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EXHIBIT 10.9
EXECUTION COPY
STOCKHOLDERS AGREEMENT
BY
AND AMONG
CMH HOLDINGS, INC.,
THE FOUNDERS
AS DEFINED HEREIN
AND
THE INVESTORS
AS DEFINED HEREIN
DATED AS OF MARCH 31, 2005
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TABLE OF CONTENTS
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SECTION I.
DEFINITIONS...................................................................2
1.1.
Construction of
Terms........................................................2
1.2.
Terms Not
Defined............................................................2
1.3.
Number of Shares
of Stock....................................................2
1.4.
Defined
Terms................................................................2
SECTION II. REPRESENTATIONS AND
WARRANTIES...............................................4
2.1.
Representations
and Warranties of the Founders...............................4
2.2.
Representations
and Warranties of the Investors..............................5
2.3.
Representations
and Warranties of New Holdings...............................5
SECTION III. RESTRICTIONS ON TRANSFER AND
ISSUANCE; RIGHT OF FIRST
OFFER; CO-SALE PROVISIONS; DRAG
ALONG....................................6
3.1.
Restrictions on
Transfer and Issuance........................................6
3.2.
Permitted
Transfers..........................................................6
3.3.
Right of First
Offer.........................................................6
3.4.
Co-Sale Option
of Eligible Investors.........................................8
3.5.
Co-Sale Option
of Participating Stockholders.................................9
3.6.
Drag
Along..................................................................11
3.7.
Contemporaneous
Transfers...................................................12
3.8.
Effect of
Prohibited
Transfers..............................................12
3.9.
Assignment of
Rights........................................................13
SECTION IV. RIGHTS TO
PURCHASE..........................................................13
4.1.
Right to
Participate in Certain Sales of Additional
Securities..............13
4.2.
Eligible Person
Acceptance..................................................13
4.3.
Calculation of
Pro Rata Allotment...........................................13
4.4.
Sale to Third
Party.........................................................14
4.5.
Exceptions to
Pre-Emptive
Rights............................................14
4.6.
Assignment of
Rights........................................................14
SECTION V. BOARD
REPRESENTATION.........................................................14
5.1.
Board
Composition...........................................................14
5.2.
Removal;
Vacancies..........................................................15
SECTION VI. COVENANTS OF NEW
HOLDINGS...................................................15
6.1.
Financial
Statements, Reports,
Etc..........................................15
6.2.
Inspection,
Consultation and
Advice.........................................16
6.3.
Key Person
Insurance........................................................16
6.4.
Directors and
Officers' Insurance; Charter and
Bylaws.......................17
6.5.
Compensation of
Directors and Investors.....................................17
6.6.
Employee
Agreements.........................................................17
6.7.
Lock-Up
Agreements..........................................................17
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6.8.
Material Adverse
Change.....................................................17
6.9.
Indemnification.............................................................18
6.10.
Amendments to
Certificate of
Incorporation..................................19
6.11.
Related Party
Transactions..................................................19
6.12.
Management
Compensation.....................................................19
6.13.
Special Bonus to TMHC
Founders..............................................20
6.14.
Special Provisions
Relating to Clayton Contribution Agreement...............20
SECTION VII. MISCELLANEOUS
PROVISIONS...................................................21
7.1.
Reliance....................................................................21
7.2.
Legend on
Shares............................................................22
7.3.
Amendment and
Waiver; Actions of the
Board..................................22
7.4.
Notices.....................................................................22
7.5.
Headings....................................................................23
7.6.
Counterparts................................................................23
7.7.
Remedies;
Severability......................................................23
7.8.
Entire
Agreement............................................................24
7.9.
Adjustments.................................................................24
7.10.
Law
Governing...............................................................24
7.11.
Successors and
Assigns......................................................24
7.12.
Dispute
Resolution..........................................................24
7.13.
Termination.................................................................24
7.14.
Stockholder
Lock-Up.........................................................25
7.15.
