Exhibit 10.5

 

 

STOCKHOLDERS’ AGREEMENT

dated as of July 21, 2006

among

REXNORD HOLDINGS, INC.,

REXNORD ACQUISITION HOLDINGS I, LLC,

REXNORD ACQUISITION HOLDINGS II, LLC

and

 

CERTAIN OTHER STOCKHOLDERS OF REXNORD HOLDINGS, INC.

 

 

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TABLE OF CONTENTS

 

 

 

 

Page

 

SECTION 1.

 

DEFINITIONS

 

1

 

SECTION 2.

 

RESTRICTION ON TRANSFERS

 

10

 

SECTION 3.

 

APPROVED SALE; TAG ALONG TRANSACTION

 

10

 

SECTION 4.

 

REPURCHASE RIGHT

 

13

 

SECTION 5.

 

INVOLUNTARY TRANSFERS

 

16

 

SECTION 6.

 

REPURCHASE DISABILITY

 

16

 

SECTION 7.

 

COOPERATION

 

18

 

SECTION 8.

 

BOARD OF DIRECTORS

 

18

 

SECTION 9.

 

REPRESENTATIONS AND WARRANTIES

 

21

 

SECTION 10.

 

INFORMATION RIGHTS; COVENANTS

 

21

 

SECTION 11.

 

REGISTRATION RIGHTS

 

23

 

SECTION 12.

 

NON-SOLICITATION; NON-HIRE; NON-COMPETE; NON-DISPARAGEMENT; CONFIDENTIALITY

 

34

 

SECTION 13.

 

TERMINATION

 

37

 

SECTION 14.

 

MISCELLANEOUS

 

37

 

SECTION 15.

 

EFFECTIVENESS

 

43

 

 

Schedule

 

Schedule I             Stockholders’ names and number of Restricted Shares owned

 

Exhibit

 

Exhibit A                Amended and Restated Certificate of Incorporation

 

Exhibit B                Form of Joinder to Stockholders’ Agreement

 

 

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                STOCKHOLDERS’ AGREEMENT dated as of July 21, 2006 (this
“Agreement”), by and among REXNORD HOLDINGS, INC., a Delaware corporation (the
“Company”), REXNORD ACQUISITION HOLDINGS I, LLC, a Delaware limited liability
company (“SPV I”), REXNORD ACQUISITION HOLDINGS II, LLC, a Delaware limited
liability company (“SPV II”; together with SPV I, “Apollo”), and the other
Stockholders of the Company from time to time party hereto, which Persons as of
the date hereof are set forth on Schedule I hereto (collectively, the
“Non-Apollo Holders”).

WHEREAS, Chase Acquisition I, Inc. (“Acquiror”), a Delaware corporation and
wholly-owned subsidiary of the Company, Chase Merger Sub, Inc., a Delaware
corporation and wholly-owned subsidiary of Acquiror, RBS Global, Inc., a
Delaware corporation (“RBS”), and TC Group, L.L.C., a Delaware limited liability
company, entered into that certain agreement and plan of merger dated as of May
24, 2006 (as the same may be amended, restated, supplemented or otherwise
modified from time to time, the “Agreement and Plan of Merger”);

WHEREAS, following the consummation of the merger contemplated by the Agreement
and Plan of Merger (the “Merger”), the Stockholders shall own all of the issued
and outstanding capital stock of the Company; and

WHEREAS, as a material inducement to Acquiror to enter into the Agreement and
Plan of Merger and to consummate the Merger and the other transactions
contemplated thereby, without which Acquiror would not have entered into the
Agreement and Plan of Merger or agree to consummate the Merger and the other
transactions contemplated thereby, the Company and the Non-Apollo Holders agree
to provide the rights and be subject to the obligations and restrictions set
forth herein.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

Section 1.              Definitions.

As used in this Agreement, the following terms shall have the following
meanings:

“Accountants” has the meaning set forth in Section 10(a)(iii)(C).

“Acquiror” has the meaning set forth in the recitals.

“Affiliate” means (i) with respect to any individual, (A) a spouse or descendant
of such individual and (B) any trust or family partnership or other entity whose
beneficiaries shall solely be such individual and/or such individual’s spouse
and/or any Person related by blood or adoption to such individual or such
individual’s spouse and (ii) with respect to any Person that is not an
individual, any other Person which directly or indirectly controls, or is under
common control with, or is controlled by, such Person.  As used in this
definition, “control” (including, with its correlative meanings, “controlled by”
and “under common control with”) shall mean possession, directly or indirectly,
of power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise).

 

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“Agreement” has the meaning set forth in the caption hereto.

“Agreement and Plan of Merger” has the meaning set forth in the recitals.

“Apollo” has the meaning set forth in the caption hereto.

“Apollo Directors” has the meaning set forth in Section 8(a)(ii).

“Apollo Nominee” has the meaning set forth in Section 3(a)(ix).

“Approved Sale” has the meaning set forth in Section 3(a)(i).

“Approved Sale Notice” has the meaning set forth in Section 3(a)(i).

“Authorized Representatives” has the meaning set forth in Section 12(d).

“Board” means the Board of Directors of the Company.

“Business Day” means a day other than a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by law to
close.

“Business Combination” has the meaning set forth in the definition of “Sale of
the Company”.

“Bylaws” means the Bylaws of the Company, as amended from time to time.

“Cause” means (i) for a Non-Apollo Holder party to an Employment Agreement or an
Option Agreement in effect at any time prior to the date of such Non-Apollo
Holder’s termination of employment or other professional relationship with the
Company or any Subsidiary of the Company, as the case may be, “Cause” as defined
in such Employment Agreement or Option Agreement, and (ii) for each other
Non-Apollo Holder, a termination of employment or other professional
relationship with the Company or a Subsidiary of the Company after the
occurrence of any of the following on the part of such Non-Apollo Holder:  (a)
commission of a felony; (b) intentional violation of law (excluding moving
violations or by reason of vicarious liability) or intentional undertaking of
any activity toward another employee or service provider of the Company or any
of its Subsidiaries that is punishable by civil penalty; (c) dishonesty, bad
faith, gross negligence, willful misconduct, fraud or willful or reckless
disregard of duties in connection with the performance of any services on behalf
of the Company or any of its Subsidiaries; (d) intentional failure to comply
with any reasonable directive by a supervisor in connection with the performance
of any services on behalf of the Company or any of its Subsidiaries following
written notice that failure to comply shall constitute “Cause” for termination;
(e) intentional breach of any material provision of any agreement with the
Company or any of its Subsidiaries; (f) intentional violation of any lawful and
reasonable material written policy adopted by the Company or any of its
Subsidiaries governing the conduct of persons performing services on behalf of
the Company; or (g) the taking of or omission to take any action that has caused
or contributed to a material deterioration in the business or reputation of the
Company or any of its Subsidiaries, or that was otherwise materially disruptive
of its or their

 

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business or affairs, other than actions taken or omitted in good faith
consistent with the best interests of the Company and its Subsidiaries.

“Closing” has the meaning set forth in the Agreement and Plan of Merger.

“Closing Date” has the meaning set forth in the Agreement and Plan of Merger.

“Code” means the Internal Revenue Code of 1986, as amended.

“Commission” means the Securities and Exchange Commission or any other
Governmental Authority at the time administering the Securities Act.

“Common Stock” means the Common Stock of the Company, par value $0.01 per share.

“Company” has the meaning set forth in the caption hereto.

“Company Confidential Information” has the meaning set forth in Section 10(b).

“Competitive Business” has the meaning set forth in Section 12(b).

“Confidential Information” has the meaning set forth in Section 12(d).

“Cypress Stockholders’ Agreement” means the Stockholders’ Agreement dated as of
the date hereof by and among the Company, SPV I, SPV II, Cypress Industrial
Holdings, LLC and George M. Sherman.

“Demand Party” has the meaning set forth in Section 11(a).

“Demand Notice” has the meaning set forth in Section 11(a).

“Disability” means (i) for a Non-Apollo Holder party to an Employment Agreement
or an Option Agreement in effect at any time prior to the date of such
Non-Apollo Holder’s termination of employment or other professional relationship
with the Company or any Subsidiary of the Company, as the case may be,
“Disability” (or term of similar import) as defined in such Employment Agreement
or Option Agreement and (ii) for each other Non-Apollo Holder, “Disability” as
defined in Section 22(e)(3) of the Code.

“Disability Notice” has the meaning set forth in Section 6(b).

“Employment Agreement” means, with respect to any Person, such Person’s most
recent employment agreement with the Company or any Subsidiary of the Company
entered into on or after the Closing Date, as the same may be amended, restated,
supplemented or otherwise modified from time to time.

“Equity Incentive Plan” means any plan or agreement approved by the Board for
the purposes of issuing equity-linked Securities to any employee, officer,
consultant or director of the Company or any of its Subsidiaries as incentive or
bonus compensation.

 

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“Equity Securities” means (a) any equity Securities of the Company (including
Common Stock but excluding any option, warrant, or similar equity-linked
Security of the Company) purchased or otherwise acquired by any Stockholder or
(b) any Securities issued or issuable directly or indirectly with respect to the
Securities referred to in clause (a) above by way of conversion, exercise or
exchange, stock dividend or stock split or in connection with a combination of
shares, recapitalization, reclassification, merger, consolidation,
reorganization or other similar event.

“Exchange Act” means the Securities Exchange Act of 1934, and the Rules and
Regulations, all as the same shall be in effect from time to time.

“Family Group” means, with respect to any natural Person, such natural Person’s
spouse and/or lineal descendants (whether by blood relationship or adoption),
and any other Person as to which such natural Person is a lineal descendant
(whether by blood relationship or adoption), and any trust or other entity
solely for the benefit of such Person and/or any of the foregoing.

“Financing Documents” has the meaning set forth in Section 6(a)(iii).

“Fund VI” means Apollo Investment Fund VI, L.P., a Delaware limited partnership.

“Good Reason” means, with respect to any Non-Apollo Holder that is a party to an
Employment Agreement or Option Agreement at any time prior to the date of such
Non-Apollo Holder’s termination of employment or other professional relationship
with the Company or any Subsidiary of the Company, as the case may be, “Good
Reason” (or a concept of similar import) as defined therein; provided, however,
that the termination of an employment or other professional relationship with
the Company or any Subsidiary of the Company by a Non-Apollo Holder not a party
to such an Employment Agreement or Option Agreement shall be deemed to be a
termination without Good Reason.

“Governmental Authority” means any Federal, state, municipal, local or foreign
government, governmental authority, regulatory or administrative agency,
governmental commission, department, board, bureau, agency or instrumentality,
court, tribunal, arbitrator or arbitral body.

“Hitt” has the meaning set forth in Section 8(a)(iii).

“Information” has the meaning set forth in Section 11(i)(xi).

“Inspectors” has the meaning set forth in Section 11(i)(xi).

“Involuntary Transfer” has the meaning set forth in Section 5(a).

“Involuntary Transferee” has the meaning set forth in Section 5(a).

“Involuntary Transfer Notice” has the meaning set forth in Section 5(a).

 

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“Involuntary Transfer Repurchase Notice” has the meaning set forth in Section
5(b).

“Involuntary Transfer Repurchase Price” has the meaning set forth in Section
5(b).

“Involuntary Transfer Repurchase Right” has the meaning set forth in Section
5(b).

“Issuer Free Writing Prospectus” means each “free writing prospectus” (as
defined in Rule 405) prepared by or on behalf of the Company or used or referred
to by the Company in any offering of Restricted Shares pursuant to Section 11.

“Joinder” has the meaning set forth in Section 2(c).

“Material Transfer” means a Transfer for consideration by Apollo of more than
10% of the Restricted Shares held by Apollo as of the Closing Date to a Person
who is not an Affiliate of Apollo.

“Merger” has the meaning set forth in the recitals.

“NASD” means the National Association of Securities Dealers, Inc.

“Non-Apollo Director” has the meaning set forth in Section 8(a)(iv).

“Non-Apollo Holder” has the meaning set forth in the caption hereto.

“Non-Compete Period” has the meaning set forth in Section 12(b).

“Option Agreement” means, with respect to any Person, such Person’s agreement
with the Company evidencing the grant of options to purchase shares of Common
Stock first entered into at or after the Closing (excluding any such agreement
with respect to Rollover Options).

“Order” means all judgments, injunctions, orders and decrees of all Governmental
Authorities in any legal, administrative or arbitration action, suit, complaint,
charge, hearing, mediation, inquiry, investigation or proceeding in which the
person in question is a party or by which any of its properties or assets are
bound.

“Outstanding Company Voting Securities” has the meaning set forth in the
definition of “Sale of the Company”.

“Permitted Issuer Information” means any “issuer information” (as defined in
Rule 433 of the Rules and Regulations) used with the prior written consent of
the Company in any offering of Restricted Shares pursuant to Section 11.

 “Person” shall be construed broadly and shall include, without limitation, an
individual, a partnership, a limited liability partnership, an investment fund,
a limited liability

 

5

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company, a corporation, an association, a joint stock corporation, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.

“Preliminary Prospectus” means any preliminary prospectus relating to an
offering of Restricted Shares pursuant to Section 11.

“Proportionate Percentage” means with respect to Apollo and each other
Stockholder in respect of Restricted Shares, a fraction (expressed as a
percentage) the numerator of which is the number of Restricted Shares held by
Apollo or such other Stockholder, as the case may be, and the denominator of
which is (i) in a situation where the Proportionate Percentage is being
calculated with respect to all Stockholders, the total number of Restricted
Shares outstanding at the time in question and (ii) in a situation where the
Proportionate Percentage is being calculated with respect to a group of
Stockholders, the total number of Restricted Shares held by the members of such
group of Stockholders.

“Prospectus” means the final prospectus relating to any offering of Restricted
Shares pursuant to Section 11, including any prospectus supplement thereto, as
filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations.

“Public Sale” means any sale of Equity Securities to the public pursuant to an
offering registered under the Securities Act or to the public effected through a
broker, dealer or market maker pursuant to the provisions of Rule 144 (if such
rule is available) under the Securities Act (or any similar rule or rules then
in effect).

“Qualified Public Offering” means an underwritten public offering of Equity
Securities of the Company pursuant to an effective Registration Statement filed
by the Company with the Securities and Exchange Commission (other than on Forms
S-4 or S-8 or successors to such forms) under the Securities Act, pursuant to
which the aggregate offering price of the Equity Securities sold in such
offering (whether sold by the Company or selling stockholders) is at least
$75,000,000.

“RBS” has the meaning set forth in the recitals.

“RBS Stockholders’ Agreement” means the Stockholders Agreement dated November
25, 2002 by and among RBS Global, Inc., Carlyle Partners III, L.P., CP III
Coinvestment, L.P., Carlyle High Yield Partners, L.P., and certain other
stockholders named therein (as amended, modified, restated or supplemented from
time to time).

“Records” has the meaning set forth in Section 11(i)(xi).

“Registration Expenses” has the meaning set forth in Section 11(j).

“Reinstatement Notice” has the meaning set forth in Section 6(b).

“Repurchase Date” has the meaning set forth in Section 4(a).

“Repurchase Disability” has the meaning set forth in Section 6(a).

 

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“Repurchase Event” means, with respect to any Non-Apollo Holder, the termination
of such Non-Apollo Holder’s employment or other professional relationship with
the Company and all of its Subsidiaries for any reason (including upon death or
Disability).

“Repurchase Notice” has the meaning set forth in Section 4(a).

“Repurchase Price” has the meaning set forth in Section 4(a).

“Repurchase Right” has the meaning set forth in Section 4(a).

“Resignation Event” has the meaning set forth in Section 8(a)(iii).

“Restated Certificate” means the Amended and Restated Certificate of
Incorporation to be filed with the Secretary of State of Delaware, in the form
attached hereto as Exhibit A.

“Restricted Shares” means at any time, with respect to Apollo or any Non-Apollo
Holder, the shares of Common Stock held by Apollo or such Non-Apollo Holder;
provided, however, that any (a) Common Stock that is sold in a public offering
pursuant to an effective Registration Statement under the Securities Act or a
sale pursuant to Rule 144 thereunder or that may be sold without restriction as
to volume or otherwise pursuant to Rule 144(k) under the Securities Act shall
not be Restricted Shares for purposes of Section 11, and (b) any Person who
holds any Common Stock, all of which can be sold pursuant to Rule 144 under the
Securities Act, shall not be deemed to hold any Restricted Shares for purposes
of Section 11 and shall have no rights to effect the registration of such
securities under Section 11.

“Road Show Material” has the meaning set forth in Section 11(k).

“Rollover Options” means the options to purchase shares of common stock (to the
extent vested) of RBS Global, Inc. in existence immediately prior to the date
hereof held by each Rollover Optionholder (as defined in the Agreement and Plan
of Merger) that are subject to a Stock Option Assumption Agreement entered into
by and among such Rollover Optionholder, the Company and RBS Global, Inc. in
connection with transactions contemplated by the Agreement and Plan of Merger
providing that such options shall be exercisable for shares of Common Stock or
other Equity Interests of the Company pursuant to the terms of the Agreement and
Plan of Merger.

“Rule 144” means Rule 144 of the Rules and Regulations or any successor rule
thereto or any complementary rule thereto.

“Rule 405” means Rule 405 of the Rules and Regulations or any successor rule
thereto or any complementary rule thereto.

“Rule 433” means Rule 433 of the Rules and Regulations or any successor rule
thereto or any complementary rule thereto.

“Rules and Regulations” means the rules and regulations of the Commission, as
the same shall be in effect from time to time.

 

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“Sale Notice” has the meaning set forth in Section 3(b)(i).

“Sale of the Company” means:

(a)           Approval by the Stockholders (or, if no stockholder approval is
required, by the Board alone) of the complete dissolution or liquidation of the
Company, other than in the context of a Business Combination (as defined below)
that does not constitute a Sale of the Company under paragraph (c) below;

(b)           The acquisition by any Person of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the
combined voting power of the then-outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that, for purposes of this
paragraph (b), the following acquisitions shall not constitute a Sale of the
Company; (A) any acquisition directly from the Company or any of its
Subsidiaries, (B) any acquisition by the Company or any of its Subsidiaries, (C)
any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its Affiliates or a successor, (D) any
acquisition by any Person pursuant to a Business Combination, (E) any
acquisition by a Person who is the beneficial owner (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 50% or more of the Outstanding
Company Voting Securities on the Closing Date (or an Affiliate, heir or
descendant of such Person) or (F) any acquisition by Apollo or one of its
Affiliated investment funds; or

(c)           Consummation of a reorganization, merger, statutory share exchange
or consolidation or similar corporate transaction involving the Company or any
of its Subsidiaries, a sale or other disposition of all or substantially all of
the assets of the Company and its Subsidiaries, taken as a whole, or the
acquisition of assets or stock of another entity by the Company or any of its
Subsidiaries (each, a “Business Combination”), in each case unless, following
such Business Combination, (1) all or substantially all of the individuals and
entities that were the beneficial owners of the Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own more
than 50% of the combined voting power of the then-outstanding voting securities
entitled to vote generally in the election of directors, as the case may be, of
the Person resulting from such Business Combination (including, without
limitation, a Person that, as a result of such transaction, owns the Company or
all or substantially all of the Company’s assets directly or through one or more
Subsidiaries of the Company, and (2) no Person (excluding any Person described
in clauses (C), (E) or (F) of paragraph (b) above) beneficially owns (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) more than 50% of the
combined voting power of the then-outstanding voting securities of such Person,
except to the extent that the ownership in excess of 50% existed prior to the
Business Combination;

provided, however, that an underwritten public offering of the securities of the
Company or any of its Subsidiaries shall in no event constitute a Sale of the
Company for purposes of this Agreement.

 

“Securities” means “securities” as defined in Section 2(1) of the Securities Act
and includes capital stock or other equity interests or any options, warrants or
other securities that are directly or indirectly convertible into, or
exercisable or exchangeable for, capital stock or

 

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other equity interests. Whenever a reference herein to Securities is referring
to any derivative Securities, the rights of a holder shall apply to such
derivative Securities and all underlying Securities directly or indirectly
issuable upon conversion, exchange or exercise of such derivative Securities.

“Securities Act” means the Securities Act of 1933, and the Rules and
Regulations, all as the same shall be in effect from time to time.

“Sellers’ Counsel” has the meaning set forth in Section 11(i)(ii).

“SPV I” has the meaning set forth in the caption hereto.

“SPV II” has the meaning set forth in the caption hereto.

“Stockholder” means Apollo, each Person listed on Schedule I and any other
Person from time to time that holds Equity Securities acquired in accordance
with the terms of this Agreement or the Cypress Stockholders’ Agreement.

“Subsidiary” means, with respect to any Person, any other Person of which 50% or
more of the voting power of the equity securities or equity interests sufficient
to elect at least a majority of its Board of Directors or other governing body
(or, if there is no such voting power, 50% or more of the equity securities or
equity interests) is owned, directly or indirectly, by such Person.

“Tag-Along Transaction” means a transaction involving a Transfer by Apollo of
more than 10% of the Restricted Shares held by Apollo as of the Closing Date to
a Person who is not an Affiliate of Apollo in which individual Non-Apollo
Holders may elect in their discretion to participate in accordance with Section
3(b); provided, however, that a “Tag-Along Transaction” shall not include, and
none of the rights of the Non-Apollo Holders set forth in Section 3(b) shall be
triggered by, a Transfer by Apollo to any limited partnership or other Person
which has directly or indirectly invested in, or otherwise has ownership, equity
or profits interests in, Fund VI or one of its Affiliated investment funds, as
part of a distribution to such Person; provided, however, that such distribution
is made on a pro rata basis to all such Persons.

“Transaction Documents” has the meaning set forth in the Agreement and Plan of
Merger.

“Transfer” means any direct or indirect transfer, assignment, sale, gift,
pledge, hypothecation, encumbrance or other disposition, or any interest therein
whatsoever, or any other transfer of beneficial ownership, whether voluntary or
involuntary, including (a) as a part of any liquidation of assets or (b) as a
part of any reorganization pursuant to the United States or other bankruptcy law
or other similar debtor relief laws, but excluding any transfer of Equity
Securities of the Company by employees of the Company or its Subsidiaries upon a
termination of employment.

“Transferee” means any Person acquiring or intending to acquire Equity
Securities through a Transfer.

 

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“Underwritten Offering” means a sale of Equity Securities to an underwriter for
reoffering to the public.

Capitalized terms used and not otherwise defined herein shall have the meanings
ascribed to them in the Agreement and Plan of Merger.

Section 2.              Restriction on Transfers.

(a)           Except as otherwise set forth below, the Non-Apollo Holders shall
not at any time Transfer any Equity Securities.  Any purported Transfer in
violation of the provisions of this Section 2 shall be null and void and shall
have no force or effect.

(b)           The restrictions contained in this Section 2 shall not apply with
respect to any Transfer of Equity Securities (i) to the Company, Apollo or any
of their respective Affiliates (which term, for purposes of this Section 2(b),
shall not include any other Stockholder or such other Affiliates of such
Stockholder other than the Company and Apollo) or (ii) pursuant to applicable
laws of descent or to such Stockholder’s executors, administrators, testamentary
legatees and beneficiaries upon such Stockholder’s death or to any member of
such Non-Apollo Holder’s Family Group.

(c)           Each Non-Apollo Holder agrees that, as a condition precedent to
any Transfer permitted under Section 2(b), each Transferee of such Equity
Securities shall have executed a joinder agreement (“Joinder”) substantially in
the form of Exhibit B attached hereto, pursuant to which such Transferee agrees
to become party hereto, a Non-Apollo Holder and have his, her or its Equity
Securities subject to, the terms of this Agreement.  Any failure by a Non-Apollo
Holder to obtain a Joinder from the Transferee as required under this Section
2(c) shall render such Transfer null and void; provided that, in the case of a
Transfer upon a Stockholder’s death or Disability, (i) the Transferee shall be
deemed to have executed, and shall be deemed to be bound by, a Joinder as of the
date of such Stockholder’s death or Disability and (ii) the Transferee shall be
given a reasonable period of time (not to exceed 90 days from the date of such
Stockholder’s death or Disability) to execute such Joinder.

(d)           This Section 2 shall not apply to an Approved Sale under Section 3
or a Transfer under Section 4.

Section 3.              Approved Sale; Tag Along Transaction.

(a)           Approved Sale; Sale of the Company.

(i)            At any time prior to the consummation of a Qualified Public
Offering that Apollo proposes a Material Transfer of its Restricted Shares,
Apollo shall be entitled to deliver notice (an “Approved Sale Notice”) to the
Company and the Non-Apollo Holders that Apollo requires the Non-Apollo Holders
to Transfer an amount of their Restricted Shares that is equal to the portion of
Apollo’s Restricted Shares that Apollo proposes to Transfer in the Material
Transfer (an “Approved Sale”); provided, however, that if the proposed
Transferee desires to purchase an amount of Restricted Shares that is less than
the aggregate amount of Restricted Shares of Apollo and the Non-Apollo Holders
that would otherwise be Transferred in the Approved Sale, then Apollo

 

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may elect to cancel such Approved Sale, or Apollo and the Non-Apollo Holders
shall sell in the Approved Sale only that number of Restricted Shares equal to
the product of (x) the total number of Restricted Shares such proposed
Transferee desires to purchase and (y) such Stockholder’s Proportionate
Percentage; and provided, further, that any such Approved Sale Notice shall
include the name of the parties to the proposed Approved Sale, a summary of the
material terms and conditions of the proposed Approved Sale, and the proposed
amount and form of consideration and the terms and conditions of payment
contemplated by the proposed Approved Sale.

(ii)           Upon receipt of an Approved Sale Notice, each Non-Apollo Holder
and the Company shall consent to and raise no objections against the Approved
Sale, and if the Approved Sale is lawful and is structured as (A) a merger or
consolidation of the Company or any of its Subsidiaries, or a sale of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole, each Non-Apollo Holder shall, and hereby does, waive any dissenter’s
rights, appraisal rights or similar rights in connection with such merger or
consolidation or sale of all or substantially all of the assets and hereby
instructs the Board to vote in favor of such Approved Sale and to submit, if
required by law, to a vote of the Stockholders of the Company or request a
written consent as promptly as possible, and hereby agrees to vote in favor of
such Approved Sale at any annual or special meeting of the Stockholders of the
Company or to execute a written consent approving such Approved Sale, or (B) a
sale of Restricted Shares, each Non-Apollo Holder shall, and hereby does agree
to, sell his, her or its Proportionate Percentage of his, her or its Restricted
Shares on the terms and conditions approved by Apollo; provided, in the case of
each of the foregoing clause (A) and (B), that the terms and conditions upon
which each Non-Apollo Holder’s Restricted Shares are sold are the same terms and
conditions that apply to Apollo.

(iii)          All Non-Apollo Holders and the Company shall take all necessary
and desirable actions in connection with the consummation of the Approved Sale,
including the execution of such agreements and such instruments and other
actions reasonably necessary to (1) provide the representations, warranties,
indemnities, covenants, conditions, escrow agreements and other provisions and
agreements relating to such Approved Sale; provided, however, that the
Non-Apollo Holders shall not be required to provide any representations,
warranties, indemnities, covenants, conditions, escrow agreements or other
provisions or agreements which are different from those made by Apollo in
connection with such Approved Sale and (2) effectuate the allocation and
distribution of the aggregate consideration upon the consummation of the
Approved Sale.  At the closing of the sale of any Restricted Shares pursuant to
this Section 3(a), each Non-Apollo Holder shall deliver at such closing, against
payment of the purchase price therefor, certificates representing their
Restricted Shares to be sold, duly endorsed for Transfer or accompanied by duly
endorsed stock powers, evidence of good title to the Restricted Shares to be
sold, the absence of liens, encumbrances and adverse claims with respect thereto
and such other documents as are deemed reasonably necessary by the Company for
the proper Transfer of such Restricted Shares on the books of the Company.

 

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(iv)          Apollo shall deliver any Approved Sale Notice to the Company and
the Non-Apollo Holders at least ten (10) days prior to the consummation of the
Approved Sale.

(v)           If any Stockholders are given an option as to the form and amount
of consideration to be received in an Approved Sale, all Stockholders shall be
given the same option.

(vi)          No Non-Apollo Holder shall be obligated to pay more than his, her
or its Proportionate Percentage of reasonable expenses incurred in connection
with a consummated Approved Sale to the extent such expenses are incurred for
the benefit of all Stockholders and are not otherwise paid by the Company or the
acquiring party (it being agreed that expenses incurred by or on behalf of
Apollo or a Non-Apollo Holder for his, her or its sole benefit shall not be
considered expenses incurred for the benefit of all Stockholders).

(vii)         No Stockholder shall be required to make any representations or
warranties that are joint and several or that pertain to matters other than
title to Securities held by such Stockholder, such Stockholder’s capacity,
authority or power to consummate the transaction in question, conflicts with
laws, conflicts with contracts, organizational documents and Orders applicable
to such Stockholder, broker and similar fees payable by such Stockholder, other
representations and warranties customary for the type of transaction being
consummated and representations and warranties with respect to any other matters
particular to such Stockholder.

