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EXHIBIT 99.2
STOCKHOLDERS AGREEMENT
DATED
MARCH 9, 2005
AMONG
FIDELITY NATIONAL INFORMATION SERVICES, INC.
AND
THE OTHER PARTIES HERETO
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TABLE OF CONTENTS
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PAGE
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ARTICLE I
REPRESENTATIONS AND WARRANTIES OF THE PARTIES ...........
1
1.1
Representations
and Warranties of the Company and Parent ...
1
1.2
Representations
and Warranties of the Stockholders .........
2
ARTICLE II VOTING
AGREEMENTS AND COVENANTS .........................
2
2.1
Election of
Directors; Committees ..........................
2
2.2
Voting Required
for Action .................................
5
2.3
Selection
Criteria .........................................
7
2.4
Sponsor Veto
...............................................
7
2.5
Independent
Company Management Terms .......................
8
2.6
Parent Board
Representation ................................
8
ARTICLE III TRANSFERS OF SHARES
.....................................
8
3.1
Restrictions on
Transfer of Shares .........................
8
3.2
Tag-Along Rights
...........................................
9
3.3
Transfers in
Violation of Agreement ........................ 10
ARTICLE IV LIQUIDITY RIGHTS
........................................ 10
4.1
Duty to
Negotiate; Appraisal ............................... 10
4.2
Exchange Rights
............................................ 13
ARTICLE V TAKE-ALONG
RIGHT ........................................ 14
5.1
Take-Along Right
........................................... 14
ARTICLE VI REDEMPTION
RIGHTS ....................................... 15
6.1
Redemption of
Sponsor Shares ............................... 15
6.2
Redemption
Closing ......................................... 16
6.3
Failure to
Redeem .......................................... 16
ARTICLE VII PRE-EMPTIVE RIGHTS
...................................... 17
7.1
Issuance of New
Shares ..................................... 17
ARTICLE VIII BOARD OBSERVERS AND ACCESS
.............................. 18
8.1
Board
Representation and Access ............................ 18
8.2
Information
Rights ......................................... 20
ARTICLE IX AMENDMENT AND
TERMINATION ............................... 21
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9.1
Amendment and
Waiver ....................................... 21
9.2
Termination of
Agreement ................................... 21
9.3
Termination as
to a Party .................................. 21
ARTICLE X
MISCELLANEOUS ...........................................
21
10.1
Certain Defined Terms
...................................... 21
10.2
Legends
.................................................... 26
10.3
Severability
............................................... 27
10.4
Entire Agreement
........................................... 27
10.5
Successors and Assigns
..................................... 27
10.6
Counterparts
............................................... 27
10.7
Remedies
................................................... 28
10.8
Notices
.................................................... 28
10.9
Governing Law
.............................................. 29
10.10
Descriptive Headings .......................................
30
10.11
Tax-Free Reorganization ....................................
30
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STOCKHOLDERS AGREEMENT
THIS
STOCKHOLDERS' AGREEMENT (this "Agreement") is entered into as
of
March 9, 2005 by and among (i) Fidelity
National Information Services, Inc., a
Delaware corporation (the "Company"), (ii)
Thomas H. Lee Equity Fund V, L.P.,
Thomas H. Lee Parallel Fund V, L.P., Thomas
H. Lee Cayman Fund V, L.P., Thomas
H. Lee Investors Limited Partnership,
Putnam Investment Holdings, LLC, Putnam
Investments Employees' Securities Company
I, LLC, and Putnam Investments
Employees' Securities Company II, LLC (each
a "THL Holder," collectively,
"THL"), (iii) TPG Partners III, L.P., TPG
Parallel III, L.P., TPG Investors III,
L.P., FOF Partners III, L.P., FOF Partners
III-B, L.P., TPG Dutch Parallel III,
C.V. and TPG Partners IV, L.P. (each a "TPG
Holder," collectively "TPG"), (iv)
Evercore METC Capital Partners II L.P.
("Evercore Holder," or "Evercore"), (v)
Banc of America Capital Investors, L.P.
