) (all such
expenses being herein called "Registration Expenses") will be borne by the
Corporation whether or not any registration statement becomes effective;
provided, however, that in no event shall Registration Expenses include any
underwriting discounts, commissions, or fees attributable to the sale of the
Registrable Shares or any counsel (except as provided above), accountants, or
other persons retained or employed by the Stockholders.
5.8 Indemnification.
(a) The Corporation agrees to indemnify and reimburse, to the fullest
extent permitted by law, each seller of Registrable Shares, and each of its
employees, advisors, agents, representatives, partners, officers, and directors
and each Person who controls such seller (within the meaning of the Securities
Act or the Exchange Act) and any agent or investment advisor thereof
(collectively, the "Seller Affiliates") (A) against any and all losses, claims,
damages, liabilities, and expenses, joint or several (including, without
limitation, attorneys' fees and disbursements except as limited by Section
5.8(c)) based upon, arising out of, related to or resulting from any untrue or
alleged untrue statement of a material fact contained in any registration
statement, prospectus, or preliminary prospectus or any amendment thereof or
supplement thereto, or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (B) against any and all loss, liability, claim, damage, and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation or investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon,
arising out of, related to or resulting from any such untrue statement or
omission or alleged untrue statement or omission, and (C) against any and all
costs and expenses (including reasonable fees and disbursements of counsel) as
may be reasonably incurred in
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investigating, preparing, or defending against any litigation, or investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon, arising out of, related to or resulting from
any such untrue statement or omission or alleged untrue statement or omission,
to the extent that any such expense or cost is not paid under subparagraph (A)
or (B) above; except insofar as the same are made in reliance upon and in strict
conformity with information furnished in writing to the Corporation by such
seller or any Seller Affiliate for use therein or arise from such seller's or
any Seller Affiliate's failure to deliver a copy of the registration statement
or prospectus or any amendments or supplements thereto after the Corporation has
furnished such seller or Seller Affiliate with a sufficient number of copies of
the same. The reimbursements required by this Section 5.8(a) will be made by
periodic payments during the course of the investigation or defense, as and when
bills are received or expenses incurred.
(b) In connection with any registration statement in which a seller of
Registrable Shares is participating, each such seller will furnish to the
Corporation in writing such information and affidavits as the Corporation
reasonably requests for use in connection with any such registration statement
or prospectus and, to the fullest extent permitted by law, each such seller will
indemnify the Corporation and its directors and officers and each Person who
controls the Corporation (within the meaning of the Securities Act or the
Exchange Act) against any and all losses, claims, damages, liabilities, and
expenses (including, without limitation, reasonable attorneys' fees and
disbursements except as limited by Section 5.8(c)) resulting from any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement, prospectus, or any preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission is contained in any
information or affidavit so furnished in writing by such seller or any of its
Seller Affiliates specifically for inclusion in the registration statement;
provided, however, that the obligation to indemnify will be several, not joint
and several, among such sellers of Registrable Shares, and the liability of each
such seller of Registrable Shares will be in proportion to, and on the condition
that such liability will be limited to, the net amount received by such seller
from the sale of Registrable Shares pursuant to such registration statement;
provided, however, that such seller of Registrable Shares shall not be liable in
any such case to the extent that prior to the filing of any such registration
statement or prospectus or amendment thereof or supplement thereto, such seller
has furnished in writing to the Corporation information expressly for use in
such registration statement or prospectus or any amendment thereof or supplement
thereto which corrected or made not misleading information previously furnished
to the Corporation.
(c) Any Person entitled to indemnification hereunder will (A) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided, however, that the failure to give such
notice shall not limit the rights of such Person) and (B) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with
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respect to such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party;
provided, however, that any person entitled to indemnification hereunder shall
have the right to employ separate counsel and to participate in the defense of
such claim, but the fees and expenses of such counsel shall be at the expense of
such person unless (X) the indemnifying party has agreed to pay such fees or
expenses, or (Y) the indemnifying party shall have failed to assume the defense
of such claim and employ counsel reasonably satisfactory to such person. If such
defense is not assumed by the indemnifying party as permitted hereunder, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). If such defense is assumed by the indemnifying party
pursuant to the provisions hereof, such indemnifying party shall not settle or
otherwise compromise the applicable claim unless (1) such settlement or
compromise contains a full and unconditional release of the indemnified party or
(2) the indemnified party otherwise consents in writing. An indemnifying party
who is not entitled to, or elects not to, assume the defense of a claim will not
be obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party, a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event the indemnifying
party shall be obligated to pay the reasonable fees and disbursements of such
additional counsel or counsels.
