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.




 





 



















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


 


 

















 


                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).


 

















 


“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 


 


2

















 


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.


 


3

















 


“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).


 


4

















 


“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

















 


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).


 


6

















 


“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.


 


7

















 


“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 


 


8

















 


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.


 


9

















 


“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 


 


10

















 


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.


 


11

















 


(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.


 


12

















 


(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 


 


13

















 


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 


 


14

















 


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 


 


15

















 


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:


 


16

















 


(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 


 


17

















 


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 


 


18

















 


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.


 


19

















 


(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.


 


20

















 


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).


 


21

















 


(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;


 


22

















 


(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 


 


23

















 


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 


 


24

















 


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 


 


25

















 


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 


 


26

















 


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 


 


27

















 


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 


 


28

















 


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.


 


29

















 


(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 


 


30

















 


(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 


 


31

















 


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 


 


32

















 


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.


 


33

















 


(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:


 


34

















 


(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 


 


35

















 


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.


 


36

















 


(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

















 


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 


 


38

















 


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 


 


39

















 


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

  



 


40

















 


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

















 


(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

















 


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

















 


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: