Document:

exv10w8

Table of Contents

Exhibit 10.8

 

 

 

 

STOCKHOLDERS’ AGREEMENT

by and among

MEDQUIST HOLDINGS INC.

and

S.A.C. PEI CB INVESTMENT, L.P.,

S.A.C. PEI CB INVESTMENT II, LLC and

INTERNATIONAL EQUITIES (S.A.C. ASIA) LIMITED

Dated
as of February 4, 2011

 

 

 

 

Table of Contents

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	Article I.	 	INTRODUCTORY MATTERS	 	 	1	 
	 
	 	1.1	 	Defined Terms	 	 	1	 
	 
	 	1.2	 	Construction	 	 	3	 
	Article II.	 	CORPORATE GOVERNANCE MATTERS	 	 	3	 
	 
	 	2.1	 	Board of Directors	 	 	3	 
	Article III.	 	COVENANTS	 	 	4	 
	 
	 	3.1	 	Books and Records; Access	 	 	4	 
	 
	 	3.2	 	Additional Information	 	 	5	 
	Article IV.	 	MISCELLANEOUS	 	 	5	 
	 
	 	4.1	 	Termination	 	 	5	 
	 
	 	4.2	 	Notices	 	 	5	 
	 
	 	4.3	 	Further Assurances	 	 	6	 
	 
	 	4.4	 	Assignment	 	 	6	 
	 
	 	4.5	 	Amendment; Waiver	 	 	6	 
	 
	 	4.6	 	Third Parties	 	 	6	 
	 
	 	4.7	 	Governing Law	 	 	6	 
	 
	 	4.8	 	Consent to Jurisdiction	 	 	6	 
	 
	 	4.9	 	Waiver of Jury Trial	 	 	7	 
	 
	 	4.10	 	Specific Performance	 	 	7	 
	 
	 	4.11	 	Entire Agreement	 	 	7	 
	 
	 	4.12	 	Titles and Headings	 	 	7	 
	 
	 	4.13	 	Severability	 	 	8	 
	 
	 	4.14	 	Counterparts	 	 	8	 
	 
	 	4.15	 	Effectiveness	 	 	8	 

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STOCKHOLDERS’ AGREEMENT

          STOCKHOLDERS’
AGREEMENT, dated as of February 4, 2011 (and effective as set forth in
Section 4.15 of this Agreement), by and among MedQuist Holdings Inc., which shall be a Delaware
corporation at the time of the IPO (the “Company”) and S.A.C. PEI CB Investment, L.P., a
Cayman Islands limited Partnership (“SAC CBI”), S.A.C. PEI CB Investment II, LLC, a
Delaware limited liability company (“SAC CBI II”) and International Equities (S.A.C. Asia)
Limited, a company incorporated under the Companies Act of 2001 of Mauritius (“SAC Asia”
and, together with SAC CBI and SAC CBI II, collectively, the “SAC Entities”).

BACKGROUND:

          WHEREAS, the Company is currently contemplating an underwritten initial public offering
(“IPO”) of shares of its Common Stock (as defined in Section 1.1); and

          WHEREAS, in connection with, and effective upon, the date of completion of the IPO (the
“Closing Date”) of the Company, the Company and the SAC Entities wish to set forth certain
understandings between such parties, including with respect to certain governance matters.

          NOW, THEREFORE, the parties agree as follows:

ARTICLE I. INTRODUCTORY MATTERS

          1.1 Defined Terms

          In addition to the terms defined elsewhere herein, the following terms have the following
meanings when used herein with initial capital letters:

     “Affiliate” has the meaning ascribed thereto in Rule 12b-2 promulgated
under the Exchange Act, as in effect on the date hereof.

     “Agreement” means this Stockholders’ Agreement, as the same may be amended,
supplemented, restated or otherwise modified from time to time in accordance with the terms
hereof.

     “Applicable Law” means, with respect to any Person, any statute, law,
regulation, ordinance, rule, injunction, order, decree, governmental approval, directive,
requirement, or other governmental restriction or any similar form of, decision of, or
determination by, any governmental authority or the Exchange, applicable to such Person or
its Subsidiaries or their respective assets.

     “beneficially own” has the meaning set forth in Rule 13d-3 promulgated under
the Exchange Act.

     “Board” means the board of directors of the Company.

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

     “Closing Date” has the meaning set forth in the Background.

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     “Company” has the meaning set forth in the preamble.

     “Common Stock” means the shares of common stock, par value $0.10 per share, of
the Company, and any other capital stock of the Company into which such stock is
reclassified or reconstituted and any other common stock of the Company.

     “Control” (including its correlative meanings, “Controlled by” and
“under common Control with”) means possession, directly or indirectly, of the 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) of a
Person.

     “Director” means any member of the Board.

     “Exchange” means The NASDAQ Global Market or such other stock exchange or
securities market on which the Common Stock is listed or quoted.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder, as the same may be amended from time to time.

     “Governmental Authority” means any nation or government, any state or other
political subdivision thereof, and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.

     “IPO” has the meaning set forth in the Background.

     “Law” means any statute, law, regulation, ordinance, rule, injunction, order,
decree, governmental approval, directive, requirement, or other governmental restriction or
any similar form of decision of, or determination by, or any interpretation or
administration of any of the foregoing by, any Governmental Authority.