(d) Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 5.8(a) or 5.8(b) are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages, liabilities, or expenses (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, liabilities, or expenses (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and the indemnified party in connection with the actions which resulted in
the losses, claims, damages, liabilities or expenses as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.8(d) were determined by pro
rata allocation (even if the Stockholders or any underwriters or all of them
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in this Section 5.8(d). The amount paid or payable by an indemnified party as
a result of the losses, claims, damages, liabilities, or expenses (or actions in
respect thereof) referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such indemnified party in connection
with investigating or, except as provided in Section 5.8(c), defending any such
action or claim. Notwithstanding the provisions of this Section 5.8(d), no
Stockholder shall be required to
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contribute an amount greater than the dollar amount by which the net proceeds
received by such Stockholder with respect to the sale of any Registrable Shares
exceeds the amount of damages which such Stockholder has otherwise been required
to pay by reason of any and all untrue or alleged untrue statements of material
fact or omissions or alleged omissions of material fact made in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto related to such sale of Registrable Securities. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Stockholders' obligations
in this Section 5.8(d) to contribute shall be several in proportion to the
amount of Registrable Shares registered by them and not joint.
If indemnification is available under this Section 5.8, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Sections 5.8(a) and 5.8(b) without regard to the relative fault of
said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 5.8(d) subject, in the case of the
Stockholders, to the limited dollar amounts set forth in Section 5.8(b).
(e) The indemnification and contribution provided for under this
Stockholders Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director, or controlling Person of such indemnified party and will survive the
transfer of securities and the termination of this Stockholders Agreement.
5.9 Further Assurances. Each Stockholder shall do all such acts and things as,
in the opinion of the Board, may be necessary or advisable to facilitate a
Qualified IPO, including, without limitation, authorizing all amendments to the
Certificate that the Board may consider necessary or advisable to facilitate any
reorganization of the Corporation that is to occur prior to the Qualified IPO.
Upon the completion of a Qualified IPO of Common Stock of the Corporation, all
the provisions of this Stockholders Agreement and all rights and obligations
hereunder shall terminate automatically, with the exception of the provisions of
Section 5.2 dealing with the allocation of participation in a secondary offering
and Section 5.8 to the extent that such provisions have not already been
fulfilled or other agreements are not in place at such time to give effect to
such provisions.
6. OPTION BY CERTAIN UNACCREDITED STOCKHOLDERS
6.1 Grant of Option. Each Stockholder acknowledges the Onex Group's desire that
each holder of the Securities of the Corporation qualify as an Accredited
Investor so that no disclosure document will be required in order to exempt
(pursuant to Regulation D under the Securities Act of 1933, as amended) any
future issuances of securities to the existing Stockholders of the Corporation.
Accordingly, upon the occurrence of an Option Transaction (as defined in Section
6.2 hereof) with respect to the Corporation, each Stockholder shall be deemed to
have granted to Onex an option ("Option") to purchase, upon the terms and
conditions set forth herein, all Securities held by such Stockholder and all
shares, notes, or other securities now or hereafter issued or issuable in
respect of
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any such Securities (whether issued or issuable by the Corporation or any other
person or entity) (collectively, the "Option Securities").