No
Waiver...................................................................25
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EXHIBITS
Exhibit A - Form of Joinder Agreement
SCHEDULES
Schedule A - TMHC Founders, Clayton Founders
and Investors
ii
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STOCKHOLDERS AGREEMENT
This
STOCKHOLDERS AGREEMENT (the "AGREEMENT") is made as of March 31,
2005,
by and among CMH Holdings, Inc., a Delaware
corporation ("NEW HOLDINGS"), the
Persons identified on SCHEDULE A hereto as
the "TMHC Founders" (the "TMHC
FOUNDERS"), the persons identified on
SCHEDULE A hereto as the "Clayton
Founders" (the "CLAYTON FOUNDERS" and,
collectively with the TMHC Founders, the
"FOUNDERS," and each, individually, a
"FOUNDER"), the Persons identified on
SCHEDULE A hereto as investors
(collectively, the "INVESTORS," and each,
individually, an "INVESTOR"), and any other
stockholder or option holder who
from time to time becomes party to this
Agreement by execution of a Joinder
Agreement in substantially the form
attached hereto as EXHIBIT A (the "JOINDER
AGREEMENT"). For the purpose of this
Agreement, a stockholder or an option
holder who joins this Agreement pursuant to
a Joinder Agreement shall be
included in the term "Founder" or
"Investor" as specified in such Joinder
Agreement.
WHEREAS, prior
to the date hereof, certain Investors and the TMHC Founders
were the holders of capital stock of TMHC
Holdings, Inc., a Delaware corporation
("TMHC"), and certain Investors and the
Clayton Founders were the holders of
capital stock of Clayton Holdings, Inc., a
Delaware corporation ("CLAYTON");
WHEREAS, on the
date hereof, New Holdings, Clayton, TMHC, the Investors and
the Founders are entering into a certain
Contribution and Share Exchange
Agreement (the "SHARE EXCHANGE AGREEMENT"),
pursuant to which, among other
things, the Investors and the Founders are
exchanging their shares of TMHC
capital stock and Clayton capital stock, as
applicable, for shares of Common
Stock and Convertible Preferred Stock (each
as defined below) of New Holdings;
WHEREAS, TMHC,
the TMHC Founders and certain of the Investors are parties
to a certain Stockholders Agreement, dated
as of May 24, 2004 (the "PRIOR TMHC
AGREEMENT"), and, in connection with the
Share Exchange Agreement, the parties
thereto desire to terminate the Prior TMHC
Agreement in its entirety and enter
into this Agreement for purposes of setting
forth certain mutual agreements and
understandings among them;
WHEREAS,
Clayton, the Clayton Founders and certain of the Investors are
parties to a certain Stockholders
Agreement, dated as of August 2, 2004 (the
"PRIOR CLAYTON AGREEMENT"), and, in
connection with the Share Exchange
Agreement, the parties thereto desire to
terminate the Prior Clayton Agreement
in its entirety and enter into this
Agreement for purposes of setting forth
certain mutual agreements and
understandings among them; and
WHEREAS, it is a
condition precedent to each of the parties' obligations
under the Share Exchange Agreement that
this Agreement be executed by the
parties hereto, and the parties are willing
to execute this Agreement and be
bound by the provisions hereof; and
WHEREAS, the
parties hereto desire to agree upon certain terms regarding
their rights and obligations with respect
to the securities of New Holdings, now
or hereafter outstanding and held by
them.
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NOW, THEREFORE,
in consideration of the premises, as an inducement to the
Founders and the Investors to consummate
the transactions contemplated by the
Share Exchange Agreement, and for other
good and valuable consideration, the
receipt and sufficiency of which is hereby
acknowledged, New Holdings, the
Founders and the Investors hereby covenant
and agree with each other as follows:
SECTION I. DEFINITIONS
1.1.
CONSTRUCTION OF TERMS. As used herein, the masculine, feminine
or
neuter gender, and the singular or plural
number, shall be deemed to be or to
include the other genders or number, as the
case may be, whenever the context so
indicates or requires. Any reference to
"day" shall mean a calendar day unless
indicated otherwise.
1.2.
TERMS NOT DEFINED. Capitalized terms used herein and not
otherwise
defined shall have the meanings ascribed to
them in the Share Exchange
Agreement.
1.3.
