EXHIBIT 1
TRANSACTION AGREEMENT
BY AND AMONG
SOTHEBY'S HOLDINGS, INC.,
A MICHIGAN CORPORATION
AND
THE INVESTORS LISTED ON EXHIBIT A
DATED AS OF SEPTEMBER 7, 2005
CONTENTS
SECTION PAGE
1. Definitions..........................................................1
2. Conversion; Purchase and Sale........................................4
2.1 Voluntary Conversion and Purchase of Shares.................4
2.2 Automatic Conversion........................................4
2.3 Closing; Closing Deliveries.................................4
3. Representations and Warranties of the Investors......................5
3.1 Organization................................................5
3.2 Authority Relative to this Agreement........................5
3.3 No Conflict; Required Filings and Consents..................6
3.4 No Commissions..............................................6
3.5 Title to Shares.............................................6
3.6 Litigation..................................................6
3.7 No Agreements or Understandings.............................6
3.8 Private Placement...........................................7
4. Representations and Warranties of the Company........................7
4.1 Organization................................................7
4.2 Authority Relative to this Agreement........................8
4.3 No Conflict; Required Filings and Consents..................8
4.4 Authorization of Conversion Shares..........................8
4.5 No Commissions..............................................8
4.6 Litigation..................................................8
4.7 Board Actions; Fairness Opinion.............................9
4.8 Listing of Shares...........................................9
5. Additional Agreements................................................9
5.1 Further Assurances..........................................9
5.2 Press Releases..............................................9
5.3 Standstill..................................................9
5.4 Restrictions on Transfer...................................11
5.5 Composition of Board of Directors and Committees...........11
5.6 Reporting..................................................12
6. Registration Rights.................................................12
6.1 Demand Registration........................................12
6.2 Piggyback Registrations....................................13
6.3 Allocation of Shares to be Registered......................14
6.4 Registration Procedures....................................14
6.5 Indemnification; Contribution..............................17
6.6 Registration Expenses......................................19
7. Miscellaneous.......................................................20
7.1 Notices....................................................20
7.2 Assignment; Binding Effect; No Third-Party Rights..........21
7.3 Entire Agreement...........................................21
7.4 Expenses...................................................21
7.5 Waivers; Amendments........................................21
7.6 Reformation and Severability...............................21
7.7 Governing Law..............................................22
7.8 Consent to Jurisdiction....................................22
7.9 Waiver of Jury Trial.......................................22
7.10 Counterparts...............................................23
7.11 Construction...............................................23
7.12 Specific Performance.......................................23
7.13 Survival of Representations and Warranties.................23
EXHIBITS
EXHIBIT A...INVESTORS
ANNEXES
ANNEX I.....FORM OF CONVERSION NOTICE
TRANSACTION AGREEMENT
THIS TRANSACTION AGREEMENT is made and entered into as of September 7, 2005, by
and among:
(1) SOTHEBY'S HOLDINGS, INC., a corporation organized under the laws of
Michigan (the COMPANY); and
(2) those investors set forth on Exhibit A (each an INVESTOR, with each of A.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ also being deemed an INVESTOR (but it
being understood and agreed that neither A. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ nor ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ owns any shares of Class B Stock or is exchanging any shares), and
collectively, the INVESTORS).
RECITALS:
WHEREAS, the Investors collectively own beneficially and of record an aggregate
of 14,034,158 shares (the SHARES) of Class B Common Stock, par value $0.10 per
share, of the Company (CLASS B STOCK), each of which is convertible at the
option of the holder thereof into one share of Class A Limited Voting Common
Stock, par value $0.10 per share, of the Company (CLASS A STOCK);
WHEREAS, the Company and the Investors desire to engage in a transaction in
which the Company and the Investors will exchange all Shares for a combination
of (1) 7,100,000 shares of Class A Stock and (2) U.S.$168,409,896 (the
TRANSACTION);
WHEREAS, the Transaction shall be effected by means of (1) the conversion by
each Investor of a portion of the Shares held by such Investor into shares of
Class A Stock on a one-for-one basis in accordance with the terms of Article
III(2)(D) of the Company's Third Amended and Restated Articles of Incorporation
(the ARTICLES) and (2) the acquisition by the Company from each Investor of the
remainder of the Shares held by such Investor for cash, in each case, on the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, immediately following the completion of the Transaction, the
outstanding shares of Class B Stock will constitute less than fifty percent
(50%) of the aggregate voting power of all of the issued and outstanding shares
of Class A Stock and Class B Stock, and, as a result thereof, each then
outstanding share of Class B Stock will be automatically converted into one
share of Class A Stock without any action of the holder thereof pursuant to
Article III(2)(D) of the Articles.
NOW, THEREFORE, in consideration of and subject to the premises and the mutual
agreements, terms and conditions contained in this Agreement, the benefits to be
derived therefrom and other good and valuable consideration, the receipt and the
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
1.1 As used in this Agreement, the following terms used are defined as follows,
except where the context of this Agreement clearly indicates otherwise:
AFFILIATE of any Person means any other Person that (a) is controlled by
such first Person; (b) is controlled by another Person that also controls
such first Person; (c) controls such first Person; (d)
in the case of an individual, is such Person's spouse, parent or child; or
(e) is a trust of which such first Person or such first Person's immediate
family member(s) is a beneficiary. For purposes hereof, the terms "control"
and "controlled" mean direct or indirect ownership of more than fifty
percent (50%) of the votes entitled to be cast in the election of directors
or managers or the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting
securities, by contract, or otherwise.
AGREEMENT means this Transaction Agreement, by and among the Company and
the Investors, including the attached Exhibits and Annexes, as the same
may, from time to time, be modified, supplemented and amended.
ARTICLES has the meaning ascribed to it in the third recital.
BLACKOUT PERIOD has the meaning ascribed to it in SECTION 6.1(B).
CLAIMS has the meaning ascribed to it in SECTION 6.5(A).
CLASS A STOCK has the meaning ascribed to it in the first recital.
CLASS B STOCK has the meaning ascribed to it in the first recital.
CLOSING means the completion of the Transaction.
CLOSING DATE means the date on which the Closing shall occur.
CODE has the meaning ascribed to it in SECTION 5.6.
COMPANY has the meaning ascribed to it in the preamble.
CONSENT means any approval, consent, authorization, waiver, notice, filing
or exemption to, from, or with respect to a specified action.
CONVERSION NOTICE has the meaning ascribed to it in SECTION 2.1.
CONVERSION SHARES has the meaning ascribed to it in SECTION 2.1.
CONVERTED SHARES has the meaning ascribed to it in SECTION 2.1.
DEMAND REQUEST has the meaning ascribed to it in SECTION 6.1(A).
EFFECTIVE PERIOD has the meaning ascribed to it in SECTION 6.4(A)(III).
EXCHANGE ACT has the meaning ascribed to it in SECTION 5.3.
GOVERNMENTAL AUTHORITY means any court, government or political subdivision
or department thereof, any governmental or regulatory body, board, bureau,
arbitrator or alternative dispute resolution body, administrative agency or
commission, securities exchange or other governmental agency or
instrumentality of competent jurisdiction.
GOVERNMENTAL CONSENT means a Consent of any Governmental Authority.
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INVESTOR and INVESTORS have the meanings ascribed to them in the preamble.
LAW means any applicable international, foreign, national, provincial,
state or local (or other political subdivision) statute, law (including
common law), ordinance, order, rule, regulation or binding requirement of a
Governmental Authority.
MAXIMUM NUMBER has the meaning ascribed to it in SECTION 6.3.
NOTICE has the meaning ascribed to it in SECTION 7.1.