("BACI Holder", or "BACI"), and (vi)
Fidelity National Financial, Inc. (the
"Parent"). Each THL Holder, TPG Holder,
the Evercore Holder and the BACI Holder is
referred to herein as a "Sponsor,"
and collectively, the "Sponsors." The
Sponsors, the Parent, each member of
management who hereafter (i) exercises
options to purchase Common Stock, or (ii)
purchases restricted Common Stock, pursuant
to the Company's 2005 Stock
Incentive Plan (the "SIP") and becomes a
party hereto (each, a "Management
Holder"), and each other Person that is or
may become a party to this Agreement
as contemplated hereby are sometimes
referred to herein collectively as the
"Stockholders" and individually as a
"Stockholder." Certain capitalized terms
used herein are defined in Section
10.1.
The
parties hereto agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
1.1 Representations and Warranties of the Company and Parent.Each
of
the Company and Parent hereby represent and
warrant to each Stockholder (other
than Parent) that as of the date of this
Agreement:
(a) it is a corporation duly organized, validly existing and in
good
standing under the laws of the State of
Delaware, it has full power and
authority to execute, deliver and perform
this Agreement and to consummate the
transactions contemplated hereby, and the
execution, delivery and performance by
it of this Agreement and the consummation
of the transactions contemplated
hereby have been duly authorized by all
necessary corporate action;
(b) this Agreement has been duly and validly executed and
delivered
by it and constitutes a legal and binding
obligation of the Company or Parent,
as the case may be, enforceable against it
in accordance with its terms; and
(c) the execution, delivery and performance by the Company and
Parent of this Agreement and the
consummation by the Company and Parent of the
transactions contemplated hereby will not,
with or without the giving of notice
or lapse of time, or both, (i) violate any
provision of law, statute, rule or
regulation to which the Company or Parent
is subject, (ii) violate any order,
judgment or decree applicable to the
Company or Parent or (iii)
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conflict with, or result in a breach or
default under, any term or condition of
the Company's or Parent's organizational
documents or any agreement or
instrument to which the Company or Parent
is a party or by which it is bound.
1.2 Representations and Warranties of the Stockholders. Each
Stockholder other than Parent (as to
himself or itself only) represents and
warrants to the Company and Parent that, as
of the time such Stockholder becomes
a party to this Agreement:
(a) it is a corporation duly organized, validly existing and in
good
standing under the laws of the State of its
state of incorporation, or it is a
limited partnership or a limited liability
company duly formed, validly
existing, and in good standing under the
Laws of the State of its state of
formation, as the case may be, it has full
power and authority to execute,
deliver and perform this Agreement and to
consummate the transactions
contemplated hereby, and the execution,
delivery and performance by it of this
Agreement and the consummation of the
transactions contemplated hereby have been
duly authorized by all necessary corporate,
partnership or limited liability
company action.
(b) this Agreement (or the separate joinder agreement executed
by
such Stockholder) has been duly and validly
executed and delivered by such
Stockholder, and this Agreement constitutes
a legal and binding obligation of
such Stockholder, enforceable against such
Stockholder in accordance with its
terms; and
(c) the execution, delivery and performance by such Stockholder
of
this Agreement (or any joinder to this
Agreement, if applicable) and the
consummation by such Stockholder of the
transactions contemplated hereby (and
thereby, if applicable) will not, with or
without the giving of notice or lapse
of time, or both, (i) violate any provision
of law, statute, rule or regulation
to which such Stockholder is subject, (ii)
violate any order, judgment or decree
applicable to such Stockholder or (iii)
conflict with, or result in a breach or
default under, any term or condition of any
agreement or other instrument to
which such Stockholder is a party or by
which such Stockholder is bound.