6.2 Option Transaction. The Option may be exercised only if (a) the Corporation
is engaged in or proposes to engage in a transaction in which any shares, notes,
or other securities will be issued to such Stockholder in a transaction
constituting a "sale" within the meaning of Section 2(3) of the Securities Act
(whether through a merger, consolidation, exchange, or purchase), (b) the
Stockholder is not an Accredited Investor at the time of the respective
transaction (an "Unaccredited Stockholder"), (c) no security holder (except for
such Unaccredited Stockholder or any other person granting a similar option to
Onex) of the Corporation involved in the respective transaction fails at the
time of such transaction to qualify as an Accredited Investor, and (d) the
issuer of the shares, notes, or other securities involved in such transaction
(as conclusively evidenced by any notice signed in good faith by an executive
officer or other authorized representative of Onex) has not prepared and is not
expected to prepare in connection with such transaction appropriate disclosure
documents that are sufficient to register such shares, notes, or other
securities under the Securities Act or to exempt such registration in accordance
with Regulation D. Each transaction for which the Option may be exercised as
provided in this Section 6.2 is herein referred to as an "Option Transaction."
6.3 Exercise of Option. Onex may exercise the Option solely with respect to all,
but not less than all, of such Unaccredited Stockholder's Option Securities
involved in the respective Option Transaction. The Option may be exercised with
respect to such Option Securities at any time before the consummation of the
respective Option Transaction for which the Option is then exercisable. The
exercise of the Option will be timely and effectively made if Onex provides
written notice of such exercise to such Unaccredited Stockholder before such
consummation of the respective Option Transaction. The earlier date on which
such notice is so mailed or delivered will constitute the respective exercise
date of the Option to which such notice relates.
6.4 Closing. Unless otherwise agreed by Onex and such Unaccredited Stockholder,
the closing of each exercise of the Option will take place at the offices of
Onex or at such place as Onex and such Unaccredited Stockholder agree, on the
fifth business day after notice of the Option's exercise is mailed or delivered
in accordance with Section 6.3. At the closing, Onex will pay the exercise price
to such Unaccredited Stockholder in cash (by certified or cashier's check)
solely upon such Unaccredited Stockholder's delivering to Onex valid
certificates evidencing all Option Securities then being purchased pursuant to
the exercise of the Option. Such certificates will be duly endorsed (with
signature guaranteed) for transfer to Onex, and upon delivery of such
certificates to Onex, such Unaccredited Stockholder will be deemed to represent
and warrant to Onex that the transferred Option Securities are owned by such
Unaccredited Stockholder free and clear of all liens, adverse claims, and other
encumbrances other than as provided in this Stockholders Agreement. Payment of
the exercise price for the Option Securities is not required in order to effect
the timely exercise of the Option. In order to ensure the transfer of the Option
Securities purchased upon exercise of the Option, each Unaccredited Stockholder
hereby severally appoints Onex as his, her or its attorney in fact for the
purpose of effecting any such transfer, and each Unaccredited Stockholder
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acknowledges and agrees that such power of attorney is coupled with an interest
and is irrevocable. Moreover, Onex and each Unaccredited Stockholder will
promptly perform, whether before or after any Option closing, such additional
acts (including without limitation executing and delivering additional
documents) as are reasonably required by either such party to effect more fully
the transactions contemplated hereby.
6.5 Exercise Price. The exercise price for each Option Security will equal the
price per share (or, in the case of securities other than capital stock, other
applicable denomination) to be paid in connection with the Option Transaction as
determined in good faith by the Board or such other governing body (or
authorized committees thereof) of either (a) the issuer of such Option Security
or (b) Onex if no such issuer determination is made, it being understood that
determinations made by the issuer or Onex pursuant to this Section 6.5 will be
final and conclusive.
6.6 Assignment of Option. The Option may be assigned or transferred in whole or
in part by Onex without any consent or other action on the part of any
Stockholder, and all references herein to "Onex" will include without limitation
each assignee or transferee of all or any part of the Option.
7. CONFIDENTIALITY, NON-COMPETITION AND NON-SOLICITATION
7.1 Acknowledgement. The Stockholders acknowledge that they and their respective
employees, nominees, advisors, agents or other representatives (collectively,
"Representatives") will have access to and will be entrusted with detailed
confidential information and trade secrets ("Confidential Information") relating
to the present and contemplated operations of the Corporation and its
Subsidiaries, the disclosure of any of which Confidential Information to
competitors of the Corporation and its Subsidiaries or to the general public
would be highly detrimental to the best interests of the Corporation. The
Stockholders acknowledge and agree that the right to maintain the
confidentiality of such Confidential Information and the right to preserve the
goodwill of the Corporation constitute proprietary rights which the Corporation
is entitled to protect.
