Exhibit 4.7
Execution Copy
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SHAREHOLDERS' AND WARRANTHOLDERS' AGREEMENT
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SHAREHOLDERS' AND WARRANTHOLDERS' AGREEMENT, dated as of September 17,
1999, amending and restating the Shareholders' Agreement, dated as of June 1,
1994, amended as of February 3, 1995, amended and restated as of July 9, 1998
and amended as of September 22, 1998 (the "Agreement") by and among U.S.I.
HOLDINGS CORPORATION, a Delaware corporation (the "Company"), and the Investors
from time to time party hereto.
R E C I T A L S :
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A. The Non-Management Investors and the Management Investors (collectively,
the "Investors") are the owners of issued and outstanding Capital Stock (as
hereinafter defined) of the Company on the date hereof.
B. The Company and the Investors desire to provide for certain matters
relating to the Capital Stock and the rights and remedies of the Investors.
A G R E E M E N T :
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The parties agree as follows:
ARTICLE I
DEFINITIONS
Definitions. The following terms, as used herein, have the following
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meanings:
"Affiliate" means, as to any Person, any other Person directly or
indirectly Controlling, Controlled by or under direct or indirect common Control
with such Person. For purposes of this Agreement and each of the Subscription
Agreements, Zurich and CapZ shall not be deemed to be Affiliates of each
other.
"Bellwether" means Bellwether Investment Pte Ltd., a Singaporean
corporation and its Affiliates.
"Buyer" means a Person (other than the Company) that is not an Investor or
an Affiliate of an Investor that has offered to purchase or otherwise acquire
for value Capital Stock of the Company.
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"By-laws" means the Amended and Restated By-laws of the Company as in
effect on the date hereof and as amended from time to time in accordance with
the terms thereof and of this Agreement.
"Capital Stock" means the Common Stock and the Preferred Stock (whether
outstanding on the date hereof or hereafter issued by the Company, including
without limitation upon the exercise of warrants or conversion of capital stock)
and any securities into or for which the Common Stock or the Preferred Stock is
convertible or exchangeable, and (except for purposes of Sections 3.1 and 3.4)
includes the Warrants, but excludes nonvoting Common Stock and nonvoting
Preferred Stock for purposes of Article III.
"CapZ" means Capital Z Financial Services Fund II, L.P. and Capital Z
Financial Services Private Fund II, L.P. and their respective Affiliates.
"CCC" means Continental Casualty Company and its Affiliates.
"Change of Control" means, as to any Person, a change, shift or transfer of
Control with respect to such Person (including any change in the Control of any
entity Controlling such Person). The decision of the Executive Committee, giving
due consideration to whether, among other things, a change of actual control or
management of a specified Person has occurred, shall be conclusive in
determining whether a Change of Control of an entity Controlling the specified
Person has occurred for purposes of this definition.
"Chase" means CBD Holdings, Ltd., CB Capital Investors, L. P. and their
respective Affiliates.
"Chubb" means The Chubb Corporation and its Affiliates.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the common stock, par value $.O1 per share, of the
Company.
"Conning" means, collectively, Conning Insurance Capital Limited
Partnership III, L.P. and Conning Insurance Capital International Partners III,
L.P. and their respective Affiliates.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of securities, partnership interests or by
contract, assignment or otherwise. The terms "Controlling" and "Controlled"
shall have meanings correlative to the foregoing.
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"Designation Right" means the right of an Investor or group of Investors or
management of the Company pursuant to Article III of this Agreement to designate
one or more members of the Board of Directors and, if applicable, the right of
such Investor or group of Investors or management of the Company to designate a
director or directors to serve on the Executive Committee.
"Equitable" means The Equitable Companies Incorporated and its Affiliates.
"Executive Committee" has the meaning set forth in Section 3.4 hereof.
"Existing Warrant Shares" means the shares of Common Stock or other shares
of capital stock of the Company for which the Existing Warrants are exercisable.
"Existing Warrants" means the Warrants issued pursuant to the Warrant
Agreement, dated as of March 12, 1996, as amended, between the Company and the
other parties thereto, to acquire shares of Common Stock.
"Existing Warrant Amendment" means the Amendment, dated as of the date
hereof, to each of the Warrant Agreement and the Warrantholders' Agreement, each
dated as of March 12, 1996, between the Company and the other parties thereto.
"Financial Directors" means those members of the Board of Directors of the
Company who are nominated by the Financial Investors.
"Financial Investors" means, collectively, Bellwether, Saratoga, Conning,
Northwestern, WLD Trust, Norwest, Indosuez, Xxxxxxx X. Xxxx and Xxxxxxx xx
Xxxxxxx.