ARTICLE II
VOTING AGREEMENTS AND COVENANTS
2.1 Election of Directors; Committees.
(a) Each Person, other than the Company, that is a party to
this
Agreement hereby agrees that such Person
will vote, or cause to be voted, all
voting Shares of the Company over which
such Person has the power to vote or
direct the voting, and will take all other
necessary or desirable actions within
such Person's control, and the Company will
take all necessary or desirable
actions within its control, to cause the
authorized number of directors to be
established at up to sixteen (16)
directors, and to elect or appoint or cause to
be elected or appointed to the board of
directors of the Company (the "Board")
and cause to be continued in office, the
following individuals, in each case
subject to the provisions of subparagraph
(b) below:
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(i) one (1)
director designated by Thomas H. Lee Equity Fund V,
L.P. and one (1) director designated by Thomas H. Lee Parallel
Fund V, L.P. (collectively, the "THL Directors"), who shall
initially be Thomas M. Hagerty and Seth Lawry and who shall be
such directors so long as they are principals of THL (or
equivalent or higher ranking employees of THL), provided that
any directors replacing the initial THL Directors shall always
be individuals who are principals of THL (or equivalent or
higher ranking employees of THL);
(ii) two (2) directors
designated by TPG Partners IV, L.P. (the
"TPG Directors"), who shall initially be Jonathan Coslet and
Marshall Haines and who shall be such directors so long as
they are principals of TPG (or equivalent or higher ranking
employees of TPG), provided that any directors replacing the
initial TPG Directors shall always be individuals who are
principals of TPG (or equivalent or higher ranking employees
of TPG); and
(iii) up to twelve (12) directors designated by Parent
representing
the proportional amount of Shares held by Parent at the
relevant time (the "Parent Directors"), one of whom shall be
William P. Foley, II, subject to the terms of paragraph (c)
below; provided that, it is acknowledged that any number of
the director seats to be filled by the Parent at any time may
remain vacant until such time as the Parent elects to fill
such seats.
(b) If at any time THL or TPG ceases to own at least 50% of the
Shares held by it as of the date hereof
(subject to adjustment for stock splits,
combinations and similar events), the
number of directors THL or TPG, as the
case may be, is entitled to designate shall
be decreased by one. In the event
such decrease results in an undesignated
Board seat, the remaining Board members
may designate, by majority vote, a
successor director to fill the vacancy
created thereby or decrease the size of the
Board by such seats.
(c) The chairman of the Board (the "Chairman") shall be elected by
a
majority vote of the Board; provided,
however, that William P. Foley, II shall
serve as the Chairman for an initial period
of three (3) years provided he
continues to be employed by the Company as
Chief Executive Officer.
(d) The Board shall hold no less than one (1) meeting per
fiscal
quarter. At each meeting of the Board (or
committee thereof) at which a quorum
is present, each director shall be entitled
to one vote on each matter to be
voted on at such meeting. A majority of the
Board shall constitute a quorum.
(e) If at any time any director ceases to serve on the Board
(whether due to resignation, removal or
otherwise), the Stockholders shall elect
a successor to fill the vacancy created
thereby on the terms and subject to the
conditions of paragraphs (a) and (b) above.
Each Person that is a party hereto
agrees to vote, or cause to be voted, all
voting Shares of the Company over
which such Person has the power to vote or
direct the voting, and shall take all
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such other actions as shall be necessary or
desirable to cause the designated
successor to be elected to fill such
vacancy.
(f) Nothing in this Agreement shall be construed to impair any
rights that the stockholders of the Company
may have to remove any director for
cause under applicable law, the certificate
of incorporation of the Company, or
the by-laws of the Company, as the case may
be. No such removal of an individual
designated pursuant to this Section 2.1 for
cause shall affect any of the
Stockholders' rights to designate a
different individual pursuant to this
Section 2.1 to fill the position from which
such individual was removed.
(g) Each member of the Board shall be entitled to reimbursement
from
the Company for his or her reasonable
out-of-pocket expenses (including travel)
incurred in attending any Board
meeting.
(h) For so long as a Sponsor has any designees on the Board,
Parent
shall maintain a directors' and officers'
liability insurance policy for
directors and officers of Parent and its
Subsidiaries (including the Company),
with coverage of at least $125.0 million of
"Side A", "Side B" and "Side C"
coverage (the "Policy"), plus an additional
$20.0 million of "Side A" coverage
with terms substantially the same as the
terms in effect under the Parent's
policy in effect on the date hereof. In the
event that any claims are made under
the Policy such that less than $50 million
of coverage remains under the Policy
in any calendar year, Parent agrees to
purchase additional "Side A", "Side B"
and "Side C" directors' and officers'
liability insurance such that there shall
always be a minimum of $50 million of
coverage available to directors and
officers of the Parent and its
Subsidiaries. The Company shall indemnify the
directors designated by the Sponsors in
accordance with the Company's
certificate of incorporation and each
indemnification agreement entered into by
the Company and such director.