     “Permitted Assigns” means with respect to the SAC Entities, their respective
Affiliates and successors and, with the express written consent of the SAC Entity
Transferring such shares, any Transferee of shares of Common Stock Transferred by such SAC
Entity, other than pursuant to a widely distributed public sale, that agrees to become party
to, and to be bound to the same extent as its Transferor by the terms of, this Agreement.

     “Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political subdivision
thereof.

     “SAC Asia” has the meaning set forth in the preamble.

     “SAC CBI” has the meaning set forth in the preamble.

     “SAC CBI II” has the meaning set forth in the preamble.

     “SAC Designee” has the meaning set forth in Section 2.1(b).

     “SAC Entities” has the meaning set forth in the preamble.

     “Stockholders” has the meaning set forth in Section 2.1(a).

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     “Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which: (i) if a
corporation, a majority of the total voting power of shares of stock entitled (without
regard to the occurrence of any contingency) to vote in the election of directors,
representatives or trustees thereof is at the time owned or Controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that Person or a
combination thereof; or (ii) if a limited liability company, partnership, association or
other business entity, a majority ownership interest in the limited liability company,
partnership, association or other business entity is at the time owned or Controlled,
directly or indirectly, by any Person or one or more Subsidiaries of that Person or a
combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a
majority ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of limited
liability company, partnership, association or other business entity gains or losses or
shall be or Control the managing director or general partner of such limited liability
company, partnership, association or other business entity.

     “Transfer” (including its correlative meanings, “Transferor”,
Transferee” and “Transferred”) shall mean, with respect to any security,
directly or indirectly, to sell, contract to sell, give, assign, hypothecate, pledge,
encumber, grant a security interest in, offer, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to purchase,
lend or otherwise transfer or dispose of any economic, voting or other rights in or to such
security. When used as a noun, “Transfer” shall have such correlative meaning as
the context may require.

          1.2 Construction

          The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rule of strict construction will be applied against any party.
Unless the context otherwise requires: (a) “or” is disjunctive but not exclusive, (b) words
in the singular include the plural, and in the plural include the singular, and (c) the words
“hereof”, “herein”, and “hereunder” and words of similar import when used
in this Agreement refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section references are to this Agreement unless otherwise specified.

ARTICLE II. CORPORATE GOVERNANCE MATTERS

          2.1 Board of Directors

          (a) On the Closing Date, the Board shall consist of no more than nine Directors.
The SAC Entities and their Permitted Assigns (collectively, the “Stockholders”) shall have
the right to nominate three Directors.

          (b) Following the Closing Date, the Stockholders shall have the right, but not the obligation,
to nominate to the Board a number of designees equal to: (i) three Directors, so long as the
Stockholders collectively beneficially own at least 20% or more of the voting power of all shares
of the Company’s capital stock entitled to vote generally in the election of Directors; (ii) two
Directors, so long as the Stockholders collectively beneficially own at least 10% of the voting
power of all shares of the Company’s capital stock entitled to vote generally in the election of
Directors; and (iii) one Director, so long as the Stockholders collectively beneficially own at
least 5% of the voting power of all shares of the Company’s capital stock entitled to vote
generally in the election of Directors; provided, that the Stockholders shall be deemed to
collectively beneficially own the shares of the Company’s capital stock

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with regard to which a Stockholder has been granted a proxy to vote such shares, so long as
such proxy remains in effect. If the Stockholders have nominated less than the total number of
designees that the Stockholders are entitled to nominate pursuant to this Section 2.1(b), then the
Stockholders shall have the right, at any time, to nominate such additional designee(s) to which
they are entitled, in which case, the Directors shall take all necessary corporation action to (x)
enable the Stockholders to nominate such additional individual(s), whether by increasing the size
of the Board, subject to the maximum number of Directors set forth in the Certificate of
Incorporation of the Company, or otherwise, (y) designate such additional individual(s) nominated
by the Stockholders as Directors and (z) cause the election of such additional individual(s) to the
Board. Each such person whom the Stockholders shall actually nominate pursuant to this Section
2.1(b) and who thereafter is serving as a Director shall be referred to herein as a “SAC
Designee”).

          (c) In accordance with the Certificate of Incorporation, and as indicated in Section 2.1(b),
the initial Board shall be divided into three classes designated Class I, Class II and Class III.
Each class shall consist, as nearly as possible, of one-third of the total number of Directors
constituting the entire Board. Class I directors (“Class I Directors”) shall be originally
elected for a term expiring at the succeeding annual meeting of stockholders, Class II directors
(“Class II Directors”) shall be originally elected for a term expiring at the second
succeeding annual meeting of stockholders, and Class III directors (“Class III Directors”)
shall be originally elected for a term expiring at the third succeeding annual meeting of
stockholders, in each case following the Closing Date. The SAC Designees shall at all times be
apportioned among the classes as nearly equal as possible.

          (d) In the event that a vacancy is created at any time by the death, disability, retirement,
resignation or removal of any SAC Designee, the remaining Directors and the Company shall cause the
vacancy created thereby to be filled by a new designee of the Stockholders as soon as possible, and
the Company hereby agrees to take, at any time and from time to time, all actions necessary to
accomplish the same. No SAC Designee may be removed without the written request of the
Stockholders, and any such removal so effected by the written request of the Stockholders shall be
effective upon the Company’s receipt of such written request or, if applicable, such other time set
forth therein.

          (e) The Company agrees to include in the slate of nominees recommended by the Board the
persons designated pursuant to this Section 2.1 and to use its best efforts to cause the election
of each such designee to the Board, including nominating such individuals to be elected as
Directors as provided herein.

ARTICLE III. COVENANTS

          3.1 Books and Records; Access

          The Company shall, and shall cause its Subsidiaries to, keep proper books, records and
accounts, in which full and correct entries shall be made of all financial transactions and the
assets and business of the Company and each of its Subsidiaries in accordance with generally
accepted accounting principles. The Company shall, and shall cause its Subsidiaries to, permit the
Stockholders and their respective designated representatives, at reasonable times and upon
reasonable prior notice to the Company, to review the books and records of the Company or any of
such Subsidiaries and to discuss the affairs, finances and condition of the Company or any of such
Subsidiaries with the officers of the Company or any such Subsidiary; provided, however, that the
Company shall not be required to disclose any privileged information of the Company so long as the
Company has used its best efforts to enter into an arrangement pursuant to which it may provide
such information to the Stockholders without the loss of any such privilege.

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          3.2 Additional Information

          The Company will promptly deliver to each Stockholder when available such financial,
operating, capital expenditure and other information as reasonably requested by such Stockholder;
provided, however, that the Company shall not be required to disclose any privileged information of
the Company so long as the Company has used its best efforts to enter into an arrangement pursuant
to which it may provide such information to the Stockholder without the loss of any such privilege.

ARTICLE IV. MISCELLANEOUS

          4.1 Termination

          This Agreement shall terminate on the earlier to occur of: (x) such time as the Stockholders
are no longer entitled to designate a Director pursuant to Section 2.1(b) and (y) with regard to
any particular Stockholder, upon the delivery of a written notice by such Stockholder to the
Company requesting that this Agreement terminate as to such Stockholder (or, if applicable, such
other time set forth therein).

          4.2 Notices

          Any notice, request, instruction or other document to be given hereunder by any party hereto
to another party hereto shall be in writing, shall be and shall be deemed given when (a) delivered
personally, (b) five (5) Business Days after being sent by certified or registered mail, postage
prepaid, return receipt requested, (c) one (1) Business Day after being sent by Federal Express or
other nationally recognized overnight courier, or (d) upon confirmation of receipt, if transmitted
by facsimile, to the parties at the following addresses (or at such other address for a party as
shall be specified by notice from such party):

     if to the Company:

MedQuist Holdings Inc.

9009 Carothers Parkway

Franklin, TN 37067

Attention: Chief Financial Officer

     if to any of the SAC Entities:

c/o S.A.C. Capital Advisors, L.P.

72 Cummings Point Road

Stamford, CT 06902

Attention: General Counsel

Fax: 203-823-4209

     with a required copy to:

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, NY 10017-3954

Attention: D. Rhett Brandon

Fax: (212) 455-2502

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          4.3 Further Assurances

          The parties hereto will use their best efforts to sign such further documents, cause such
meetings to be held, resolutions passed, exercise their votes and do and perform and cause to be
done such further acts and things as may be necessary in order to give full effect to this
Agreement and every provision hereof.

          4.4 Assignment

          Neither the Company nor the Stockholders shall assign all or any part of this Agreement
without the prior written consent of the other party; provided, however, that each of the
Stockholders shall be entitled to assign, in whole or in part, at any time and from time to time,
to any of their respective Permitted Assigns without such prior written consent. Except as
otherwise provided herein, this Agreement will inure to the benefit of and be binding on the
parties hereto and their respective successors and permitted assigns.

          4.5 Amendment; Waiver

          This Agreement may be amended, supplemented or otherwise modified only by a written instrument
executed by the parties hereto. No waiver by any party of any of the provisions hereof will be
effective unless explicitly set forth in writing and executed by the party so waiving. Except as
provided in the preceding sentence, no action taken pursuant to this Agreement, including without
limitation, any investigation by or on behalf of any party, will be deemed to constitute a waiver
by the party taking such action of compliance with any covenants or agreements contained herein.
The waiver by any party hereto of a breach of any provision of this Agreement will not operate or
be construed as a waiver of any subsequent breach.

          4.6 Third Parties

          This Agreement does not create any rights, claims or benefits inuring to any Person that is
not a party hereto nor create or establish any third party beneficiary hereto.

          4.7 Governing Law

          THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE
OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS OR SIMILAR RULES OR PRINCIPLES THAT
MIGHT REQUIRE THE APPLICATION TO THIS AGREEMENT OF THE LAWS OF ANOTHER JURISDICTION.

          4.8 Consent to Jurisdiction

          Each party to this Agreement, by its execution hereof, (a) hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in New York, New York for the
purpose of any action, claim, cause of action or suit (in contract, tort or otherwise), inquiry,
proceeding or investigation arising out of or based upon this Agreement or relating to the subject
matter hereof, (b) hereby waives to the extent not prohibited by applicable law, and agrees not to
assert, and agrees not to allow any of its subsidiaries to assert, by way of motion, as a defense
or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction
of the above-named courts, that its property is exempt or immune from attachment or execution, that
any such proceeding brought in one of the above-

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named courts is improper, or that this Agreement or the subject matter hereof may not be
enforced in or by such court and (c) hereby agrees not to commence or maintain any action, claim,
cause of action or suit (in contract, tort or otherwise), inquiry, proceeding or investigation
arising out of or based upon this Agreement or relating to the subject matter hereof other than
before one of the above-named courts nor to make any motion or take any other action seeking or
intending to cause the transfer or removal of any such action, claim, cause of action or suit (in
contract, tort or otherwise), inquiry, proceeding or investigation to any court other than one of
the above-named courts whether on the grounds of inconvenient forum or otherwise. Each party
hereto hereby consents to service of process in any such proceeding in any manner permitted by New
York law, and agrees that service of process by registered or certified mail, return receipt
requested, at its address specified pursuant to Section 4.2 hereof is reasonably calculated to give
actual notice. Notwithstanding the foregoing in this Section 4.8, a party may commence any action
in a court other than the above-named courts solely for the purpose of enforcing an order or
judgment issued by one of the above-named courts.