NUMBER OF SHARES OF STOCK. Whenever any provision of this
Agreement calls for any calculation based
on a number of shares of capital stock
issued and outstanding or held by a Person,
the number of shares deemed to be
issued and outstanding or held by that
Person, unless specifically stated
otherwise, shall be the total number of
shares of Common Stock then issued and
outstanding and owned by such Person, plus,
without duplication, the total
number of shares of Common Stock issuable
upon the conversion of any Convertible
Preferred Stock (but not shares of
Redeemable Preferred Stock issuable upon
conversion of any Convertible Preferred
Stock) then issued and outstanding and
owned by such Person.
1.4.
DEFINED TERMS. The following capitalized terms, as used in this
Agreement, shall have the meanings set
forth below.
"AFFILIATE"
shall mean, with respect to any Person (as defined below), any
other Person which, directly or indirectly,
controls, is controlled by or is
under common control with such Person,
including, without limitation, any
partner, officer, director, member or
employee of such Person and, with respect
to any Person that is a venture capital
fund, any investment fund now or
hereafter managed by, or which is
controlled by or under common control with,
one or more general partners of such
Person.
"BOARD OF
DIRECTORS" shall mean the board of directors of New Holdings.
"CHARTER" shall
mean the amended and restated certificate of incorporation
of New Holdings in effect as of the date
hereof, as amended from time to time.
"CODE" shall
mean the Internal Revenue Code of 1986, as amended.
"COMMISSION"
shall mean the United States Securities and Exchange
Commission, or any other federal agency at
the time administering the Securities
Act and the Exchange Act.
"COMMON STOCK"
shall mean, collectively, (a) the common stock, par value
$0.01 per share, of New Holdings, (b) the
Class B common stock, par value $0.01
per share, of New
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Holdings, and (c) any other common equity
securities issued by New Holdings,
and, in each case, any other shares of
stock issued or issuable with respect
thereto (whether by way of a stock dividend
or stock split or in exchange for or
upon conversion of such shares or otherwise
in connection with a combination of
shares, recapitalization, merger,
consolidation or other corporate
reorganization).
"CONVERTIBLE
PREFERRED STOCK" shall mean, collectively, (a) the Series A
convertible preferred stock, par value
$0.01 per share, of New Holdings, and (b)
the Series B convertible preferred stock,
par value $0.01 per share, of New
Holdings, and, in each case, any other
shares of stock issued or issuable with
respect thereto (whether by way of a stock
dividend or stock split or in
exchange for or upon conversion of such
shares or otherwise in connection with a
combination of shares, recapitalization,
merger, consolidation or other
corporate reorganization).
"DIRECTOR" shall
mean a member of the Board of Directors.
"EXCHANGE ACT"
shall mean the Securities Exchange Act of 1934, as amended
from time to time, or any similar successor
federal statute, and the rules and
regulations of the Commission thereunder,
all as the same shall be in effect at
the time.
"MAJORITY
INTEREST" shall mean Investors holding not less than a majority
of the outstanding Shares held by all
Investors, calculated in accordance with
Section 1.3 hereof.
"MATERIAL
ADVERSE EFFECT" means a material adverse effect on the assets,
liabilities, condition (financial or
other), business, results of operations or
prospects of a Person.
"PERSON" shall
mean any individual, corporation, joint venture, trust,
unincorporated organization, limited
liability company, partnership, government
and any agency or political subdivision
thereof.
"PREFERRED
STOCK" shall mean the Redeemable Preferred Stock and the
Convertible Preferred Stock.
"PROCEEDING"
shall mean any complaint, lawsuit or similar legal action
filed in any court and any investigation,
formal or informal, by any regulatory
or self-regulatory authority or any other
Person.
"QPO" shall have
the meaning set forth in the Charter.
"REDEEMABLE
PREFERRED STOCK" shall mean, collectively, (a) the Series A
redeemable preferred stock, par value $0.01
per share, of New Holdings, and (b)
the Series B redeemable preferred stock,
par value $0.01 per share, of New
Holdings, and, in each case, any other
shares of stock issued or issuable with
respect thereto (whether by way of a stock
dividend or stock split or in
exchange for or in replacement of such
shares or otherwise in connection with a
combination of shares, recapitalization,
merger, consolidation or other
corporate reorganization).
"RESTRICTED PERIOD"
shall mean the period that commences on the date hereof
and ends on August 2, 2007.
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"SECURITIES"
shall mean the Convertible Preferred Stock and the Common
Stock.