7.2 Covenants.
(a) Covenants of Stockholders. Each Stockholder hereby agrees with each
of the other Stockholders and with the Corporation that neither it nor any of
their respective representatives shall, directly or indirectly:
(1) subject to Section 7.3, at any time disclose any Confidential
Information to any person nor use the same for any purpose other than the
purposes of the Corporation, nor disclose or use for any purpose other than
those of the Corporation the private affairs of the Corporation or any
other non-public information relating to the business and affairs of the
Corporation or any of its Subsidiaries which they may acquire as a result
of being a Stockholder or director of the Corporation or any of its
Subsidiaries; provided, however, that any party may disclose any
information (i) to the extent required by law, regulation or by valid order
of a governmental body, regulatory board, administrative tribunal or
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comparable entity, (ii) to such party's legal counsel or (iii) to any of
its Affiliates or accounting or financial advisors who need to know such
information and have delivered to the Corporation a confidentiality
agreement, in form and content satisfactory to the Corporation, acting
reasonably, by which the Affiliate or advisor, as the case may be, has
agreed not to disclose such information to any person, not to use such
information for any purpose other than to provide advice to the Stockholder
and, forthwith upon request, to return to the Corporation all tangible
evidence of such information;
(2) subject to Section 7.2(b), until such time as such Stockholder
ceases to be a Stockholder of the Corporation, either individually or in
partnership or jointly or in conjunction with any person, as principal,
agent, shareholder or in any other manner whatsoever, carry on or be
engaged in or concerned with or interested in, or advise, lend money to,
guarantee the debts or obligations of, or permit its name or any part
thereof to be used or employed by or associated with, any person engaged in
or concerned with or interested in any business which is competitive with
the business carried on by the Corporation or any Subsidiary at such time
without, in each case, the prior written consent of the Corporation, which
consent shall not be unreasonably withheld or delayed; and
(3) until such time as such Stockholder ceases to be a Stockholder of
the Corporation, at any time contact, or take any steps designed to bring
information to the attention of, any employee or executive of the
Corporation for the purpose of offering such employee or executive
employment with, or enticing such employee or executive to seek employment
with, any person other than the Corporation, regardless of the business in
which such other person is engaged, without, in each case, the prior
written consent of the Corporation, which consent shall not be unreasonably
withheld or delayed or until such time as such Stockholder ceases to be a
Stockholder of the Corporation, at any time, directly or indirectly,
individually or in partnership or jointly or in conjunction with any
person, as principal, agent, shareholder or in any other manner whatsoever,
contact, approach or solicit any customer or client (or prospective
customer or client) of the Corporation for the purpose of soliciting any
such client or customer (or prospective client or customer) for the purpose
of selling to such person services the same or similar to any services
provided by the Corporation.
(b) Covenants of ▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇ shall not be bound by the
restrictions on competitive activities contained in Section 7.2(a)(2); provided,
however, that (i) ▇▇▇▇▇▇▇▇ shall not commence any such activity or take any step
in furtherance thereof without providing prior written notice thereof to the
Corporation and to Onex and (ii) upon ▇▇▇▇▇▇▇▇ commencing any activity of the
type referred to in Section 7.2(a)(2), ▇▇▇▇▇▇▇▇ shall, subject to applicable
law, not be entitled to receive any Confidential Information from the
Corporation or any other person.
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7.3 Exceptions.
(a) Disclosure by Onex. The restriction set out in Section 7.2(a) shall
not preclude disclosure of Confidential Information by Onex in connection with
any proposed Liquidity Transaction or other transaction involving the
Corporation; provided, however, that such disclosure shall not be made without
the approval of the Board and until the person receiving such Confidential
Information has delivered to the Corporation a confidentiality agreement, in
form and content satisfactory to the Corporation, acting reasonably, by which
the person receiving such Confidential Information agrees: (1) not to disclose
such information to any person other than its legal and financial advisors,
subject in each case to such legal and financial advisors agreeing prior to any
such disclosure to them to be bound by such confidentiality agreement; (2) not
to use such information for any purpose other than in connection with the
proposed Liquidity Transaction or other proposed transaction; and (3) forthwith
upon request, to return to the Corporation or to Onex all tangible evidence of
such information.
