Exhibit 10.3

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT, dated as of August 18, 2015 (this
“Agreement”), is by and among Houlihan Lokey, Inc., a Delaware corporation (the
“Company”), and the HL Management Stockholders (as defined below).

 

W I T N E S S E T H:

 

WHEREAS, in connection with the IPO (as defined below), the Company desires to
grant registration rights to the HL Management Stockholders on the terms and
conditions set out in this Agreement.

 

NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, the parties hereto agree as follows:

 

Article 1
DEFINITIONS

 

Section 1.01                             Defined Terms.  As used in this
Agreement, the following terms shall have the following meanings:

 

“Action” means any demand, action, suit, countersuit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority or any
federal, state, local, foreign or international arbitration or mediation
tribunal.

 

“Affiliate” of any Person means a Person that controls, is controlled by, or is
under common control with such Person; provided, however, that, for purposes of
this Agreement, the Company and its subsidiaries shall not be considered to be
“Affiliates” of any HL Management Stockholder, and no HL Management Stockholder
shall not be considered to be an “Affiliate” of the Company or its subsidiaries
or any other HL Management Stockholder.  As used herein, “control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such entity, whether through
ownership of voting securities or other interests, by contract or otherwise.

 

“Agreement” has the meaning set forth in the preamble to this Agreement.

 

“Business Day” means any day other than a Saturday, Sunday or a day on which
banking institutions are authorized or obligated by law to be closed in New
York, New York.

 

“Common Stock” means shares of Class A common stock of the Company.

 

“Company” has the meaning set forth in the preamble to this Agreement.

 

“Company Notice” has the meaning set forth in Section 2.01(a).

 

“Demand Registration” has the meaning set forth in Section 2.01(a).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

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“Governmental Authority” means any nation or government, any state, municipality
or other political subdivision thereof, and any entity, body, agency,
commission, department, board, bureau, court, tribunal or other instrumentality,
whether federal, state, local, domestic, foreign or multinational, exercising
executive, legislative, judicial, regulatory, administrative or other similar
functions of, or pertaining to, government and any executive official thereof.

 

“HL Management Stockholder” means a holder of Shares who is (x) a party hereto
as set forth on Schedule A of this Agreement and (y) a party to an HL Lock-Up
Agreement (as defined in the Stockholders’ Agreement) or subject to similar
transfer restrictions under an equity award agreement or other agreement entered
into between the Company and such holder of Shares, and shall include his or her
successors.

 

“HL Management Stockholder Representative” has the meaning set forth in
Section 3.13.

 

“IPO” means the initial public offering of Common Stock pursuant to an effective
Registration Statement under the Securities Act.

 

“Loss” or “Losses” has the meaning set forth in Section 2.08(a).

 

“ORIX” means ORIX HLHZ Holding LLC, a Delaware limited liability company, and
shall include its successors, by merger, acquisition, reorganization or
otherwise.

 

“ORIX Registration Rights Agreement” means that certain Registration Rights
Agreement, dated as of August 18, 2015, between the Company and ORIX.

 

“Person” means an individual, a general or limited partnership, a corporation, a
trust, a joint venture, an unincorporated organization, a limited liability
entity, any other entity and any Governmental Authority.

 

“Piggyback Registration” has the meaning set forth in Section 2.02(a).

 

“Prospectus” means the prospectus included in any Registration Statement, all
amendments and supplements to such prospectus, including post-effective
amendments, and all other material incorporated by reference in such prospectus.

 

“Registrable Securities” means any Shares and any securities issued or issuable
directly or indirectly with respect to, in exchange for, upon the conversion of
or in replacement of the Shares, whether by way of a dividend or distribution or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation, exchange or other reorganization; provided that any such
Shares shall cease to be Registrable Securities if (i) they have been Registered
and sold pursuant to an effective Registration Statement or sold pursuant to
Rule 144 under the Securities Act, (ii) they have been transferred by the
applicable HL Management Stockholder in a transaction in which such HL
Management Stockholder’s rights under this Agreement are not, or cannot be,
assigned, or (iii) they have ceased to be outstanding.

 

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“Registration” means a registration with the SEC of the offer and sale to the
public of Common Stock under a Registration Statement.  The terms “Register,”
“Registered” and “Registering” shall have a correlative meaning.

 

“Registration Expenses” means all expenses incident to the Company’s performance
of or compliance with this Agreement, including all (i) registration,
qualification and filing fees; (ii) expenses incurred in connection with the
preparation, printing and filing under the Securities Act of the Registration
Statement, any Prospectus and any issuer free writing prospectus and the
distribution thereof; (iii) the fees and expenses of the Company’s counsel and
independent accountants; (iv) the fees and expenses incurred in connection with
the registration or qualification and determination of eligibility for
investment of the Shares under the state or foreign securities or blue sky laws
and the preparation, printing and distribution of a World Sky Memorandum
(including the related fees and expenses of counsel); (v) the costs and charges
of any transfer agent and any registrar; (vi) all expenses and application fees
incurred in connection with any filing with, and clearance of an offering by,
Financial Industry Regulatory Authority, Inc.; (vii) expenses incurred in
connection with any “road show” presentation to potential investors;
(viii) printing expenses, messenger, telephone and delivery expenses;
(ix) internal expenses of the Company (including all salaries and expenses of
employees of the Company performing legal or accounting duties); (x) reasonable
fees and expenses of outside counsel for the HL Management Stockholders; and
(xi) and fees and expenses of listing any Registrable Securities on any
securities exchange on which shares of Common Stock are then listed; but
excluding any Selling Expenses.

 

“Registration Period” has the meaning set forth in Section 2.01(c).

 

“Registration Rights” means the rights of the HL Management Stockholders to
cause the Company to Register Registrable Securities pursuant to this Agreement.

 

“Registration Statement” means any registration statement of the Company filed
with, or to be filed with, the SEC under the rules and regulations promulgated
under the Securities Act, including the related Prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
and all exhibits and all material incorporated by reference in such registration
statement.

 

“SEC” has the meaning set forth in the recitals to this Agreement.

 

“Securities Act” means the U.S. Securities Act of 1933, as amended.

 

“Selected Courts” has the meaning set forth in Section 3.05.

 

“Selling Expenses” means all underwriting discounts, selling commissions and
transfer taxes applicable to the sale of Registrable Securities hereunder.

 

“Shares” means all shares of Common Stock.

 

“Share Restrictions” means the (i) restrictions on the sale of shares (subject
to any exceptions thereto) set forth in the individual lock-up agreement entered
into by each HL Management Stockholder and the Company (which each HL Management
Stockholder

 

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acknowledges shall continue to apply as provided therein, and which, for the
avoidance of doubt, nothing in this Agreement or the ORIX Registration Rights
Agreement is intended to, or shall be interpreted to, waive or supersede), and
(ii) any restrictions, limitations, or conditions on the sale of shares imposed
on HL Management Stockholders by the Company, in the sole discretion of the
Board of Directors, or as a result of any current or future obligation of the
Company.

 

“Shelf Registration” means a Registration Statement of the Company for an
offering to be made on a delayed or continuous basis of Common Stock pursuant to
Rule 415 under the Securities Act (or similar provisions then in effect).

 

“Stockholders’ Agreement” means that certain Stockholders’ Agreement, dated as
of the date hereof, among the Company and the Holders identified therein.

 

“Takedown Notice” has the meaning set forth in Section 2.01(f).

 

“Underwritten Offering” means a Registration in which securities of the Company
are sold to an underwriter or underwriters for reoffering to the public.

 

Section 1.02                             General Interpretive Principles. 
Whenever used in this Agreement, except as otherwise expressly provided or
unless the context otherwise requires, any noun or pronoun shall be deemed to
include the plural as well as the singular and to cover all genders.  Whenever
the words “include,” “includes” or “including” are used in this Agreement, they
shall be deemed to be followed by the words “without limitation.” Unless
otherwise specified, the terms “hereof,” “herein,” “hereunder” and similar terms
refer to this Agreement as a whole (including the exhibits hereto), and
references herein to Articles and Sections refer to Articles and Sections of
this Agreement.  Except as otherwise indicated, all periods of time referred to
herein shall include all Saturdays, Sundays and holidays; provided, however,
that if the date to perform the act or give any notice with respect to this
Agreement shall fall on a day other than a Business Day, such act or notice may
be performed or given timely if performed or given on the next succeeding
Business Day.  References to a Person are also to its permitted successors and
assigns.  The parties have participated jointly in the negotiation and drafting
of this Agreement and, in the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as jointly drafted by
the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provision of this
Agreement.

 

Article 2
REGISTRATION RIGHTS

 

Section 2.01                             Registration.

 

(a)                                 Request.  The HL Management Stockholder
Representative, on behalf of the HL Management Stockholders, shall have the
right to request that the Company file a Registration Statement with the SEC on
the appropriate registration form for all or part of the Registrable Securities
held by the HL Management Stockholders by delivering a written request to the
Company specifying the kind and number of shares of Registrable Securities the
HL Management Stockholders wish to Register and the intended method of
distribution thereof (a “Demand Registration”); provided that any sale by an HL
Management Stockholder in connection with any Demand Registration must comply
with the applicable Share Restrictions;.

 

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The Company shall (i) within 10 Business Days of the receipt of such request,
give written notice of such Demand Registration to ORIX (the “Company Notice”)
but only if ORIX then owns Registrable Securities, (ii) use its reasonable best
efforts to file a Registration Statement (or an amendment or supplement to a
previously filed shelf Registration Statement) in respect of such Demand
Registration as soon as reasonably practicable and in any event within 60 days
of the receipt of the request, and (iii) use its reasonable best efforts to
cause such Registration Statement to become effective (if necessary) as soon as
reasonably practicable thereafter.  Subject to Section 2.01(e) below, the
Company shall include in such Registration all Registrable Securities that ORIX
requests to be included within the 10 Business Days following its receipt of the
Company Notice, as applicable.  Notwithstanding the foregoing, the HL Management
Stockholder Representative shall not, nor shall the Company be required to, take
any action that would otherwise be permitted or required under this Section 2.01
if such action would violate Section 2.05 hereof or any similar provision
contained in the underwriting agreement or any lock-up agreement entered into in
connection with the IPO or any Underwritten Offering.

 

(b)                                 Limitations of Demand Registrations.  The HL
Management Stockholder Representative, on behalf of the HL Management
Stockholders, shall have the right to require the Company to make up to two
Demand Registrations pursuant to Section 2.01(a) during the first 12 months
after the effective date of the registration statement related to the IPO, and
up to three Demand Registrations per year thereafter; provided, however, that
the HL Management Stockholder Representative may not require the Company to
effect a Demand Registration within 90 days of the date a previous Demand
Registration was requested by the HL Management Stockholder Representative.  To
the extent the HL Management Stockholder Representative has requested to include
Registrable Securities in a Piggyback Registration but no such Registrable
Securities were required to be included in such Piggyback Registration pursuant
to Section 2.02(c), the Company shall not be required to effect a Demand
Registration on behalf of the HL Management Stockholders prior to the
consummation of such Piggyback Registration (and the conclusion of any related
holdback periods pursuant to Section 2.05).

 

(c)                                  Effective Registration.  The Company shall
be deemed to have effected a Registration for purposes of Section 2.01(b) if the
Registration Statement is declared effective by the SEC or becomes effective
upon filing with the SEC, and remains effective until the earlier of (i) the
date when all Registrable Securities thereunder have been sold and (ii) 40 days
from the effective date of the Registration Statement (the “Registration
Period”).  No Registration shall be deemed to have been effective if the
conditions to closing specified in the underwriting agreement, if any, entered
into in connection with such Registration are not satisfied by reason of the
Company and by no act or omission of the HL Management Stockholders.  If, during
the Registration Period, such Registration is interfered with by any stop order,
injunction or other order or requirement of the SEC or other Governmental
Authority, the Registration Period shall be extended on a day-for-day basis for
any period the HL Management Stockholders are unable to complete an offering as
a result of such stop order, injunction or other order or requirement of the SEC
or other Governmental Authority.

 

(d)                                 Underwritten Offering.  If the HL Management
Stockholder Representative so indicates at the time of its request pursuant to
Section 2.01(a), such offering of Registrable Securities shall be in the form of
an Underwritten Offering and the Company shall include such information in the
Company Notice, as applicable.  In the event that the HL Management

 

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Stockholders intend to distribute the Registrable Securities by means of an
Underwritten Offering, the HL Management Stockholders may not include
Registrable Securities in such Registration unless the HL Management
Stockholders, subject to the limitations set forth in Section 2.06, (i) agree to
sell their Registrable Securities on the basis provided in the applicable
underwriting arrangements; (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements and
(iii) cooperates with the Company’s reasonable requests in connection with such
Registration (it being understood that the Company’s failure to perform its
obligations hereunder, which failure is caused by the HL Management
Stockholders’ failure to cooperate, will not constitute a breach by the Company
of this Agreement).  The selection of underwriters will be in accordance with
Section 2.03 and the HL Management Stockholder Representative shall have the
right to cause the Company and its employees to participate in all reasonable
marketing efforts that the underwriters deem appropriate.

 

(e)                                  Priority of Securities in an Offering
pursuant to a Demand Registration.  If the managing underwriter or underwriters
of a proposed Underwritten Offering pursuant to a Demand Registration by the HL
Management Stockholder Representative under Section 2.01 determines that, in
their opinion, the number of securities requested to be included in such
Underwritten Offering exceeds the number that can be sold in such Underwritten
Offering without being likely to have a significant adverse effect on the price,
timing or distribution of the securities offered or the market for the
securities offered, then the managing underwriter or underwriters shall inform
the HL Management Stockholder Representative in writing of such determination,
and the shares included in such Underwritten Offering shall be included in the
following order of priority: (a) if ORIX participates in the Underwritten
Offering, first, any securities to be sold for the account of ORIX and the HL
Management Stockholders, 25% for the account of the HL Management Stockholders
and 75% for the account of ORIX (or as close to such ratio as possible, given
the desired sale amounts and the size of any necessary reduction); second, any
securities to be sold for the account of the Company; and lastly, any other
securities or (b) if ORIX does not participate in the Underwritten Offering,
first, any securities to be sold for the account of the HL Management
Stockholders; second, any securities to be sold for the account of the Company;
and lastly, any other securities.

 

(f)                                   Shelf Registration.  At any time after the
date hereof when the Company is eligible to Register the applicable Registrable
Securities on Form S-3 (or a successor form), the HL Management Stockholder
Representative may request the Company to Register some or all of the HL
Management Stockholders’ Registrable Securities on a Shelf Registration.  If the
HL Management Stockholders are holders of Registrable Securities included on a
Shelf Registration, the HL Management Stockholder Representative shall have the
right to request that the Company cooperate in a shelf takedown at any time,
subject to the limitations set forth in Sections 2.01(b) and (h), by delivering
a written request thereof to the Company specifying the kind and number of
shares of Registrable Securities the HL Management Stockholders wish to include
in the shelf takedown (“Takedown Notice”).  The Company shall as soon as
reasonably practicable and in any event within five Business Days of the receipt
of a Takedown Notice take all actions reasonably requested by the HL Management
Stockholder Representative, including the filing of a Prospectus supplement and
the other actions described in Section 2.04, in accordance with the intended
method of distribution set forth in the Takedown Notice as expeditiously as
practicable.  Any request by the HL Management Stockholder Representative to
effect an Underwritten

 

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Offering as a shelf takedown shall be subject to the requirements, limitations
and provisions relating to Demand Registrations and Underwritten Offerings in
this Section 2.01.

 

(g)                                  SEC Form.  Except as set forth in the next
sentence, the Company shall use its reasonable best efforts to cause Demand
Registrations to be Registered on Form S-3 (or any successor form), and if the
Company is not then eligible under the Securities Act to use Form S-3, Demand
Registrations shall be Registered on Form S-1 (or any successor form).  The
Company shall use its reasonable best efforts to become eligible to use Form S-3
and, after becoming eligible to use Form S-3, shall use its reasonable best
efforts to remain so eligible.  All Demand Registrations shall comply with
applicable requirements of the Securities Act and, together with each Prospectus
included, filed or otherwise furnished by the Company in connection therewith,
shall not contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.

 

(h)                                 Suspension Periods.  Notwithstanding
anything to the contrary contained in this Agreement, the Company shall be
entitled, from time to time, by providing written notice to the HL Management
Stockholder Representative and the other holders of Common Stock who elected to
participate in a Registration, to postpone the filing or effectiveness of a
Registration, or, to the extent a Registration is effective, to require such
holders of Common Stock to suspend the use of the Prospectus for sales of
Registrable Securities under the Registration, in each case for a reasonable
period of time not to exceed 90 days in succession or 120 days in the aggregate
in any 12-month period (a “Suspension Period”) if the board of directors of the
Company determines in good faith and in its reasonable judgment that it is
required to disclose in the Registration material, non-public information that
the Company has a bona fide business purpose for preserving as confidential.
Immediately upon receipt of such notice, the holders of Common Stock covered by
the Registration shall suspend the use of the Prospectus until the requisite
changes to the Prospectus have been made as required below. Any Suspension
Period shall terminate at such time as the public disclosure of such information
is made. After the expiration of any Suspension Period and without any further
request from the holders of Common Stock, the Company shall as soon as
reasonably practicable file and seek the effectiveness of the Registration, or
prepare a post-effective amendment or supplement to the Registration or the
Prospectus, or any document incorporated therein by reference, as applicable, or
file any other required document so that, as thereafter delivered to purchasers
of the Registrable Securities included therein, the Prospectus will not include
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.

 

Section 2.02                             Piggyback Registrations.

 

(a)                                 Participation.

 

(i)                                     If the Company proposes to file a
Registration Statement under the Securities Act with respect to any offering of
Common Stock for its own account and/or for the account of another stockholder
(other than a Registration (i) pursuant to a Registration Statement on Form S-8,
or other registration solely relating to an offering or sale to employees or
directors of the Company pursuant to any employee stock plan or other employee
benefit arrangement, or

 

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Form S-4 or similar form that relates to a transaction subject to Rule 145 under
the Securities Act, (ii) pursuant to any form that does not include
substantially the same information as would be required to be included in a
Registration Statement covering the sale of Registrable Securities, (iii) in
connection with any dividend reinvestment or similar plan or (iv) for the sole
purpose of offering securities to another entity or its security holders in
connection with the acquisition of assets or securities of such entity or any
similar transaction), then, as soon as practicable (but in no event less than
15 days prior to the proposed date of filing such Registration Statement), the
Company shall give written notice of such proposed filing to the HL Management
Stockholder Representative, and such notice shall offer the HL Management
Stockholders the opportunity to Register under such Registration Statement such
number of Registrable Securities as the HL Management Stockholder Representative
may request in writing (a “Piggyback Registration”).

 

(ii)                                  Subject to Section 2.02(a) and
Section 2.02(c), the Company shall include in such Registration Statement all
such Registrable Securities that are requested to be included therein within 12
days after the receipt of any such notice; provided, however, that if, at any
time after giving written notice of its intention to Register any securities
pursuant to this Section 2.01(a) and prior to the effective date of the
Registration Statement filed in connection with such Registration, the Company
shall determine for any reason not to Register or to delay Registration of such
securities, the Company may, at its election, give written notice of such
determination to the HL Management Stockholder Representative and, thereupon,
(i) in the case of a determination not to Register, shall be relieved of its
obligation to Register any Registrable Securities in connection with such
Registration and shall have no liability to the HL Management Stockholders in
connection with such termination, without prejudice, however, to the rights of
the HL Management Stockholder Representative to request that such Registration
be effected as a Demand Registration under Section 2.01, and (ii) in the case of
a determination to delay Registration, shall be permitted to delay Registering
any Registrable Securities for the same period as the delay in Registering such
other shares of Common Stock.  Registration effected under this Section 2.02
shall not relieve the Company of its obligation to effect any Demand
Registration under Section 2.01.

 

(iii)                               If the offering pursuant to a Registration
Statement pursuant to this Section 2.02 is to be an Underwritten Offering and
the HL Management Stockholder Representative makes a request for a Piggyback
Registration pursuant to Section 2.02(a), then the Company and the HL Management
Stockholder Representative shall each use their reasonable best efforts to
coordinate arrangements with the underwriters so that the HL Management
Stockholders may participate in such Underwritten Offering.  If the offering
pursuant to such Registration Statement is to be on any other basis and the HL
Management Stockholder Representative makes a request for a Piggyback
Registration pursuant to Section 2.02(a), then the Company and the HL Management
Stockholder Representative shall each use their reasonable best efforts to
coordinate arrangements so that the HL Management Stockholders may participate
in such offering on such basis.  If the Company files a Shelf Registration for
its own account and/or for the account of any other Persons, the Company agrees
that it shall use its reasonable best efforts to include in such Registration
Statement such disclosures as may be required by Rule 430B under the Securities
Act in order to ensure that the HL Management Stockholders may be added to such
Shelf Registration at a later time through the filing of a Prospectus supplement
rather than a post-effective amendment.

 

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(iv)                                                                             
Notwithstanding the foregoing, any sale by an HL Management Stockholder in
connection with any Piggyback Registration must comply with the applicable Share
Restrictions.

 

(b)                                 Right to Withdraw.  The HL Management
Stockholder Representative shall have the right to withdraw its request for
inclusion of the HL Management Stockholders’ Registrable Securities in any
Underwritten Offering pursuant to this Section 2.02 at any time prior to the
execution of an underwriting agreement with respect thereto by giving written
notice to the Company of its request to withdraw and, subject to the preceding
clause, the HL Management Stockholders shall be permitted to withdraw all or
part of their Registrable Securities from a Piggyback Registration at any time
prior to the effective date thereof.

 

(c)                                  Priority of Piggyback Registration.  If the
managing underwriter or underwriters of any proposed Underwritten Offering of a
class of Registrable Securities included in a Piggyback Registration informs the
Company and the HL Management Stockholder Representative in writing that, in its
or their opinion, the number of securities of such class which the HL Management
Stockholder Representative and any other Persons intend to include in such
Underwritten Offering exceeds the number which can be sold in such Underwritten
Offering without being likely to have a significant adverse effect on the price,
timing or distribution of the securities offered or the market for the
securities offered, then the securities to be included in such Underwritten
Offering shall be included in the following order of priority:

 

(i)                                     if the Piggyback Registration relates to
an offering for the Company’s own account, then first, there shall be included
in the Underwritten Offering any securities to be sold for the account of the
Company; second, (A) if ORIX and the HL Management Stockholders each intend to
participate in such Underwritten Offering, there shall be included in the
Underwritten Offering any securities to be sold for the account of ORIX and the
HL Management Stockholders, 25% for the account of the HL Management
Stockholders and 75% for the account of ORIX (or as close to such ratio as
possible, given the desired sale amounts and the size of any necessary
reduction) or (B) if ORIX does not participate in the offering, there shall be
included in the Underwritten Offering any securities to be sold for the account
of the HL Management Stockholders; and lastly, there shall be included in the
Underwritten Offering any other securities; or

 

(ii)                                  if the Piggyback Registration relates to
an offering other than for the Company’s own account, then first, any securities
that were originally proposed to be sold (other than any securities to be sold
for the account of ORIX), prior to the initiation of the Piggyback Registration,
second, (A) if ORIX and the HL Management Stockholders both intend to
participate in such Underwritten Offering, there shall be included in the
Underwritten Offering any securities to be sold for the account of ORIX and the
HL Management Stockholders, 25% for the account of the HL Management
Stockholders and 75% for the account of ORIX (or as close to such ratio as
possible, given the desired sale amounts and the size of any necessary
reduction) or (B) if ORIX does not participate in the offering, there shall be
included in the Underwritten Offering any securities to be sold for the account
of the HL Management Stockholders; and lastly, there shall be included in the
Underwritten Offering any other securities.