"SECURITIES ACT"
shall mean the Securities Act of 1933, as amended from
time to time, or any similar successor
federal statute, and the rules and
regulations of the Commission thereunder,
all as the same shall be in effect at
the time.
"SHARES" shall
mean, at any time, (i) shares of Common Stock, (ii) shares
of Preferred Stock, and (iii) any other
equity securities now or hereafter
issued by New Holdings, together with any
options thereon and any other shares
of stock issued or issuable with respect
thereto (whether by way of a stock
dividend, stock split or in exchange for or
upon conversion of such shares or
otherwise in connection with a combination
of shares, recapitalization, merger,
consolidation or other corporate
reorganization). At all times, the number of
Shares deemed issued and outstanding or
held or to be voted by any Person shall
be calculated in accordance with Section
1.3.
"STOCK OPTION
PLAN" means New Holdings' 2005 Stock Option and Grant Plan,
as amended from time to time.
"TRANSFER" means
any direct or indirect transfer, donation, sale,
assignment, pledge, hypothecation, grant of
a security interest in or other
disposal or attempted disposal of all or
any portion of a security, any interest
or rights in a security, or any rights
under this Agreement. "TRANSFERRED" means
the accomplishment of a Transfer, and
"Transferee" means the recipient of a
Transfer.
SECTION II. REPRESENTATIONS AND
WARRANTIES
2.1.
REPRESENTATIONS AND WARRANTIES OF THE FOUNDERS. Each of the
Founders, individually and not jointly,
hereby represents, warrants and
covenants to New Holdings and the Investors
as follows: (a) such Person has full
authority, power and capacity to enter into
this Agreement and perform its
obligations hereunder; (b) this Agreement
constitutes the valid and binding
obligation of such Person enforceable
against it in accordance with its terms,
except (i) as limited by applicable
bankruptcy, insolvency, reorganization,
moratorium and other laws of general
application affecting enforcement of
creditors' rights generally, (ii) as
limited by laws relating to the
availability of specific performance,
injunctive relief, or other equitable
remedies and (iii) to the extent the
indemnification provisions may be limited
by applicable federal or state securities
laws; and (c) the execution, delivery
and performance by such Person of this
Agreement (i) does not and will not
violate any laws, rules or regulations of
the United States or any state or
other jurisdiction applicable to such
Person, or require such Person to obtain
any approval, consent or waiver of, or to
make any filing with, any other Person
that has not been obtained or made and (ii)
does not and will not result in a
breach of, constitute a default under,
accelerate any obligation under, or give
rise to a right of termination of, any
indenture or loan or credit agreement or
any other material agreement, contract,
instrument, mortgage, lien, lease,
permit, authorization, order, writ,
judgment, injunction, decree, determination
or arbitration award to which such Person
is a party or by which the property of
such Person is bound or affected, or result
in the creation or imposition of any
mortgage, pledge, lien, security interest
or other charge or encumbrance on any
of the assets or properties of such
Person.
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2.2.
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each of the
Investors, separately and not jointly,
hereby represents, warrants and covenants
to New Holdings and the Founders as
follows: (a) such Investor has full
authority, power and capacity to enter into
this Agreement and perform its
obligations hereunder; (b) this Agreement
constitutes the valid and binding
obligation of such Investor enforceable
against it in accordance with its terms,
except (i) as limited by applicable
bankruptcy, insolvency, reorganization,
moratorium and other laws of general
application affecting enforcement of
creditors' rights generally, (ii) as
limited by laws relating to the
availability of specific performance,
injunctive relief, or other equitable
remedies and (iii) to the extent the
indemnification provisions may be limited
by applicable federal or state securities
laws; and (c) the execution, delivery
and performance by such Investor of this
Agreement (i) does not and will not
violate any laws, rules or regulations of
the United States or any state or
other jurisdiction applicable to such
Investor, or require such Investor to
obtain any approval, consent or waiver of,
or to make any filing with, any
Person that has not been obtained or made
and (ii) does not and will not result
in a breach of, constitute a default under,
accelerate any obligation under, or
give rise to a right of termination of, any
indenture or loan or credit
agreement or any other material agreement,
contract, instrument, mortgage, lien,
lease, permit, authorization, order, writ,
judgment, injunction, decree,
determination or arbitration award to which
such Investor is a party or by which
the property of such Investor is bound or
affected, or result in the creation or
imposition of any mortgage, pledge, lien,
security interest or other charge or
encumbrance on any of the assets or
properties of such Investor.