(b) Acquisition of Public Securities. The restriction set out in
Section 7.2(a) shall not preclude the acquisition by any Stockholder of up to
five percent (5%) in the aggregate of the outstanding shares of any class or
series of any issuer which are traded on any stock exchange or other public
market.
7.4 Reasonable Restrictions. The Stockholders hereby agree that all restrictions
contained in this Article 7 are reasonable and valid and waive all defenses to
the strict enforcement thereof to the fullest extent permitted by law.
8. MISCELLANEOUS
8.1 Implementation. Each Stockholder agrees to vote its shares of Common Stock,
and all other securities of the Corporation entitled to vote on a particular
matter, at all times, to cause its nominees to the Board (if any) to act at all
times and otherwise to exercise its influence in respect of the Corporation, the
Corporation agrees to exercise its influence in respect of its Subsidiaries, and
the Corporation and each Stockholder agrees to sign all such documents and to do
and perform all such other acts or things as may be necessary or desirable from
time to time in order to give full effect to the provisions and intent of this
Stockholders Agreement and to ensure that the provisions of this Stockholders
Agreement shall govern the affairs of the Corporation and its Subsidiaries to
the maximum extent permitted by law, notwithstanding any conflicting provision
in the Certificate or the Bylaws or any conflicting resolutions of the directors
or shareholders of the Corporation. In the case of any conflict between the
provisions of this Stockholders Agreement and the Certificate, the Bylaws or any
such resolutions, each Stockholder agrees to take all such action as may be
required under the DGCL or otherwise to amend the Certificate, the Bylaws or
such resolutions, as the case may be, to resolve such conflict so that the
provisions of this Stockholders Agreement shall, to the maximum extent permitted
by law, at all times prevail.
8.2 Notices. Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by
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telecopier or registered or certified mail, postage prepaid, return receipt
requested, addressed as follows (or at such other address as may be substituted
by notice given as herein provided):
If to the Corporation:
With copies to (which shall not constitute notice):
If to any Stockholder, at its address listed on the signature
pages hereof.
Any notice or communication hereunder shall be deemed to have
been given or made as of the date so delivered if personally delivered; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and five
(5) calendar days after mailing if sent by registered or certified mail (except
that a notice of change of address shall not be deemed to have been given until
actually received by the addressee).
Failure to mail a notice or communication to a Stockholder or
any defect in it shall not affect its sufficiency with respect to other
Stockholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
8.3 Successors and Assigns. Whether or not an express assignment has been made
pursuant to the provisions of this Stockholders Agreement, provisions of this
Stockholders Agreement that are for the Stockholders' benefit as the holders of
any Securities are also for the benefit of, and enforceable by, all subsequent
holders of Securities, except as otherwise expressly provided herein. This
Stockholders Agreement shall be binding upon the Corporation, each Stockholder,
and their respective successors and assigns.
8.4 Remedies. The Stockholders agree and acknowledge that money damages may not
be an adequate remedy for any breach of the provisions of this Stockholders
Agreement and that any Stockholder may in its sole discretion apply to any court
of competent jurisdiction for specific performance and/or injunctive relief in
order to enforce or prevent any violation of the provisions of this Stockholders
Agreement.
8.5 Termination. The provisions of this Stockholders Agreement, other than
Article 5, shall terminate upon the consummation of a Qualified IPO and may be
terminated at any time by agreement in writing of the Required Stockholders at
the time of such agreement.
8.6 Legal Holidays. A "Legal Holiday" used with respect to a particular place of
payment is a Saturday, a Sunday or a day on which banking institutions at such
place are not required to be open. If a payment date is a Legal Holiday at such
place, payment may be made at such place on the next succeeding day that is not
a Legal Holiday, and no interest on the amount of such payment shall accrue for
the intervening period.