          4.9 Waiver of Jury Trial

          TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO
HEREBY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE)
ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE OR ACTION, CLAIM, CAUSE OF ACTION
OR SUIT (IN CONTRACT, TORT OR OTHERWISE), INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR
BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT
THIS SECTION 4.9 CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY ARE RELYING AND WILL RELY IN
ENTERING INTO THIS AGREEMENT. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
SECTION 4.9 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF
ITS RIGHT TO TRIAL BY JURY.

          4.10 Specific Performance

          Each of the parties hereto acknowledges and agrees that in the event of any breach of
this Agreement by any of them, the non-breaching party would be irreparably harmed and could not be
made whole by monetary damages. Each party accordingly agrees to waive the defense in any action
for specific performance that a remedy at law would be adequate and that the parties, in addition
to any other remedy to which they may be entitled at law or in equity, shall be entitled to compel
specific performance of this Agreement.

          4.11 Entire Agreement

          This Agreement sets forth the entire understanding of the parties hereto with respect to the
subject matter hereof. There are no agreements, representations, warranties, covenants or
undertakings with respect to the subject matter hereof other than those expressly set forth herein.
This Agreement supersedes all other prior agreements and understandings between the parties with
respect to such subject matter.

          4.12 Titles and Headings

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          The section headings contained in this Agreement are for reference purposes only and will not
affect the meaning or interpretation of this Agreement.

          4.13 Severability

          If one or more of the provisions, paragraphs, words, clauses, phrases or sentences contained
herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable
in any respect for any reason, the validity, legality and enforceability of any such provision,
paragraph, word, clause, phrase or sentence in every other respect and of the remaining provisions,
paragraphs, words, clauses, phrases or sentences hereof shall not be in any way impaired, it being
intended that all rights, powers and privileges of the parties hereto shall be enforceable to the
fullest extent permitted by Law.

          4.14 Counterparts

          This Agreement may be executed in any number of counterparts, each of which will be deemed to
be an original and all of which together will be deemed to be one and the same instrument.

          4.15 Effectiveness

          This Agreement shall become effective upon the Closing Date.

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          IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or caused this
Agreement to be executed on its behalf as of the date first written above.

	 	 	 	 	 
	 	MEDQUIST HOLDINGS INC.

 	 
	 	By:  	/s/
Clyde Swoger	 
	 	 	Name:  	Clyde Swoger	 
	 	 	Title:  	CFO	 
	 

	 	 	 	 	 
	 	S.A.C. PEI CB INVESTMENT, L.P.

By: S.A.C. PEI CB Investment GP, Limited, its general partner

 	 
	 	By:  	/s/
Peter Nussbaum	 
	 	 	Name:  	Peter Nussbaum	 
	 	 	Title:  	Authorized Signatory	 
	 

	 	 	 	 	 
	 	S.A.C. PEI CB INVESTMENT II, LLC

By: S.A.C. Private Capital Group, LLC, its manager

 	 
	 	By:  	/s/ Peter Nussbaum	 
	 	 	Name:  	Peter Nussbaum	 
	 	 	Title:  	Authorized Signatory	 
	 

	 	 	 	 	 
	 	INTERNATIONAL EQUITIES (S.A.C. ASIA) LIMITED

 	 
	 	By:  	/s/ Peter Nussbaum	 
	 	 	Name:  	Peter Nussbaum	 
	 	 	Title:  	Authorized Signatory	 
	 

[Signature Page to IPO Stockholders' Agreement]exv10w44

Exhibit 10.44

S.A.C. PEI CB Investment, L.P.

c/o Walkers SPV Limited

Walker House, 87 Mary Street

George Town, Grand Cayman

Ky1-9002, Cayman Islands

Messrs Paul Brough, Edward Middleton
   
and Patrick Cowley

in their capacity as liquidators

without personal liability, of

Lehman Brothers Commercial Corporation Asia Limited

(In Liquidation)

c/o KPMG

8th Floor, Prince’s Building

10 Chater Road, Central

Hong Kong

Ladies and Gentlemen:

Memorandum of Understanding

for S.A.C. PEI CB Investment, L.P. Redemption Transaction

This letter (this “Agreement”) sets forth the understanding of the parties with respect to material
terms and conditions of a transaction (the “Transaction”) between Lehman Brothers Commercial
Corporation Asia Limited a company incorporated in Hong Kong S.A.R. (Registration Number 0157352)
(“LBCCA”), Messrs Paul Brough, Edward Middleton and Patrick Cowley in their capacity as joint and
several liquidators of LBCCA (the “Liquidators”) acting without personal liability, S.A.C. Private
Equity Investors, L.P., a Delaware limited partnership (“SAC PEI”), S.A.C. PEI CB Investment, L.P.,
a Cayman Islands exempted limited partnership (the “Company”), and the Company’s general partner
S.A.C. PEI CB Investment GP, Limited (the “General Partner”), relating to, among other matters,
LBCCA’s ownership of limited partnership interests (the “Interests”) in the Company and the
Company’s beneficial ownership of shares, par value $0.10 per share (the “CBay Shares”) of
CBaySystems Holdings Limited (to be renamed MedQuist Holdings Inc.) (“CBay”).