(i) There shall be established at all times during the term of
this
Agreement a Compensation Committee of the
Board (the "Compensation Committee")
which shall be comprised of up to five (5)
directors as follows: one (1) of whom
shall be one of the THL Directors, one (1)
of whom shall be one of the TPG
Directors and three (3) of whom shall be
Parent Directors, provided that, one
(1) of the Parent Directors shall be an
independent director selected by Parent
who shall not be an employee of Parent. The
Compensation Committee will (i)
determine the compensation of all senior
employees and consultants of the
Company (including salary, bonus, equity
participation and benefits) consistent
with compensation of companies similar to
the Company and (ii) subject to
Section 2.2(a)(vii) hereof, approve the
grants of any options or awards under,
or amendments to or replacement of, the SIP
and the repurchases of any stock
under the terms of the SIP; provided that
no member of the Compensation
Committee may vote on his own compensation
or option or award grant. The initial
members of the Compensation Committee shall
be William P. Foley, II, Thomas M.
Hagerty and Jonathan Coslet and two other
individuals designated by Parent in
accordance with the provisions in this
clause (i).
(j) There shall be established at all times during the term of
this
Agreement an Audit Committee of the Board
(the "Audit Committee") which shall be
comprised of THL Directors, TPG Directors
and Parent Directors representing the
proportional amount of Shares
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held by the Sponsors and Parent,
respectively. The Audit Committee shall
determine the Company's audit policies,
review audit reports and recommendations
made by the Company's internal audit staff
and its independent auditors, meet
with the Company's independent auditors,
oversee the independent auditors, and
recommend the Company's engagement of
independent auditors.
(k) All other committees that may be established by the Board
from
time to time shall be comprised of up to
five (5) directors as follows: one (1)
of whom shall be one of the THL Directors,
one (1) of whom shall be one of the
TPG Directors and three (3) of whom shall
be Parent Directors, provided that,
one (1) of the Parent Directors shall be an
independent director selected by
Parent who shall not be an employee of
Parent.
2.2 Voting Required for Action.
(a) At any time prior to a Public Offering, the following actions
by
the Company or any of its Subsidiaries
shall require the approval of (X) the
holders of at least a majority of the
Shares then held by THL and its
Transferees, and (Y) the holders of at
least a majority of the Shares then held
by TPG and its Transferees (together, the
"Major Sponsors"):
(i) the approval
of any modification or deviation in excess of (A)
20% with respect to the capital expenditure line item of the
annual operating budget and capital expenditure budget of the
Company and its Subsidiaries from the amounts included in the
three (3) year projections attached hereto as Schedule 1
(unless such increase relates to an acquisition permitted or
approved under Section 2.2(a)(ii)), and (B) 20% of the
aggregate amounts set forth in the annual operating budget and
capital expenditure budget approved by the Board on an annual
basis,
(ii) acquisition, by
merger or consolidation, or by purchase of, or
investments in, all or substantially all of the assets or
stock of, any business or any corporation, partnership, joint
venture, limited liability company, association or other
business organization or division thereof, in excess of
$50,000,000 per transaction or series of related transactions,
or in excess of $100,000,000 in the aggregate in any fiscal
year,
(iii) amendments to the certificate of incorporation or bylaws
of
the Company or any of its Subsidiaries in a manner which
disproportionately and adversely affects the rights of the
Sponsors or which adversely affect the indemnification or
exculpation of any director of the Company,
(iv) subject to the
rights of the Sponsors in Sections 4.1 and 5.1,
any (A) sale of all or substantially all of the assets of, or
liquidation, dissolution or recapitalization of, the Company
or any of its Material Subsidiaries, or (B) change of control
of the Company or a Material Subsidiary, whether through
merger or sale of stock or otherwise, the result of which is
Persons owning voting stock of the Company or such Material
Subsidiary, as the
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case may be, prior to such transaction do not hold more than
50% of the voting stock of the Company or such Material
Subsidiary after giving effect to such transaction,
(v) the
incurrence of any indebtedness for borrowed money by the
Company or any of its Subsidiaries in excess of $100,000,000
in the aggregate or the granting of any lien or encumbrance on
the assets or pledge of the capital stock of the Company or
its Subsidiaries (other than indebtedness incurred under, and
liens imposed in connection with the Financing),
(vi) the authorization