 

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Section 2.03                             Selection of Underwriter(s).  In any
Underwritten Offering pursuant to Section 2.01 in which ORIX participates, ORIX
shall select the lead managing underwriter(s), provided that, in each case, the
Company shall have the right to designate co-managing underwriters and passive
bookrunners in any such Underwritten Offering.  In any Underwritten Offering
pursuant to Section 2.01 in which ORIX does not participate, the HL Management
Stockholder Representative shall select the lead managing underwriter(s),
provided that, in each case, the Company shall have the right to designate
co-managing underwriters and passive bookrunners in any such Underwritten
Offering.  In an Underwritten Offering pursuant to Section 2.02 where the
Company proposes to file a Registration Statement under the Securities Act with
respect to any offering of securities for its own account and/or for the account
of ORIX, or any stockholder other than the HL Management Stockholders, the
Company or such stockholder shall select the underwriter; provided that prior to
the 18-month anniversary of the IPO, upon the request of ORIX, ORIX may select
an underwriter (which shall be a nationally-recognized financial institution,
but need not be the lead managing underwriter for such offering) to advise the
board of directors of the Company regarding the advisability of such an
offering.

 

Section 2.04                             Registration Procedures.

 

(a)                                 In connection with the Registration and/or
sale of Registrable Securities pursuant to this Agreement, through an
Underwritten Offering or otherwise, the Company shall use reasonable best
efforts to effect or cause the Registration and the sale of such Registrable
Securities in accordance with the intended methods of disposition thereof and:

 

(i)                                     prepare and file the required
Registration Statement, including all exhibits and financial statements required
under the Securities Act to be filed therewith, and before filing with the SEC a
Registration Statement or Prospectus, or any amendments or supplements thereto,
(A) furnish to the underwriters, if any, and to the HL Management Stockholder
Representative, if the HL Management Stockholders are participating in such
Registration, copies of all documents prepared to be filed, which documents will
be subject to the review of such underwriters and the HL Management Stockholder
Representative, if the HL Management Stockholders are participating, and their
respective counsel, and (B) consider in good faith any comments of the
underwriters and the HL Management Stockholder Representative, if the HL
Management Stockholders are participating, and their respective counsel on such
documents;

 

(ii)                                  prepare and file with the SEC such
amendments and supplements to such Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep such Registration
Statement effective in accordance with the terms of this Agreement and to comply
with the provisions of the Securities Act with respect to the disposition of all
of the Shares Registered thereon;

 

(iii)                               in the case of a Shelf Registration, prepare
and file with the SEC such amendments and supplements to such Registration
Statement and the Prospectus used in connection therewith as may be necessary to
keep such Registration Statement effective and to comply with the provisions of
the Securities Act with respect to the disposition of all Shares subject thereto
for a period ending on the 3rd anniversary after the effective date of such
Registration Statement;

 

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(iv)                              notify the HL Management Stockholder
Representative, if the HL Management Stockholders are participating, and the
managing underwriter or underwriters, if any, and (if requested) confirm such
advice in writing and provide copies of the relevant documents, as soon as
reasonably practicable after notice thereof is received by the Company (A) when
the applicable Registration Statement or any amendment thereto has been filed or
becomes effective, or when the applicable Prospectus or any amendment or
supplement to such Prospectus has been filed, (B) of any written comments by the
SEC or any request by the SEC or any other Governmental Authority for amendments
or supplements to such Registration Statement or such Prospectus or for
additional information, (C) of the issuance by the SEC of any stop order
suspending the effectiveness of such Registration Statement or any order
preventing or suspending the use of any preliminary or final Prospectus or the
initiation or threatening of any proceedings for such purposes, (D) if, at any
time, the representations and warranties of the Company in any applicable
underwriting agreement cease to be true and correct in all material respects,
and (E) of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Registrable Securities for offering or
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose;

 

(v)                                 as soon as reasonably practicable notify the
HL Management Stockholder Representative, if the HL Management Stockholders are
participating, and the managing underwriter or underwriters, if any, when the
Company becomes aware of the occurrence of any event as a result of which the
applicable Registration Statement or the Prospectus included in such
Registration Statement (as then in effect) contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein (in the case of such Prospectus and any preliminary Prospectus, in light
of the circumstances under which they were made) not misleading or, if for any
other reason it shall be necessary during such time period to amend or
supplement such Registration Statement or Prospectus in order to comply with the
Securities Act and, in either case as soon as reasonably practicable thereafter,
at the Company’s option, suspend the use of such Registration Statement or
Prospectus pursuant to Section 2.01(h), or prepare and file with the SEC, and
furnish without charge to the HL Management Stockholder Representative, if the
HL Management Stockholders are participating, and the managing underwriter or
underwriters, if any, an amendment or supplement to such Registration Statement
or Prospectus which will correct such statement or omission or effect such
compliance;

 

(vi)                              use its reasonable best efforts to prevent or
obtain the withdrawal of any stop order or other order suspending the use of any
preliminary or final Prospectus;

 

(vii)                           as soon as reasonably practicable incorporate in
a Prospectus supplement or post-effective amendment such information as the
managing underwriters, if any, and the HL Management Stockholder Representative,
if the HL Management Stockholders are participating, may reasonably request to
be included therein in order to permit the intended method of distribution of
the Registrable Securities; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as reasonably

 

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practicable after being notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;

 

(viii)                        furnish to the HL Management Stockholder
Representative, if the HL Management Stockholders are participating, and each
underwriter, if any, without charge, as many conformed copies as the HL
Management Stockholders Representative, if the HL Management Stockholders are
participating, or underwriter may reasonably request of the applicable
Registration Statement and any amendment or post-effective amendment thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits (including those incorporated by reference);

 

(ix)                              deliver to the HL Management Stockholder
Representative, if the HL Management Stockholders are participating, and each
underwriter, if any, without charge, as many copies of the applicable Prospectus
(including each preliminary Prospectus) and any amendment or supplement thereto
as the HL Management Stockholder Representative, if the HL Management
Stockholders are participating, or such underwriter may reasonably request (it
being understood that the Company consents to the use of such Prospectus or any
amendment or supplement thereto by the HL Management Stockholder Representative,
if the HL Management Stockholders are participating, and the underwriters, if
any, in connection with the offering and sale of the Registrable Securities
covered by such Prospectus or any amendment or supplement thereto) and such
other documents as the HL Management Stockholder Representative, if the HL
Management Stockholders are participating, or such underwriter may reasonably
request in order to facilitate the disposition of the Registrable Securities by
the HL Management Stockholder Representative, if the HL Management Stockholders
are participating, or such underwriter;

 

(x)                                 on or prior to the date on which the
applicable Registration Statement is declared effective or becomes effective,
use its reasonable best efforts to register or qualify, and cooperate with the
HL Management Stockholder Representative, if the HL Management Stockholders are
participating, the managing underwriter or underwriters, if any, and their
respective counsel, in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or “Blue Sky”
laws of each state and other jurisdiction of the United States as the HL
Management Stockholder Representative, if the HL Management Stockholders are
participating, or such managing underwriter or underwriters, if any, or their
respective counsel reasonably request in writing and do any and all other acts
or things reasonably necessary or advisable to keep such registration or
qualification in effect for so long as such Registration Statement remains in
effect and so as to permit the continuance of sales and dealings in such
jurisdictions of the United States for so long as may be necessary to complete
the distribution of the Registrable Securities covered by the Registration
Statement; provided that the Company will not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified or to take
any action which would subject it to taxation or general service of process in
any such jurisdiction where it is not then so subject;

 

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(xi)                              in connection with any sale of Registrable
Securities that will result in such securities no longer being Registrable
Securities, cooperate with the HL Management Stockholder Representative, if the
HL Management Stockholders are participating, and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive Securities Act legends; and to register such Registrable Securities
in such denominations and such names as the HL Management Stockholder
Representative, if the HL Management Stockholders are participating, or the
underwriter(s), if any, may request at least two Business Days prior to such
sale of Registrable Securities; provided that the Company may satisfy its
obligations hereunder without issuing physical stock certificates through the
use of The Depository Trust Company’s Direct Registration System;

 

(xii)                           cooperate and assist in any filings required to
be made with the Financial Industry Regulatory Authority and each securities
exchange, if any, on which any of the Company’s securities are then listed or
quoted and on each inter-dealer quotation system on which any of the Company’s
securities are then quoted, and in the performance of any due diligence
investigation by any underwriter (including any “qualified independent
underwriter”) that is required to be retained in accordance with the rules and
regulations of each such exchange, and use its reasonable best efforts to cause
the Registrable Securities covered by the applicable Registration Statement to
be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof or the
underwriter or underwriters, if any, to consummate the disposition of such
Registrable Securities;

 

(xiii)                        not later than the effective date of the
applicable Registration Statement, provide a CUSIP number for all Registrable
Securities and provide the applicable transfer agent with printed certificates
for the Registrable Securities which are in a form eligible for deposit with The
Depository Trust Company; provided that the Company may satisfy its obligations
hereunder without issuing physical stock certificates through the use of The
Depository Trust Company’s Direct Registration System;

 

(xiv)                       in the case of an Underwritten Offering, obtain for
delivery to and addressed to the HL Management Stockholder Representative, if
the HL Management Stockholders are participating, and the underwriter or
underwriters, an opinion from the Company’s outside counsel in customary form
and content for the type of Underwritten Offering, dated the date of the closing
under the underwriting agreement;

 

(xv)                          in the case of an Underwritten Offering, obtain
for delivery to and addressed to the underwriter or underwriters and, to the
extent agreed by the Company’s independent certified public accountants, the HL
Management Stockholder Representative, if the HL Management Stockholders are
participating, a comfort letter from the Company’s independent certified public
accountants in customary form and content for the type of Underwritten Offering,
dated the date of execution of the underwriting agreement and brought down to
the closing under the underwriting agreement;

 

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(xvi)                       use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC and make generally available to its
security holders, as soon as reasonably practicable, but no later than 90 days
after the end of the 12-month period beginning with the first day of the
Company’s first quarter commencing after the effective date of the applicable
Registration Statement, an earnings statement satisfying the provisions of
Section 11(a) of the Securities Act and the rules and regulations promulgated
thereunder and covering the period of at least 12 months, but not more than 18
months, beginning with the first month after the effective date of the
Registration Statement;

 

(xvii)                    provide and use its reasonable best efforts to be
maintained a transfer agent and registrar for all Registrable Securities covered
by the applicable Registration Statement from and after a date not later than
the effective date of such Registration Statement;

 

(xviii)                 use its reasonable best efforts to cause all Registrable
Securities covered by the applicable Registration Statement to be listed on each
securities exchange on which any of the Company’s securities are then listed or
quoted and on each inter-dealer quotation system on which any of the Company’s
securities are then quoted;

 

(xix)                       provide (A) the HL Management Stockholder
Representative, if the HL Management Stockholders are participating in the
Registration, (B) the underwriters (which term, for purposes of this Agreement,
shall include a Person deemed to be an underwriter within the meaning of
Section 2(a)(11) of the Securities Act), if any, of the Registrable Securities
to be Registered, (C) the sale or placement agent therefor, if any, (D) counsel
for such underwriters or agent, and (E) any attorney, accountant or other agent
or representative retained by the HL Management Stockholder Representative, if
the HL Management Stockholders are participating, or any such underwriter, as
selected by the HL Management Stockholder Representative, if the HL Management
Stockholders are participating, the opportunity to participate in the
preparation of such Registration Statement, each Prospectus included therein or
filed with the SEC, and each amendment or supplement thereto, and to require the
insertion therein of material, furnished to the Company in writing with respect
to the HL Management Stockholder Representative, which in the reasonable
judgment of the HL Management Stockholder Representative, if the HL Management
Stockholders are participating, and their counsel should be included; and for a
reasonable period prior to the filing of such Registration Statement, make
available upon reasonable notice at reasonable times and for reasonable periods
for inspection by the parties referred to in (A) through (E) above (which
activities shall, to the extent possible, be coordinated among all participants
in the Registration to minimize the demands on the Company), all pertinent
financial and other records, pertinent corporate documents and properties of the
Company that are available to the Company, and use its reasonable best efforts
to cause all of the Company’s officers, directors and employees and the
independent public accountants who have certified its financial statements to
make themselves available at reasonable times and for reasonable periods, to
discuss the business of the Company and to supply all information available to
the Company reasonably requested by any such Person in connection with such
Registration Statement as shall be necessary to enable them to exercise their
due diligence

 

14

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responsibility, subject to the foregoing, provided that any such Person gaining
access to information or personnel pursuant to this Section 2.04(a)(xix) shall
agree to use reasonable efforts to protect the confidentiality of any
information regarding the Company which the Company determines in good faith to
be confidential, and of which determination such Person is notified, unless
(A) the release of such information is required by law or regulation or is
requested or required by deposition, interrogatory, requests for information or
documents by a governmental entity, subpoena or similar process, (B) such
information is or becomes publicly known without a breach of this Agreement,
(C) such information is or becomes available to such Person on a
non-confidential basis from a source other than the Company or (D) such
information is independently developed by such Person;

 

(xx)                          to use its reasonable best efforts to cause the
executive officers of the Company to participate in the customary “road show”
presentations that may be reasonably requested by the managing underwriter or
underwriters in any Underwritten Offering and otherwise to facilitate, cooperate
with, and participate in each proposed offering contemplated herein and
customary selling efforts related thereto; and

 

(xxi)                       take all other customary steps reasonably necessary
to effect the Registration, offering and sale of the Registrable Securities.

 

(b)                                 As a condition precedent to any Registration
hereunder, the Company may require the HL Management Stockholder Representative,
if the HL Management Stockholders are participating, to furnish to the Company
such information regarding the distribution of Registrable Securities being
offered in connection with the Registration and such other necessary information
relating to the HL Management Stockholders and their ownership of Registrable
Securities as the Company may from time to time reasonably request from the HL
Management Stockholder Representative as far in advance as practicable before
the expected filing date of each Registration Statement pursuant to this
agreement.  The HL Management Stockholder Representative, if the HL Management
Stockholders are participating, agrees to furnish such information to the
Company and to cooperate with the Company as reasonably necessary to enable the
Company to comply with the provisions of this Agreement.

 

(c)                                  The HL Management Stockholder
Representative, if the HL Management Stockholders are participating, agrees
that, upon receipt of any written notice from the Company of the occurrence of
any event of the kind described in Section 2.04(a)(v), it will forthwith
discontinue disposition of Registrable Securities pursuant to such Registration
Statement until its receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 2.04(a)(v), or until it is advised in writing
by the Company that the use of the Prospectus may be resumed, and if so directed
by the Company, it will deliver to the Company (at the Company’s expense) all
copies, other than permanent file copies then in its possession, of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice.  In the event the Company shall give any such notice, the period
during which the applicable Registration Statement for a Demand Registration is
required to be maintained effective shall be extended by the number of days
during the period from and including the date of the giving of such notice to
and including the date when each seller of Registrable Securities covered by
such Registration Statement either receives the copies of the supplemented or
amended Prospectus contemplated

 

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by Section 2.04(a)(v) or is advised in writing by the Company that the use of
the Prospectus may be resumed.

 

Section 2.05                             Holdback Agreements.  Each of the
Company and the HL Management Stockholders that have elected to participate in
any Underwritten Offering agree, upon notice from the managing underwriter or
underwriters in connection with any Registration for such Underwritten Offering
of the Company’s securities (other than pursuant to a registration statement on
Form S-4 or any similar or successor form or pursuant to a registration solely
relating to an offering and sale to employees or directors of the Company
pursuant to any employee stock plan or other employee benefit plan arrangement),
not to effect (other than pursuant to such Registration) any public sale or
distribution of Registrable Securities, including, but not limited to, any sale
pursuant to Rule 144, or make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of, any Registrable Securities, any other
equity securities of the Company or any securities convertible into or
exchangeable or exercisable for any equity securities of the Company without the
prior written consent of the managing underwriters during such period as
reasonably requested by the managing underwriters (but in no event longer than
the seven days before and the 90 days after the pricing of such Underwritten
Offering or during any 12-month period for more than an aggregate of 180 days);
provided that (a) with respect to the Company, such restrictions shall be
subject to exceptions no less favorable than those contained in any underwriting
agreement entered into in connection with the IPO and (b) such restrictions
shall not apply in any circumstance to Registrable Securities acquired by the HL
Management Stockholders in the public market subsequent to the IPO. 
Notwithstanding the foregoing, no holdback agreements of the type contemplated
by this Section 2.05 shall be required of the HL Management Stockholders that
have elected to participate in any Underwritten Offering unless each of the
Company’s directors and executive officers, and ORIX, agrees to be bound by a
substantially identical holdback agreement for at least the same period of time.

 

Section 2.06                             Underwriting Agreement in Underwritten
Offerings.  If requested by the managing underwriters for any Underwritten
Offering, the Company and the HL Management Stockholders shall enter into an
underwriting agreement in customary form with such underwriters for such
offering; provided, however, that the HL Management Stockholders shall not be
required to make any representations or warranties to the Company or the
underwriters (other than representations and warranties regarding (i) the HL
Management Stockholders’ ownership of Registrable Securities to be transferred
free and clear of all liens, claims and encumbrances created by the HL
Management Stockholders, (ii) the HL Management Stockholders’ power and
authority to effect such transfer, (iii) such matters pertaining to the HL
Management Stockholders’ compliance with securities laws as reasonably may be
requested and (iv) the HL Management Stockholders’ intended method of
distribution) or to undertake any indemnification obligations to the Company
with respect thereto, except as otherwise provided in Section 2.08 hereof.

 

Section 2.07                             Registration Expenses Paid By Company. 
In the case of any Registration of Registrable Securities required pursuant to
this Agreement (including any Registration that is delayed or withdrawn) or
proposed Underwritten Offering pursuant to this Agreement, the Company shall pay
all Registration Expenses regardless of whether the Registration Statement

 

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becomes effective or the Underwritten Offering is completed.  The Company shall
have no obligation to pay any Selling Expenses.

 

Section 2.08                             Indemnification.

 

(a)                                 Indemnification by the Company.  The Company
agrees to indemnify and hold harmless, to the full extent permitted by law, each
HL Management Stockholder and, to the extent applicable, such HL Management
Stockholder’s officers, directors, employees, advisors, Affiliates and agents
and each Person who controls (within the meaning of the Securities Act or the
Exchange Act) such HL Management Stockholder from and against any and all
losses, claims, damages, liabilities (or Actions in respect thereof, whether or
not such indemnified party is named or a party thereto) and expenses (including
reasonable costs of investigation and legal expenses), whether joint or several,
(each, a “Loss” and collectively “Losses”) arising out of or based upon (i) any
untrue or alleged untrue statement of a material fact contained in any
Registration Statement under which the sale of Registrable Securities was
Registered under the Securities Act (including any final or preliminary
Prospectus contained therein or any amendment thereof or supplement thereto or
any documents incorporated by reference therein), or any such statement made in
any free writing prospectus (as defined in Rule 405 under the Securities Act)
that the Company has filed or is required to file pursuant to Rule 433(d) of the
Securities Act, or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of a Prospectus, preliminary Prospectus or free writing
prospectus, in light of the circumstances under which they were made) not
misleading; provided, however, that the Company shall not be liable to any
particular indemnified party in any such case to the extent that any such Loss
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any such Registration Statement in
reliance upon and in conformity with written information furnished to the
Company by the HL Management Stockholder Representative expressly for use in the
preparation thereof.  This indemnity shall be in addition to any liability the
Company may otherwise have.  Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the HL Management
Stockholders or any indemnified party and shall survive the transfer of such
applicable securities by the HL Management Stockholders.

 

(b)                                 Indemnification by the HL Management
Stockholders.  Each HL Management Stockholder, if such HL Management Stockholder
is participating in a Registration, agrees to indemnify and hold harmless, to
the full extent permitted by law, the Company and the Company’s directors,
officers, employees, advisors, Affiliates and agents and each Person who
controls the Company (within the meaning of the Securities Act and the Exchange
Act) from and against any Losses arising out of or based upon (i) any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement under which the sale of such Registrable Securities was Registered
under the Securities Act (including any final or preliminary Prospectus
contained therein or any amendment thereof or supplement thereto or any
documents incorporated by reference therein), or any such statement made in any
free writing prospectus that the Company has filed or is required to file
pursuant to Rule 433(d) of the Securities Act, or (ii) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a Prospectus,
preliminary Prospectus or free writing prospectus, in light of the circumstances
under which they were made) not

 

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misleading, but in each case of (i) or (ii), only to the extent, that such
untrue or alleged untrue statement or omission or alleged omission is contained
in any information furnished in writing by such HL Management Stockholder, if
such HL Management Stockholder is participating, to the Company expressly for
inclusion in such Registration Statement, Prospectus, preliminary Prospectus or
free writing prospectus.  In no event shall the liability of a HL Management
Stockholder, if such HL Management Stockholder is participating, hereunder be
greater in amount than the dollar amount of the net proceeds received by such HL
Management Stockholder under the sale of the Registrable Securities giving rise
to such indemnification obligation.  This indemnity shall be in addition to any
liability such HL Management Stockholder may otherwise have.  Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Company or any indemnified party.

 

(c)                                  Conduct of Indemnification Proceedings. 
Any Person entitled to indemnification hereunder will (i) as soon as reasonably
practicable give written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (provided that any delay or failure to
so notify the indemnifying party shall relieve the indemnifying party of its
obligations hereunder to the extent that it is materially prejudiced by reason
of such delay or failure) and (ii) permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
party; provided, however, that any Person entitled to indemnification hereunder
shall have the right to select and employ separate counsel and to participate in
the defense of such claim, but the fees and expenses of such counsel shall be at
the expense of such Person (other than reasonable costs of investigation,
supervision and monitoring) unless (a) the indemnifying party has agreed in
writing to pay such fees or expenses, (b) the indemnifying party shall have
failed to assume the defense of such claim within a reasonable time after
receipt of notice of such claim from the Person entitled to indemnification
hereunder or fails to employ counsel reasonably satisfactory to such Person or
to pursue the defense of such claim, (c) the named parties to any proceeding
include both such indemnified and the indemnifying party and the indemnified
party has reasonably concluded (based on written advice of counsel) that there
may be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, or
(d) in the reasonable judgment of any such Person, based upon written advice of
its counsel, a conflict of interest may exist between such Person and the
indemnifying party with respect to such claims (in which case, if the Person
notifies the indemnifying party in writing that such Person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of
such Person).  If such defense is not assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement made
without its consent, but such consent may not be unreasonably withheld,
conditioned or delayed.  If the indemnifying party assumes the defense, the
indemnifying party shall not have the right to settle such action without the
consent of the indemnified party.  No indemnifying party shall consent to entry
of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of an unconditional release from all liability in respect to
such claim or litigation.  It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm (in addition to any appropriate local counsel) at any one time from all
such indemnified party or parties unless (x) the employment of more than one
counsel has been

 

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authorized in writing by the indemnifying party or parties, (y) an indemnified
party has reasonably concluded (based on written advice of counsel) that there
may be legal defenses available to it that are different from or in addition to
those available to the other indemnified parties or (z) a conflict or potential
conflict exists or in the reasonable judgment of such Person may exist (based on
advice of counsel to an indemnified party) between such indemnified party or
parties and the other indemnified parties, in each of which cases the
indemnifying party shall be obligated to pay the reasonable fees and expenses of
such additional counsel.

 

(d)                                 Contribution.  If for any reason the
indemnification provided for in Section 2.08(a) or Section 2.08(b) is
unavailable to an indemnified party or insufficient to hold it harmless as
contemplated by Section 2.08(a) or Section 2.08(b), then the indemnifying party
shall, in lieu of indemnifying such indemnified party thereunder, contribute to
the amount paid or payable by the indemnified party as a result of such Loss in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and the indemnified party on the other hand
in connection with the statements or omissions which resulted in such Loss as
well as any other relevant equitable considerations.  The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the indemnifying party or the
indemnified party and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission.  Notwithstanding anything in this Section 2.08(d) to the contrary, no
indemnifying party (other than the Company) shall be required pursuant to this
Section 2.08(d) to contribute any amount in excess of the amount by which the
net proceeds received by such indemnifying party from the sale of Registrable
Securities in the offering to which the Losses of the indemnified parties relate
(before deducting expenses, if any) exceeds the amount of any damages which such
indemnifying party has otherwise been required to pay by reason of such untrue
statement or omission.  The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 2.08(d) were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in this Section 2.08(d).  No
Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.  The amount paid
or payable by an indemnified party hereunder shall be deemed to include, for
purposes of this Section 2.08(d), any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating, preparing
to defend or defending against or appearing as a third party witness in respect
of, or otherwise incurred in connection with, any such loss, claim, damage,
expense, liability, action, investigation or proceeding.  If indemnification is
available under this Section 2.08, the indemnifying parties shall indemnify each
indemnified party to the full extent provided in Section 2.08(a) and
Section 2.08(b) hereof without regard to the relative fault of said indemnifying
parties or indemnified party.

 

Section 2.09                             Reporting Requirements; Rule 144.  The
Company shall use its reasonable best efforts to be and remain in compliance
with the periodic filing requirements imposed under the SEC’s rules and
regulations, including the Exchange Act, and thereafter shall timely file such
information, documents and reports as the SEC may require or prescribe under
Section 13 or 15(d) (whichever is applicable) of the Exchange Act.  If the
Company is not required to file such reports during such period, it will, upon
the request of the HL Management Stockholder

 

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Representative, make publicly available such necessary information for so long
as necessary to permit sales pursuant to Rule 144 or Regulation S under the
Securities Act, and it will take such further action as the HL Management
Stockholder Representative may reasonably request, all to the extent required
from time to time to enable the HL Management Stockholders to sell Registrable
Securities without Registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 or Regulation S under the Securities
Act, as such Rules may be amended from time to time, or (b) any rule or
regulation hereafter adopted by the SEC.  From and after the date hereof through
the date upon which the HL Management Stockholders no longer own any Registrable
Securities, the Company shall forthwith upon request furnish the HL Management
Stockholder Representative (i) a written statement by the Company as to whether
it has complied with such requirements and, if not, the specifics thereof,
(ii) a copy of the most recent annual or quarterly report of the Company, and
(iii) such other reports and documents filed by the Company with the SEC as the
HL Management Stockholder Representative may reasonably request in availing
itself of an exemption for the sale of Registrable Securities without
registration under the Securities Act.

 

Article 3
MISCELLANEOUS

 

Section 3.01                             Term.  This Agreement shall terminate
upon the earlier of (i) such time as there are no Registrable Securities and
(ii) such time when the parties shall unanimously agree, except for the
provisions of Section 2.07 and Section 2.08 and all of this Article 3, which
shall survive any such termination.

 

Section 3.02                             Notices.  All notices or other
communications under this Agreement shall be in writing and shall be deemed to
be duly given when (a) delivered in person or (b) deposited in the United States
mail or private express mail, postage prepaid, addressed as follows:

 

If to the HL Management Stockholders, to the HL Management Stockholder
Representative:

 

Houlihan Lokey, Inc.

10250 Constellation Blvd

Los Angeles, CA 90067

Attention:

Lindsey Alley, Chief Financial Officer

 

Christopher Crain, General Counsel

 

If to the Company to:

 

Houlihan Lokey, Inc.

10250 Constellation Blvd

Los Angeles, CA 90067

Attention:

Lindsey Alley, Chief Financial Officer

 

Christopher Crain, General Counsel

 

Any party may, by notice to the other parties, change the address to which such
notices are to be given.

 

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Section 3.03                             Successors, Assigns and Transferees. 
This Agreement and all provisions hereof shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.  The Company may assign this Agreement at any time in connection with a
sale or acquisition of the Company, whether by merger, consolidation, sale of
all or substantially all of the Company’s assets, or similar transaction,
without the consent of any HL Management Stockholder; provided that the
successor or acquiring Person agrees in writing to assume all of the Company’s
rights and obligations under this Agreement. Each HL Management Stockholder may
assign its rights and obligations under this Agreement to any transferee that
acquires Registrable Shares from such HL Management Stockholder in a transaction
that does not violate the Share Restrictions; provided that such transferee
executes an agreement to be bound hereby in the form attached hereto as
Exhibit A (a “Joinder”), an executed counterpart of which shall be furnished to
the Company.  Notwithstanding the foregoing, if such transfer is subject to
covenants, agreements or other undertakings restricting transferability thereof,
the Registration Rights shall not be transferred in connection with such
transfer unless such transferee complies with all such covenants, agreements and
other undertakings.

 

Section 3.04                             Governing Law; Equitable Remedies. 
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF DELAWARE (WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES
THEREOF).  The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with its specific terms or was otherwise breached.  It is accordingly
agreed that the parties hereto shall be entitled to an injunction or injunctions
and other equitable remedies to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any of the Selected
Courts (as defined below), this being in addition to any other remedy to which
they are entitled at law or in equity.  Any requirements for the securing or
posting of any bond with respect to such remedy are hereby waived by each of the
parties hereto.  Each party further agrees that, in the event of any Action for
an injunction or other equitable remedy in respect of such breach or enforcement
of specific performance, it will not assert the defense that a remedy at law
would be adequate.

 

Section 3.05                             Consent to Jurisdiction.  With respect
to any Action arising out of or relating to this Agreement or any transaction
contemplated hereby each of the parties hereto hereby irrevocably (i) submits to
the exclusive jurisdiction of the United States District Court for the Southern
District of New York or the Court of Chancery located in the State of Delaware,
County of Newcastle (the “Selected Courts”) and waives any objection to venue
being laid in the Selected Courts whether based on the grounds of forum non
conveniens or otherwise and hereby agrees not to commence any such Actions other
than before one of the Selected Courts; provided, however, that a party may
commence any Action in a court other than a Selected Court solely for the
purpose of enforcing an order or judgment issued by one of the Selected Courts;
(ii) consents to service of process in any Action by the mailing of copies
thereof by registered or certified mail, postage prepaid, or by recognized
international express carrier or delivery service, to the Company at its address
referred to in Section 3.02; provided, however, that nothing herein shall affect
the right of any party hereto to serve process in any other manner permitted by
law; and (iii) TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE
WAIVED, WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT

 

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(WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING,
AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AND AGREES THAT ANY OF THEM
MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE
KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO
WAIVE ITS RIGHT TO TRIAL BY JURY IN ANY ACTION WHATSOEVER BETWEEN THEM RELATING
TO THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS WILL INSTEAD BE TRIED
IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

 

Section 3.06                             Specific Performance.  In the event of
any actual or threatened default in, or breach of, any of the terms, conditions
and provisions of this Agreement, the party or parties who are or are to be
thereby aggrieved shall have the right to seek specific performance and
injunctive or other equitable relief of its rights under this Agreement, in
addition to any and all other rights and remedies at law or in equity, and all
such rights and remedies shall be cumulative.

 

Section 3.07                             Headings.  The article, section and
paragraph headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.

 

Section 3.08                             Severability.  If any provision of this
Agreement or the application thereof to any Person or circumstance is determined
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof or the application of such provision to Persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereby, so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party.  Upon such determination, the parties shall
negotiate in good faith in an effort to agree upon such a suitable and equitable
provision to effect the original intent of the parties.

 

Section 3.09                             Amendment; Waiver; Future Rights.

 

(a)                                 This Agreement may not be amended or
modified and waivers and consents to departures from the provisions hereof may
not be given, except by an instrument or instruments in writing making specific
reference to this Agreement and signed by the Company and the HL Management
Stockholder Representative.

 

(b)                                 Waiver by any party of any default by the
other party of any provision of this Agreement shall not be deemed a waiver by
the waiving party of any subsequent or other default, nor shall it prejudice the
rights of the other party.

 

(c)                                  The Company shall not grant any shelf,
demand, piggyback or incidental registration rights that are senior to the
rights granted to the HL Management Stockholders

 

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hereunder to any other Person without the prior written consent of the HL
Management Stockholders; provided that this provision shall not restrict ORIX’s
ability to exercise its rights under the ORIX Registration Rights Agreement. 
The Company shall not agree to an amendment to the ORIX Registration Rights
Agreement that adversely impacts the HL Management Stockholders’ rights
hereunder.

 

Section 3.10                             Additional Parties; Joinder.  The
Company may permit any Person who acquires Shares or rights to acquire Shares
from the Company after the date hereof to become a party to this Agreement (each
such Person, an “Additional Investor”) and to succeed to all of the rights and
obligations of an HL Management Stockholder under this Agreement by delivering
to the Company a duly executed Joinder.  Upon the execution and delivery of a
Joinder by such Additional Investor, the Shares of such Additional Investor (the
“Acquired Shares”) shall be Registrable Securities to the extent provided
herein, and such Additional Investor shall be an HL Management Stockholder under
this Agreement with respect to the Acquired Shares.

 

Section 3.11                             Further Assurances.  Each of the
parties hereto shall execute and deliver all additional documents, agreements
and instruments and shall do any and all acts and things reasonably requested by
the other party hereto in connection with the performance of its obligations
undertaken in this Agreement.

 

Section 3.12                             Counterparts.  This Agreement may be
executed in one or more counterparts, all of which shall be considered one and
the same agreement, and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other party. 
Execution of this Agreement or any other documents pursuant to this Agreement by
facsimile or other electronic copy of a signature shall be deemed to be, and
shall have the same effect as, executed by an original signature.

 

Section 3.13                             HL Management Stockholder
Representative.

 

(a)                                 Each HL Management Stockholder party hereto
hereby appoints and authorizes Scott Beiser and Irwin Gold to act jointly as the
initial HL Management Stockholder Representative (collectively, the “Initial HL
Management Stockholder Representative”), to act on behalf of the HL Management
Stockholders party hereto to the extent set forth in Agreement.  Notwithstanding
the foregoing, the HL Management Stockholder Representative shall have no
obligation to act on behalf of the HL Management Stockholders, except as
expressly provided herein.  All decisions, actions, consents, settlements and
instructions by the HL Management Stockholder Representative shall be binding
upon all of the HL Management Stockholders, and each HL Management Stockholder’s
successors, and no HL Management Stockholder shall have the right to object to,
dissent from, protest or otherwise contest the same.  The Company shall not have
the right to object to, dissent from, protest or otherwise contest the authority
of the HL Management Stockholder Representative.  The Company shall be entitled
to rely on any decision, action taken or omitted to be taken, consent or
instruction of the HL Management Stockholder Representative in accordance with
this Agreement as being the decision, action taken or omitted to be taken,
consent or instruction of the HL Management Stockholders.

 

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(b)                                 At any time, the HL Management Stockholder
Representative may, by a majority vote of the individuals comprising the HL
Management Stockholder Representative, designate one or more additional
individuals to act as the HL Management Stockholder Representative. Any
individual comprising the HL Management Stockholder Representative may be
removed from office by a majority vote of the other individuals comprising the
HL Management Stockholder Representative. Within three months of designating,
removing, or replacing any HL Management Stockholder Representative, the
remaining individual(s) comprising the HL Management Stockholder Representative
shall send written notice to the Company of (i) the person designated as the HL
Management Stockholder Representative by a majority vote of the individuals
comprising the HL Management Stockholder Representative or (ii) the individual
removed from office as the HL Management Stockholder Representative by a
majority vote of the individuals comprising the HL Management Stockholder
Representative.  Each HL Management Stockholder Representative must be (i) an
employee of the Company or a subsidiary of the Company and (ii) a holder of
Shares. The HL Management Stockholder Representative may act on behalf of the HL
Management Stockholders individually or collectively in its capacity as such. As
a condition to becoming an HL Management Stockholder Representative, the
successor HL Management Stockholder Representative, to the extent not already a
party hereto, must become a party to this Agreement by executing documentation
reasonably satisfactory to the Company (each successor HL Management Stockholder
Representative appointed pursuant to the terms of this Section 3.12 is referred
to as a “Successor HL Management Stockholder Representative,” and, collectively
with the Initial HL Management Stockholder Representative, are referred to as
the “HL Management Stockholder Representative”).  Each HL Management Stockholder
Representative hereby accepts his or her appointment as such pursuant to the
terms and conditions of this Agreement, and agrees to act in such capacity in
accordance with the terms and conditions of this Agreement, unless and until
replaced by a Successor HL Management Stockholder Representative as herein
provided.

 

(c)                                  The HL Management Stockholder
Representative shall not be liable for any error of judgment or mistake of fact
or law, or for any action or omission under this Agreement, except for the HL
Management Stockholder Representative’s fraud, bad faith or willful misconduct. 
The HL Management Stockholder Representative shall not be liable for acting on
any notice, request or instruction or other document believed to be genuine and
to have been executed by or on behalf of the proper party or parties.  The
Company shall pay all reasonable expenses of the HL Management Stockholder
Representative, including counsel fees, and shall discharge all liabilities
incurred by the HL Management Stockholder Representative in connection with the
exercise of the HL Management Stockholder Representative’s powers and the
performance of the HL Management Stockholder Representative’s duties under this
Agreement.  Any action or omission undertaken by the HL Management Stockholder
Representative in good faith in accordance with the advice of legal counsel
shall be binding and conclusive on the parties to this Agreement.  The Company
shall also defend, indemnify and hold the HL Management Stockholder
Representative harmless from and against any and all claims and liabilities in
connection with or arising out of the exercise of any powers or the performance
of any duties by the HL Management Stockholder Representative as herein provided
or contemplated, except such as shall arise from the fraud, bad faith or willful
misconduct of the HL Management Stockholder Representative.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first written above.

 

 

The HL Management Stockholders named in Schedule A herein

 

 

 

 

 

 

By:

/s/ Scott L. Beiser

 

Name: Scott L. Beiser

 

 

As Attorney-in-fact acting on behalf of each of the HL Management Stockholders

 

 

 

HOULIHAN LOKEY, INC.

 

 

 

 

 

 

By:

/s/ J. Lindsey Alley

 

Name:

J. Lindsey Alley

 

Title:

Chief Financial Officer

 

 

 

HL MANAGEMENT STOCKHOLDER REPRESENTATIVE

 

 

 

 

 

 

By:

/s/ Scott L. Beiser

 

Name:

Scott L. Beiser

 

 

 

As the Initial Management Stockholder Representative

 

 

 

 

By:

/s/ Irwin N. Gold

 

Name:

Irwin N. Gold

 

 

As the Initial Management Stockholder Representative

 

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