2.3.
REPRESENTATIONS AND WARRANTIES OF NEW HOLDINGS. New Holdings
hereby represents, warrants and covenants
to the Investors and the Founders as
follows: (a) New Holdings has full
authority, power and capacity to enter into
this Agreement and perform its obligations
hereunder; (b) this Agreement
constitutes the valid and binding
obligation of New Holdings enforceable against
it in accordance with its terms, except (i)
as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and
other laws of general application
affecting enforcement of creditors' rights
generally, (ii) as limited by laws
relating to the availability of specific
performance, injunctive relief, or
other equitable remedies, and (iii) to the
extent the indemnification provisions
may be limited by applicable federal or
state securities laws; and (c) the
execution, delivery and performance by New
Holdings of this Agreement (i) does
not and will not violate any laws, rules or
regulations of the United States or
any state or other jurisdiction applicable
to New Holdings, or require New
Holdings to obtain any approval, consent or
waiver of, or to make any filing
with, any Person that has not been obtained
or made and (ii) does not and will
not result in a breach of, constitute a
default under, accelerate any obligation
under, or give rise to a right of
termination of, any indenture or loan or
credit agreement or any other material
agreement, contract, instrument,
mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction,
decree, determination or arbitration award
to which New Holdings is a party or
by which the property of New Holdings is
bound or affected, or result in the
creation or imposition of any mortgage,
pledge, lien, security interest or other
charge or encumbrance on any of the assets
or properties of New Holdings.
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SECTION III. RESTRICTIONS ON TRANSFER AND
ISSUANCE; RIGHT OF FIRST OFFER;
CO-SALE PROVISIONS; DRAG ALONG
3.1.
RESTRICTIONS ON TRANSFER AND ISSUANCE.
(a) Until
the expiration of the Restricted Period, no Clayton
Founder may Transfer any of his, her or its
Shares except pursuant to Transfers
described in and carried out in accordance
with subsections (a) or (b) of
Section 3.2, Section 3.5 or Section 3.6.
Following the expiration of the
Restricted Period, each of the Clayton
Founders agrees that such Clayton Founder
will not, without the prior written consent
of a Majority Interest, Transfer all
or any portion of the Shares now owned or
hereafter acquired by such Founder,
except in connection with, and strictly in
compliance with, the provisions of
this Section III.
(b) Each
of the TMHC Founders agrees that such TMHC Founder
will not, without the prior written consent
of a Majority Interest, Transfer all
or any portion of the Shares now owned or
hereafter acquired by such Founder,
except in connection with, and strictly in
compliance with, the provisions of
this Section III.
3.2.
PERMITTED TRANSFERS. Notwithstanding anything herein to the
contrary, the provisions of Sections 3.3
and 3.4 shall not apply to either of
the Transfers listed below; PROVIDED that,
in each case the Transferee shall
either be an original party to this
Agreement or shall have entered into a
Joinder Agreement in substantially the form
attached hereto as EXHIBIT A
providing that all Shares so Transferred
shall continue to be subject to all
provisions of this Agreement as if such
Shares were still held by the Founder
effecting such Transfer, except that no
further Transfer shall thereafter be
permitted hereunder except in compliance
with Sections 3.3 and 3.4:
(a)
Transfers by any Founder to the spouse, children or
siblings of such Founder or to a trust,
family limited partnership, or other
estate planning vehicle for the exclusive
benefit of any such Founder, spouse,
children or siblings; and
(b)
Transfers upon the death of any Founder to such Founder's
heirs, executors or administrators or to a
trust under such Founder's will, or
Transfers between such Founder and such
Founder's guardian or conservator.
Notwithstanding anything to the contrary in
this Agreement, if a Transferee that
is a party to a Transfer described in this
Section 3.2 fails to execute a
Joinder Agreement, such Transferee shall
take any Shares so Transferred subject
to all provisions of this Agreement as if
such Shares were still held by the
Founder making such Transfer, whether or
not they so agree in writing.
3.3.