PARTICIPATING INVESTOR has the meaning ascribed to it in SECTION
6.4(A)(II).
PARTIES means the Company and the Investors, each of which being a PARTY.
PERSON means any individual, firm, corporation, partnership, trust, joint
venture, Governmental Authority or other entity, and shall include any
successor (by merger or otherwise) of such entity.
PIGGY-BACK REGISTRATION has the meaning ascribed to it in SECTION 6.2.
PIGGY-BACK REQUEST has the meaning ascribed to it in SECTION 6.2.
PROCEEDING means any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Authority or arbitrator.
PURCHASED SHARES has the meaning ascribed to it in SECTION 2.1.
REGISTRABLE SHARES has the meaning ascribed to it in SECTION 6.1(A).
REPRESENTATIVES means, with respect to any Person, any of such Person's
officers, directors, employees, agents, attorneys, accountants,
consultants, equity partners or financial advisors or other Persons acting
on behalf of such Person.
SEC has the meaning ascribed to in SECTION 5.3.
SECURITIES ACT means the U.S. Securities Act of 1933, as amended.
SHARES has the meaning ascribed to it in the first recital.
TRANSACTION has the meaning ascribed to it in the second recital.
U.S.$ or U.S. DOLLARS means United States dollars.
1.2 In this Agreement:
(a) words denoting persons shall include bodies corporate and
unincorporated associations of persons;
(b) subject to SECTION 7.2, references to a party include references to
the successors or assigns (immediate or otherwise) of that party.
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2. CONVERSION; PURCHASE AND SALE
2.1 VOLUNTARY CONVERSION AND PURCHASE OF
SHARES
On the terms and subject to conditions of this Agreement, at the Closing,
each Investor shall (i) voluntarily convert that number of Shares set forth
opposite the name of such Investor on EXHIBIT A under the heading
"Converted Shares" (the CONVERTED SHARES) into shares of Class A Stock on a
one-for-one basis pursuant to Article III(2)(D) of the Articles (the shares
of Class A Stock issued upon such conversion, CONVERSION SHARES) by
surrender at the Closing of certificates representing the Shares to be so
converted, if such Shares are certificated, and a notice of conversion in
the form of ANNEX I duly executed by such Investor (a CONVERSION NOTICE)
and (ii) sell, assign, transfer and deliver to the Company, and the Company
shall acquire from such Investor, that number of Shares set forth opposite
the name of such Investor on EXHIBIT A under the heading "Purchased Shares"
(the PURCHASED SHARES), in exchange for cash in an amount equal to that
amount set forth opposite the name of such Investor on EXHIBIT A under the
heading "Purchase Amount."
2.2 AUTOMATIC CONVERSION
Each of the parties acknowledges and agrees that the Transaction will
result in the automatic conversion of each share of Class B Stock
outstanding immediately after the Closing into one share of Class A Stock,
without any action by the holder thereof, pursuant to Article III(2)(D) of
the Articles.
2.3 CLOSING; CLOSING DELIVERIES
(a) The Closing shall take place on the date of this Agreement at a time
mutually agreed by the parties at the offices of ▇▇▇▇▇ & Overy LLP, ▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
(b) At the Closing:
(i) the Company shall deliver to each Investor:
(A) one of more certificates representing the Conversion Shares into
which such Investor has converted Shares, which certificates
shall be in definitive form and registered in the name of such
Investor as set forth on EXHIBIT A, and shall bear a legend
substantially in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ACQUIRED IN A
TRANSACTION THAT WAS NOT REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE, AND
MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT (1) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR LAWS AND (2) IN
COMPLIANCE WITH THE PROVISIONS OF THE TRANSACTION AGREEMENT,
DATED AS OF SEPTEMBER 7, 2005, BY AND AMONG SOTHEBY'S HOLDINGS,
INC. (THE COMPANY) AND THE INVESTORS
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LISTED ON EXHBIT A THERETO (A COPY OF WHICH IS ON FILE WITH THE
COMPANY).
(B) by wire transfer to the bank account(s) set forth opposite of
name of such Investor on EXHIBIT A, immediately available funds
in U.S. dollars in an amount equal to that amount set forth
opposite the name of such Investor on EXHIBIT A under the heading
"Purchase Amount;" and
(ii) each Investor shall deliver to the Company one or more
certificates representing the number of Shares set forth opposite
the name of such Investor on EXHIBIT A, if such Shares are so
certificated, together with a duly executed Conversion Notice
with respect to such Investor's Converted Shares, and, if
applicable, duly executed stock powers, endorsed in blank, with
appropriate transfer tax stamps, if any, affixed, with respect to
such Investor's Purchased Shares.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor, severally and not jointly, hereby represents and warrants
to the Company that the representations and warranties set forth in this
ARTICLE 3 are true and correct on the date of this Agreement.
3.1 ORGANIZATION
Such Investor (other than any Investor who is a natural person) is duly
organized, validly existing and (if the concept is applicable) in good
standing under the laws of its jurisdiction of organization, has the
requisite power and authority to own, operate and lease its properties and
to carry on its business as it is now being conducted. Such Investor
(other than any Investor who is a natural person) is duly qualified to do
business in each jurisdiction in which the nature of its business or the
properties owned, operated or leased by it makes such qualification
necessary, except where the failure to be so qualified would not adversely
affect the ability of such Investor to consummate the Transaction or
result in material penalties.
3.2 AUTHORITY RELATIVE TO THIS AGREEMENT
Such Investor has all necessary power and authority to enter into this
Agreement and to carry out its obligations under this Agreement. The
execution and delivery by such Investor (other than any Investor who is a
natural person) of this Agreement and the consummation of the Transaction
have been duly authorized and all other proceedings on the part of such
Investor necessary to authorize this Agreement and the Transaction have
been taken. This Agreement has been duly executed and delivered by such
Investor, and assuming the due authorization, execution and delivery by
the Company, constitutes a legal, valid and binding obligation of such
Investor, enforceable in accordance with its terms. If such Investor is
married and such Investor's Shares constitute community property, or
spousal or other approval is otherwise required for this Agreement to be
legal, valid and binding, this Agreement has been authorized, executed and
delivered by, and constitutes a legal, valid and binding obligation of,
such Investor's spouse. No trust of which such Investor is trustee
requires the consent of any beneficiary thereof to the execution and
delivery of this Agreement.
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3.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS
(a) The execution, delivery and performance of this Agreement by such Investor
do not (i) conflict with or violate the charter or other organizational
document of such Investor (other than any Investor who is a natural
person), (ii) conflict with or violate any Law or order applicable to such
Investor or (iii) breach or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation
of, or result in any loss of any material benefit under, or the creation of
a lien on any of such Investor's assets pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, permit or other instrument
or obligation to which such Investor is a party, except in the case of
clause (iii) as would not adversely affect the ability of such Investor to
consummate the Transaction or result in material penalties.
(b) The execution, delivery and performance by such Investor of this Agreement
do not require any Governmental Consent to be obtained by such Investor.
3.4 NO COMMISSIONS
Other than ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., the fees of which shall be paid by the
Investors, no Person has or will have, as a result of the Transaction, any
right, interest or valid claim against or upon any party for any
commission, fee or other compensation as a finder or broker because of any
act or omission by such Investor or any of its Representatives.