or issuance, or committing to authorize or
issue, any equity securities of the Company or its
Subsidiaries senior to the Shares (or any replacement
securities) held by the Sponsors as to liquidation preference,
redemption rights or dividend rights,
(vii) any increase in the authorized number of shares of Common
Stock or Common Stock Equivalents issued or to be issued to
employees, officers or directors of, or consultants or
advisors to the Company, pursuant to the SIP or adoption of
any similar incentive or option plan, or any option grant
under the SIP in excess of 16,378,379 shares or the making of
any restricted stock awards under the SIP in excess of the
initial 2,500,000 aggregate share award contemplated by
Section 2.7 hereof,
(viii)entering into any contract or transaction (other than an
Exempted Arrangement) which involves payments by any party of
more than $500,000 annually in the aggregate, between the
Company and any of its Subsidiaries on the one hand and any
Stockholder or its Affiliates or any Related Parties on the
other,
(ix) in the event an
employee of the Company is terminated without
Cause (as defined in the SIP), exercising any call right under
the SIP to repurchase Common Stock or Common Stock Equivalents
from such employee if the aggregate purchase price paid to
employees for the repurchase of shares pursuant to the SIP
within the prior 12 months (including the current repurchase )
exceeds $15,000,000,
(x) any Public
Offering that is not a Qualified Public Offering,
or
(xi) any (A)
commencement of a case, proceeding or other action (1)
under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization
or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (2)
seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any
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substantial part of its assets, or (B) making of a general
assignment for the benefit of its creditors.
(xii) the amendment or modification, in a manner adverse to the
Sponsors, of the commission percentage payable to any of the
Company's Subsidiaries pursuant to the Issuing Agency
Agreements by and among the Company's Subsidiaries and each of
Chicago Title Insurance Company and LSI Title Agency, Inc.
(b) The Company agrees to provide each of the Sponsors written
notice of any proposed action that is
approved or denied by the Major Sponsors
pursuant to Section 2.2(a) within 10
business days following such approval or
denial, as the case may be, which notice
shall include a brief summary of the
action taken by the Major Sponsors.
2.3 Selection Criteria. In the event that the Board determines
to
appoint a new Chief Executive Officer,
Chief Financial Officer or Chief
Operating Officer (or equivalent position)
at any time or times, the Company
shall select persons for such positions who
meet criteria agreed to in advance
by the Board in consultation with the Major
Sponsors.
2.4 Sponsor Veto.
(a) Each time the Board proposes to replace the Chief Executive
Officer, Chief Financial Officer or Chief
Operating Officer, the Major Sponsors,
for bona fide, good faith reasons,
communicated in writing in reasonable detail
by the Major Sponsors within a reasonable
time after the Company notifies the
Major Sponsors of the identity of a
proposed replacement candidate, shall have
the right to veto the selection of two such
proposed candidates for Chief
Executive Officer, two such proposed
candidates for Chief Financial Officer and
two such proposed candidates for Chief
Operating Officer of the Company (each
such candidate, a "Candidate").
(b) In the event the Major Sponsors have already vetoed two
Candidates for any of such positions, the
Major Sponsors will have the right to
veto a third Candidate for such position so
long as the Major Sponsors withdraw
their veto and waives their veto rights
with respect to one of the previously
vetoed Candidates, and the Company will
have the right to appoint to such
position the Candidate for whom the veto
was withdrawn.
(c) Notwithstanding anything in this Section 2.4 to the
contrary:
(i) a simple
majority of the Board may appoint an interim Chief
Executive Officer, Chief Financial Officer or Chief Operating
Officer to serve for a term not to exceed (unless otherwise
agreed in writing by the Sponsor Group) 120 calendar days (the
"Interim Term"); and
(ii) a simple majority
of the Board may extend the Interim Term by
successive increments of 60 calendar days until a Chief
Executive Officer, Chief Financial Officer or Chief Operating
Officer is appointed, so long as the
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Company is proceeding in good faith with the process set forth
in this Section 2.4.
2.5 Independent Company Management Terms. The Company will use
reasonable best efforts to put in place
within a reasonable time after the date
hereof a senior management team at the
Company (including a chief legal officer
and chief operating officer) composed of
managers who are not employed by, or
serve as directors of, Parent (other than
William P. Foley, II and Brent Bickett
who will be employed by both Parent and the
Company).
2.6 Parent Board Representation. Parent will use reasonable
best
efforts to have Thomas M. Hagerty nominated
and elected to Parent's Board of
Directors.
2.7 2005 Stock Incentive Plan. Promptly following the Closing
Date,
the Company intends to offer to certain key
employees set forth on a schedule
previously delivered to the Sponsors stock
awards under the SIP covering an
aggregate of 2,500,000 shares of Common
Stock, at a purchase price per share of
$10 each. Each person offered such an award
will have until the date (the
"Cut-Off Date") that is 60 days after the
Closing Date to accept the award by
returning a signed copy of the award
agreement, payment for the shares and a
counterpart signature page to this
Agreement. The making of any (i) restricted
stock award under the SIP in excess of the
initial 2,500,000 shares referred to
above shall, and (ii) stock option award
under the SIP in excess of the initial
16,378,379 shares reserved in the SIP,
shall require consent in accordance with
Section 2.2(a).
ARTICLE III
TRANSFERS OF SHARES
3.1 Restrictions on Transfer of Shares.
(a) Prior to the completion of the Company's first Public
Offering,
no Stockholder may Transfer any Shares,
except in an Exempt Transfer or
otherwise in accordance with the applicable
terms of this Agreement.
(b) No Transfer of any Shares by any Stockholder shall become
effective unless and until the Transferee
(unless such Transferee already is
party to this Agreement) executes and
delivers to the Company a counterpart to
this Agreement, agreeing to be treated in
the same manner as the transferring
Stockholder. Upon such Transfer and such
execution and delivery, the Transferee
acquiring Transferred Shares shall be bound
by, and entitled to the benefits of,
this Agreement in the same manner as the
transferring Stockholder; provided that
no Transferee of a Sponsor (other than
pursuant to the second sentence of the
definition of an Exempt Transfer) shall be
entitled to any of the rights of the
Sponsor set forth in this Agreement (or the
benefits hereunder) other than
Section 3.2, Article VII, Article VI,
Section 8.2, Article IX and Article X
hereof. Any attempted Transfer of Shares by
any Stockholder not in accordance
with this Section 3.1 shall not be
effective and shall be void.
(c) No Shares may be transferred by a Stockholder (other than
pursuant to an effective registration
statement under the Securities Act)
unless, if requested by the Company, such
Stockholder first delivers to the
Company an opinion of counsel, which
opinion and counsel
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shall be reasonably satisfactory to the
Company, to the effect that such
Transfer is not required to be registered
under the Securities Act.
3.2 Tag-Along Rights.
(a) At any time after the date of this Agreement, if any Sponsor
or
Parent (the "Selling Holder") proposes to
Transfer any Shares, the Selling
Holder shall, before such Transfer:
(i) Deliver to
the Company and to the other Stockholders (the
"Other Holders") at least thirty (30) days prior written
notice of such proposed Transfer (the "Sale Notice") and the
terms of such Transfer, including (A) the number of Shares to
which the Transfer relates (the "Offered Shares"), (B) the
name and address of the proposed Transferee, (C) the proposed
amount and type of consideration (including, if the
consideration consists in whole or in part of non-cash
consideration, such information available to the Selling
Holder as may be reasonably necessary for the other
Stockholders to properly analyze the economic value and
investment risk of such non-cash consideration) and the terms
and conditions of payment proposed by the Selling Holder.
(ii) Any of the Other
Holders may, within twenty-five (25) days of
the receipt of the Sale Notice, give written notice (each, a
"Tag-Along Notice") to the Selling Holder that such Other
Holder wishes to participate in such proposed Transfer upon
the terms and conditions set forth in the Sale Notice, which
Tag-Along Notice shall specify the Shares such Other Holder
desires to include in such proposed Transfer; provided,
however, that (1) each Other Holder shall be required, as a
condition to being permitted to sell Shares pursuant to this
Section 3.2(a) in connection with a Transfer of Offered
Shares, to sell a number of shares equal to the product of its
Pro Rata Amount and the number of Offered Shares, (2) to
exercise its tag-along rights hereunder, each Other Holder
must agree to make to the Transferee on behalf of itself the
same representations, warranties, covenants, indemnities and
agreements as the Selling Holder agrees to make in connection
with the Transfer of the Offered Shares (except that in the
case of representations and warranties pertaining specifically
to, or covenants made specifically by, the Selling Holder, the
Other Holders shall make comparable representations and
warranties pertaining specifically to (and, as applicable,
covenants by) themselves), and must agree to bear its ratable
share (which shall be proportionate based on the value of
Shares that are Transferred) of all liabilities to the
Transferees
arising out of representations, warranties (other
than those representations, warranties and covenants that
pertain specifically to a given Stockholder), covenants,
indemnities or other agreements made in connection with the
Transfer. Each Stockholder will bear (x) its own costs of any
sale of Shares pursuant to this Section 3.2(a) and (y) its
pro-rata
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share (based upon the relative amount of Shares sold) of any
of the other costs of any reasonable and customary sale of
Shares pursuant to this Section 3.2(a) to the extent such
costs are incurred for the benefit of all Stockholders and are
not otherwise paid by the Transferee.
(b) If none of the Other Holders gives the Selling Holder a
Tag-Along Notice prior to the expiration of
the 25-day period for giving
Tag-Along Notices with respect to the
Transfer proposed in the Sale Notice, then
(notwithstanding this Section 3.2(a)) the
Selling Holder may Transfer such
Offered Shares on the terms and conditions
set forth, and to or among any of the
Transferees identified (or Affiliates of
Transferees identified), in the Sale
Notice at any time within ninety (90) days
after expiration of the 25-day period
for giving Tag-Along Notices with respect
to such Transfer. Any such Offered
Shares not Transferred by the Selling
Holder during such 90-day period will
again be subject to the provisions of this
Section 3.2 upon subsequent Transfer.
If one or more Other Holders give the
Selling Holder a timely Tag-Along Notice,
then the Selling Holder shall use all
reasonable efforts to obtain the agreement
of the prospective Transferee(s) to the
participation of the Other Holders in
any contemplated Transfer, on the same
terms and conditions as are applicable to
the Offered Shares, and no Selling Holder
shall transfer any of its shares to
any prospective Transferee if such
prospective Transferee(s) declines to allow
the participation of any of the Other
Holders.
(c) The rights and restrictions contained in Section 3.2(a)
shall
not apply with respect to any Exempt
Transfer, except Exempt Transfers pursuant
to this Section 3.2.
3.3 Transfers in Violation of Agreement. Any Transfer or
attempted
Transfer of any Shares in violation of any
provision of this Agreement shall be
void, and the Company shall not record such
Transfer on its books or treat any
purported transferee of such Shares as the
owner of such Shares for any purpose.
ARTICLE IV
LIQUIDITY RIGHTS
4.1 Duty to Negotiate; Appraisal.
(a) If the Sponsors shall have cooperated with the Company in
its
efforts to consummate a Qualified Public
Offering but the Company has not
consummated a Qualified Public Offering
prior to the second anniversary of the
Closing Date, then, at any time thereafter,
the holders of 75% of the Sponsor
Shares (together, the "Sponsor Group") may
give notice (the "Transfer Notice")
to Parent that the Sponsors desire to sell
their Shares to Parent. For a period
of 30 days from the date of the Transfer
Notice, each party will negotiate in
good faith regarding a sale of all the
Sponsor Shares to the Parent or the
Company. If the parties are unable to agree
upon the terms of a sale of the
Sponsor Shares to the Parent or the Company
within such 30-day period, then the
Sponsor Group may elect to initiate the
Appraisal Process to determine the
Appraisal Price (the "Election"). Any
Appraisal Process shall be initiated by
the Sponsor Group by delivering to Parent
and the Company the report of the
first appraiser.
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(b) If, following the first Appraisal Process, the Sponsor Group
is
not satisfied in its sole discretion, with
the Appraisal Price (which
determination it shall make within fifteen
(15) days of completion of the
Appraisal Process), then it may elect (the
"Second Election") to initiate the
Appraisal Process a second time; provided
that the Sponsor Group may not make a
Second Election within 12 months of the
Election. If, following the second
Appraisal Process, the Sponsor Group is not
satisfied in its sole discretion,
with the Appraisal Price (which
determination it shall make within fifteen (15)
days of completion of the Appraisal
Process), then it may elect to initiate the
Appraisal Process a third time (the "Third
Election"), provided that, the
Sponsor Group may not make a Third Election
within 12 months of the Second
Election. The Sponsor Group may not
initiate the Appraisal Process more than
three times.