(viii)        Any indemnification obligations for breaches of representations,
warranties and covenants made by the Company and its Subsidiaries (but not by or
on behalf of any Stockholder individually) shall be shared pro rata among the
Stockholders (based on such Stockholder’s Proportionate Percentage) based on the
aggregate consideration payable with respect to the Restricted Shares, and in no
event shall a Stockholder be required to incur indemnification or contribution
obligations with respect to such breaches that are joint and several or exceed
the aggregate consideration payable with respect to such Stockholder’s
Restricted Shares Transferred in the Approved Sale.

(ix)           Each Non-Apollo Holder and the Company hereby grants an
irrevocable proxy and power of attorney which, it is agreed, is coupled with an
interest, to any nominee of Apollo (the “Apollo Nominee”) to take all necessary
actions and execute and deliver all documents deemed necessary and appropriate
by such Person to effectuate the consummation of any Approved Sale.  To the
extent a Non-Apollo Holder fails to comply with the provisions of this Section
3(a), such Non-Apollo Holder hereby indemnifies, defends and holds the Apollo
Nominee harmless (severally in accordance with his, her or its pro rata share of
the consideration received in any such Approved Sale (and not jointly and
severally)) against all liability, loss or damage, together with all reasonable
costs and expenses (including reasonable legal fees and expenses), relating to
or arising from its exercise of the proxy and power of attorney granted hereby.

 

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(x)            The Non-Apollo Holders shall not be required to comply with, and
shall have no obligations under, Section 2 in connection with any Approved Sale.

(b)           Tag-Along Transaction.

(i)            Subject to the provisions of Section 3(a) above, prior to the
consummation of a Qualified Public Offering, if Apollo desires to effect a
Tag-Along Transaction, Apollo shall give written notice to the Non-Apollo
Holders offering such Non-Apollo Holders the option to participate in such
Tag-Along Transaction (a “Sale Notice”) on the terms and conditions set forth in
the Sale Notice (and, in any event, on the same terms and conditions as
Apollo).  The Sale Notice shall include the name of the parties to the proposed
Tag-Along Transaction, a summary of the material terms and conditions of the
proposed Tag-Along Transaction, and the proposed amount and form of
consideration and the terms and conditions of payment contemplated by the
proposed Tag-Along Transaction.  Each Non-Apollo Holder may, by written notice
to Apollo delivered within ten (10) days of the date of the Sale Notice, elect
to sell in such Tag-Along Transaction, on the terms and conditions approved by
Apollo (which terms and conditions shall be the same as those on which Apollo’s
Restricted Shares are sold and shall be consistent with the terms and conditions
set forth in the Sale Notice); provided, however, that if the proposed
Transferee desires to purchase an amount of Restricted Shares that is less than
the aggregate amount of Restricted Shares proposed to be Transferred by Apollo
and the Non-Apollo Holders in the Tag-Along Transaction, then Apollo may elect
to cancel such Tag-Along Transaction, or Apollo and the Non-Apollo Holders shall
be permitted to sell only that number of Restricted Shares equal to the product
of (x) the total number of Restricted Shares subject to the proposed Tag-Along
Transaction and (y) such Stockholder’s Proportionate Percentage.  No Transfer
permitted under this Section 3(b) shall be subject to the requirements of
Section 2.

(ii)           Upon the closing of the sale of any Restricted Shares pursuant to
paragraph (b)(i) above, each Non-Apollo Holder shall deliver at such closing,
against payment of the purchase price therefor, certificates representing their
Restricted Shares to be sold, duly endorsed for Transfer or accompanied by duly
endorsed stock powers, evidence of good title to the Restricted Shares to be
sold, the absence of liens, encumbrances and adverse claims with respect thereto
and such other documents as are deemed reasonably necessary by the Company for
the proper Transfer of such Restricted Shares on the books of the Company.

Section 4.              Repurchase Right.

(a)           From and after a Repurchase Event, the Company shall have the
right, but not the obligation, to repurchase all or any portion of the Equity
Securities held by such Non-Apollo Holder (including any Equity Securities
received upon a distribution from any deferred compensation plan or other Equity
Incentive Plan or any Equity Securities issuable upon exercise of any option,
warrant or similar equity-linked Security of the Company held by such Non-Apollo
Holder) in accordance with this Section 4 (the “Repurchase Right”), in each
case, at a price (the “Repurchase Price”) equal to “fair market value,” but
subject to Section 4(b), and subject further to any provisions to the contrary
contained in such Non-Apollo Holder’s

 

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Employment Agreement or Option Agreement, as applicable.  The Company may
exercise the Repurchase Right, by written notice (a “Repurchase Notice”) to such
Non-Apollo Holder, within six months after the Repurchase Event; provided,
however, that with respect to Equity Securities acquired by a Non-Apollo Holder,
after such Repurchase Event (whether by exercise of any option, warrant or
similar equity-linked Security of the Company, distribution of shares from any
deferred compensation plan or otherwise), the Company may exercise the
Repurchase Right by delivering a Repurchase Notice to such Non-Apollo Holder
within six months after the acquisition of such Equity Securities by such
Non-Apollo Holder (each date on which any such purchase is closed with respect
to the subject Equity Securities, the “Repurchase Date”).  The determination
date for purposes of determining the fair market value shall be the Repurchase
Date applicable to the subject Equity Securities.  Subject to Section 6 below,
the Repurchase Date with respect to any repurchase of Equity Securities pursuant
to the exercise of the Repurchase Right shall take place on the later of (i) the
date specified by the Company, which shall in no event be later than thirty (30)
days following the date of the Repurchase Notice and (ii) within ten (10) days
following the receipt by the Company of all necessary government approvals.

(b)           Notwithstanding anything contained herein to the contrary, unless
otherwise provided in the applicable Employment Agreement or Option Agreement of
a Non-Apollo Holder, in the event a Non-Apollo Holder’s employment or consulting
relationship with the Company or any of its Subsidiaries is terminated for Cause
by the Company or any of its Subsidiaries or by the Non-Apollo Holder without
Good Reason and before the second anniversary of the Closing Date (or in the
case of Hitt, the fifth anniversary of the Closing), then the Company may
exercise the Repurchase Right by delivering a Repurchase Notice to such
Non-Apollo Holder within the time periods set forth in Section 4(a) above at a
price equal to the lesser of (i) in the case of Common Stock, $ ___ per share of
Common Stock, subject to adjustment by the Company to reflect any stock split,
recapitalization or similar adjustment to the Common Stock (or, for shares of
Common Stock acquired after the Closing Date and not upon exercise of a Rollover
Option, the original acquisition cost to such Non-Apollo Holder of such shares
of Common Stock) and (ii) the fair market value of such Equity Securities.  The
determination date for purposes of determining the fair market value shall be
the closing date of the purchase of the applicable Equity Securities.

(c)           The Company shall give prompt written notice to Apollo stating
whether the Company will exercise the Repurchase Rights pursuant to Section 4(a)
or Section 4(b) above.  If such notice states that the Company will not exercise
such Repurchase Rights for all or any portion of the applicable Equity
Securities subject thereto, Apollo (or its designee) shall have the right
(exercisable by delivery of written notice to such Non-Apollo Holder on or
before the later of (i) the 30th day following the receipt of such notice or
(ii) six months after the Repurchase Event) to purchase any such Equity
Securities not purchased by the Company on the same terms and conditions as the
Company set forth in Section 4(a) or Section 4(b).

(d)           The Repurchase Date shall take place on a date designated by the
Company or Apollo, as applicable, in accordance with Section 4(a) or Section
4(c), respectively; provided, however, that the Repurchase Date may be deferred
to a date designated by the Company  or Apollo, as applicable, or, to the extent
required to avoid liability under applicable securities laws, the Non-Apollo
Holder, until such time as the subject Non-Apollo Holder has

 

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held the Equity Securities for a period of at least six months and one day.  The
Company or Apollo, as applicable, may effect such repurchase of Equity
Securities and the Company shall record such Transfer on its books whether or
not such Non-Apollo Holder attends such closing or delivers certificates
representing such Equity Securities to the Company.  Each Non-Apollo Holder
hereby grants an irrevocable proxy and power of attorney which, it is agreed, is
coupled with an interest to any nominee of the Company or Apollo, as applicable,
to take all necessary actions and execute and deliver all documents deemed
necessary and appropriate by such nominee to effect such repurchase of Equity
Securities.  Any Non-Apollo Holder who fails to take all necessary actions and
execute and deliver all documents necessary and appropriate to fulfill his, her
or its obligations under this Section 4 shall indemnify, defend and hold such
nominee harmless against all liability, loss or damage, together with all
reasonable costs and expenses (including reasonable legal fees and expenses),
relating to or arising from such nominee’s exercise of the proxy and power of
attorney granted hereby.  In addition, any such Non-Apollo Holder shall
immediately lose all rights such holder may have under Section 8 in the event of
any such purchase.

(e)           For purposes of this Section 4, Section 5 and Section 6, the “fair
market value” of any Equity Securities shall be determined as follows:

(i)            if the Equity Securities are listed on one or more National
Securities Exchanges (within the meaning of the Exchange Act), each share shall
be valued at the average closing price per share on the principal exchange on
which such shares are then trading for the 10 trading days immediately preceding
the date of determination;

(ii)           if the Equity Securities are not traded on a National Securities
Exchange but are quoted on the NASDAQ Stock Market or a successor quotation
system and the shares are listed as a National Market issue under the National
Market System, each share shall be valued at the average of the last sales price
per share for the 10 trading days immediately preceding the date of
determination as reported by the NASDAQ Stock Market or any such successor
quotation system; or

(iii)          if the Equity Securities are not listed on a National Securities
Exchange and are not traded on the NASDAQ Stock Market and listed as a National
Market issue under the National Market System, the fair market value shall be
determined by the Board in good faith based on its good faith determination of
the fair market value of the Company and its subsidiaries as a whole without
regard to the percentage of shares represented by the shares subject to such
determination or any minority discount or control premium.

Notwithstanding the foregoing, if a Person whose Equity Securities are being
valued hereunder pursuant to clause (iii) above disagrees with the valuation
determined by the Board, such Person may elect to choose within five Business
Days of being advised of the determination of the Board to have the fair market
value determined by and independent appraiser, the selection of which shall be
subject to the mutual agreement of the Company and such Person.  The fees and
expenses of any such independent appraiser shall be borne equally by the Company
and the Person whose Equity Securities are being

 

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valued hereunder and the determination by the independent appraiser selected in
accordance with this Section 4(e) shall be final and binding.

Section 5.              Involuntary Transfers.

(a)           In the case of any Transfer of title or beneficial ownership of
Equity Securities upon default, foreclosure, forfeit, divorce, court order or
otherwise, other than by a voluntary decision on the part of a Non-Apollo Holder
(each, an “Involuntary Transfer”), the Non-Apollo Holder shall promptly (but in
no event later than two days after the Involuntary Transfer) furnish written
notice (the “Involuntary Transfer Notice”) to the Company indicating that the
Involuntary Transfer has occurred, specifying the name of the Person to whom the
Equity Securities were transferred (the “Involuntary Transferee”), giving a
detailed description of the circumstances giving rise to, and stating the legal
basis for, the Involuntary Transfer.

(b)           Upon the receipt of the Involuntary Transfer Notice, and for 60
days thereafter, the Company shall have the right to repurchase, and the
Involuntary Transferee shall have the obligation to sell, all (but not less than
all) of the Equity Securities acquired by the Involuntary Transferee for a
repurchase price equal to the “fair market value” (as determined in accordance
with Section 4(e)) of such Equity Securities as of the date of the Involuntary
Transfer (the “Involuntary Transfer Repurchase Price” and such right, the
“Involuntary Transfer Repurchase Right”).  The Involuntary Transfer Repurchase
Right shall be exercised by written notice (the “Involuntary Transfer Repurchase
Notice”) to the Involuntary Transferee given in accordance with Section 14(k) of
this Agreement on or prior to the last date on which the Involuntary Transfer
Repurchase Right may be exercised by the Company.

(c)           Subject to Section 6 below, the repurchase of Equity Securities
pursuant to the exercise of the Involuntary Transfer Repurchase Right shall take
place on a date specified by the Company, but in no event following the later of
the 60th day following the date of the date of the Involuntary Transfer
Repurchase Notice or the 10th day following the receipt by the Company of all
necessary governmental approvals.  On such date, the Involuntary Transferee
shall transfer the Equity Securities subject to the Involuntary Transfer
Repurchase Notice to the Company, free and clear of all liens and encumbrances,
by delivering to the Company the certificates representing the Equity Securities
to be purchased, duly endorsed for transfer to the Company or accompanied by a
stock power duly executed in blank, and the Company shall pay to the Involuntary
Transferee the Involuntary Transfer Repurchase Price.  The Involuntary
Transferee and the Non-Apollo Holder shall use all commercially reasonable
efforts to assist the Company in order to expedite all proceedings described in
this Section 5.  If the Involuntary Transferee does not transfer the Equity
Securities to the Company as required, the Company will cancel such Equity
Securities and deposit the funds in a non-interest bearing account and make
payment upon delivery.

Section 6.              Repurchase Disability.

(a)           Notwithstanding anything to the contrary herein, except as
otherwise provided by Section 6(c), the Company shall not be permitted to
purchase any Equity Securities held by any Non-Apollo Holder or Involuntary
Transferee upon exercise of the Repurchase Right or the Involuntary Transfer
Repurchase Right if the Board reasonably determines that:

 

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(i)            the purchase of Equity Securities would render the Company or its
Subsidiaries unable to meet their obligations in the ordinary course of business
at any time during the one year period commencing on the date such purchase of
Equity Securities would otherwise be required taking into account any pending or
proposed transactions, capital expenditures or other budgeted cash outlays by
the Company and its Subsidiaries which are reasonably likely to be consummated
or paid, as the case may be, within such one year period, including, without
limitation, any proposed acquisition of any other entity by the Company or any
of its Subsidiaries which is reasonably likely to be consummated within such one
year period;

(ii)           the Company is prohibited from purchasing the Equity Securities
by applicable law restricting the purchase by a corporation of its own shares;
or

(iii)          the purchase of Equity Securities would constitute a breach of,
default, or event of default under, or is otherwise prohibited by, the terms of
any loan agreement or other agreement or instrument representing indebtedness to
which the Company or any of its Subsidiaries is a party (collectively, the
“Financing Documents”) or the Company or its applicable Subsidiaries is not able
to obtain the requisite consent of any of its senior lenders to the purchase of
the Equity Securities.

The events described in (i) through (iii) above each constitute a “Repurchase
Disability.”