TERMS

	 	 	 

	Transaction Structure:

	 	The Transaction is being executed
on February 2, 2011.
	 
	 	 
	 

	 	Equity Contribution. Immediately prior to the
Closing (as defined in the section labelled “Closing”
below, SAC PEI has, directly or indirectly, made or
caused to be made, an equity contribution (the
“Contribution”) in the aggregate amount of US$13.7
million in cash to the Company in exchange for
additional newly issued limited partnership interests
in the Company. LBCCA hereby consents to the making
of the

 

 

	 	 	 

	 

	 	Contribution and waives any rights to object
to the Contribution or to participation in making the
Contribution under the Third Amended and Restated
Exempted Limited Partnership Agreement of the
Company, dated as of August 5, 2008, among the
parties thereto (the “Limited Partnership
Agreement”).
	 
	 	 
	 

	 	Redemption of LBCCA’s Interests in the Company;
Retained CBay Shares. Promptly following the
Contribution, the Company will redeem all of LBCCA’s
Interests in the Company in exchange for (i) an
amount equal to US$13,700,000 in cash and (ii)
4,228,584 shares of CBay (the “Retained CBay Shares”)
owned of record and beneficially by the Company (the
“Redemption”), after giving effect to the 4-1/2:1
stock split (the “CBay Stock-Split”) contemplated in
the Offering described below. Alternatively, at the
Company’s election (provided that such election does
not result in LBCCA incurring or potentially
incurring any additional liabilities, including,
without limitation, tax liabilities), in lieu of the
Redemption, the Company may elect to make a non-pro
rata cash and in-kind distribution to LBCCA of (i) an
amount equal to US$13.7 million in cash and (ii)
4,228,584 shares of CBay owned of record and
beneficially by the Company (after giving effect to
the CBay Stock Split) followed by a redemption of
LBCCA’s Interests in the Company for US$1 (the
“Distribution”). SAC PEI and the General Partner
hereby waive any rights that they may have (pursuant
to the Limited Partnership Agreement or otherwise) to
pro rata treatment with respect to the Redemption or
Distribution. The parties hereby irrevocably and
unconditionally agree that upon the occurrence of
such Redemption or Distribution, LBCCA will no longer
be a party to the Limited Partnership Agreement and,
accordingly, LBCCA shall have no further rights or
obligations with respect to the Company, including as
a limited partner in the Company, or rights or
obligations under the Limited Partnership Agreement,
including, without limitation, with respect to
restrictions on transfer under the Limited
Partnership Agreement. The parties acknowledge and
agree that following the Redemption or Distribution,
(i) the parties will have no recourse against LBCCA
under the Limited Partnership Agreement, including,
for the avoidance of doubt, but not limited to, any
rights that the Company might have otherwise had
pursuant to clauses 5.2(b) and 6.1 of the Limited
Partnership Agreement and (ii) LBCCA will have no
recourse against any of the parties under the Limited
Partnership Agreement, including, for the avoidance
of doubt, but not limited to, any rights that LBCCA
might have otherwise had pursuant to clause 4.4 of
the Limited Partnership Agreement; provided, however,
that, notwithstanding the foregoing, in respect only
of claims made by third parties (e.g., other than
LBCCA, the Company or CBay), clause 4.4 of the
Limited Partnership Agreement (as provided under
clause 4.4(e) of the Limited Partnership Agreement),
as in effect on the date hereof, shall be deemed to

2

 

	 	 	 

	 

	 	survive (with this transaction being deemed a
termination for such purposes). The Company
acknowledges and agrees that all amounts to be paid
pursuant to this letter agreement shall be paid in
full, without set-off or deduction and hereby
acknowledges and agrees that it is not owed any
amounts from LBCCA under the Limited Partnership
Agreement. Promptly following the Closing of the
Redemption or Distribution, as the case may be, the
parties shall execute and deliver a novation
agreement, in form and substance reasonably
satisfactory to them, evidencing the termination of
the Limited Partnership Agreement in respect of
LBCCA. The parties agree that, except for the
Consulting Agreement or as otherwise expressly set
forth in this Agreement, it is the intention of the
parties that all other agreements and arrangements
related to LBCCA’s participation as a limited partner
in the Company shall be terminated, whether set forth
in the Limited Partnership Agreement or otherwise.
	 
	 	 
	 

	 	Entry into Lock-up Agreement. Simultaneously with the
Redemption or Distribution, LBCCA will enter into a
lockup agreement in the form attached as Exhibit A
hereto (the “Lock-Up Agreement”). CBay will procure
that the Company will enter into a lock-up agreement
in substantially the same form as the Lock-Up
Agreement and no such lock-up agreement entered into
by the Company will contain any more favourable or
less restrictive terms in any material respect than
the Lock-Up Agreement.
	 