(c) If, following any Appraisal Process, the Sponsor Group is
satisfied, in its sole discretion, with the
Appraisal Price, the Sponsor Group
shall so notify the Parent and the Company
and the Parent or the Company may
elect, within fifteen (15) days of receipt
of notice of the Sponsor Group's
approval of the Appraisal Price, in its
sole discretion, to purchase for cash
all but not less than all of the Sponsor
Shares from the Sponsors at the
Appraisal Price by sending written notice
to the Sponsors, and, in such event,
the Sponsors shall sell all but not less
than all of the Sponsor Shares to the
Company and/or Parent. The closing of the
purchase of the Shares from the
Sponsors by the Company and/or Parent
pursuant to this Section 4.1(c) shall
occur no later than 30 days after notice of
the Company or Parent's election to
purchase.
(d) If the Sponsor Group, in its sole discretion, has approved
an
Appraisal Price, but the Company and Parent
elect not to purchase the Sponsors'
Shares or fail to make an election within
the 15-day time period referenced in
clause (c) above, then the Sponsor Group
shall have the right to compel a Sale
of the Company pursuant to Section 4.1(e)
(the "Sale Process").
(e) In accordance with Section 4.1(d) above, the Sponsor Group
may
elect to compel a Sale of the Company in
accordance with the provisions of this
Section 4.1(e) by providing written notice
thereof to the Company.
(i) The
Stockholders and the Company promptly after receiving such
notice will take, under the direction of the Sponsor Group,
all actions reasonably necessary or desirable and will use
their reasonable best efforts to cause the consummation of
such Sale of the Company (and, as used in this Section 4.1, if
structured as a stock sale, a sale of 100% of the outstanding
stock of the Company) at the highest value reasonably
available. Without limiting the foregoing, (i) each of Parent
and the Company shall provide each of the Sponsors with prompt
notice regarding any and all approvals, consents,
notifications, waivers and other legal requirements applicable
to it and necessary for the consummation of the proposed Sale
of the Company, and shall use its reasonable best efforts to
obtain all such approvals, consents, notifications and
waivers, and comply with all such other legal requirements in
a timely fashion, (ii) the Company shall hire an investment
bank (chosen by the Sponsor Group, but reasonably acceptable
to the Company) to identify potential buyers, conduct an
auction process
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and otherwise facilitate a Sale of the Company, (iii) subject
to the provisions of 4.1(e)(ii), if the proposed Sale of the
Company is structured as a sale of assets or a merger or
consolidation, or otherwise requires equityholder approval,
subject to the approval of the terms of such proposed Sale of
the Company by the Sponsor Group, in its sole discretion, the
Stockholders and the Company will vote or cause to be voted
all Shares that they hold or with respect to which such
Stockholder has the power to direct the voting and which are
entitled to vote on such transaction in favor of such
transaction and will waive any appraisal rights which they may
have in connection therewith, and (iv) subject to the
provisions of 4.1(e)(ii) and to the approval of the Sale of
the Company by the Sponsor Group, in its sole discretion, if
the proposed Sale of the Company is structured as or involves
a sale or redemption of Shares, the Stockholders will agree to
sell all but not less than all of their Shares on the terms
and conditions approved by such Sponsor Group, and the
Stockholders and the Company will execute any merger, asset
purchase, security purchase, recapitalization or other sale
agreement approved by such Sponsor Group (the "Definitive Sale
Agreements"), and will make to the buyer the same
representations, warranties, covenants, indemnities and
agreements (other than non-competition agreements) as the
Sponsor Group makes in connection with such Sale of the
Company (except that in the case of representations and
warranties pertaining specifically to, or covenants made
specifically by, any Sponsor, the other Stockholders shall
make comparable representations and warranties pertaining
specifically to (and, as applicable, covenants by)
themselves), and must agree to bear their ratable share (which
shall be proportionate based on the value of Shares that are
being sold in such Sale of the Company) of all liabilities of
the Stockholders arising ou