(b)           Except as otherwise provided by Section 6(c), in the event of a
Repurchase Disability, the Company shall notify in writing the Non-Apollo Holder
or Involuntary Transferee with respect to whom the Repurchase Right or the
Involuntary Transfer Repurchase Right has been exercised (a “Disability
Notice”).  The Disability Notice shall specify the nature of the Repurchase
Disability.  The Company shall thereafter repurchase the Equity Securities
described in the Repurchase Notice or Involuntary Transfer Repurchase Notice as
soon as reasonably practicable after all Repurchase Disabilities cease to exist
(or the Company may elect, but shall have no obligation, to cause its nominee to
repurchase the Equity Securities while any Repurchase Disabilities continue to
exist); provided, however, that if some, but not all of the Equity Securities to
be repurchased can be so repurchased without creating a Repurchase Disability,
then the Company shall consummate such repurchase to the fullest extent it is
able without causing a Repurchase Disability in accordance with the terms of
this Agreement (without giving effect to this Section 6).  In the event the
Company suspends its obligations to repurchase the Equity Securities pursuant to
a Repurchase Disability, (i) the Company shall provide written notice to each
applicable Non-Apollo Holder or Involuntary Transferee as soon as practicable
after all Repurchase Disabilities cease to exist (the “Reinstatement Notice”);
(ii) the fair market value of the Equity Securities subject to a Repurchase
Notice or Involuntary Transfer Repurchase Notice shall be equal to the greater
of the fair market value (as determined in accordance with Section 4(e)) of the
Equity Securities as of the date of the date of the Repurchase Notice or the
Involuntary Transfer Repurchase Notice, as the case may be, and the fair market
value (as determined in accordance with Section 4(e)) determined as of the date
the Reinstatement Notice is delivered to the Non-Apollo Holder or Involuntary
Transferee, which fair market value shall be used to determine the Repurchase
Price or Involuntary Transfer Repurchase Price in the manner described above;
and (iii) the repurchase shall occur on a date

 

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specified by the Company within 10 days following the determination of the fair
market value of the Equity Securities to be repurchased as provided in clause
(ii) above.

Section 7.              Cooperation.

(a)           In the event that Apollo exercises its rights pursuant to Section
3(a) or Section 3(b), each Non-Apollo Holder shall consent to and raise no
objections (other than to challenge the lawfulness of any transaction to be
consummated in connection with Apollo’s exercise of such rights, but only in the
event that such Non-Apollo Holder would be required to violate applicable law in
connection with the consummation of such transaction) against the transaction,
and shall take all actions that the Board reasonably deems necessary or
desirable in connection with the consummation of the transaction.  Without
limiting the generality of the foregoing, each Non-Apollo Holder agrees to (i)
consent to and raise no objections (other than to challenge the lawfulness of
any transaction to be consummated in connection with Apollo’s exercise of such
rights, but only in the event that such Non-Apollo Holder would be required to
violate applicable law in connection with the consummation of such transaction)
against the transaction; (ii) execute any stock purchase agreement, merger
agreement or other agreement entered into with the third party purchaser with
respect to the transaction setting forth the terms and any ancillary agreement
with respect to such transaction; (iii) vote the Equity Securities held by such
Non-Apollo Holder in favor of the transaction; and (iv) refrain from the
exercise of dissenters’ or appraisal rights with respect to the transaction.

(b)           If the Company or the holders of the Company’s securities enter
into any negotiation or transaction for which Rule 506 (or any similar rule then
in effect) promulgated under the Securities Act, may be available with respect
to the negotiation or transaction (including a merger, consolidation, or other
reorganization), each Non-Apollo Holder shall, if reasonably requested by the
Company, appoint a purchaser representative (as defined in Rule 501 of the
Securities Act) reasonably acceptable to the Company.  If the purchaser
representative is designated by the Company, the Company shall pay the fees of
the purchaser representative, but if any Non-Apollo Holder appoints another
purchaser representative, the Non-Apollo Holder shall be responsible for the
fees of the purchaser representative so appointed.

(c)           Each Non-Apollo Holder shall bear its pro rata share of the costs
of any transaction in which it sells Equity Securities (based upon the net
proceeds received by such Non-Apollo Holder in such transaction) to the extent
such costs are incurred for the benefit of all holders of Equity Securities and
are not otherwise paid by the Company or the acquiring party (it being agreed
that expenses incurred by or on behalf of Apollo or a Non-Apollo Holder for his,
her or its sole benefit shall not be considered expenses incurred for the
benefit of all Stockholders).

Section 8.              Board of Directors.

(a)           Number of Directors; Nomination; Removal; Committees.

(i)            The Company and the Stockholders shall take such corporate
actions as may be required to ensure that (A) the number of directors
constituting the Board is at all times five (5), and (B) the presence of three
(3) directors (including a

 

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majority of Apollo Directors (as defined below)) is required to constitute a
quorum of the Board.

(ii)           For so long as Apollo owns any shares of Common Stock (or
equity-linked Securities convertible or exchangeable into shares of Common
Stock), (A) Apollo shall have the right to nominate two (2) Persons to serve as
directors on the Board and propose the removal of such nominees and (B) Fund VI
shall have the right to nominate one (1) Person to serve as director on the
Board and propose the removal of such nominee (the Persons nominated pursuant to
clause (A) and (B) of this paragraph, the “Apollo Directors”).  Each such
nomination or proposal shall be made by Apollo or Fund VI, as the case may be,
delivering a written notice to the Company.  As promptly as practicable, but in
any event within five (5) days, after delivery of such notice, the parties
hereto shall take or cause to be taken such corporate actions as may be
reasonably required to cause the election or removal proposed in such notice,
and the Stockholders agree to vote their shares in favor of such proposal.  Such
corporate actions may include calling a meeting or soliciting a written consent
of the Board, or calling a meeting or soliciting a written consent of the
Stockholders of the Company.  The Apollo Directors initially shall be Laurence
Berg, Steven Martinez and Peter P. Copses, it being acknowledged and agreed that
Fund VI has nominated Peter P. Copses to serve as an Apollo Director.

(iii)          Robert Hitt (“Hitt”) shall have the right to serve as a director
until he (A) resigns as a director, or (B) ceases, for any reason, to serve the
Company under his Employment Agreement and is no longer the chief executive
officer of the Company (each such event, with respect to Hitt, a “Resignation
Event”).  In the event of any such Resignation Event, Hitt agrees to resign as a
director of the Company and each Subsidiary of the Company immediately pursuant
to a written resignation notice delivered to the Board.  In the event Hitt fails
to so resign following a Resignation Event, the Stockholders agree to vote their
shares to remove Hitt as a director pursuant to the terms of this Agreement
immediately.  Hitt acknowledges and agrees that he shall have no right to be
appointed to the Board following removal therefrom pursuant to this Section 8.

(iv)          While serving as a director in accordance with this Section 8,
Hitt shall be a “Non-Apollo Director.”  In the event, Hitt loses his right to
serve as a director, his replacement shall be appointed by the holders of a
majority of the Common Stock of the Company owned by Shareholders other than
Apollo and Affiliates of Apollo and such replacement shall be a “Non-Apollo
Director.”

(v)           The majority of the members of each committee created by the Board
shall be Apollo Directors, and each Stockholder shall vote his, her or its
Equity Securities, and the Company and the Stockholders shall take such
corporate actions as may be required, to effectuate the provisions of this
Section 8(a)(v).

(b)           Meetings; Expenses; Compensation.

 

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(i)            The Company agrees to cause the Bylaws to provide, at all times
from and after the Closing, that meetings of the Board or any committee thereof
may be conducted by teleconference and that Board action may be taken by
unanimous written consent.

(ii)           The Company shall convene meetings of the Board at least once
every three months.  Upon any failure by the Company to convene any meeting
required by this paragraph, a director nominated under Section 8(a)(ii) shall be
empowered to convene such meeting.

(iii)          The Company shall reimburse each director for his or her
reasonable out-of-pocket expenses (including travel and related expenses)
incurred in connection with (i) attending the meetings of the Board and all
committees thereof and (ii) conducting any other Company business requested by
the Company.  The Company shall maintain directors and officers indemnity
insurance coverage reasonably satisfactory to Apollo, and the Restated
Certificate and By-laws shall provide for indemnification and exculpation of
directors to the fullest extent permitted under applicable law.

(iv)          The Company shall pay each Apollo Director and each independent
director appointed by Apollo (A) a director’s fee in the amount of $40,000 per
year; (B) an attendance fee in the amount of $2,000 for each meeting of the
board of directors attended in person by such director; and (C) an attendance
fee in the amount of $1,000 for each meeting of the board of directors attended
telephonically by such director.

(c)           Increase of Number of Directors.   In the event that, and at such
time as,  the number of directors constituting the Board is increased to more
than five (5), Apollo shall have the right (for so long as Apollo owns any
shares of Common Stock (or equity-linked Securities convertible into shares of
Common Stock)) to nominate additional directors such that the majority of the
directors comprising the Board shall be Apollo Directors, and the Company and
Stockholders shall take all corporate actions as may be required to ensure that
(x) nominees of Apollo constitute a majority of the directors of the Board and
(y) the presence of a majority of directors (including a majority of directors
appointed by Apollo) is required to constitute a quorum of the Board.

(d)           Subsidiaries.  The provisions of this Section 8 shall apply,
mutatis mutandis, to the board of directors of each Subsidiary of the Company.

(e)           Inconsistency; Termination.

(i)            In the event that any provision of the Bylaws or Restated
Certificate is inconsistent with any provision of this Section 8, the
Stockholders shall take such action as may be necessary to amend any such
provision in the Bylaws or Restated Certificate to reflect the terms and
provisions of this Section 8.

(ii)           The provisions of this Section 8 shall terminate automatically
and be of no further force and effect upon the consummation of a Qualified
Public Offering.

 

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Section 9.              Representations and Warranties.

Each Stockholder, severally and not jointly, represents and warrants that (a)
effective as of the Closing, such Stockholder is the record owner of the number
and type of Equity Securities of the Company set forth opposite his, her or its
name on Schedule I attached hereto, (b) this Agreement has been duly authorized,
executed and delivered by such Stockholder and constitutes the valid and binding
obligation of such Stockholder, enforceable in accordance with its terms, and
(c) such Stockholder has not granted and is not a party to any proxy, voting
trust or other agreement which is inconsistent with or conflicts with the
provisions of this Agreement, and each Stockholder covenants that it shall not
grant any proxy or become party to any voting trust or other agreement which is
inconsistent with or conflicts with the provisions of this Agreement.

Section 10.            Information Rights; Covenants.

(a)           For so long as Apollo owns any Equity Securities, it shall be
entitled to receive regular and suitable business (e.g. sales, marketing and
technology), financial and other information reasonably appropriate to monitor
and manage its ownership interests and such other information as it may
reasonably request, from time to time.  Such information will include, without
limitation, the following:

(i)            Access to Records.  The Company shall, and shall cause each
Subsidiary of the Company to, afford to Apollo and its officers, employees,
advisors, counsel and other authorized representatives, during normal business
hours, reasonable access, upon reasonable advance notice, to all of the books,
records and properties of the Company and each such Subsidiary and all officers
and employees of the Company and each such Subsidiary.

(ii)           Hiring of Advisors.  In connection with any possible Sale of the
Company or any transactions permitted or contemplated herein, and upon the
request of Apollo, subject to the fiduciary duties of the directors of the
Company, the Company shall hire any (A) investment bank, (B) legal advisor, (C)
financial or accounting advisor, or (D) other such advisor(s) on terms and
conditions satisfactory to Apollo.

(iii)          Financial Reports.  The Company shall furnish Apollo with the
following:

(A)          Monthly Reports.  As soon as available, but not later than 30 days
after the end of each fiscal month, a consolidated balance sheet of the Company
as of the end of such period and consolidated statements of income of the
Company for such period and for the period commencing at the end of the previous
fiscal year and ending with the end of such period, setting forth in each case
in comparative form the corresponding figures for the corresponding period of
the preceding fiscal year, and including comparisons to the budget or business
plan and an analysis of the variances from the budget or plan, all prepared in
accordance with generally accepted accounting principals consistently applied
(except for the absence of footnotes and year-end adjustments).

 

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(B)           Quarterly Reports.  As soon as available, but not later than 45
days after the end of each quarterly accounting period, (1) a consolidated
balance sheet of the Company as of the end of such period and consolidated
statements of income, cash flows and changes in stockholders’ equity for such
quarterly accounting period and for the period commencing at the end of the
previous fiscal year and ending with the end of such period, setting forth in
each case in comparative form the corresponding figures for the corresponding
period of the preceding fiscal year, and including comparisons to the budget or
business plan and an analysis of the variances from the budget or plan, all
prepared in accordance with generally accepted accounting principals
consistently applied and (2) a report by management of the Company of the
operating and financial highlights of the Company and its Subsidiaries for such
period, which shall include (x) a comparison between operating and financial
results and budget and (y) an analysis of the operations of the Company and its
Subsidiaries for such period.

(C)           Annual Audit.  As soon as available, but not later than 90 days
after the end of each fiscal year of the Company, audited consolidated financial
statements of the Company, which shall include statements of income, cash flows
and changes in stockholders’ equity for such fiscal year and a balance sheet as
of the last day thereof, each prepared in accordance with generally accepted
accounting principles, consistently applied, and accompanied by the report of a
the firm of independent certified public accountants selected by the Board (the
“Accountants”).  The Company and its Subsidiaries shall maintain a system of
accounting sufficient to enable its Accountants to render the report referred to
in this Section 10.

(D)          Miscellaneous.  Promptly upon becoming available, the Company shall
provide to Apollo:

(1)           copies of all financial statements, reports, press releases,
notices, proxy statements and other documents sent by the Company or its
Subsidiaries to Apollo or its or their stockholders generally or released to the
public and copies of all regular and periodic reports, if any, filed by the
Company or its Subsidiaries with the Securities and Exchange Commission, any
securities exchange or the NASD;

(2)           notification in writing of any litigation or governmental
proceeding in which it or any of its Subsidiaries is involved and which might,
if determined adversely, materially and adversely effect the Company or any of
its Subsidiaries;

(3)           notification in writing of the existence of any default under any
material agreement or instrument to which the Company or any of its Subsidiaries
is a party or by which any of their assets are bound;

 

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(4)           upon request, copies of all reports prepared for or delivered to
the management of the Company or its Subsidiaries by its or their accountants;
and

(5)           upon request, any other routinely collected financial or other
information available to management of the Company or its subsidiaries
(including, without limitation, routinely collected statistical data).

(b)           Apollo shall, and shall cause its Authorized Representatives (as
defined below) to, hold in confidence all Company Confidential Information (as
defined below) of the Company and its Subsidiaries and Affiliates provided or
made available to, or otherwise known by or in the possession of, Apollo;
provided, however, that the foregoing provision shall not apply to information
which: (i) is or becomes generally known to the industry or the public (other
than as a result of the breach of this Section 10 by Apollo); or (ii) is or
becomes available to Apollo on a non-confidential basis from a source other than
the Company or its Subsidiaries or Affiliates or their respective directors,
officers, employees or agents.  As used in this Agreement, the term “Company
Confidential Information” means information that is not generally known to the
public and that is used, developed or obtained by the Company or any of its
Subsidiaries in connection with their respective businesses, including
processes, ideas, inventions (whether patentable or not), know-how, schematics,
trade secrets, trademarks, copyrights, patents, designs and all other
intellectual property and proprietary information, books, records, financial
statements, customer lists, details regarding products and services, marketing
information, sales information and all other technical, business, financial,
customer and product development plans, forecasts, strategies and information,
previously, presently, or subsequently disclosed to Apollo or its Affiliates or
Authorized Representatives, in each case to the extent not generally known to
the public.  Notwithstanding the terms of this Agreement, Company Confidential
Information may be disclosed by Apollo and its Authorized Representatives when
compelled by governmental rule or regulation, or compelled by legal process or
court order if Apollo (and/or its Authorized Representatives) has given the
Company prompt written notice of such request or order and the Company
Confidential Information to be disclosed as far in advance of its disclosure as
reasonably possible so that the Company may seek an appropriate protective order
or waive compliance by Apollo.  For purposes of the preceding sentence, Apollo
and its Authorized Representatives shall be entitled to rely conclusively on an
opinion of its nationally recognized outside counsel that Apollo or its
Authorized Representative is compelled by governmental rule or regulation, or
compelled by legal process or court order, to disclose any such Company
Confidential Information.

(c)           Notwithstanding the disclosure obligations set forth in Section
10(a), to the extent applicable to the Company, the Company shall comply in all
material respects with the applicable requirements and provisions of Regulation
FD (17 C.F.R. § 243.100, as amended, modified, restated or supplemented from
time to time).

Section 11.            Registration Rights.

(a)           Right to Demand; Demand Notices.  Subject to the provisions of
this Section 11, at any time and from time to time, Apollo (the “Demand Party”)
shall have the right

 

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to make two (2) written requests in any 12-month period to the Company for
registration under and in accordance with the provisions of the Securities Act
of all or part of its Restricted Shares.  All requests made pursuant to this
Section 11 will specify the aggregate amount of Restricted Shares to be
registered, and will also specify the intended method of Transfer thereof (a
“Demand Notice”), including, if such Transfer is pursuant to an Underwritten
Offering, whether such offering shall be a “firm commitment” underwriting. 
Subject to Section 11(e), promptly upon receipt of any such Demand Notice, the
Company will use its best efforts to effect, as soon as possible, but in any
event within 90 days, such registration under the Securities Act of the
Restricted Shares that the Company has been so requested to register.

(b)           Company’s Right to Defer Registration.  If the Company is
requested to effect a Demand Registration and the Company furnishes to the
Demand Party a copy of a resolution of the Board certified by the secretary of
the Company stating that in the good faith judgment of the Board it would be
materially adverse to the Company for such Registration Statement to be filed on
or before the date such filing would otherwise be required hereunder, the
Company shall have the right to defer such filing for a period of not more than
ninety (90) days after receipt of the request for such registration from such
Demand Party.  If the Company shall so postpone the filing of a Registration
Statement and if the Demand Party within thirty (30) days after receipt of the
notice of postponement advises the Company in writing that such Demand Party has
determined to withdraw such request for registration, then such Demand
Registration shall be deemed to be withdrawn and shall not be deemed to have
been requested for purposes of Section 11(a).  If the effective date of any
Registration Statement filed would otherwise be at least forty-five (45)
calendar days, but fewer than ninety (90) calendar days, after the end of the
Company’s fiscal year, and the Securities Act requires the Company to include
audited financials as of the end of such fiscal year, the Company may delay the
effectiveness of such Registration Statement for such period (up to a maximum of
45 days) as is reasonably necessary to include therein audited financial
statements for such fiscal year.

(c)           Registration Statement Form.  Registrations under this Section 11
shall be on such appropriate registration form of the Commission (i) as shall be
selected by the Company and as shall be reasonably acceptable to the Demand
Party and (ii) as shall permit the Transfer of Restricted Shares in accordance
with the intended method or methods of Transfer specified in the Demand Party’s
Demand Notice.  If, in connection with any registration under this Section 11
that is proposed by the Company to be on Form S-3 or any successor form, the
managing underwriter, if any, shall advise the Company in writing that in its
opinion the use of another permitted form is of material importance to the
success of the offering, then such registration shall be on such other permitted
form.

(d)           Effective Registration Statement.  The Company shall be deemed to
have effected a Demand Registration if (i) the Registration Statement relating
to such Demand Registration is declared effective by the Commission; provided,
however, that no Demand Registration shall be deemed to have been requested for
purposes of Section 11(a) if (x) such registration, after it has become
effective, is or becomes subject to any stop order, injunction or other Order of
the Commission or other Governmental Authority or court by reason of an act or
omission by the Company and such interference is not cured within twenty (20)
Business Days or (y) the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in connection with such
registration are not satisfied because of an act or omission

 

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by the Company (other than a failure of the Company or any of its officers or
employees to execute or deliver any closing certificate by reason of facts or
circumstances existing due to actions of Apollo) or (ii) at any time after the
Demand Party delivers a Demand Notice to the Company and prior to the
effectiveness of the Registration Statement, the preparation of such
Registration Statement is discontinued or such Registration Statement is
withdrawn or abandoned at the request of the Demand Party (other than as
contemplated by Section 11(e)) unless the Demand Party has elected to pay and
has paid to the Company in full the Registration Expenses (as set forth in
Section 11(j)) in connection with such Registration Statement.

(e)           Cutbacks.  If the managing underwriter advises the Company that
the inclusion of all such Restricted Shares proposed to be included in any
registration would interfere with the successful marketing (including pricing)
of the Equity Securities of the Company to be offered thereby, then the number
of Restricted Shares proposed to be included in such registration shall be
allocated among the Company and the selling Stockholders in the following order
of priority:

(i)            first, the Restricted Shares to be offered by the Company; and

(ii)           second, the amount of Restricted Shares which all other
Stockholders have requested to be included in such registration (that the
managing underwriter believes can be sold without interfering with the
successful marketing (including pricing) of the Equity Securities of the
Company), pro rata based upon the number of Restricted Shares proposed to be
sold by each such Stockholder in such registration.

(f)            Piggyback Registration.  If the Company at any time proposes for
any reason to register Restricted Shares under the Securities Act (other than on
Form S-4 or Form S-8 promulgated under the Securities Act or any successor forms
thereto) including, without limitation, pursuant to Section 11(a) or Section
11(g), it shall promptly give written notice to each Stockholder of its
intention to register the Restricted Shares and, upon the written request, given
within 15 days after delivery of any such notice by the Company, of any such
Stockholder to include in such registration Restricted Shares (which request
shall specify the number of Restricted Shares proposed to be included in such
registration), the Company shall use its best efforts to cause all such
Restricted Shares to be included in such registration on the same terms and
conditions as the Restricted Shares otherwise being sold in such registration,
and in any event, subject to Section 11(e) the Company shall include the
Restricted Shares if the registration is effected pursuant to Section 11(a) or
Section 11(g) on the same terms and conditions as the Restricted Shares
otherwise being sold in such registration.

(g)           Registrations on Form S-3.  Notwithstanding anything contained in
this Agreement to the contrary, at such time as the Company shall have qualified
for the use of Form S-3 promulgated under the Securities Act or any successor
form thereto, Apollo shall have the right to request in writing an unlimited
number of Demand Registrations on Form S-3 or such successor form of Restricted
Shares held by Apollo, which request or requests shall (i) specify the number of
Restricted Shares intended to be sold or otherwise Transferred and (ii) state
the intended method of Transfer of such Restricted Shares.  Promptly (and in any
event within 5 days) after receipt of any such request, the Company shall give
written notice of such proposed

 

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registration to the other Stockholders and, subject to Section 11(e), shall
include in such proposed registration any Restricted Shares requested to be
included in such proposed registration by such Stockholders who respond in
writing to the Company’s notice within 15 days after delivery of such Notice
(which response shall specify the number of Restricted Shares proposed to be
included in such registration).

(h)           Holdback Agreement.  If the Company at any time shall register any
shares of Common Stock under the Securities Act (including any registration
pursuant to Section 11(a)) for sale to the public, Apollo and the Non-Apollo
Holders shall not sell, make any short sale of, grant any option for the
purchase of, or otherwise Transfer, any Restricted Shares (other than those
Restricted Shares included in such registration pursuant to Section 11(a))
without the prior written consent of the Company for a period designated by the
Company in writing to Apollo and the Non-Apollo Holders, which period shall not
begin more than 10 days prior to the effectiveness of the Registration Statement
pursuant to which such public offering shall be made and shall not exceed 90
days (or 180 days in the case of the initial public offering) after the
effective date of such Registration Statement.

(i)            Preparation and Filing.  If and whenever the Company is under an
obligation pursuant to the provisions of this Agreement to use its best efforts
to effect the registration of any Restricted Shares, the Company shall, as
expeditiously as practicable:

(i)            use its best efforts to cause a Registration Statement that
registers such Restricted Shares to become and remain effective for a period of
90 days or until all of such Restricted Shares have been Transferred (if
earlier);

(ii)           furnish, at least five Business Days before filing a Registration
Statement that registers such Restricted Shares, any Preliminary Prospectus and
the Prospectus relating thereto or any amendments or supplements relating to
such a Registration Statement or such prospectuses, to one counsel acting on
behalf of all selling Stockholders selected by Apollo (the “Sellers’ Counsel”),
copies of all such documents proposed to be filed (it being understood that such
five Business Day period need not apply to successive drafts of the same
document proposed to be filed so long as such successive drafts are supplied to
such counsel in advance of the proposed filing by a period of time that is
customary and reasonable under the circumstances), and shall use its best
efforts to reflect in each such document, when so filed with the Commission,
such comments as the Stockholders whose Restricted Shares are to be covered by
such Registration Statement may reasonably propose;

(iii)          prepare and file with the Commission 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 for
at least a period of 90 days or until all of such Restricted Shares have been
Transferred (if earlier) and to comply with the provisions of the Securities Act
with respect to the sale or other Transfer of such Restricted Shares;

(iv)          promptly notify the Sellers’ Counsel in writing (A) of the receipt
by the Company of any notification with respect to any comments by the
Commission

 

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with respect to such Registration Statement, any Preliminary Prospectus, the
Prospectus or any Issuer Free Writing Prospectus, or any request by the
Commission for the amending or supplementing thereof or for additional
information with respect thereto, (B) of the receipt by the Company of any
notification with respect to the issuance by the Commission of any stop order
suspending the effectiveness of such Registration Statement, Preliminary
Prospectus, Prospectus or Issuer Free Writing Prospectus or any amendment or
supplement thereto or the initiation of any proceedings for that purpose and (C)
of the receipt by the Company of any notification with respect to the suspension
of the qualification of such Restricted Shares for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purposes;

(v)           use its best efforts to register or qualify such Restricted Shares
under such other securities or blue sky laws of such jurisdictions as any
selling Stockholder reasonably requests and do any and all other acts and things
which may be reasonably necessary or advisable to enable the holders of such
Restricted Shares to consummate the Transfer in such jurisdictions.

(vi)          without limiting subsection (v) above, use its best efforts to
cause such Restricted Shares to be registered with or approved by such other
Governmental Authorities as may be necessary by virtue of the business and
operations of the Company to enable the holders of such Restricted Shares to
consummate the Transfer of such Restricted Shares;

(vii)         furnish to each selling Stockholder and the underwriters, if any,
such number of copies of such Registration Statement, any amendments thereto,
any exhibits thereto or documents incorporated by reference therein (but only to
the extent not publicly available on EDGAR or the Company’s website), any
Preliminary Prospectus, any Issuer Free Writing Prospectus and the Prospectus
(each in conformity with the requirements of the Securities Act), and such other
documents as such selling Stockholder or underwriters may reasonably request in
order to facilitate the public offering and sale or other Transfer of such
Restricted Shares;

(viii)        notify in writing on a timely basis each selling Stockholder at
any time when the Prospectus is required to be delivered under the Securities
Act, of the happening of any event as a result of which the Prospectus included
in such Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing and, at the request of such Stockholder, prepare
and furnish to such Stockholder a number of copies reasonably requested by such
Stockholder of a supplement to or an amendment of such Prospectus as may be
necessary so that, as thereafter delivered to the offerees of such Restricted
Shares, such Prospectus shall not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing;

(ix)           prevent the issuance of an Order suspending the effectiveness of
a Registration Statement, and if one is issued, use its best efforts to obtain
the withdrawal

 

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of any Order suspending the effectiveness of a Registration Statement as soon as
possible;

(x)            retain in accordance with the Rules and Regulations all Issuer
Free Writing Prospectuses not required to be filed pursuant to the Rules and
Regulations; and if at any time after the date hereof any event shall have
occurred as a result of which any Issuer Free Writing Prospectus, as then
amended or supplemented, would conflict with the information in the Registration
Statement, the most recent Preliminary Prospectus or the Prospectus or would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, or, if for any other
reason it shall be necessary to amend or supplement any Issuer Free Writing
Prospectus effect compliance with the Securities Act and the Rules and
Regulations, to notify promptly in writing the selling Stockholders and
underwriters and, upon request, to file such document and to prepare and furnish
without charge to each selling Stockholder and underwriter as many copies as
each such selling Stockholder and underwriter may from time to time reasonably
request of an amended or supplemented Issuer Free Writing Prospectus that will
correct such conflict, statement or omission or effect compliance with the
Securities Act and the Rules and Regulations;

(xi)           make available for inspection by the selling Stockholders, the
Sellers’ Counsel or any underwriter participating in any Transfer pursuant to
such Registration Statement and any attorney, accountant or other agent retained
by any such seller or underwriter (collectively, the “Inspectors”), all
pertinent financial and other records, pertinent corporate documents and
properties of the Company (collectively, the “Records”), as shall be reasonably
necessary to enable them to exercise their due diligence responsibility, and
cause the Company’s officers, managers and employees to supply all information
(together with the Records, the “Information”) reasonably requested by any such
Inspector in connection with such Registration Statement.  Any of the
Information that the Company determines in good faith to be confidential, and of
which determination the Inspectors are so notified, shall not be disclosed by
the Inspectors unless (i) the disclosure of such Information is necessary to
avoid or correct a misstatement or omission in the Registration Statement, (ii)
the release of such Information is ordered pursuant to a subpoena or other Order
from a Governmental Authority or (iii) such Information has been made generally
available to the public.  The selling Stockholders agree that they will, upon
learning that disclosure of such Information is sought by a Governmental
Authority, give prompt written notice to the Company and use their reasonable
commercial efforts to allow the Company, at the Company’s expense, to undertake
appropriate action to prevent disclosure of the Information deemed confidential;

(xii)          in the case of an Underwritten Offering, use its best efforts to
obtain, from its Accountants, a “cold comfort” letter in customary form and
covering such matters of the type customarily covered by cold comfort letters;

(xiii)         use its best efforts to obtain, from its counsel, an opinion or
opinions in customary form (which shall also be addressed to the Stockholders
selling

 

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Restricted Shares in such registration) and, in the case of an Underwritten
Offering, use its best efforts to obtain, from its counsel, an opinion or
opinions in customary form;

(xiv)        provide a transfer agent and registrar (which may be the same
entity) for such Restricted Shares and a CUSIP number for such Restricted
Shares, in each case no later than the effective date of such registration;

(xv)         upon the request of any underwriter, issue to any underwriter to
which any selling Stockholder may sell Restricted Shares in such offering,
certificates evidencing such Restricted Shares;

(xvi)        upon the request of Apollo, list such Restricted Shares on any
national securities exchange on which any shares of Common Stock are listed or,
if no such shares are listed on a national securities exchange, use its best
efforts to qualify such Restricted Shares for inclusion on the automated
quotation system of the National Association of Securities Dealers, Inc. (the
“NASD”) or such other national securities exchange as Apollo shall request;

(xvii)       in connection with an Underwritten Offering, participate, to the
extent requested by the managing underwriter for the offering or Apollo, in
customary efforts to sell the Restricted Shares being offered, cause such steps
to be taken as to ensure the good faith participation of senior management
officers of the Company in “road shows” as is customary and take such other
actions as the underwriters or Apollo may request in order to expedite or
facilitate the Transfer of Restricted Shares;

(xviii)      cooperate with each Stockholder and each underwriter participating
in the Transfer of Restricted Shares and their respective counsel in connection
with any filings required to be made with the NASD, including, if appropriate,
the pre-filing of the Prospectus as part of a shelf Registration Statement in
advance of an Underwritten Offering;

(xix)         make available to its security holders, as soon as reasonably
practicable but not later than eighteen (18) months after the effective date,
earnings statements (which need not be audited) covering a period of twelve (12)
months beginning within three (3) months after the effective date of the
Registration Statement, which earnings statements shall satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder;

(xx)          during the period when the Prospectus is required to be delivered
under the Securities Act, promptly file all documents required to be filed with
the Commission, including pursuant to Sections 13(a), 13(c), 14, or 15(d) of the
Exchange Act;

(xxi)         otherwise use its best efforts to comply with all applicable Rules
and Regulations; and

(xxii)        use its best efforts to take all other steps necessary to effect
the registration of such Restricted Shares contemplated hereby.

 

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(j)            Expenses.  All expenses incident to the Company’s performance of,
or compliance with, this Section 11, including (a) all registration and filing
fees, and any other fees and expenses associated with filings required to be
made with any stock exchange, the Commission and the NASD (including, if
applicable, the fees and expenses of any “qualified independent underwriter” and
its counsel as may be required by the rules and regulations of the NASD); (b)
all fees and expenses of compliance with state securities or “blue sky” laws
(including fees and disbursements of counsel for the underwriters or
Stockholders in connection with “blue sky” qualifications of the Restricted
Shares and determination of their eligibility for investment under the laws of
such jurisdictions as the managing underwriters may designate); (c) all printing
and related messenger and delivery expenses (including expenses of printing
certificates for the Restricted Shares in a form eligible for deposit with The
Depository Trust Company (or any other depositary or transfer agent/registrar)
and of printing any Preliminary Prospectus, any Issuer Free Writing Prospectus
and the Prospectus and any amendments thereto), all fees and disbursements of
counsel for the Company and of all independent certified public accountants of
the issuer (including the expenses of any special audit and “cold comfort”
letters required by or incident to such performance); (d) Securities Act
liability insurance if the Company so desires or the underwriters so require;
(e) all fees and expenses incurred in connection with the listing of the
Restricted Shares on any securities exchange (including NASDAQ) and all rating
agency fees; (f) all fees and disbursements of the Sellers’ Counsel to represent
the selling Stockholders in connection with such registration; and (g)
reasonable fees and expenses of outside counsel and advisors retained by the
Company (all such expenses being herein called “Registration Expenses”), will be
borne by the Company, regardless of whether the Registration Statement becomes
effective; provided, however, that all underwriting discounts and selling
commissions applicable to the Restricted Shares shall not be borne by the
Company, but shall be borne by the seller or sellers thereof, in proportion to
the number of Restricted Shares sold by such seller or sellers.  In addition,
the Company will, in any event, pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any audit and the fees and expenses
of any Person, including special experts, retained by the Company.

(k)           Indemnification.

(i)            In connection with any registration of any Restricted Shares
under the Securities Act pursuant to this Agreement, the Company shall indemnify
and hold harmless each seller of such Restricted Shares, each underwriter,
broker or any other Person acting on behalf of such seller and each other
Person, if any, who controls any of the foregoing Persons within the meaning of
the Securities Act against any losses, claims, damages or liabilities, joint or
several, to which any of the foregoing Persons may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (1)
any untrue statement or alleged untrue statement of a material fact contained in
(A) any Preliminary Prospectus, the Registration Statement, the Prospectus or in
any amendment or supplement thereto, (B) any Issuer Free Writing Prospectus or
in any amendment or supplement thereto or (C) any Permitted Issuer Information
used or referred to in any “free writing prospectus” (as defined in Rule 405)
used or referred to by any underwriter or (D) any “road show” (as defined in
Rule 433) not constituting an Issuer Free Writing Prospectus, when considered
together with the most recent Preliminary Prospectus

 

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(collectively, “Road Show Material”), (2) the omission or alleged omission to
state in any Preliminary Prospectus, the Registration Statement, the Prospectus,
any Issuer Free Writing Prospectus or in any amendment or supplement thereto or
in any Permitted Issuer Information or any Road Show Material any material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Preliminary Prospectus, Issuer Free Writing Prospectus, Road
Show Material and the Prospectus, in the light of the circumstances under which
they were made) not misleading, or any violation by the Company of the
Securities Act or state securities or blue sky laws applicable to the Company
and relating to action or inaction required of the Company in connection with
such registration or qualification under such state securities or blue sky laws;
and shall reimburse such seller, such underwriter, such broker or such other
Person acting on behalf of such seller and each such controlling Person for any
legal or other expenses reasonably incurred by any of them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Preliminary Prospectus, the Registration Statement, the
Prospectus, any Issuer Free Writing Prospectus or in any such amendment or
supplement thereto or in any Permitted Issuer Information or any Road Show
Material in reliance upon and in conformity with written information furnished
to the Company through an instrument duly executed by such seller or underwriter
specifically for use in the preparation thereof; and provided, further, however,
that the foregoing indemnity agreement shall not inure to the benefit of any
indemnified party if (w) such loss, claim, damage, liability or judgment arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Prospectus or any amendment
or supplement thereto, as the case may be, (x) the Company informed such sellers
and underwriters of such untrue statement or alleged untrue statement or
omission or alleged omission prior to the confirmation of sales of the Shares,
(y) such untrue statement or alleged untrue statement or omission or alleged
omission was corrected in an amended or supplemented Preliminary Prospectus (or,
where permitted by law, an Issuer Free Writing Prospectus) and such corrected
Preliminary Prospectus (or Issuer Free Writing Prospectus) was provided to the
underwriters such that the underwriters had a reasonably sufficient amount of
time to deliver such corrected Preliminary Prospectus (or Issuer Free Writing
Prospectus) to the Persons to whom the underwriters offered the Restricted
Shares and (z) the timely delivery of such amended Preliminary Prospectus (or
Issuer Free Writing Prospectus) to such Person would have constituted a complete
defense to the losses, claims, damages, liabilities and judgments asserted by
such Person.

(ii)           In connection with any registration of Restricted Shares under
the Securities Act pursuant to this Agreement, each seller of Restricted Shares
shall indemnify and hold harmless (in the same manner and to the same extent as
set forth in the preceding paragraph of this Section 11(k)) the Company, each
officer of the Company who shall sign such Registration Statement, each
underwriter, broker or other Person acting on behalf of such seller, each Person
who controls any of the foregoing Persons within the meaning of the Securities
Act and each other seller of Restricted Shares under such Registration Statement
with respect to any statement or omission from any

 

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Preliminary Prospectus, the Registration Statement, the Prospectus, any Issuer
Free Writing Prospectus or in any amendment or supplement thereto or in any Road
Show Material, if such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company or such underwriter
through an instrument duly executed by such seller specifically for use in
connection with the preparation of such Preliminary Prospectus, Registration
Statement, Prospectus, Issuer Free Writing Prospectus or in any amendment or
supplement thereto or in Road Show Material; provided, however, that the maximum
amount of liability in respect of such indemnification shall be, limited, in the
case of each seller of Restricted Shares, to an amount equal to the net proceeds
actually received by such seller from the sale of Restricted Shares effected
pursuant to such registration.

(iii)          Indemnification similar to that specified in Sections 11(k)(i)
and (k)(ii) shall be given by the Company and each seller of Restricted Shares
(with such modifications as may be appropriate) with respect to any required
registration or other qualification of their Securities under any Federal or
state law or regulation of Governmental Authority other than the Securities Act.

(iv)          Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the preceding
paragraphs of this Section 11(k), such indemnified party will, if a claim in
respect thereof is made against an indemnifying party, give written notice to
the latter of the commencement of such action (provided, however, that an
indemnified party’s failure to give such notice in a timely manner shall only
relieve the indemnification obligations of an indemnifying party to the extent
such indemnifying party is materially prejudiced by such failure).  In case any
such action is brought against an indemnified party, the indemnifying party will
be entitled to participate in and to assume the defense thereof, jointly with
any other indemnifying party similarly notified to the extent that it may wish,
with counsel reasonably satisfactory to such indemnified party, and after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be responsible for
any legal or other expenses subsequently incurred by the latter in connection
with the defense thereof; provided, however, that if any indemnified party shall
have reasonably concluded that there may be one or more legal or equitable
defenses available to such indemnified party which are additional to or conflict
with those available to the indemnifying party, or that such claim or litigation
involves or could have an effect upon matters beyond the scope of the indemnity
agreement provided in this Section 11(k), the indemnifying party shall not have
the right to assume the defense of such action on behalf of such indemnified
party and such indemnifying party shall reimburse such indemnified party and,
any Person controlling such indemnified party for that portion of the fees and
expenses of any counsel retained by the indemnified party which are reasonably
related to the matters covered by the indemnity agreement provided in this
Section 11(k).

(v)           If the indemnification provided for in this Section 11(k) is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, claim, damage or liability referred to herein, then
the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amounts paid

 

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or payable by such indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions which resulted in such loss,
claim, damage or liability as well as any other relevant equitable
considerations; provided, however, that the maximum amount of liability in
respect of such contribution shall be limited, in the case of each seller of
Restricted Shares, to an amount equal to the net proceeds actually received by
such seller from the sale of Restricted Shares effected pursuant to such
registration.  The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.  No Person guilty of fraud shall be entitled to
indemnification or contribution hereunder.

(vi)          The indemnification and contribution provided for under this
Agreement will remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party and will survive the Transfer of
Restricted Shares.

(l)            Underwritten Offerings.

Notwithstanding anything to the contrary set forth in this Agreement:

(i)            to the extent that all the holders selling Restricted Shares in a
proposed registration shall enter into an underwriting or similar agreement,
which agreement contains provisions covering one or more issues addressed in
this Section 11, the provisions contained in this Section 11 addressing such
issue or issues shall be of no force or effect with respect to such
registration.  If any offering pursuant to a Demand Registration or pursuant to
Section 11(g) involves an Underwritten Offering, Apollo shall have the right to
select the managing underwriter or underwriters to administer the offering,
which managing underwriters shall be a firm of nationally recognized standing
and reasonably satisfactory to the Company in which case the Company shall enter
into an agreement with such firm for the underwriting of such offering
containing terms and conditions reasonably satisfactory to Apollo and the
Company; and

(ii)           no Stockholder may participate in any registration hereunder that
is underwritten unless such Stockholder agrees (A) to sell such Stockholder’s
Restricted Shares proposed to be included therein on the basis provided in any
underwriting arrangement(s) acceptable to Apollo and the Company and consistent
with the terms hereof and (B) as expeditiously as possible, to notify the
Company of the occurrence of any event concerning such Stockholder as a result
of which any Preliminary Prospectus, any Issuer Free Writing Prospectus or the
Prospectus contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

 

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(m)          Information by Holder.  Each holder of Restricted Shares to be
included in any registration shall furnish to the Company such written
information regarding such holder and the distribution proposed by such holder
as the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in this Agreement.

(n)           Exchange Act Compliance.  From and after the date a Registration
Statement filed by the Company pursuant to the Exchange Act relating to any
class of the its Securities shall have become effective, the Company shall
comply with all of the reporting requirements of the Exchange Act (whether or
not it shall be required to do so) and shall comply with all other public
information reporting requirements of the Commission which are conditions to the
availability of Rule 144 for the sale of Restricted Shares.  The Company shall
cooperate with each holder in supplying such information as may be necessary for
such holder to complete and file any information reporting forms presently or
hereafter required by the Commission as a condition to the availability of Rule
144 or any comparable successor rules).  The Company shall furnish to any holder
of Restricted Shares upon request a written statement executed by the Company as
to the steps it has taken to comply with the current public information
requirement of Rule 144 (or such comparable successor rules).  After the
consummation of a Qualified Public Offering, subject to the limitations on
Transfers imposed by this Agreement, the Company shall use its best efforts to
facilitate and expedite transfers of Restricted Shares pursuant to Rule 144
under the Securities Act, which efforts shall include timely notice to its
transfer agent to expedite such transfers of Restricted Shares.

(o)           No Conflict of Rights.  The Company represents and warrants to
Apollo and the Non-Apollo Holders that the registration rights granted in this
Agreement do not conflict with any other registration rights granted by the
Company.  The Company shall not, after the date hereof, grant any registration
rights which conflict with or impair, or have any priority over, the
registration rights granted hereby.

(p)           Termination.  The provisions of this Section 11 shall terminate
and be of no further force or effect when there shall not be any Restricted
Shares, provided, however, that Sections 11(j) and (k) shall survive the
termination of this Agreement indefinitely.

(q)           Cypress Stockholders’ Agreement.  Each of the parties to this
Agreement acknowledge that the Cypress Stockholders’ Agreement contains
provisions comparable to the provisions of this Section 11, including provisions
relating to piggyback registration rights.  Nothing in this Section 11 shall
limit or in any way restrict the rights of the parties to the Cypress
Stockholders’ Agreement thereunder.

Section 12.            Non-Solicitation; Non-Hire; Non-Compete;
Non-Disparagement; Confidentiality.

The following provisions shall apply to each Non-Apollo Holder to the extent
that such Non-Apollo Holder is not subject to any similar provisions pursuant to
a separate arrangement with the Company or any of its Subsidiaries:

 

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(a)           With respect to each Non-Apollo Holder, during the period
commencing on the date of this Agreement and ending on the second anniversary of
the date on which such Non-Apollo Holder’s employment or other professional
relationship with the Company or any Subsidiary of the Company terminates
(whether pursuant to the terms of his or her Employment Agreement with the
Company or any Subsidiary of the Company or otherwise), such Non-Apollo Holder
shall not and shall cause its Affiliates (other than the Company and its
Subsidiaries) not to (without the prior written consent of Apollo) directly or
indirectly (i) induce or attempt to induce any employee of the Company or any
Subsidiary of the Company to leave the employ of the Company or any Subsidiary
of the Company, or in any way interfere with the relationship between the
Company or any Subsidiary of the Company, on the one hand, and any employee
thereof, on the other hand, (ii) hire any Person who is or at any time was an
employee of the Company or any Subsidiary of the Company until six (6) months
after such individual’s employment relationship with the Company or such
Subsidiary has ended, or (iii) induce or attempt to induce any customer,
supplier, licensee or other business relation of the Company or any Subsidiary
of the Company to cease doing business with the Company or such Subsidiary, or
in any way interfere with the relationship between any such customer, supplier,
licensee or business relation, on the one hand, and the Company or any
Subsidiary of the Company, on the other hand.

(b)           With respect to each Non-Apollo Holder, during the period
commencing on the date of this Agreement and ending on the first anniversary of
the date on which such Non-Apollo Holder’s employment or other professional
relationship with the Company or any Subsidiary of the Company terminates
(whether pursuant to the terms of his or her Employment Agreement with the
Company or any Subsidiary of the Company or otherwise) (the “Non-Compete
Period”), such Non-Apollo Holder shall not and shall cause its Affiliates (other
than the Company and its Subsidiaries) not to (without the prior written consent
of Apollo) directly or indirectly (i) engage in any Competitive Business, (ii)
render any services to any Competitive Business in a manner that enhances the
capacity of such Competitive Business to engage in the production, sale,
provision or distribution of products or services similar to those produced,
sold, distributed or provided by the Company or any of its Subsidiaries, or
(iii) acquire a financial interest in any Competitive Business.  For purposes of
this Agreement, the phrase “directly or indirectly engage in” shall include any
direct or indirect ownership or profit participation interest in such
enterprise, whether as an owner, stockholder, member, partner, joint venturer of
or otherwise, and shall include any direct or indirect participation in such
enterprise as an employee, consultant, director, officer, licensor of technology
or otherwise.  For purposes of this Agreement, the term “Competitive Business”
shall mean a business that engages in the production, sale, provision or
distribution of products or services similar to those produced, sold,
distributed or provided by the Company or any of its Subsidiaries during the
period in which such Non-Apollo Holder was employed or retained by the Company
or any Subsidiary of the Company.  Notwithstanding the foregoing, nothing herein
shall prohibit such Non-Apollo Holder from being a passive owner of not more
than 2% of the outstanding equity securities of any class of a corporation or
other entity that is publicly traded, or not more than 2% of any non-voting
equity securities or debt securities of any corporation or other entity, so long
as such Non-Apollo Holder has no active participation in the business of such
corporation or other entity (including serving as a member of the board of
directors or as a consultant). The obligations of each Non-Apollo Holder under
this Section 12(b) shall apply to any geographic area in which the Company

 

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or its Subsidiaries have engaged in business during such Non-Apollo Holder’s
Non-Compete Period.

(c)           Each Non-Apollo Holder acknowledges and agrees that, during such
time as such Person is employed with, or otherwise has another professional
relationship with, the Company or any Subsidiary of the Company and thereafter,
he, she or it shall not (except in the ordinary course promotion of a product or
a service of a subsequent employer or a company for which he, she or it is
providing products or services), directly or indirectly, issue or communicate
any public statement, or statement likely to become public, that is disparaging
of or damaging to the Company, any of its Subsidiaries, any product, practice or
service thereof, or, any officer, director or employee thereof or Apollo or any
of its officers, directors, members, managers, partners, employees or Affiliated
investment funds.  The foregoing shall not be violated by truthful responses to
legal process or inquiry by a Governmental Authority.

(d)           Each Non-Apollo Holder shall, and shall cause its affiliates,
employees, counsel and authorized representatives (collectively, “Authorized
Representatives”) to, hold in confidence all Confidential Information of the
Company, Apollo and their respective Subsidiaries and Affiliates provided or
made available to, or otherwise known by or in the possession of, such
Non-Apollo Holder; provided, however, that the foregoing provision shall not
apply to information which: (a) is or becomes generally known to the industry or
the public (other than as a result of the breach of this Section 12(d) by such
Non-Apollo Holder); or (b) is or becomes available to such Non-Apollo Holder on
a non-confidential basis from a source other than (i) the Company or its
Subsidiaries or Affiliates or their respective directors, officers, employees or
agents, or (ii) Apollo or its Affiliates or its or its Affiliates’ limited
partners, general partners, directors, members, officers, managers, employees,
agents, advisors or representatives.  As used in this Agreement, the term
“Confidential Information” means information that is not generally known to the
public and that is used, developed or obtained by the Company or any of its
Subsidiaries or Apollo or any of its Affiliates in connection with their
respective businesses, including processes, ideas, inventions (whether
patentable or not), know-how, schematics, trade secrets, trademarks, copyrights,
patents, designs and all other intellectual property and proprietary
information, books, records, financial statements, customer lists, details
regarding products and services, marketing information, sales information and
all other technical, business, financial, customer and product development
plans, forecasts, strategies and information, previously, presently, or
subsequently disclosed to a Non-Apollo Holder or a Non-Apollo Holder’s
Authorized Representatives, in each case to the extent not generally known to
the public.  Notwithstanding the terms of this Agreement, Confidential
Information may be disclosed by a Non-Apollo Holder and its Authorized
Representatives when compelled by governmental rule or regulation, or compelled
by legal process or court order if such Non-Apollo Holder (and/or its Authorized
Representatives) has given the Company or Apollo, as applicable, prompt written
notice of such request or order and the Confidential Information to be disclosed
as far in advance of its disclosure as reasonably possible so that the Company
or Apollo, as applicable, may seek an appropriate protective order or waive
compliance by such Non-Apollo Holder.  For purposes of the preceding sentence, a
Non-Apollo Holder and its Authorized Representatives shall be entitled to rely
conclusively on an opinion of his, her or its nationally recognized outside
counsel that such Non-Apollo Holder or Authorized Representative is compelled by
governmental rule or regulation, or compelled by legal process or court order,
to disclose any such Confidential Information.

 

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(e)           Each Non-Apollo Holder acknowledges and agrees that the covenants
set forth above are both (i) in partial consideration for monies received under
the Agreement and Plan of Merger and (ii) reasonable and necessary in order for
the Company, Apollo and the other Non-Apollo Holders to preserve and protect
their legitimate business interests, that irreparable injury will result if such
Non-Apollo Holder breaches any of the terms of such covenants and that damages
would be an inadequate remedy for any breach as set forth in Section 14(j)
below.  Accordingly, each Non-Apollo Holder acknowledges and agrees that in the
event of a breach of any of the covenants contained in this Section 12, in
addition to any other remedy that may be available at law or in equity, Apollo,
the Company and its Subsidiaries will be entitled to specific performance and
injunctive relief.

Section 13.            Termination.

Subject to the terms of Section 11(p), this Agreement shall terminate on the
first to occur of:

(a)           the date the Company consummates a Qualified Public Offering;

(b)           the complete liquidation of the Company and its Subsidiaries or
the sale, lease or other disposition by the Company of all or substantially all
of the assets of the Company and its Subsidiaries, taken as a whole; and

(c)           the execution of a resolution of the Board terminating this
Agreement.

Section 14.            Miscellaneous.

(a)           Restrictive Legends.

(i)            Each certificate for Restricted Shares (unless otherwise
permitted by the provisions of Section 14(a)(ii)) shall include a legend in
substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES OR BLUE SKY LAWS.  THESE SECURITIES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT OR LAWS.  THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE ALSO SUBJECT TO A STOCKHOLDERS AGREEMENT DATED AS OF JULY 21,
2006 BY AND AMONG REXNORD HOLDINGS, INC. (THE “COMPANY”) AND THE OTHER PARTIES
NAMED THEREIN.  THE TERMS OF SUCH STOCKHOLDERS AGREEMENT INCLUDE, AMONG OTHER
THINGS, RESTRICTIONS ON TRANSFER.  A

 

37

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COPY OF SUCH AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE
HOLDER HEREOF UPON WRITTEN REQUEST.”

(ii)           Subject to Section 14(b), any holder of Restricted Shares
registered that are pursuant to the Securities Act and qualified under
applicable state securities laws may exchange any certificate or other evidence
of ownership of such Restricted Shares for a certificate or other evidence of
ownership with respect to the Common Stock so registered that shall not bear the
legend set forth in clause (i) of this Section 14(a).

(b)           Compliance with Securities Laws.  Upon any proposed Transfer of
Restricted Shares, the Company shall not be obligated to register the Transfer
of such Restricted Shares on the stock transfer books of the Company until the
Company shall have received (i) to the extent required to ensure compliance with
the Securities Act and any other applicable laws, an opinion of counsel
reasonably satisfactory to the Company, to the effect that the proposed Transfer
of Restricted Shares may be effected without registration under the Securities
Act or any such other applicable laws and/or (ii) representation letters in form
and substance reasonably satisfactory to the Company to ensure compliance with
the provisions of the Securities Act and any other applicable laws.  Each
certificate evidencing Restricted Shares transferred as above provided shall
bear the legend set forth in Section 14(a)(i), except that such certificate
shall not bear such legend if neither such legend nor the restrictions on
Transfer in Section 14(a) and Section 14(b) are required in order to ensure
compliance with the provisions of the Securities Act.

(c)           Severability.  Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, and such invalid, void or
otherwise unenforceable provisions shall be null and void.  It is the intent of
the parties, however, that any invalid, void or otherwise unenforceable
provisions be automatically replaced by other provisions which are as similar as
possible in terms to such invalid, void or otherwise unenforceable provisions
but are valid and enforceable to the fullest extent permitted by law.

(d)           Entire Agreement; Termination of RBS Stockholders’ Agreement.

(i)            This Agreement constitutes the entire agreement among the parties
hereto and supersedes any other agreements, whether written or oral, that may
have been made or entered into by or among any of the parties hereto relating to
the subject matter hereof (including (A) the RBS Stockholders’ Agreement and (B)
the provisions set forth across from the sub-heading “Shareholder Agreement” in
those certain Management Incentive Compensation Term Sheets dated as of May 24,
2006), except for any Employment Agreements, Option Agreements or agreements
relating to Rollover Options.

(ii)           The Stockholders hereby acknowledge and agree that, effective as
of the Closing, notwithstanding anything to the contrary contained in the RBS
Stockholders’ Agreement, and with no further action on the part of any party
thereto or

 

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hereto, the RBS Stockholders’ Agreement shall terminate and be of no further
force or effect, and none of the parties hereto or thereto shall have any
further liability or obligation thereunder whether arising prior to, on or after
the date hereof.

(e)           Successors and Assigns.  This Agreement shall bind and inure to
the benefit of the Company, Apollo and the Non-Apollo Holders and their
respective successors and permitted assigns.  Except as otherwise expressly
permitted pursuant to the terms of this Agreement (or with the prior written
consent of Apollo), neither the Company nor the Non-Apollo Holders shall assign
or otherwise Transfer their rights or obligations hereunder.  Apollo shall have
the right to assign or otherwise Transfer its rights and obligations hereunder
to its Affiliates.

(f)            Modifications; Amendments.  The terms and provisions of this
Agreement may not be modified, amended or waived, except pursuant to a writing
signed by the Company, and the holders of a majority of the Common Stock;
provided, however, that any such modification, amendment or waiver that
adversely affects any Stockholder and is prejudicial to such Stockholder
relative to all of the other Stockholders shall not be effected without the
consent of such Stockholder.

(g)           Waiver.  No course of dealing between the Company, Apollo and the
Non-Apollo Holders (or any of them) or any delay in exercising any rights
hereunder will operate as a waiver of any rights of any party to this
Agreement.  The failure of any party hereto to enforce any of the provisions of
this Agreement will in no way be construed as a waiver of such provisions and
will not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.

(h)           Table of Contents and Headings.  The table of contents and section
headings of  this Agreement are included for reference purposes only and shall
not affect the construction or interpretation of any of the provisions of this
Agreement.

(i)            Counterparts; Facsimile Signatures.  This Agreement may be
executed in any number of original or facsimile counterparts, and each such
counterpart hereof shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.

(j)            Remedies.

(i)            Apollo and each Non-Apollo Holder shall have all rights and
remedies reserved for Apollo or such Non-Apollo Holder pursuant to this
Agreement and the Restated Certificate and the Bylaws and all rights and
remedies which Apollo or such Non-Apollo Holder has been granted at any time
under any other agreement or contract and all of the rights which such holder
has under any law or equity.  Any Person having any rights under any provision
of this Agreement will be entitled to enforce such rights specifically, to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights granted by law or equity.

(ii)           The parties hereto agree that if any parties seek to resolve any
dispute arising under this Agreement pursuant to a legal proceeding, the
prevailing

 

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parties to such proceeding shall be entitled to receive reasonable fees and
expenses (including reasonable attorneys’ fees and expenses) incurred in
connection with such proceedings.

(iii)          It is acknowledged that it will be impossible to measure in money
the damages that would be suffered if the parties fail to comply with any of the
obligations herein imposed on them and that in the event of any such failure, an
aggrieved Person will be irreparably damaged and will not have an adequate
remedy at law.  Any such Person shall, therefore, be entitled to injunctive
relief, including specific performance, to enforce such obligations, and if any
action should be brought in equity to enforce any of the provisions of this
Agreement, none of the parties hereto shall raise the defense that there is an
adequate remedy at law.

(k)           Notices.  All notices, requests, consents and other communications
hereunder to any party hereto shall be deemed to be sufficient if contained in a
written instrument and shall be deemed to have been duly given when delivered in
person, by telecopy, by nationally-recognized overnight courier, or by first
class registered or certified mail, postage prepaid, addressed to such party at
the address set forth below or such other address as may hereafter be designated
in writing by the addressee to the addressor:

(i)

 

if to the Company, to:

 

 

 

 

 

Rexnord Holdings, Inc.