	 	 
	 

	 	Proxy Agreement. LBCCA agrees that, for the period
that LBCCA beneficially owns any of the CBay Shares
(it being agreed that except for the Lockup Agreement
and compliance with US Securities laws nothing herein
shall limit or restrict in any manner the ability of
LBCCA to transfer or otherwise dispose of the
Retained CBay Shares at any time in its sole
discretion), the Company or its designee is hereby
granted an irrevocable proxy with respect to such
CBay Shares to vote and cause to be voted at any
meeting of shareholders or by written consent any (i)
Retained CBay Shares or (ii) CBay Shares issued
pursuant to the Consulting Agreement (as defined
below), in favour of the board nominees designated by
the Company (or any of its affiliates) to the Board
of Directors of CBay (or its successor) or by CBay
(or any nominating committee thereof). Such proxy
entitles the Company or its designee to vote LBCCA’s
CBay Shares in favour of directors. LBCCA will not
directly or indirectly vote against any such
director. Such proxy is deemed to be coupled with an
interest. If, for any reason, the proxy is
unenforceable, LBCCA will agree to vote its shares
for CBay directors as directed by the Company. For
the avoidance of doubt, the proxy granted herein does
not confer any right to vote on any matter other than
the election of directors as set forth above., The
foregoing proxy and agreement to vote may be
terminated at any time by the Company, by written
notice to

3

 

	 	 	 

	 

	 	LBCCA.
	 
	 	 
	 

	 	Rights under the Consulting Agreement. Any rights
and obligations of LBCCA accrued or arising under the
Agreement, dated as of August 19, 2008, by and among
CBay, S.A.C. PEI CB Investment II, LLC and LBCCA (the
“Consulting Agreement”), including without limitation
the Annual LBCCA Payment and reimbursement of
Out-of-Pocket Expenses as such terms are defined in
the Consulting Agreement, shall be unaffected by this
Transaction. The parties acknowledge that they are
each expressly reserving all of their respective
rights in relation to the Consulting Agreement and
nothing in this letter or the Closing of the
Transaction, shall amend, vary or extinguish such
rights.
	 
	 	 
	The Closing:

	 	Closing of the Transaction including the Redemption
or Distribution, payment of the US$13.7 million to
LBCCA and issuance of 4,228,584 shares in CBay (after
giving effect to the CBay Stock Split) to LBCCA will
take place as soon as possible following execution of
this Agreement (the “Closing”).
	 
	 	 
	The Offering:

	 	CBay proposes to carry out an underwritten public
offering of CBay Shares, including through any
related overallotment option (the “Offering”), for
which one or more investment banking firms will act
as the representative of the underwriters. CBay and
LBCCA agree that LBCCA may, at LBCCA’s sole
discretion, sell up to 2,222,222 of the Retained CBay
Shares as part of the “Firm Offer” (as defined in the
underwriters agreement to be entered into between
amongst others Lazard Capital Markets LLC and
Macquarie Capital (USA) LLC and Macquarie Capital
(USA) Inc. (together, the “Representatives”), CBay,
the Company and LBCCA (the “Underwriting Agreement”))
in the Offering, subject to the Representative’s
right to reduce such number of shares. If, in the
Representative’s reasonable opinion, the number of
securities requested to be included in the Offering
(including primary shares offered by CBay or any
other security holder) exceeds the number which can
reasonably be sold in such Offering within an
acceptable price range, it may reduce the number of
Retained CBay Shares that LBCCA may sell; provided,
however, that the Representative will first be
required to attempt to reduce the number of CBay
Shares offered therein by parties other than LBCCA
and if it is unable to reduce other parties’ CBay
Shares being sold into the Offering first, then it
may, proportionate with other parties, reduce the
number of CBay Shares being sold into the Offering by
LBCCA. LBCCA will be required to execute the
Underwriting Agreement (together with a side letter
varying certain matters set out in the Underwriting
Agreement) and such other agreements as LBCCA and the
Representatives mutually agree. LBCCA will not be
required to sell any shares or bring down
representations and warranties in the “Option
Closing” (as

4

 

	 	 	 

	 

	 	defined in the Underwriters Agreement).
LBCCA acknowledges and agrees that the Offering may
not take place at all or on the terms contemplated
hereby. If for any reason LBCCA does not sell its
Retained CBay Shares in the Offering, such shares
shall remain Retained CBay Shares for purposes of
this Agreement.
	 
	 	 
	 

	 	Any CBay Shares beneficially owned by LBCCA but not
sold in the Offering may be freely transferred or
otherwise disposed of by LBCCA following the
Offering, subject to the termination or prior waiver
of the Lock-Up Agreement and to applicable securities
laws.
	 
	 	 
	 

	 	CBay will procure that LBCCA has the benefit of
reliance on any SEC rule 10b-5 opinions issued by
CBay’s counsel in connection with the Offering,
provided that LBCCA is a selling stockholder in such
Offering and a party to the Underwriting Agreement.
	 
	 	 
	OTHER TERMS AND CONDITIONS

	 
	 	 
	Securities Law Matters:

	 	Rule 144 Matters.
	 
	 	 
	 

	 	(a) CBay agrees that following the Offering, CBay
will use its commercially reasonable efforts to file
such reports required to be filed by it under the
Securities Act and the Exchange Act and the rules
promulgated thereunder and to take such further
action as required by Rule 144 to the extent required
from time to time to enable LBCCA to sell the
Retained CBay Shares without registration under the
Securities Act, within the limitation of the
exemptions provided by Rule 144. This clause (a)
will expire 12 months from the date of the Offering.

(b) CBay agrees that following the Offering it will
use commercially reasonable efforts to, at CBay’s own
cost, cause its general counsel or an outside legal
counsel reasonably acceptable to the transfer agent
of CBay to issue legal opinions on behalf of LBCCA as
reasonably requested by LBCCA so that any restrictive
legend placed on the certificates of the Retained
CBay Shares held by LBCCA may be removed in
connection with any sale of such Retained CBay Shares
pursuant to Rule 144.
	 