3.5 TITLE TO SHARES
Such Investor is the record and beneficial owner of, or is the trustee of a
trust that is the record holder of, and the beneficiaries of which are the
beneficial owners of, and has good and marketable title to, that number of
Shares set forth opposite the name of such Investor on EXHIBIT A. Such
Investor does not own, beneficially or of record, any securities of the
Company other than such Shares or as set forth on SCHEDULE 3.5. The
Transaction will not constitute a violation of any preemptive, preferential
or first refusal rights enforceable against such Investor. Upon delivery to
the Company at Closing of certificates, if such Purchased Shares are
certificated, representing such Investor's Purchased Shares, duly endorsed
by such Investor for transfer to the Company, and upon such Investor's
receipt of the applicable purchase price therefor, the Company will acquire
all of such Investor's rights and interests in such Investor's Purchased
Shares, free of any adverse claim on title to such Shares.
3.6 LITIGATION
There are not any (i) Proceedings pending or, to the knowledge of such
Investor, threatened against or affecting such Investor or any of its
Affiliates or (ii) investigations by any Governmental Authority that are
pending or, to the knowledge of such Investor, threatened against or
affecting such Investor or any of its Affiliates that, in either case,
would, individually or in the aggregate, adversely affect the ability of
such Investor to consummate the Transaction.
3.7 NO AGREEMENTS OR UNDERSTANDINGS
Such Investor is not a party to any contract, arrangement, understanding or
relationship (legal or otherwise) with any other Person (including any
other Investor) with respect to any securities of the Company, including
but not limited to transfer or voting of any securities of the Company,
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finder's fees, joint ventures, loan or option arrangements, puts or calls,
guarantees of profits, division of profits or loss or the giving or
withholding of proxies, or the proceeds and Conversion Shares to be
received pursuant to the Articles and this Agreement.
3.8 PRIVATE PLACEMENT
(a) Such Investor is acquiring the Conversion Shares for its own account, for
investment and not with a view to the resale or distribution thereof in
violation of any applicable Law.
(b) Such Investor understands that the Conversion Shares will be issued in a
transaction exempt from the registration or qualification requirements of
the Securities Act and any applicable state securities Laws, and that the
Conversion Shares must be held indefinitely unless a subsequent disposition
thereof is registered or qualified under the Securities Act and such Laws
or is exempt from such registration or qualification.
(c) Such Investor:
(i) has been furnished with or has had full access to all the information
that it considers necessary or appropriate to make an informed
investment decision with respect to the Conversion Shares and the
Transaction and that it has requested from the Company;
(ii) has had an opportunity to discuss with the management of the Company
the intended business and financial affairs of the Company and to
obtain information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or
expense) necessary to verify any information furnished to it or to
which it had access;
(iii)can bear the economic risk of an investment in the Conversion Shares
indefinitely and a total loss in respect of such investment, and has
such knowledge and experience in business and financial matters so as
to enable it to understand and evaluate the risks of and form an
investment decision with respect to its investment in the Company and
to protect its interests in connection with such investment; and
(iv) has made the decision to engage in the Transaction based on its review
of all information that it deems relevant and has not relied on any
advice, recommendation or information provided by the Company's
financial advisor or that of the Special Committee of the Company's
Board of Directors.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Investor that the
representations and warranties set forth in this ARTICLE 4 are true and
correct on the date of this Agreement.
4.1 ORGANIZATION
The Company is a corporation duly organized, validly existing and in good
standing under the laws of Michigan and has the requisite corporate power
and authority to own, operate and lease its properties and to carry on its
business as it is now being conducted. The Company is duly qualified to do
business in each jurisdiction in which the nature of its business or the
properties owned, operated or leased by it makes such qualification
necessary, except where the failure to be
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so qualified would not adversely affect the ability of the Company to
consummate the Transaction or result in material penalties.
4.2 AUTHORITY RELATIVE TO THIS AGREEMENT
The Company has all necessary corporate power and authority to enter into
this Agreement and to carry out its obligations under this Agreement. The
execution and delivery by the Company of this Agreement and the
consummation of the Transaction have been duly authorized and all other
corporate proceedings on the part of the Company necessary to authorize
this Agreement and the Transaction have been taken. This Agreement has been
duly executed and delivered by the Company, and, with respect to each
Investor, assuming the due authorization, execution and delivery by such
Investor, constitutes a legal, valid and binding obligation of the Company,
enforceable by such Investor in accordance with its terms.
4.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS
(a) The execution, delivery and performance of this Agreement by the Company do
not (i) conflict with or violate the charter or other organizational
document of the Company, (ii) conflict with or violate any Law or order
applicable to the Company or (iii) breach or constitute a default (or an
event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration
or cancellation of, or result in any loss of any material benefit under, or
the creation of a lien on any of the Company's assets pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, permit or
other instrument or obligation to which the Company is a party, except in
the case of clause (iii) as would not adversely affect the ability of the
Company to consummate the Transaction or result in material penalties.
(b) The execution, delivery and performance by the Company of this Agreement do
not require any Governmental Consent to be obtained by the Company.
4.4 AUTHORIZATION OF CONVERSION SHARES
The Conversion Shares have been duly authorized for issuance and when
issued and delivered by the Company in accordance with the terms of this
Agreement will be validly issued and fully paid and nonassessable. Such
issuance will not constitute a violation of any preemptive, preferential or
first refusal rights enforceable against the Company.
4.5 NO COMMISSIONS
Other than Banc of America Securities LLC and Bear, ▇▇▇▇▇▇▇ & Co., Inc. (in
the case of Bear, ▇▇▇▇▇▇▇ & Co., Inc., on behalf of the Special Committee
of the Board of Directors), the fees of which shall be paid by the Company,
no Person has or will have, as a result of the Transaction, any right,
interest or valid claim against or upon any party for any commission, fee
or other compensation as a finder, or broker because of any act or omission
by the Company, its Board of Directors or any committee thereof or any of
their respective Representatives.
4.6 LITIGATION
There are not any (a) Proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its
Affiliates or (b) investigations by any
8
Governmental Authority that are pending or threatened against or affecting
the Company or any of its Affiliates that, in either case, would,
individually or in the aggregate, adversely affect the ability of the
Company to consummate the Transaction.
4.7 BOARD ACTIONS; FAIRNESS OPINION
The Board of Directors of the Company, at a meeting duly called and held
and at which a quorum was present throughout, upon the recommendation of a
Special Committee of the Board of Directors (which Special Committee
included only directors who were not Investors or Affiliates of Investors),
has adopted a resolution approving and adopting this Transaction Agreement
and the transactions contemplated thereby, including the Transaction. The
Special Committee of the Board of Directors of the Company has received the
opinion of Bear, ▇▇▇▇▇▇▇ & Co., Inc., dated the date hereof, to the effect
that the aggregate Purchase Amount and the aggregate Conversion Shares
taken together to be paid and issued to the Investors is fair, from a
financial point of view, to the holders of Class A Stock immediately before
and immediately after consummation of the transactions contemplated by the
Agreement and to the Company (excluding, in all cases the Investors). The
Board of Directors has taken all such steps as required to cause the
transactions contemplated hereby, including the Transaction with respect to
each Person that is or will be subject to the reporting requirements of
Section 16(a) of the Exchange Act with respect to the Company to be exempt
under Rule 16b-3 promulgated under the Exchange Act.
4.8 LISTING OF SHARES
The Conversion Shares are listed for trading on the New York Stock
Exchange.
5. ADDITIONAL AGREEMENTS
5.1 FURTHER ASSURANCES
Each party shall do and perform or cause to be done and performed all such
further acts and things and shall execute and deliver all such other
agreements, certificates, instruments and documents as any other party
reasonably may request in order to carry out the intents and accomplish the
purposes of this Agreement and the consummation of the Transaction.