"Full Board Matters" means (i) approving or adopting, or recommending to
the stockholders of the Company, any action or matter expressly required by the
Delaware General Corporation Law to be submitted to such stockholders for
approval and (ii) adopting, amending or repealing any by-law of the Company.
"Immediate Family Members" of a natural Person means the spouse and lineal
descendants (including legally adopted descendants) of such Person.
"Indosuez" means Indosuez USI Partners and its Affiliates.
"Investors" means the Non-Management Investors, the Management Investors
and any Persons who become bound by the terms and provisions of this Agreement
by executing a Joinder Agreement.
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"Joinder Agreement" means a joinder agreement in the form attached hereto
as Exhibit A-1 or Exhibit A-2, as applicable.
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"Management Investors" means the signatories identified as "Management
Investors" on the signature pages to this Agreement, any predecessor agreement,
a Joinder Agreement or the Existing Warrant Amendment, which signatories are
identified as such on Annex A hereto (as supplemented and amended from time to
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time after the date hereof by the Company).
"1933 Act" means the Securities Act of 1993, as amended, and the rules and
regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
"Non-Management Investors" means the signatories identified as
"Non-Management Investors" on the signature pages to this Agreement, any
predecessor agreement, a Joinder Agreement or the Existing Warrant Amendment,
which signatories are identified as such on Annex A hereto (as supplemented and
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amended from time to time after the date hereof by the Company).
"Northwestern" means The Northwestern Mutual Life Insurance Company and its
Affiliates.
"Norwest" means Norwest Equity Capital, LLC and its Affiliates.
"Orion" means Orion Capital Corporation and its Affiliates.
"Person" means any individual, corporation, partnership, joint venture,
association, limited liability company, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Preferred Stock" means the Preferred Stock, par value $.O1 per share, of
the Company including any series of such Preferred Stock now or hereafter
created by the Board of Directors of the Company.
"Public Offering" shall have the meaning set forth in Section 2.1(e).
"Public Stock" means any Capital Stock of any class that is listed on a
national securities exchange or that has been accepted for inclusion in the
National Association of Securities Dealers Automated Quotation System or any
similar national over-the-counter market.
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"Registrable Securities" means shares of Common Stock and Preferred Stock
now owned or hereafter acquired by the Investors and the Warrant Shares for
which Warrants now owned or hereafter acquired by the Investors may be
exercisable, but only so long as such securities are "Restricted Securities." A
security shall be deemed to be a "Restricted Security" until such time as such
security (i) has been effectively registered under the 1933 Act and disposed of
in accordance with the registration statement covering it or (ii) has been sold
publicly pursuant to Rule 144 (or any similar provision then in force) under the
0000 Xxx.
"Regulated Holder" means any Investor that is (or is a subsidiary of a bank
holding company that is) (x) a Small Business Investment Company licensed by the
United States Small Business Administration ("SBA") and subject to the various
rules and regulations promulgated by the SBA or (y) subject to the various
provisions of Regulation Y of the Board of Governors of the Federal Reserve
System, 12 C.F.R., Part 225 (or any successor to Regulation Y).
"Regulatory Problem" means, with respect to any Investor, (i) any set of
facts or circumstances wherein it has been asserted by any governmental
regulatory agency (or such Investor reasonably believes that there is a
significant risk of such assertion) that such Investor (or any bank holding
company that Controls such Investor) is not entitled to hold, or exercise any
material right with respect to, all or any portion of the Capital Stock held by
such Investor or (ii) when such Investor and its Affiliates would own, control
or have power (including voting rights) over a greater quantity of Capital Stock
than is permitted under any law or regulation or any requirement of any
governmental authority applicable to such Investor or to which such Investor is
subject.
"Requisite Securityholders" means securityholders of the Company that hold
in the aggregate more than 90% of the Total Voting Power, provided that such
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securityholders include all securityholders having the right to designate a
member or members of the Board of Directors of the Company.
"Saratoga" means, collectively, Saratoga Partners III, L.P., a Delaware
limited partnership and its Affiliates, and Saratoga Partners III, C.V., an
entity organized under the laws of the Netherlands Antilles and its Affiliates.
"Series W Warrant Shares" means the shares of Preferred Stock or other
shares of capital stock of the Company for which the Series W Warrants are
exercisable.
"Series W Warrants" means the warrants to acquire shares of Series W
Preferred Stock issued under the Warrant Agreement, dated as of the date hereof,
between the Company and the holders of such warrants.
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"Strategic Directors" means the members of the Board of Directors of the
Company nominated by the Strategic Investors.
"Strategic Investors" means Chase, CCC, Chubb, Equitable, Orion, Provident,
Travelers and Zurich.
"Subscription Agreement" means any Subscription Agreement pursuant to which
an Investor acquires Capital Stock from the Company.