	 	 
	 

	 	(c) If, during the six (6) months following the
Closing, there is (i) a sale or conveyance by CBay of
all or a substantial portion of its assets, (ii) an
acquisition of CBay by another person by means of
merger, consolidation, share sale or another form of
corporate reorganisation in which the Retained CBay
Shares are exchanged for other securities or other
consideration, or (iii) any person becomes the
“beneficial owner” (as defined in Rule 13d-3 of the
Exchange Act), directly or indirectly, of securities
of

5

 

	 	 	 

	 

	 	CBay representing fifty percent (50%) or more of
the total voting power of CBay (a “CBay Change of
Control Event”), CBay agrees to take such reasonable
actions as may be necessary or appropriate to ensure
that the Retained CBay Shares held by LBCCA before
the consummation of such CBay Change of Control Event
are not adversely affected relative to other holders
of CBay Shares in connection with such CBay Change of
Control Event.
	 
	 	 
	Expenses:

	 	Each of the parties shall pay its own expenses
incurred by or on its behalf related to the
Transaction (including, but not limited to,
reasonable fees and expenses of each of their
counsel, accountants and financial advisors).
	 
	 	 
	The Liquidators:

	 	The Liquidators have entered into and signed this
letter and would sign any separate agreement solely
as agents for and on behalf of LBCCA. In their
capacity as Liquidators, none of the Liquidators,
their firm, officers, directors, staff, partners,
employees, agents, advisors and representatives shall
have any personal liability whatsoever in respect of
(a) any of the obligations undertaken by LBCCA; (b)
any failure on the part of LBCCA to observe, perform
or comply with any such obligations; (c) under or in
relation to any associated arrangements or
negotiations; or (d) under any document or assurance
made pursuant to this letter or any definitive
agreement. Each party acknowledges and agrees that
(a) in their capacity as liquidators, the Liquidators
are parties to this letter and any definitive
agreement solely for the purpose of obtaining the
benefit of each provision of this Agreement in their
favour; and (b) the Liquidators are the agents of
LBCCA and shall incur no personal liability from
acting in the capacity of agents or otherwise, nor
shall any claim arise against any of them otherwise
than against LBCCA.

Representations and Warranties of LBCCA. LBCCA hereby represents and warrants to SAC PEI, the
Company and the General Partner, to the extent only of the actual factual knowledge of the
Liquidators (which does not include implied or imputed knowledge), that (a) it has the authority
under the laws of Hong Kong to enter into, perform and deliver this Agreement, and has taken all
necessary action to approve and authorize the same and (b) its obligations under this Agreement are
legal, valid, binding and enforceable against LBCCA in accordance with its terms except as
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors’ rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at law) and do not conflict
with any law or regulation or its constitutional documents or any other document binding on it. In
addition, LBCCA hereby represents and warrants to SAC PEI, the Company and the General Partner that
(i) it has not since September 19, 2008 (the “Appointment Date”) (A) entered into any agreement
under which it is obligated to sell, assign or otherwise transfer, hypothecate, pledge or cause or
permit any lien or other encumbrance to be placed on any of its Interests or (B) sold, assigned or
otherwise transferred, hypothecated, pledged or caused or permitted any lien or other encumbrance
to be placed on any of its Interests or assigned any of its rights under the Limited Partnership
Agreement; and (ii) to the extent only of the actual factual

6

 

knowledge of the Liquidators (which
does not include implied or imputed knowledge), it did not prior to the Appointment Date (A) enter
into any agreement under which it is or was obligated to sell, assign or otherwise transfer,
hypothecate, pledge or cause or permit any lien or other encumbrance to be placed on any of its
Interests or (B) sell, assign or otherwise transfer, hypothecate, pledge or cause or permit any
lien or other encumbrance to be placed on any of its Interests or assign any of its rights under
the Limited Partnership Agreement. LBCCA further
represents and warrants to the Company, to the extent only of the actual factual knowledge of the
Liquidators (which does not include implied or imputed knowledge), that (i) it is the sole legal
and beneficial owner of the Interests which will be transferred to the Company pursuant to the
Redemption or Distribution and (ii) there is no encumbrance on, over or affecting such Interests to
be transferred (or any of them) nor any agreement or commitment to create any such encumbrance and
no claim has been made that any person is entitled to such encumbrance. For the purposes of this
paragraph, the term encumbrance means any option, transfer, mortgage, pledge, lien, charge,
assignment by way of security, hypothecation, security interest, any arrangements commonly referred
to as flawed assets arrangements and set-off rights which exceed the rights of the insolvency
set-off rules of any relevant jurisdiction, or any other security arrangement or agreement, whether
conditional or not.

Representations and Warranties of the Company and the General Partner. Each of the Company and the
General Partner hereby represents and warrants to LBCCA, to the extent only of the actual factual
knowledge of the General Partner (which does not include implied or imputed knowledge), that (a) it
has the authority under the laws of the Cayman Islands to enter into, perform and deliver this
Agreement, and has taken all necessary action to approve and authorize the same and (b) its
obligations under this Agreement are legal, valid, binding and enforceable against it in accordance
with its terms except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally
and by general equitable principles (whether enforcement is sought by proceedings in equity or at
law) and do not conflict with any law or regulation or its constitutional documents or any other
document binding on it. The Company further represents and warrants to LBCCA,that it is the sole
legal and beneficial owner of the Retained CBay Shares which will be transferred to LBCCA pursuant
to the Redemption or Distribution. The Company confirms to LBCCA, that there is no encumbrance on,
over or affecting such Retained CBay Shares to be transferred (or any of them), nor any agreement
or commitment to create any such encumbrance and no claim has been made that any person is entitled
to such encumbrance. For the purposes of this paragraph, encumbrance shall mean any option,
transfer, mortgage, pledge, lien, charge, assignment by way of security, hypothecation, security
interest, any arrangements commonly referred to as flawed assets arrangements and set-off rights
which exceed the rights of the insolvency set-off rules of any relevant jurisdiction, or any other
security arrangement or agreement, whether conditional or not.