5.2 PRESS RELEASES
The initial press release announcing the Transaction shall be in the form
mutually agreed by the Company and the Investors (acting jointly through
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇), and the Company and the Investors (acting jointly
through ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇) shall use reasonable efforts to coordinate and
agree, prior to the issuance or release thereof, upon any additional public
announcement relating to the Transaction, except to the extent such
announcement is, based on the advice of counsel, required by Law or stock
exchange regulation, and in all cases any such announcement shall be
consistent with the reporting provided for in SECTION 5.6.
5.3 STANDSTILL
Each Investor agrees that until the earlier of the (a) fourth anniversary
of the date of this Agreement or (b) 30 days after the date on which (i)
the Investors, together with their Affiliates, own (beneficially and of
record), in the aggregate, securities representing less than ten percent
(10%) of the total voting power of all issued and outstanding securities of
the Company and (ii)
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no Affiliate of any Investor is a member of the board of directors of the
Company (PROVIDED, HOWEVER, that if such 30th day would otherwise occur on
or before the second anniversary of the date of this Agreement, such 30th
day referred to this clause (b) shall not be deemed to occur until such
second anniversary), neither such Investor nor any of its controlled
Affiliates (including all Affiliates of such Investor who are natural
persons) shall, unless requested to do so by the Company in writing, (A) in
any manner acquire, agree to acquire or make any proposal to acquire,
directly or indirectly, alone or in concert with others, ownership
(beneficial or otherwise) of, or the ability to control or vote, any
securities (other than those acquired in consideration of service as a
directors of the Company) or property of the Company or any of its
subsidiaries not otherwise owned or controlled as of the consummation of
the Transaction (PROVIDED, HOWEVER, that the foregoing shall not prohibit
such Persons from acquiring an aggregate of less than one percent (1%) of
the then outstanding shares of Class A Stock by means of open market
purchases in any 360 day period; PROVIDED, FURTHER, that in no event shall
the Investors acquire any additional shares of Class A Stock if, after
giving effect to such acquisition, such Persons' aggregate holdings of
shares of Class A Stock would exceed fifteen percent (15%) of the then
outstanding shares of Class A Stock), (B) propose to enter into, or seek to
effect, directly or indirectly, alone or in concert with others, any
merger, consolidation, recapitalization, reorganization or business
combination involving the Company or any of its subsidiaries or to
purchase, directly or indirectly, alone or in concert with others, a
material portion of the business or assets of the Company or any of its
subsidiaries, (C) make, or in any way participate, directly or indirectly,
in any "solicitation" of "proxies" (as such terms are used in the proxy
rules of the Securities and Exchange Commission (SEC)) to vote or written
consents, or seek to advise or influence (except in the capacity of a
member of the Board of Directors of the Company or any committee thereof)
any person with respect to the voting of, or the execution of a written
consent in respect of any voting securities of the Company or any of its
subsidiaries, (D) grant a proxy with respect to any voting securities of
the Company to any Person other than an officer or agent of the Company or
execute any written consent in lieu of a meeting of the holders of voting
securities of the Company, (E) form, join or in any way participate in a
"group" (within the meaning of Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the EXCHANGE Act)) with respect to any voting
securities of the Company or any of its subsidiaries except as may
currently be the case, (F) except as contemplated hereby, initiate or
propose any security holder proposal, or seek election to or seek to place
a Representative or other Affiliate or nominee on the Board of Directors of
the Company or seek the removal of any member of the Board of Directors of
the Company, (G) otherwise act, alone or in concert with others, to seek to
control or influence the management, Board of Directors or business,
operations or policies of the Company (other than solely by virtue of
representation on the Board of Directors of the Company or the exercise of
voting rights of any Class A Shares in accordance with this Agreement), (H)
disclose any intention, plan or arrangement inconsistent with the foregoing
or (I) advise, assist or encourage any other persons in connection with any
of the foregoing, including by publicly disclosing a willingness or desire
to have any other Person engage in any of the transactions or actions
described in this SECTION 5.3. Each Investor also agrees (on behalf of
itself and its controlled Affiliates) during such period not to (x) request
the Company (or its directors, officers, employees or agents), directly or
indirectly, to amend or waive any provisions of this SECTION 5.3 (including
this sentence), or (y) take any action that would reasonably be expected to
require the Company to make a public announcement regarding the possibility
of any of the transactions of the Company or actions described in this
SECTION 5.3.
10
5.4 RESTRICTIONS ON TRANSFER
Prior to the second anniversary of the date of this Agreement, no Investor
shall, except as may be permitted pursuant to the last sentence of this
SECTION 5.4, (a) directly or indirectly offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant for the sale of, lend
or otherwise dispose of or transfer, by gift or otherwise, or in any way
encumber any shares of the capital stock of the Company owned or controlled
by it or its controlled Affiliates (including all Affiliates of such
Investor who are natural persons) (or securities issued in respect thereof)
or securities convertible or exchangeable or exercisable for or repayable
with such capital stock (or securities issued in respect thereof), except
to an Affiliate or family member of such Investor in connection with tax-
or estate-planning (PROVIDED that promptly following any such permitted
transfer, the transferee shall execute and deliver to the Company an
appropriate document in form and substance reasonably satisfactory to the
Company confirming that such transferee takes such capital stock subject to
all terms and conditions of this Agreement to the same extent as its
transferor was bound); PROVIDED that an Investor or its controlled
Affiliates may pledge such shares or securities to a bona fide financial
institution in connection with a bona fide loan made by such institution
(PROVIDED, FURTHER, that upon any foreclosure of such pledge, such
institution shall take such shares or securities subject to all
restrictions contained in this SECTION 5.4, but only for a period ending on
the earlier of (1) 180 days following receipt by the Company of notice of
such foreclosure or (2) the second anniversary of the date of this
Agreement), or (b) enter into any swap or any other agreement or
transaction that transfers, in whole or in part, directly or indirectly,
the economic consequence of ownership of any such shares of capital stock
(or any securities issued in respect thereof), whether any such swap or
transaction is to be settled by delivery of such capital stock (or any
securities issued in respect thereof) or other securities, in cash or
otherwise. Any purported action by any Investor in violation of this
SECTION 5.4 shall be null and void. Notwithstanding the foregoing, the
Investors and their controlled Affiliates shall be permitted to sell shares
of Class A Stock provided that the aggregate number of shares of Class A
Stock sold for the account of all the Investors and their Affiliates,
together with the aggregate number of shares of Class A Stock sold for the
account of all the Investors and their Affiliates within the preceding
three months, does not exceed the greater of (i) one percent of the shares
of Class A Stock outstanding as shown by the most recent report or
statement published by the Company, or (ii) the average weekly reported
volume of trading in shares of Class A Stock on all national securities
exchanges and/or reported through the automated quotation system of a
registered securities association during the four calendar weeks preceding
the date of receipt of the order to execute the transaction by the broker
or the date of execution of the transaction directly with a market maker,
or (iii) the average weekly volume of trading in shares of Class A Stock
reported through the consolidated transaction reporting system,
contemplated by Rule 11Aa3-1 under the Exchange Act during the four-week
period specified in the preceding clause (ii), and PROVIDED FURTHER that
any such sale is in accordance with applicable law.
5.5 COMPOSITION OF BOARD OF DIRECTORS AND COMMITTEES
Concurrently with the execution and delivery of this Agreement, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ shall tender his written resignation, effective as of the Closing,
from both the Executive Committee and the Nominating and Governance
Committee of the Board of Directors (it being understood that ▇▇. ▇▇▇▇▇▇▇
shall not be required to resign from the Board of Directors or the
Compensation Committee thereof or as Chairman of the Compensation
Committee. In addition, each Investor agrees not to initiate, propose, vote
in favor of or otherwise support, or induce or attempt to induce any other
person to initiate, propose, vote in favor of or otherwise support, the
nomination
11
or election of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ or any Affiliate of any shareholder of the
Company to the Board of Directors, unless such person is nominated by the
Board of Directors of the Company or any committee thereof.