 

 

c/o RBS Global, Inc.

 

 

4701 Greenfield Avenue

 

 

Milwaukee, WI 53214

 

 

Fax: (414) 643-2510

 

 

Attn: Patricia Whaley, Esq.

 

 

 

 

 

 

 

 

with a copy to:

 

 

O’Melveny & Myers LLP

 

 

Times Square Tower

 

 

7 Times Square

 

 

New York, New York 10036

 

 

Fax: (212) 326-2061

 

 

Attention: John M. Scott, Esq.

 

 

 

(ii)

 

if to Apollo, to:

 

 

 

 

 

Apollo Management VI, L.P.

 

 

c/o Apollo Management, L.P.

 

 

9 West 57th Street, 43rd Floor

 

 

New York, NY 10019

 

 

Fax: (212) 515-3288

 

 

Attention:

Mr. Laurence Berg

 

 

 

Mr. Steven Martinez

 

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with a copy to:

O’Melveny & Myers LLP

Times Square Tower

7 Times Square

New York, New York 10036
Fax:  (212) 326-2061

Attention:  John M. Scott, Esq.

 

(iii)          if to any Non-Apollo Holder, to the address set forth opposite
such Non-Apollo Holder’s name on Schedule I or in the Joinder signed by such
Non-Apollo Holder.

All such notices, requests, consents and other communications shall be deemed to
have been delivered (a) in the case of personal delivery or delivery by
telecopy, on the date of such delivery, (b) in the case of nationally-recognized
overnight courier, on the next Business Day and (c) in the case of mailing, on
the third Business Day following such mailing if sent by certified mail, return
receipt requested.

(l)            Arbitration.  EXCEPT AS SET FORTH BELOW, THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAWS OR PRINCIPLES THEREOF THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE
OF NEW YORK.  ALL MATTERS WHICH ARE THE SUBJECT OF THIS AGREEMENT RELATING TO
MATTERS OF INTERNAL GOVERNANCE OF THE COMPANY SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY
LAW OR RULE THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE
OF DELAWARE TO BE APPLIED.  Any dispute or controversy arising under, out of, or
in connection with or in relation to this Agreement shall be finally determined
and settled by arbitration in New York, New York in accordance with the
applicable rules of the American Arbitration Association, and judgment upon the
award may be entered in any court having jurisdiction.  Within 20 days of the
conclusion of the arbitration hearing, the arbitrator shall prepare written
findings of fact and conclusions of law.  It is mutually agreed that the written
decision of the arbitrator shall be valid, binding, final and non-appealable;
provided, however, that the parties hereto agree that the arbitrator shall not
be empowered to award punitive damages against any party to such arbitration. 
To the extent permitted by law, the arbitrator’s fees and expenses will be borne
equally by each party.  In the event that an action is brought to enforce the
provisions of this Agreement pursuant to this Section 14(l), each party shall
pay its own attorney’s fees and expenses regardless of whether in the opinion of
the court or arbitrator deciding such action there is a prevailing party.  EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL, INCLUDING
TRIAL BY JURY, IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT.

 

41

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(m)          Interpretive Matters.  Unless the context otherwise requires, (i)
all references to articles, sections, schedules or exhibits are to Articles,
Sections, Schedules or Exhibits of or to this Agreement, (ii) each accounting
term not otherwise defined in this Agreement has the meaning assigned for it in
accordance with GAAP, (iii) words in the singular or plural include the singular
and plural, and pronouns stated in either the masculine, feminine or neuter
gender shall include the masculine, feminine and neuter, and (iv) the term
“including” and any variation thereof shall mean by way of example and not by
way of limitation.  The parties hereto have participated jointly in the
negotiation and drafting of this Agreement.  In the event an ambiguity or
question of intent arises, this Agreement shall be construed as if drafted
jointly by the parties, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.

(n)           Further Assurances.  Each party hereto shall do and perform or
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments, and
documents as any other party hereto reasonably may request in order to carry out
the provisions of this Agreement and the consummation of the transactions
contemplated hereby.

(o)           Third Party Beneficiaries.  The covenants of the Company contained
in this Agreement (i) are being given by the Company as an inducement to the
Stockholders to enter into this Agreement (and the Company acknowledges that the
Stockholders have expressly relied thereon) and (b) are solely for the benefit
of the Stockholders.  Accordingly, except as expressly set forth herein
(including in Section 8(b)(iii) with respect to directors and officers indemnity
insurance), no third party (including, without limitation, any holder of Equity
Securities of the Company) or anyone acting on behalf of any thereof, other than
the Stockholders and their permitted assignees, shall be a third party or other
beneficiary of such covenants and no such third party shall have any rights of
contribution against the Stockholders or the Company with respect to such
covenants or any matter subject to or resulting in indemnification under this
Agreement or otherwise.

(p)           Additional Parties; Additional Equity Securities.  In the event
any Equity Securities are issued to a Person (other than Cypress Industrial
Holdings, LLC, George M. Sherman or any other entity controlled by George M.
Sherman) that is not a party hereto (including the issuance of Equity Securities
upon the exercise or conversion of options, warrants or similar equity-linked
Securities of the Company) at any time during the term of this Agreement, such
Equity Securities, as a condition to their issuance, shall become subject to
this Agreement via the execution of a Joinder substantially in the form of
Exhibit B pursuant to which such Person agrees to become party hereto, a
Non-Apollo Holder and have his, her or its Equity Securities subject to, the
terms of this Agreement.  In the event any Stockholder acquires additional
Equity Securities (including via the issuance of Equity Securities upon the
exercise or conversion of options, warrants or similar equity-linked Securities
of the Company), such Equity Securities shall automatically be subject to the
terms of this Agreement.

(q)           Stock Splits, Mergers, etc.  If, and as often as, there are any
changes in any Equity Securities, as applicable, by way of stock split, stock
dividend, combination or reclassification, or through merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions of this Agreement, as may

 

42

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be required, so that the rights, privileges, duties and obligations hereunder
shall continue with respect to the Equity Securities, as so changed.

(r)            No Right to Employment.  None of the provisions hereof shall
create, or be construed or deemed to create, any right to employment in favor of
any Person by the Company or any of its Subsidiaries.

Section 15.            Effectiveness.

This Agreement shall become effective as of the Closing.  In the event that the
Agreement and Plan of Merger is terminated pursuant to its terms and the Closing
does not occur, this Agreement shall be null and void and of no force and
effect.

 

43

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IN WITNESS WHEREOF, the parties hereto have executed this Stockholders’
Agreement on the date first written above.

 

REXNORD HOLDINGS, INC.

 

 

 

 

 

By:

/s/ Thomas Jansen

 

 

Name:

Thomas Jansen

 

 

Title:

Executive Vice President and Chief Financial Officer

 

 

 

 

 

REXNORD ACQUISITION HOLDINGS I, LLC

 

 

 

 

 

By:

/s/ Patricia Navis

 

 

Name:

Patricia Navis

 

 

Title:

Authorized Person

 

 

 

 

 

REXNORD ACQUISITION HOLDINGS II, LLC

 

 

 

 

 

By:

/s/ Patricia Navis

 

 

Name:

Patricia Navis

 

 

Title:

Authorized Person

 

 

 

 

 

ROBERT A. HITT

 

 

 

 

 

/s/ Robert A. Hitt

 

Name: Robert A. Hitt

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

TODD ADAMS

 

 

 

 

 

/s/ Todd Adams

 

Name: Todd Adams

 

 

 

 

 

MICHAEL GALLANT

 

 

 

 

 

/s/ Michael Gallant

 

Name: Michael Gallant

 

 

 

 

 

ANDREW SILVERNAIL

 

 

 

 

 

/s/ Andrew Silvernail

 

Name: Andrew Silvernail

 

 

 

 

 

DEAN VLASAK

 

 

 

 

 

/s/ Dean Vlasak

 

Name: Dean Vlasak

 

 

 

 

 

CURT ZAMEC

 

 

 

 

 

/s/ Curt Zamec

 

Name: Curt Zamec

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

DANIEL CLIFFORD

 

 

 

 

 

/s/ Daniel Clifford

 

Name: Daniel Clifford

 

 

 

 

 

KARL-HEINZ WILLMANN

 

 

 

 

 

/s/ Karl-Heinz Willmann

 

Name: Karl-Heinz Willmann

 

 

 

 

 

VINCENT BUFFA

 

 

 

 

 

/s/ Vincent Buffa

 

Name: Vincent Buffa

 

 

 

 

 

MICHAEL HEATH

 

 

 

 

 

/s/ Michael Heath

 

Name: Michael Heath

 

 

 

 

 

DON DREHER

 

 

 

 

 

/s/ Don Dreher

 

Name: Don Dreher

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

BILL BUTLER

 

 

 

 

 

/s/ Bill Butler

 

Name: Bill Butler

 

 

 

 

 

DENNIS LONGO

 

 

 

 

 

/s/ Dennis Longo

 

Name: Dennis Longo

 

 

 

 

 

CHRIS JURASEK

 

 

 

 

 

/s/ Chris Jurasek

 

Name: Chris Jurasek

 

 

 

 

 

DOUG CIABOTTI

 

 

 

 

 

/s/ Doug Ciabotti

 

Name: Doug Ciabotti

 

 

 

 

 

TIM CARPENTER

 

 

 

 

 

/s/ Tim Carpenter

 

Name: Tim Carpenter

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

KELLY KELLER

 

 

 

 

 

/s/ Kelly Keller

 

Name: Kelly Keller

 

 

 

 

 

DAVE DOERR

 

 

 

 

 

/s/ Dave Doerr

 

Name: Dave Doerr

 

 

 

 

 

PATRICIA WHALEY

 

 

 

 

 

/s/ Patricia Whaley

 

Name: Patricia Whaley

 

 

 

 

 

CRAIG DANECKI

 

 

 

 

 

/s/ Craig Danecki

 

Name: Craig Danecki

 

 

 

 

 

STEVE CRIPE

 

 

 

 

 

/s/ Steve Cripe

 

Name: Steve Cripe

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

BRIAN HALVERSON

 

 

 

 

 

/s/ Brian Halverson

 

Name: Brian Halverson

 

 

 

 

 

JAY MORTENSEN

 

 

 

 

 

/s/ Jay Mortensen

 

Name: Jay Mortensen

 

 

 

 

 

ROBERT GRAUMANN

 

 

 

 

 

/s/ Robert Graumann

 

Name: Robert Graumann

 

 

--------------------------------------------------------------------------------

 

 

Schedule I

Stockholder

 

Restricted Shares Owned

 

Address for Notices

 

Rexnord Acquisition Holdings I, LLC

 

 

 

 

 

Rexnord Acquisition Holdings II, LLC

 

 

 

 

 

Robert A. Hitt

 

 

 

 

 

Michael Andrzejewski

 

 

 

 

 

Todd Adams

 

 

 

 

 

Michael Gallant

 

 

 

 

 

Andrew Silvernail

 

 

 

 

 

Dean Vlasak

 

 

 

 

 

Curt Zamec

 

 

 

 

 

Daniel Clifford

 

 

 

 

 

Karl Heinz-Willman

 

 

 

 

 

Vincent Buffa

 

 

 

 

 

Michael Heath

 

 

 

 

 

Don Dreher

 

 

 

 

 

 

S-

--------------------------------------------------------------------------------

 

Bill Butler

 

 

 

 

 

Dennis Longo

 

 

 

 

 

Chris Jurasek

 

 

 

 

 

Doug Ciabotti

 

 

 

 

 

Tim Carpenter

 

 

 

 

 

Kelly Keller

 

 

 

 

 

Dave Doerr

 

 

 

 

 

Patricia Whaley

 

 

 

 

 

Craig Danecki

 

 

 

 

 

Steve Cripe

 

 

 

 

 

Brian Halverson

 

 

 

 

 

Jay Mortensen

 

 

 

 

 

Robert Graumann

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

Exhibit A

Amended and Restated Certificate of Incorporation of the Company

See attached

 

A-1

--------------------------------------------------------------------------------

 

Exhibit B

FORM OF JOINDER TO
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT

THIS JOINDER (this “Joinder” to that certain Stockholders Agreement dated as of
          ,           , by and among REXNORD HOLDINGS, INC., a Delaware
corporation (the “Company”), REXNORD ACQUISITION HOLDINGS I, LLC, a Delaware
limited liability company (“SPV I”), REXNORD ACQUISITION HOLDINGS II, LLC, a
Delaware limited liability company (“SPV II”; together with SPV I, “Apollo”),
and the other stockholders of the Company (the “Agreement”), is made and entered
into as of [                    ] by and between the Company and [Holder]
(“Holder”).  Capitalized terms used but not otherwise defined herein shall have
the meanings set forth in the Agreement.

WHEREAS, Holder has acquired certain shares of Common Stock, and the Agreement
and the Company requires Holder, as a holder of Common Stock, to become a party
to the Agreement, and Holder agrees to do so in accordance with the terms
hereof.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties to this Joinder hereby agree as follows:

1.             Agreement to be Bound.  Holder hereby agrees that upon execution
of this Joinder, [he, she or it] shall become a party to the Agreement and shall
be fully bound by, and subject to, all of the covenants, terms and conditions of
the Agreement as though an original party thereto and shall be deemed a
Non-Apollo Holder for all purposes thereof.  In addition, Holder hereby agrees
that all Common Stock held by Holder shall be deemed Restricted Shares for all
purposes of the Agreement.

2.             Successors and Assigns.  Except as otherwise provided herein,
this Joinder shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and Holder and any subsequent holders of
Common Stock and the respective successors and assigns of each of them, so long
as they hold any shares of Common Stock.

3.             Counterparts.  This Joinder may be executed in separate
counterparts, including by facsimile, each of which shall be an original and all
of which taken together shall constitute one and the same agreement.

4.             Notices.  For purposes of Section 14(k) of the Agreement, all
notices, demands or other communications to the Holder shall be directed to:

[Name]
[Address]
[Attention]
[Facsimile Number]

5.             Governing Law.  EXCEPT AS SET FORTH BELOW, THIS JOINDER SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH

 

B-1

--------------------------------------------------------------------------------

 

THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF
LAWS OR PRINCIPLES THEREOF THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK.

6.             Descriptive Headings.  The descriptive headings of this Joinder
are inserted for convenience only and do not constitute a part of this Joinder.

* * * * *

 

B-2

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have executed this Joinder as of the date
first above written.

 

REXNORD HOLDINGS, INC.

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

 

 

[HOLDER]

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------