Representations and Warranties of SAC PEI. SAC PEI hereby represents and warrants to each of the
LBCCA, the Company and the General Partner, to the extent only of the actual factual knowledge of
the SAC PEI (which does not include implied or imputed knowledge), that (a) it has the authority
under the laws of the State of Delaware to enter into, perform and deliver this Agreement, and has
taken all necessary action to approve and authorize the same and (b) its obligations under this
Agreement are legal, valid, binding and enforceable against it in accordance with its terms except
as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors’ rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at law) and do not conflict
with any law or regulation or its constitutional documents or any other document binding on it.

7

 

Representations and Warranties of CBay. CBay hereby represents and warrants to each of the LBCCA,
the Company, SAC PEI and the General Partner, to the extent only of the actual factual knowledge of
the board of directors of CBay (which does not include implied or imputed knowledge), that (a) it
has the authority under the laws of the British Virgin Islands to enter into, perform and deliver
this Agreement, and has taken all necessary action to approve and authorize the same and (b) its
obligations under this Agreement are legal, valid, binding and enforceable against it in accordance
with its terms except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally
and by general equitable principles (whether enforcement is sought by proceedings in equity or at
law) and do not conflict with any law or regulation or its constitutional documents or any other
document binding on it. CBay further represents and warrants that the CBay Shares to be
transferred to LBCCA pursuant to the Redemption or Distribution have been duly authorised, validly
issued and are fully paid, non-assessable and free of liens and encumbrances (as defined above).

Further Assurance. The parties shall perform all further acts and things and execute and deliver
(or procure the execution and delivery of) such further documents, as may be required by law or as
may be necessary or required to implement and give effect to this letter and the Transaction.

Commercially Reasonable Efforts. The parties will use their commercially reasonable efforts to give
effect to the terms set out in this letter and the Transaction.

Amendment. This letter may not be amended, modified or otherwise supplemented except by an
instrument in writing signed by, or on behalf of, each of the parties hereto.

Miscellaneous. This letter may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument. Facsimile or PDF
signatures shall be deemed to constitute originals. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in construing or interpreting
this letter. This letter shall be governed by, and construed in accordance with, the laws of the
State of New York.

8

 

	 	 	 	 	 
	 	Very truly yours,

S.A.C. PEI CB INVESTMENT, L.P.,

acting by its general partner

S.A.C. PEI CB INVESTMENT GP, LIMITED

 	 
	 	By:  	/s/ Peter Nussbaum
 	 
	 	 	Name:  	Peter Nussbaum 	 
	 	 	Title:  	Authorized Signatory 	 
	 

	 	 	 	 	 

	Accepted,
Agreed and Acknowledged as of February 2, 2011:
	 	 	 	 
	 
	 	 	 	 
	SIGNED by Brough, PJ one of the Liquidators
	 	 	)	 
	for and on behalf of
	 	 	)	 
	LEHMAN BROTHERS COMMERCIAL
	 	 	)	 
	CORPORATION ASIA LIMITED
	 	 	)	 
	acting without personal liability
	 	 	)	 
	in the presence of
	 	 	)	 

	 	 	 

	/s/
Andrew Payne 

Name: Andrew Payne

	 	 
	Title:
Solicitor/Registered Foreign Lawyer
	 	 

	 	 	 	 	 

	SIGNED by Brough, PJ one of the Liquidators
	 	 	)	 
	for and on behalf of all of them
	 	 	)	 
	acting without personal liability, solely to take the benefit
	 	 	)	 
	of this letter, in the presence of
	 	 	)	 

	 	 	 

	/s/
Andrew Payne 

Name: Andrew Payne

	 	 
	Title:
Solicitor/Registered Foreign Lawyer
	 	 

9

 

	 	 	 	 	 

	S.A.C. PRIVATE EQUITY INVESTORS, L.P.	 	 
	 
	 	 	 	 
	By:

	 	S.A.C. Private Equity GP, L.P., its general partner	 	 
	 
	 	 	 	 
	By:

	 	S.A.C. Capital Management, LLC, its general partner	 	 
	 
	 	 	 	 
	By:

	 	/s/ Peter Nussbaum
 

Name: Peter Nussbaum
	 	 
	 

	 	Title: Authorized Signatory	 	 
	 
	 	 	 	 
	S.A.C. PEI CB INVESTMENT GP, LIMITED	 	 
	 
	 	 	 	 
	By:

	 	/s/ Peter Nussbaum
 

Name: Peter Nussbaum
	 	 
	 

	 	Title: Authorized Signatory	 	 
	 
	 	 	 	 
	CBAYSYSTEMS HOLDINGS LIMITED	 	 
	 
	 	 	 	 
	By:

	 	/s/ Clyde Swoger
 

Name: Clyde Swoger
	 	 
	 

	 	Title: Chief Financial Officer	 	 

10

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