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8.7 Governing Law. THIS STOCKHOLDERS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
8.8 Severability. In case any provision in this Stockholders Agreement shall be
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and the remaining provisions shall not in any way be affected or
impaired thereby
8.9 No Waivers; Amendments.
(a) No Waivers. No failure or delay on the part of the Corporation or
any Stockholder in exercising any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Corporation or any Stockholder at law or in equity or otherwise.
(b) Amendment and Waiver. Any provision of this Stockholders Agreement
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed by the Corporation and the Required Stockholders and such
amendment or waiver shall be binding on all of the Stockholders and the
Corporation.
8.10 Currency. Unless otherwise indicated, all dollar amounts referred to in
this Stockholders Agreement are expressed in United States dollars.
8.11 Sections and Headings. The division of this Stockholders Agreement into
Articles and Sections and the insertion of headings are for reference purposes
only and shall not affect the interpretation of this Stockholders Agreement. The
terms "this Stockholders Agreement", "hereof", "herein", "hereunder" and similar
expressions refer to this Stockholders Agreement and not to any particular
Section or other portion hereof and include any agreement or instrument
supplemental or ancillary hereto. Unless otherwise indicated, any reference in
this Stockholders Agreement to a Section or Schedule refers to the specified
Section of or Schedule to this Stockholders Agreement.
8.12 Entire Agreement. This Stockholders Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether written or oral. There are no conditions, covenants, agreements,
representations, warranties or other provisions, express or implied, collateral,
statutory or otherwise, relating to the subject matter hereof except as provided
in this Stockholders Agreement.
8.13 Duplicate Originals. All parties may sign any number of copies of this
Stockholders Agreement. Each signed copy shall be an original, but all of them
together shall represent the same agreement.
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8.14 Time of Essence. Time shall be of the essence of this Stockholders
Agreement.
8.15 Number and Gender. In this Stockholders Agreement, words importing the
singular number only shall include the plural and vice versa and words importing
any gender shall include all genders.
8.16 Ceasing to be a Party. Except as otherwise provided in this Stockholders
Agreement, a Stockholder shall cease to be a party to this Stockholders
Agreement in the event that such Stockholder and every Affiliate thereof no
longer holds or has any interest in any securities of the Corporation. Any
Stockholder that ceases to be a party to this Stockholders Agreement shall have
no further rights or obligations under this Stockholders Agreement, other than
rights and obligations that may have arisen or accrued before such Stockholder
ceased to be a party.
8.17 Change in Securities. The provisions of this Stockholders Agreement
relating to securities of any class or series shall apply, mutatis mutandis, to
any securities into which such securities may be converted, reclassified,
redesignated, subdivided, consolidated or otherwise changed from time to time
and to any securities of any successor or continuing corporation to the
Corporation that may be received in respect of any securities on a
reorganization, amalgamation, consolidation or merger, statutory or otherwise.
8.18 Securities Subsequently Acquired. Each Stockholder agrees that, in addition
to the shares of Common Stock now owned by it as set out opposite its, his or
her name in Schedule A, all Common Stock or Common Stock Equivalents hereafter
acquired by such Stockholder shall be subject in all respects to the provisions
of this Stockholders Agreement.
8.19 Registration of Securities. The parties acknowledge that shares of Common
Stock and Common Stock Equivalents beneficially owned by a Stockholder may from
time to time be registered in the name of a nominee which will hold such
securities as a bare trustee for the sole benefit and under the sole direction
of such Stockholder. Each Stockholder shall cause all such shares of Common
Stock and Common Stock Equivalents to remain subject in all respects to, and to
be dealt with only in accordance with, this Stockholders Agreement in the same
manner as if they were registered at all times in the name of such Stockholder.
The Corporation may at any time require that evidence satisfactory to it, acting
reasonably, be provided to the effect that any such nominee holds all shares of
Common Stock and Common Stock Equivalents for the sole benefit of the relevant
Stockholder.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this
Stockholders Agreement to be duly executed as of the date first written above.
CUSTOMERONE HOLDING CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: CEO
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ONEX CUSTOMERONE LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇ ▇▇▇▇
Title: Director
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By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
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