RIGHT OF FIRST OFFER. Subject to Section 3.2, if at any time
any
TMHC Founder or, following the Restricted
Period any Clayton Founder proposes to
Transfer all or any portion of the Shares
held by such Founder to any other
Person, such Founder (a "SELLER") may,
subject to the provisions of Section 3.4
hereof, Transfer such Shares pursuant to
and in accordance with the following
provisions of this Section 3.3:
(a) OFFER
NOTICE. The Seller shall give written notice (the
"OFFER NOTICE") to New Holdings and each of
the Investors and non-selling
Founders (the "OFFEREES") stating,
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among other things, that the Seller desires
to make such Transfer, the number
and type of Shares proposed to be
Transferred and the price per Share in cash at
which the Seller proposes to effect such
Transfer (a "SELLER OFFER"). The Offer
Notice shall constitute an irrevocable
offer to sell all, but not less than all,
of the Shares which are the subject of the
Seller Offer (the "OFFERED SHARES")
to the Offerees, on the basis described
below, at a purchase price in cash equal
to the price contained in, and on the same
terms and conditions described in the
Offer Notice.
(b)
OFFEREES' OPTION. At any time within twenty five (25) days
after receipt by the Offerees of the Offer
Notice (the "OFFEREE OPTION PERIOD"),
each Offeree or its Affiliates, including
future funds that have affiliated but
not identical general partners, may elect
to accept the offer to purchase with
respect to all, but not less than all, of
the Offered Shares and shall give
written notice of such election (the
"OFFEREE ACCEPTANCE NOTICE") to the Seller
and each other Offeree within the Offeree
Option Period, which notice shall
indicate the maximum number of Offered
Shares that the Offeree is willing to
purchase, including the number of Offered
Shares it would purchase if one or
more other Offerees do not elect to
purchase their Pro Rata Fractions (as
defined in paragraph (c) below). An Offeree
Acceptance Notice shall constitute a
valid, legally binding and enforceable
agreement for the sale and purchase of
the Offered Shares covered by such Offeree
Acceptance Notice. The closing for
the purchase of Offered Shares by the
Offerees under this Section 3.3(b) shall
take place at the offices of New Holdings
no later than the later of (i) fifteen
(15) days following the expiration of the
Offeree Option Period or (ii) the
satisfaction of any governmental approval
or filing requirements, or on such
other date or at such other place as may be
agreed to by the Seller and such
purchasing Offerees. The Seller shall
notify the Offerees promptly if any
Offeree fails to offer to purchase all of
its Pro Rata Fraction (as defined
below).
(c)
ALLOCATION OF OFFERED SHARES AMONG OFFEREES. Upon the
expiration of the Offeree Option Period,
the number of Offered Shares to be
purchased by each Offeree shall be
determined as follows: (i) first, there shall
be allocated to each Offeree electing to
purchase a number of Offered Shares
equal to the lesser of (A) the number of
Offered Shares as to which such Offeree
accepted the offer to purchase, as set
forth in its respective Offeree
Acceptance Notice and (B) such Offeree's
Pro Rata Fraction (as defined below),
and (ii) second, the balance, if any, not
allocated under clause (i) above,
shall be allocated to those Offerees who
within the Offeree Option Period
delivered an Offeree Acceptance Notice that
accepted the offer to purchase with
respect to a number of Offered Shares that
exceeded their respective Pro Rata
Fractions, in each case on a PRO RATA basis
in proportion to the number of
Shares held by each such Offeree up to the
amount of such excess. As used
herein, an Offeree's "PRO RATA FRACTION"
shall be equal to the product obtained
by multiplying the total number of Offered
Shares by a fraction, the NUMERATOR
of which is the total number of Shares
owned by such Offeree, and the
DENOMINATOR of which is the total number of
Shares held by all Offerees, in each
case calculated as of the date of the Offer
Notice.
(d) SALE
TO THIRD PARTY. If the Offerees do not elect to
exercise the rights to purchase under this
Section 3.3 with respect to all, and
not less than all, of the Offered Shares
proposed to be sold, the Seller may
sell all or a portion of the Offered Shares
to any other Person (a "BUYER") on
the terms and conditions set forth in the
Offer Notice, subject to the
provisions of Section 3.4. If the Seller's
sale to a Buyer is not consummated in
accordance with the terms of Section 3.4,
the Seller's rights under this Section
3.3(d) shall be deemed to lapse, and
any
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Transfers of Shares by the Seller shall be
in violation of the provisions of
this Agreement unless the Seller sends a
new Offer Notice and once again
complies with the provisions of this
Section 3.3 with respect to such proposed
Transfer.