5.6 REPORTING
The parties hereto intend that (a) the Transaction shall constitute a
tax-free reorganization under section 368(a)(1)(E) of the Internal Revenue
Code of 1986, as amended (the CODE), in which the Shares are exchanged for
a combination of Class A Stock and cash, and (b) this Agreement shall
constitute a "plan of reorganization" as that term is used in Sections 354
and 361 of the Code. The Company shall report the Transaction for federal
income tax purposes, and all other purposes, as such a tax-free
reorganization under section 368(a)(1)(E) of the Code and shall not treat
or report any of the cash paid for Shares as a dividend.
6. REGISTRATION RIGHTS
6.1 DEMAND REGISTRATION
(a) Any Investor or Investors may at any time following the second anniversary
of the date of this Agreement require the Company to file a registration
statement under the Securities Act in respect of all or a portion of the
Registrable Shares (as defined below) owned by such Investors (PROVIDED
that (i) such request covers either (A) Registrable Shares with a market
value on the date of such request of not less than U.S.$75 million, or (B)
not less than (1) 3.5 million Registrable Shares, in the case of the first
Demand Request, or (2) all remaining Registrable Shares (PROVIDED that such
amount is greater than 750,000 shares), in the case of the second Demand
Request, (ii) the Company shall not be obligated to file a registration
statement relating to any request under this SECTION 6.1(A) within a period
of 180 days after the effective date of any other registration statement
relating to any request under this SECTION 6.1(A) and (iii) the Investors
shall not be entitled to require the Company to effect more than two
requested registrations pursuant to this SECTION 6.1(A)) (PROVIDED that any
registration statement filed at the request of an Investor pursuant to this
SECTION 6.1(A) will not count as a Demand Request unless effectiveness is
maintained until the earlier of the completion of the offering and the date
that is 90 days following the effective date of such registration
statement), by delivering to the Company a written notice stating that such
right is being exercised, specifying the number of Registrable Shares to be
included in such registration and describing the intended method of
distribution thereof (a DEMAND REQUEST). Upon receipt of a Demand Request,
the Company shall provide written notice of such Demand Request to each
Investor that has not signed such Demand Request. Upon the written election
of any such Investor, given within ten business days following the receipt
by such Investor of any such written notice from the Company (which
election shall specify the number of Registrable Shares intended to be
disposed of by such Investor), the Company shall include such Registrable
Shares in such registration statement. In connection with any registration
pursuant to this SECTION 6.1, the Company and the Participating Investors
will consult and cooperate with each other to determine the appropriate
form of such registration and related marketing of the Registrable Shares;
PROVIDED, HOWEVER, that unless otherwise agreed by the Company and the
Participating Investors, any such registration and the manner of marketing
Registrable Shares shall be in the form of a fully underwritten offering;
it being understood that nothing contained in this sentence shall in any
way affect or prejudice the rights and obligations of the Investors and the
Company under SECTION 6.4. REGISTRABLE SHARES means (x) Conversion Shares,
(y) any other shares of Class A Stock held by Investors as of the
consummation of the Transaction and (z) any securities that may be issued
in respect of (x) and
12
(y), PROVIDED that such shares of Class A Stock shall cease to be
Registrable Shares as soon as such shares (i) have been sold or otherwise
disposed of pursuant any registration statement, (ii) have otherwise been
sold, transferred or otherwise disposed of by any Investor other than to an
Affiliate or (iii) have ceased to be outstanding.
(b) Notwithstanding anything in this Agreement to the contrary, the Company
shall be entitled to postpone and delay for reasonable periods of time not
to exceed 60 consecutive days in the case of any given postponement and in
no event to exceed an aggregate of 120 days in any 360-day period in the
case of more than one postponement (each, a BLACKOUT PERIOD), the filing or
effectiveness of any registration statement relating to a Demand Request if
the Company determines in good faith that such filing or the offering of
any Registrable Shares would (i) impede, delay or otherwise interfere with
any pending or contemplated acquisition, disposition, corporate
reorganization or other material transaction involving the Company or its
subsidiaries, (ii) adversely affect any pending or contemplated financing,
offering or sale of any class of securities of the Company for the account
of the Company and the Company is advised by the managing underwriter(s)
(with a copy to the Investors) that such financing, offering or sale would,
in its or their opinion, be adversely affected by the requested
registration or (iii) require disclosure of material non-public information
that is not then otherwise required by law and that, if disclosed at such
time, would be harmful to the interests of the Company or its shareholders.
(c) In the case a registration statement has been filed pursuant to SECTION
6.1(A), if any event described in clause (i) of SECTION 6.1(B) has
occurred, the Company may cause such registration statement to be withdrawn
and its effectiveness terminated or may postpone amending or supplementing
such registration statement for a reasonable period of time; PROVIDED, that
in no event shall such a registration statement so withdrawn by the Company
count as one of the two Demand Requests to which the Investors are
entitled.
(d) In connection with any underwritten offering to be made pursuant to a
registration statement filed pursuant to SECTION 6.1(A), the managing
underwriter therefor shall be selected by the Investors, subject to the
Company's consent, such consent not to be unreasonably withheld.
(e) No securities (other than those of the Investor(s) making the Demand
Request and of other Investor(s) registering their Registrable Shares in
accordance with Section 6.1(a)) may be registered on a registration
statement requested pursuant to a Demand Request without the consent of the
Investor(s) making the Demand Request (such consent not to be withheld, if,
in the opinion of the nationally recognized investment banking firm
selected by the Investors to act as managing underwriter of such offering,
the inclusion in the registration statement of some or all of such other
securities sought to be registered would not adversely affect the price or
success of such offering).
6.2 PIGGYBACK REGISTRATIONS.
If, at any time following second anniversary of this Agreement, the Company
proposes to register any shares of Class A Stock under the Securities Act
on its behalf or on behalf of any of its shareholders, on a form and in a
manner that would permit registration of Registrable Shares (other than in
connection with dividend reinvestment plans, rights offerings or a
registration statement on Form S-4 or S-8 or any similar successor form),
the Company shall give reasonably prompt written notice to the Investors of
its intention to do so. Upon the written election of any Investor (a
PIGGY-BACK REQUEST), given within ten business days following the receipt
by such Investor of any such written notice (which election shall specify
the number of the Registrable
13
Shares intended to be disposed of by such Investor), the Company shall
include in such registration statement (a PIGGY-BACK REGISTRATION), subject
to the provisions of SECTION 6.3 and SECTION 6.4, such number of the
Registrable Shares as shall be set forth in such Piggy-Back Request;
PROVIDED, HOWEVER, the Company may, in its sole discretion, cause such
registration statement to be withdrawn and its effectiveness terminated at
any time (PROVIDED that the Company shall give reasonably prompt written
notice to the Investors of its intention to withdraw and terminate the
effectiveness of such registration statement).