3.4.
CO-SALE OPTION OF ELIGIBLE INVESTORS. If, at any time following
the Restricted Period, a Seller provides an
Offer Notice to sell Offered Shares
and the Investors do not elect to exercise
the rights to purchase under Section
3.3 with respect to all of the Offered
Shares proposed to be sold, the Seller
may sell all or a portion of such Offered
Shares to a Buyer on the terms and
conditions set forth in the Offer Notice,
subject to the provisions of this
Section 3.4:
(a)
CO-SALE NOTICE. As soon as practicable following the
expiration of the Investor Option Period,
and in no event later than five (5)
days thereafter, the Seller shall provide
notice (the "CO-SALE NOTICE") to each
of the Investors and to each Founder who is
not the Seller (the "ELIGIBLE
INVESTORS") of each such Eligible
Investor's right to participate in a Transfer
of Offered Shares to a Buyer (a "SELLER
TRANSFER") on a PRO RATA basis with the
Seller (the "CO-SALE OPTION"). To the
extent one or more such Eligible Investors
exercise their Co-Sale Option in accordance
with this Section 3.4, the number of
Shares that the Seller may Transfer
pursuant to the Seller Transfer shall be
correspondingly reduced.
(b)
INVESTOR ACCEPTANCE. Each of the Eligible Investors shall
have the right to exercise its Co-Sale
Option by giving written notice (the
"CO-SALE ACCEPTANCE NOTICE") to the Seller
within ten (10) days after receipt by
such Eligible Investor of the Co-Sale
Notice (the "CO-SALE ELECTION PERIOD").
Each Co-Sale Acceptance Notice shall set
forth the maximum number of Shares
subject thereto which the Eligible Investor
wishes to sell, including the number
of Shares it would sell if one or more
other Eligible Investors do not elect to
participate in the sale on the terms and
conditions stated in the Offer Notice.
Any Eligible Investor holding Preferred
Stock shall be permitted to sell to the
proposed Buyer in connection with any
exercise of the Co-Sale Option, at its
option, (i) shares of Common Stock and/or
shares of Common Stock and Redeemable
Preferred Stock acquired upon conversion of
Convertible Preferred Stock, or (ii)
shares of Convertible Preferred Stock;
PROVIDED, that in the case of (A) the
sale of Convertible Preferred Stock, the
Buyer shall pay for each such share the
greater of (1) the full liquidation
preference of each such share of Convertible
Preferred Stock and (2) the sum of the
liquidation preference of each share of
Redeemable Preferred Stock issuable upon
conversion of such share of Convertible
Preferred Stock and the relevant price per
share of the underlying shares of
Common Stock, and (B) the sale of
Redeemable Preferred Stock, the Buyer shall
pay for each such share the full
liquidation preference of each such share of
Redeemable Preferred Stock. Anything herein
to the contrary notwithstanding, in
the event the Investors do not elect to
exercise their respective Co-Sale
Options, then no Founder shall be entitled
to exercise its Co-Sale Option
hereunder.
(c)
ALLOCATION OF SHARES. Each Eligible Investor shall have the
right to sell pursuant to the Seller
Transfer that portion of its Shares which
is equal to or less than the product
obtained by multiplying (i) in the case of
a Seller Transfer by a TMHC Founder, (A)
the product of (1) the total number of
Shares offered by the Seller for sale to
the Buyer subject to the Seller
Transfer, multiplied by (2) .085,
multiplied by (B) a fraction, the NUMERATOR of
which is the total number of Shares owned
by such Eligible Investor and the
DENOMINATOR of which is the total number of
Shares held by all Eligible
Investors and the Seller, in each case, as
of the date of the
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Offer Notice, subject to increase as
hereinafter provided, and (ii) in the case
of a Seller Transfer by any other Founder,
(A) the total number of Shares
offered by the Seller for sale to the Buyer
subject to the Seller Transfer by
(B) a fraction, the NUMERATOR of which is
the total number of Shares owned by
such Eligible Investor and the DENOMINATOR
of which is the total number of
Shares held by all Eligible Investors and
the Seller. If any Eligible Investor
does not elect to sell the full amount of
such Shares which such Eligible
Investor is entitled to sell pursuant to
this Section 3.4, then any other
Investors who have elected to sell Shares
shall have the right to sell, on a PRO
RATA basis (based on the number of Shares
held by each such Investor) with any
other Investors and up to the maximum
number of Shares stated in each such
Investor's Co-Sale Acceptance Notice, any
Shares not elected to be sold by such
Eligible Investor.