6.3 ALLOCATION OF SHARES TO BE REGISTERED
In the event that the Company proposes to register shares of Class A Stock
in connection with an underwritten offering and a nationally recognized
investment banking firm selected by the Company to act as managing
underwriter thereof shall have advised the Company that, in its opinion,
the inclusion in the registration statement of some or all of the
Registrable Shares sought to be registered in a Piggy-Back Request would
adversely affect the price or success of the offering, the Company shall
include in such registration statement such number of Registrable Shares as
the Company is advised can be sold in such offering without such an effect
(the MAXIMUM NUMBER) as follows and in the following order of priority: (a)
first, such number of shares of Class A Stock as the Company intended to be
registered by the Company for its own account; and (b) second, if and to
the extent that the number of shares of Class A Stock to be registered
under clause (a) is less than the Maximum Number, such number of
Registrable Shares as the Investors (and to the extent required by
registration rights granted to other shareholders, such shareholders) shall
have intended to register that, when added to the number of shares of Class
A Stock to be registered under clause (a), is less than or equal to the
Maximum Number, it being understood that the number of Registrable Shares
included by each Investor (and other shareholders having registration
rights) shall be cut back, if necessary, in proportion to their relative
ownership at the time.
6.4 REGISTRATION PROCEDURES
(a) In connection with the registration statement to be prepared pursuant to
this ARTICLE 6, and in accordance with the intended method or methods of
distribution of the Registrable Shares as described in such registration
statement, the Company shall, as soon as reasonably practicable and to the
extent reasonably practicable:
(i) prepare and file (as expeditiously as practicable but in any event
within 45 days after receipt of a Demand Request) with the SEC a
registration statement on an appropriate registration form and use
reasonable efforts to cause such registration statement to become and
remain effective as promptly as reasonably practicable; PROVIDED that
before filing a registration statement or prospectus or any amendments
or supplements thereto, the Company shall furnish to counsel to the
Investors draft copies of all such documents proposed to be filed at
least five days prior to such filing and consider in good faith any
comments thereon of the Investors or their Representatives;
(ii) furnish without charge to each Investor seeking to dispose of
Registrable Shares thereunder (each, a PARTICIPATING INVESTOR), and
the managing underwriter or underwriters, if any, such number of
copies of the registration statement and each post-effective amendment
or supplement thereto and copies of the summary, preliminary, final,
amended or supplemented prospectuses included in such registration
statement as such Participating Investor or such underwriter may
reasonably request;
14
(iii) use reasonable efforts to keep such registration statement effective
for the earlier of (A) 90 days and (B) such time as all of the
securities covered by the registration statement have been disposed
(the EFFECTIVE PERIOD); prepare and file with the SEC such amendments,
post-effective amendments and supplements to the registration
statement and the prospectus as may be necessary to maintain the
effectiveness of the registration for the Effective Period and to
cause the prospectus (and any amendments or supplements thereto) to be
filed;
(iv) use reasonable efforts to register or qualify the Registrable Shares
covered by such registration statement under such other securities or
"blue sky" laws of such jurisdictions in the United States or its
territories as are reasonably necessary, keep such registrations or
qualifications in effect for so long as the registration statement
remains in effect, and do any and all other acts and things which may
be reasonably necessary to enable each Participating Investor or any
underwriter to consummate the disposition of the Registrable Shares in
such jurisdictions;
(v) use reasonable efforts to cause the Registrable Shares covered by such
registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable
each Participating Investor to consummate the disposition of the
Registrable Shares;
(vi) use reasonable best efforts to cause all Registrable Shares covered by
such registration statement to be listed on the New York Stock
Exchange or on the principal securities exchange on which shares of
Class A Stock, or any securities that may be issued in respect thereof
in any merger, consolidation or recapitalization, are then listed;
(vii) promptly notify each Participating Investor and the managing
underwriter or underwriters, if any, after becoming aware thereof, (A)
when the registration statement or any related prospectus or any
amendment or supplement thereto has been filed, and, with respect to
the registration statement or any post-effective amendment, when the
same has become effective, (B) of any comments of the SEC or request
by the SEC for amendments or supplements to the registration statement
or the related prospectus or for additional information, (C) of the
issuance by the SEC of any stop order suspending the effectiveness of
the registration statement or the initiation of any proceedings for
that purpose, (D) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Registrable
Shares to be registered for sale in any jurisdiction or the initiation
of any proceeding for such purpose or (E) within the Effective Period
of the happening of any event or the existence of any fact that makes
any statement in the registration statement or any post-effective
amendment thereto, prospectus or any amendment or supplement thereto,
or any document incorporated therein by reference untrue in any
material respect or which requires the making of any changes in the
registration statement or post-effective amendment thereto or any
prospectus or amendment or supplement thereto 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;
(viii) during the Effective Period, use its reasonable efforts to obtain the
withdrawal of any order enjoining or suspending the use or
effectiveness of the registration statement or any post-effective
amendment thereto at the earliest time practicable;
15
(ix) deliver promptly to each Participating Investor, copies of all
correspondence between the SEC and the Company, its counsel or
auditors and all memoranda relating to discussions with the SEC or its
staff with respect to the registration statement;
(x) in the case of an underwritten offering, use reasonable efforts to
enter into customary agreements, including an underwriting agreement
customary in form and scope for underwritten secondary offerings of
the nature contemplated by the applicable registration statement,
including with contemplated opinions of counsel to the Company,
"comfort letters" or similar documents of the independent certified
public accountants of the Company, indemnities and officer's
certificates as to the accuracy of the Company's representations and
warranties contained in the underwriting agreement;
(xi) use its reasonable best efforts to comply with all applicable rules
and regulations of the SEC, and make earnings statements satisfying
the provisions of Section 11(a) of the Securities Act generally
available to the Participating Investors no later than 45 days after
the end of any twelve-month period (or 90 days, if such period is a
fiscal year) (A) commencing at the end of any fiscal quarter in which
shares of Class A Stock are sold to underwriters in an underwritten
public offering, or (B) if not sold to underwriters in such an
offering, beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the registration
statement, which statements shall cover said twelve-month period;
(xii) provide a transfer agent and registrar for all such Registrable Shares
covered by such registration statement not later than the effective
date of such registration statement, subject to any applicable laws or
regulations;
(xiii) make reasonably available for inspection by the representatives of the
underwriters participating in any disposition pursuant to such
registration statement relevant financial and other records, pertinent
corporate documents and properties of the Company in connection with
customary due diligence relating to such registration;
(xiv) in connection with any underwritten offering, to the extent reasonably
required, make senior executives of the Company available to the
Participating Investors for meetings with prospective purchasers of
the shares of Class A Stock and prepare and present to potential
investors customary "road show" material, in each case in accordance
with the reasonable recommendations of the underwriters and in all
respects in a manner consistent with offerings of securities of a
similar size to such offering of the shares of Class A Stock; and
(xv) cooperate with each Participating Investor and the managing
underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing such Registrable
Shares to be sold under the registration statement; and, in the case
of an underwritten offering, enable such Registrable Shares to be in
such denominations and registered in such names as the managing
underwriter or underwriters, if any, may request in writing at least
two business days prior to any sale of the Registrable Shares to the
underwriters.
(b) In the event that the Company would be required, pursuant to SECTION
6.4(A)(VII)(E) above, to notify each Participating Investor or the managing
underwriter or underwriters, if any, of the happening of any event
specified therein, the Company shall, subject to the provisions of
16
SECTION 6.1(B), as promptly as practicable, prepare and furnish to each
Participating Investor and to each such underwriter a reasonable number of
copies of a prospectus supplemented or amended so that, as thereafter
delivered to purchasers of Registrable Shares that have been registered
pursuant to this Agreement, such prospectus shall not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading. Each
Participating Investor agrees that, upon receipt of any notice from the
Company pursuant to SECTION 6.4(A)(VIII)(E), it shall, and shall use its
reasonable efforts to cause any sales or placement agent or agents for the
Registrable Shares and the underwriters, if any, to, forthwith discontinue
disposition of the Registrable Shares until such Person shall have received
copies of such amended or supplemented prospectus and, if so directed by
the Company, to destroy or to deliver to the Company all copies, other than
permanent file copies, then in its possession of the prospectus (prior to
such amendment or supplement) covering such Registrable Shares as soon as
practicable after such Participating Investor's receipt of such notice.
(c) Each Participating Investor shall furnish to the Company in writing its
intended method of distribution of the Registrable Shares it proposes to
dispose of and such other information as the Company may from time to time
reasonably request in writing, but only to the extent that such information
is required in order for the Company to comply with its obligations under
all applicable securities and other laws and to ensure that the prospectus
relating to such Registrable Shares conforms to the applicable requirements
of the Securities Act. Each Participating Investor shall notify the Company
as promptly as practicable of any inaccuracy or change in information
previously furnished by such Participating Investor to the Company or of
the occurrence of any event, in either case as a result of which any
prospectus relating to the Registrable Shares contains or would contain an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
and promptly furnish to the Company any additional information required to
correct and update any previously furnished information or required so that
such prospectus shall not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
(d) In the case of any underwritten offering to be made pursuant to a
registration statement filed pursuant to this ARTICLE 6, all Registrable
Shares to be included in such registration shall be subject to the
applicable underwriting agreement and no Investor may participate in such
registration unless such Investor agrees to sell such Investor's
Registrable Shares on the basis provided therein and completes and executes
all questionnaires, indemnities, underwriting agreements and other
documents (other than powers of attorney) that must be executed in
connection therewith, and provides such other information to the Company or
the underwriter as may be reasonably requested to register such Investor's
Registrable Shares.
6.5 INDEMNIFICATION; CONTRIBUTION
(a) The Company shall, and it hereby agrees to, indemnify and hold harmless
each Participating Investor and its officers, directors, employees and
controlling Persons, if any, and each underwriter, its partners, officers,
directors, employees and controlling Persons, if any, in any offering or
sale of Registrable Shares, against any losses, claims, damages or
liabilities to which each such indemnified party may become subject,
insofar as such losses, claims, damages or liabilities, or actions or
proceedings in respect thereof, including any amounts paid in settlement as
provided in this Agreement (collectively, CLAIMS), arise out of or are
based upon an untrue
17
statement or alleged untrue statement of a material fact contained in any
registration statement, or any preliminary or final prospectus contained
therein, or any amendment or supplement thereto, or any document
incorporated by reference therein, or arise out of or are based upon any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, and the Company
shall, and it hereby agrees to, reimburse each Participating Investor or
any such underwriter for any legal or other out-of-pocket expenses
reasonably incurred by it in connection with investigating or defending any
such Claims; PROVIDED, HOWEVER, that the Company shall not be liable to any
such Person in any such case to the extent that any such Claims arise out
of or are based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, or
preliminary or final prospectus, or amendment or supplement thereto, in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Participating Investor or any underwriter
expressly for use therein; and PROVIDED, FURTHER, that the Company will not
be liable to any Person who participates as an underwriter in the offering
or sale of Registrable Securities or any other Person, if any, who controls
such underwriter with respect to any preliminary or final prospectus
contained therein, or any amendment or supplement thereto, to the extent
that any Claim of such underwriter or controlling Person results from the
fact that such underwriter sold Registrable Securities to a Person to whom
there was not sent or given (to the extent legally required), at or prior
to the written confirmation of such sale, a copy of the final prospectus or
of the final prospectus as then amended or supplemented, whichever is most
recent, if the Company has previously furnished copies thereof to such
underwriter.
(b) Each Participating Investor shall, and hereby agrees to (1) indemnify and
hold harmless each of the Company, each other Participating Investor and
their respective directors, officers, employees and controlling Persons, if
any, and each underwriter, its partners, officers, directors, employees and
controlling Persons, if any, in any offering or sale of Registrable Shares,
against any Claims to which each such indemnified party may become subject,
insofar as such Claims arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in such
registration statement, or any preliminary or final prospectus contained
therein, or any amendment or supplement thereto, or any document
incorporated by reference therein, or arise out of or are based upon any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, in each case only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Participating Investor expressly for use
therein, and (2) reimburse the Company for any legal or other out-of-pocket
expenses reasonably incurred by the Company in connection with
investigating or defending any such Claim.
(c) Promptly after receipt by an indemnified party under SECTION 6.5(A) or
SECTION 6.5(B) of written notice of the commencement of any action or
proceeding for which indemnification under SECTION 6.5(A) or SECTION 6.5(B)
may be requested, such indemnified party shall notify the indemnifying
party in writing of the commencement of such action or proceeding, but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party in respect of such
action or proceeding hereunder unless the indemnifying party was materially
prejudiced by such failure of the indemnified party to give such notice,
and in no event shall such omission relieve the indemnifying party from any
other liability it may have to such indemnified party. In case any such
action or proceeding shall be brought against any indemnified party and it
shall notify an indemnifying party of the commencement thereof, such
indemnifying party shall be entitled to participate therein and, to the
18
extent that it shall determine, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, such indemnifying party shall not be liable to such
indemnified party for any legal or any other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. If there exists or is reasonably likely
to exist a conflict of interest that would make it inappropriate under
applicable standards of professional conduct in the reasonable judgment of
the indemnified party for the same counsel to represent both the
indemnified party and the indemnifying party or if the indemnifying party
elects not to assume the defense of a claim, it will not be obligated to
pay the fees and expenses of more than one counsel for each indemnified
party with respect to such claim in each jurisdiction for which the
indemnified party reasonably determines counsel is necessary. The
indemnifying party will not be subject to any liability for any settlement
made without its consent, which consent shall not be unreasonably withheld.
No indemnifying party shall, without the prior written consent of the
indemnified party, compromise or consent to entry of any judgment or enter
into any settlement agreement with respect to any action or proceeding in
respect of which indemnification is sought under SECTION 6.5(A) or SECTION
6.5(B) (whether or not the indemnified party is an actual or potential
party thereto), unless such compromise, consent or settlement includes an
unconditional release of the indemnified party from all liability in
respect of such claim or litigation and does not subject the indemnified
party to any injunctive relief or other equitable remedy.
(d) Each Participating Investor and the Company agree that if, for any reason,
the indemnification provisions contemplated by SECTIONS 6.5(A) or SECTION
6.5(B) are unavailable to or are insufficient to hold harmless an
indemnified party in respect of any Claims referred to therein (other than
as a result of the provisos thereto), then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a
result of such Claims in such proportion as is appropriate to reflect the
relative fault of and benefits derived by the indemnifying party, on the
one hand, and the indemnified party, on the other hand, as well as other
equitable considerations, or if that allocation is not permitted under
applicable law then in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Participating Investors.
The parties agree that it would not be just and equitable if contribution
were determined by pro rata allocation or other method which does not take
into account the equitable considerations referred to in this paragraph.
The amount paid or payable by an indemnified party as a result of the
Claims referred to above shall be deemed to include (subject to the
limitations set forth in SECTION 6.5(C)) any legal or other fees or
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action, proceeding or claim. 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.
6.6 REGISTRATION EXPENSES
The Company shall bear all registration and filing fees, fees and expenses
of compliance with securities or blue sky laws, fees and expenses in
connection with the review of underwriting arrangements by the NASD
Regulation, Inc., transfer agent fees, printing costs, fees and expenses
relating to "road show" investor presentations and fees and disbursements
of its counsel (and the reasonable fees and disbursements of one counsel
(plus such local or other counsel as may be reasonably necessary in
connection with such offering) to the Investors), and accountants and other
advisors, in each case, in connection with any registration and listing of
any Registrable Shares pursuant to this ARTICLE 6, other than underwriting
fees, discounts or other selling
19
commissions in connection with the Registrable Shares disposed of by any
Participating Investor, which shall be borne by such Participating
Investor.