(d) CO-SALE CLOSING. Within ten
(10) calendar days after the
end of the Co-Sale Election Period, the
Seller shall promptly notify each
participating Eligible Investor of the
number of Shares held by such Eligible
Investor that will be included in the sale
and the date on which the Seller
Transfer will be consummated, which shall
be no later than the later of (i)
sixty (60) calendar days after the end of
the Co-Sale Election Period and (ii)
the date of the satisfaction of any
governmental approval or filing
requirements, if any. Each participating
Eligible Investor may effect its
participation in any Seller Transfer
hereunder by delivering to the Buyer, or to
the Seller for delivery to the Buyer, one
or more instruments or certificates,
properly endorsed for transfer,
representing the Shares it elects to sell
pursuant thereto. At the time of
consummation of the Seller Transfer, the Seller
and the participating Investors shall cause
the Buyer to remit directly to each
participating Eligible Investor that
portion of the sale proceeds to which the
participating Eligible Investor is entitled
by reason of its participation in
the Seller Transfer. No Shares may be
purchased by the Buyer from the Seller
unless the Buyer simultaneously purchases
from the participating Eligible
Investors all of the Shares that they have
elected to, and are entitled to, sell
pursuant to this Section 3.4.
(e) SALE
TO THIRD PARTY. Any Shares held by a Seller that are
the subject of a Seller Transfer and that
the Seller desires to Transfer to a
Buyer in compliance with this Section 3.4,
may be sold to such Buyer only during
the period specified in Section 3.4(d) and
only on terms no more favorable to
the Seller than those contained in the
Offer Notice. Promptly after such
Transfer, the Seller shall notify New
Holdings and the Investors of the
consummation thereof and shall furnish such
evidence of the completion and time
of completion of the Transfer and of the
terms thereof as may reasonably be
requested by a Majority Interest. Prior to
the effectiveness of any Transfer to
a Buyer hereunder, such Buyer shall have
entered into a Joinder Agreement in
substantially the form attached hereto as
EXHIBIT A, and such Buyer shall have
all the rights and obligations hereunder as
if such Buyer were a Founder. If the
Seller Transfer is not consummated within
the period required by this Section
3.4 or the Buyer fails timely to remit to
each participating Investor its
respective portion of the sale proceeds,
the Seller Transfer shall be deemed to
lapse, and any Transfer of Shares pursuant
to such Seller Transfer shall be in
violation of the provisions of this
Agreement unless the Seller sends a new
Offer Notice with respect to such Offered
Shares and once again complies with
the provisions of Section 3.3 and Section
3.4 with respect to such Seller
Transfer.
3.5.
CO-SALE OPTION OF PARTICIPATING STOCKHOLDERS. If any one or
more
of the Investors entertains a bona fide
offer from a Buyer who is not an
investment fund controlled by or under
common control with of such Investor(s)
(a "TRANSACTION OFFER") to purchase all
or
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any portion of the Shares held by such
Investor(s), such Investor(s)
(collectively, a "TRANSFERRING INVESTOR")
may sell such Shares to the Buyer on
the terms and conditions of the Transaction
Offer, subject to the provisions of
this Section 3.5:
(a)
CO-SALE NOTICE. The Transferring Investor shall provide
notice to each Founder and each other
Investor (the "STOCKHOLDER CO-SALE
NOTICE") of his, her or its right to
participate in the Transaction Offer on a
PRO RATA basis with the Transferring
Investor (the "STOCKHOLDER CO-SALE
OPTION"). If one or more of the Founders or
other Investors (each, a
"PARTICIPATING STOCKHOLDER") exercise their
Stockholder Co-Sale Option in
accordance with this Section 3.5, the
number of Shares that the Transfer