7. MISCELLANEOUS 7.1 NOTICES
All reports, approvals, and notices required or permitted by this Agreement
to be given to a party (each a NOTICE) shall be given in writing, by
personal delivery, telecopy or overnight courier, to the party concerned at
its address as set forth below (or at such other address as a party may
specify by written notice pursuant to this SECTION 7.1 to the other):
If to the Company:
Sotheby's Holdings, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Worldwide General Counsel
with copies to:
▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to any Investor, at the address set forth under such Investor's name on
EXHIBIT A, with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
and
20
Honigman, Miller, ▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
All Notices shall be deemed effective, delivered and received (a) if given
by personal delivery, or by overnight courier, when actually delivered and
signed for, or (b) if given by facsimile, when such facsimile is
transmitted to the facsimile number specified above and receipt therefor is
confirmed.
7.2 ASSIGNMENT; BINDING EFFECT; NO THIRD-PARTY RIGHTS
Except as otherwise provided in this Agreement, neither this Agreement nor
the rights granted under this Agreement may be assigned or transferred by
the Company or any Investor, and any attempted assignment, delegation or
transfer in violation of this provision, shall be void and of no force and
effect. Except as expressly stated in this Agreement, this Agreement is for
the sole benefit of the parties and is not intended to and shall not confer
upon any Person other than the parties any rights or remedies under this
Agreement. Except as otherwise provided in this Agreement, this Agreement
shall be binding on the permitted successors and assigns of the parties,
each such permitted successor and assign being deemed to be a party in
substitution of its respective transferor.
7.3 ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement among the
parties with respect to the subject matter and supersedes all prior oral
and written understandings and agreements relating thereto.
7.4 EXPENSES
Except as provided in SECTION 6.6, all expenses incurred by a party or on
its behalf in connection with this Agreement or related to the preparation,
negotiation, execution and performance of this Agreement, shall be borne by
the party incurring such expenses.
7.5 WAIVERS; AMENDMENTS
Any waiver by any party of a breach of any provision of this Agreement
shall not operate as or be construed to be a waiver of any other breach of
such provision or of any breach of any other provision of this Agreement.
The failure of a party to insist upon strict adherence to any term of this
Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence
to that term or any other term of this Agreement. Any waiver must be in a
writing signed by the waiving party. This Agreement may only be amended
with the written consent of the Company and the Investors.
7.6 REFORMATION AND SEVERABILITY
Whenever possible, each provision of this Agreement will be interpreted in
such a manner as to be effective and valid under applicable Law, but if any
provision of this Agreement is held to be
21
illegal, invalid or unenforceable under present or future Laws effective
during the term, then (i) in lieu of such illegal, invalid or unenforceable
provision, the parties shall endeavor in good faith negotiations to agree
on a provision as similar to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable, provided
that no party shall be required to agree to any provision that would
materially alter any of its rights or obligations under this Agreement and
(ii) the legality, validity and enforceability of the remaining provisions
of this Agreement shall not in any way be affected or impaired thereby
except where the fundamental relationship among the parties has been
materially altered.
7.7 GOVERNING LAW
This Agreement (and any claims or disputes arising out of or related to
this Agreement or to the transactions contemplated by this Agreement or to
the inducement of any party to enter into this Agreement, whether for
breach of contract, tortious conduct, or otherwise and whether predicated
on common law, statute or otherwise) shall in all respects be governed by
and construed in accordance with the laws of the State of New York,
including all matters of construction, validity and performance, in each
case without reference to any conflict of law rules that might lead to the
application of the laws of any other jurisdiction.
7.8 CONSENT TO JURISDICTION
Each party irrevocably submits to the exclusive jurisdiction of (a) the
Supreme Court of the State of New York, New York County, and (b) the United
States District Court for the Southern District of New York, for the
purposes of any suit, action or other proceeding arising out of the
Transaction. Each party agrees to commence any such action, suit or
proceeding either in the United States District Court for the Southern
District of New York or if such suit, action or other proceeding may not be
brought in such court for jurisdictional reasons, in the Supreme Court of
the State of New York, New York County. Each party further agrees that
service of any process, summons, notice or document by U.S. registered mail
to such party's respective address provided for in SECTION 7.1 shall be
effective service of process for any action, suit or proceeding in New York
with respect to any matters to which it has submitted to jurisdiction in
this SECTION 7.8. Each party irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising
out of the Transaction in (i) the Supreme Court of the State of New York,
New York County, or (ii) the United States District Court for the Southern
District of New York, and hereby and thereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.
7.9 WAIVER OF JURY TRIAL
Each party hereby waives to the fullest extent permitted by applicable Law,
any right it may have to a trial by jury in respect to any litigation
directly or indirectly arising out of, under or in connection with the
Transaction. Each party (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that
such other party would not, in the event of litigation, seek to enforce the
foregoing waiver and (b) acknowledges that it and the other parties have
been induced to enter into this Agreement by, among other things, the
mutual waivers and certifications in this SECTION 7.9.
22
7.10 COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the
same instrument.
7.11 CONSTRUCTION
The headings in this Agreement are solely for convenience of reference and
shall be given no effect in the construction or interpretation of this
Agreement. The parties acknowledge that each of them has had the benefit of
legal counsel of its choice, has been afforded the opportunity to review
this Agreement with its legal counsel and that this Agreement shall be
construed as if jointly drafted by the parties.
7.12 SPECIFIC PERFORMANCE
The parties acknowledge and agree that irreparable damage would occur if
any party fails to comply with its obligations under the terms of this
Agreement and that each party shall be entitled to specific performance in
such event, in addition to such other remedies at law or in equity as may
be available.
7.13 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All of the representations and warranties made in this Agreement shall
survive the Closing.
23
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first above written.
SOTHEBY'S HOLDINGS, INC.
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first above written.
THE A. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ RESTATED REVOCABLE TRUST
By: /S/ A. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
Name: A. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Trustee, under Trust Agreement, dated April 27,
1978, as amended and restated in its entirety by
instrument dated April 10, 2002
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first above written.
THE ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ REVOCABLE TRUST
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Trustee, under Trust Agreement, dated October 10,
1988, as amended and restated in its entirety by
instrument dated March 16, 1995, as same has been amended
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first above written.
THE A. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 2003 GRANTOR RETAINED ANNUITY TRUST
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Trustee, under Trust Agreement, dated May 15, 2003
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ KALISMAN
--------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Trustee, under Trust Agreement, dated May 15, 2003
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Trustee, under Trust Agreement, dated May 15, 2003
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first above written.
THE A. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 2004 GRANTOR RETAINED ANNUITY TRUST
By: /S/ A. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
Name: A. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Trustee, under Trust Agreement, dated November 17,
2004
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first above written.
TAUBMAN INVESTMENTS, LLC
By: /S/ A. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
Name: A. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee, under Trust Agreement,
dated April 27, 1978, as amended and restated in its
entirety by instrument dated April 10, 2002
Title: Manager
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first above written.
FOR PURPOSES OF THE SECOND SENTENCE OF SECTION 3.5, SECTIONS
3.7, 5.2, 5.3 AND 5.5 AND ARTICLE 7 ONLY:
/S/ A. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
A. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first above written.
FOR PURPOSES OF THE SECOND SENTENCE OF SECTION 3.5, SECTIONS
3.7, 5.2, 5.3 AND 5.5, AND ARTICLE 7 ONLY:
/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