"Total Voting Power" means the total combined voting power in the election
of directors of all Capital Stock then outstanding (assuming, except for
purposes of Section 3.2 and clause (i) of the first sentence of Section 6.3
(solely as such clause (i) relates to amendments, modifications, consents or
waivers with respect to Section 3.2), the exercise of all unexercised Warrants
in accordance with the terms thereof and (except for purposes of Article III and
clause (i) of the first sentence of Section 6.3 (solely as such clause (i)
relates to amendments, modifications, consents or waivers with respect to
Article III)) the conversion of outstanding shares of Series I Preferred Stock
into Series H Preferred Stock and nonvoting Common Stock into voting Common
Stock), excluding any Capital Stock held by the Company or any of its
Subsidiaries.
"Transfer" means any direct or indirect transfer, sale, conveyance, pledge,
hypothecation or other disposition of Capital Stock, including, without
limitation, any of the foregoing which occurs by virtue of any Change of
Control.
"Travelers" means, collectively, The Travelers Indemnity Company and The
Travelers Insurance Company, and their respective Affiliates.
"UNUMProvident" means UNUMProvident Corporation and its Affiliates.
"Warrant Shares" means the Series W Warrant Shares and the Existing Warrant
Shares.
"Warrants" means the Series W Warrants and the Existing Warrants.
"WLD" means WLD Trust and its Affiliates.
"Zurich" means Zurich American Holding Company of America and its
Affiliates.
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ARTICLE II
COVENANTS OF THE INVESTORS
SECTION 2.1 Transfers by Investors. (a) Transfers in General. No Investor
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shall Transfer any Capital Stock now or hereafter owned by such Investor except
as expressly permitted in this Section 2.1.
(b) Permitted Transfers. Without complying with the provisions of
Section 2.1(c) or 2.2, without the consent of the Company or any other Investor
and without first offering such Capital Stock to the Company or any other
Investor, each Investor, at any time, may (i) Transfer to any Person any Capital
Stock which constitutes Public Stock and (ii) without regard to whether such
Capital Stock is Public Stock at such time, (A) in the case of an Investor that
is not a natural Person, Transfer any Capital Stock which it may now or
hereafter own to any Affiliate of such Investor which is not a natural Person,
(B) in the case such Investor is a partnership, limited liability company, or a
nominee for any of the foregoing, Transfer any Capital Stock to a partner,
member, retired partner or member, or estate of a retired partner or member of
such partnership or limited liability company, as the case may be, so long as
such transfer is in accordance with the transferee's interest in such
partnership or limited liability company and is without consideration, (C) in
the case of an Investor that is a natural Person, Transfer any Capital Stock to
any Immediate Family Member or any trust or custodian account for the sole
benefit of such Investor or his Immediate Family Members and in accordance with
applicable laws of descent and distribution and (D) in the case of a Management
Investor, Transfer Capital Stock to the Company upon death, disability or
termination of employment as provided in such Management Investor's Subscription
Agreement; provided, however, that the transferee of any such Investor pursuant
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to clauses (A) through (D) above shall be required to execute and deliver a
Joinder Agreement as a condition of such Transfer.
(c) Right of First Offer. If any Investor (the "Transferor") wishes to
Transfer any or all of its Capital Stock (the "Offered Securities") other than
(i) in a Transfer permitted under Section 2.1(b), (ii) pursuant to the exercise
of its tag-along rights under Section 2.2(a), or (iii) in a Control Sale
Transaction (as defined in Section 2.2(b)), then in each case the Transferor
shall first notify the Company in a written notice of its desire to transfer the
Offered Securities (the "Transfer Notice"). The Company or the Company's
designee (provided that such designee is a Qualified Transferee, as defined
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below) may offer to purchase all, but not less than all, of the Offered
Securities by notifying the Transferor in a written notice setting forth the
terms and conditions upon which the Company or such designee proposes to
purchase the Offered Securities (the "Offer Notice"). If the Transferor elects
to sell the Offered Securities to a designee of the Company pursuant to the
Offer Notice, such Transfer must be made in compliance with the provisions of
Section 2.2(a) (if applicable) and the designee (if not then an Investor) must
execute and deliver a Joinder
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Agreement. If the Transferor (i) receives no Offer Notice (or receives a notice
from the Company declining to offer to purchase the Offered Securities) within
30 days after submitting the Transfer Notice, or (ii) in its sole discretion
rejects the offer made in the Offer Notice, the Transferor may Transfer the
Offered Securities and assign its rights under this Agreement and any other
agreements relating to the Offered Securities to any Person provided that (v)
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the price per security paid by such Person for the Offered Securities is greater
than the price per security set forth in the Offer Notice (if any), (w) such
Person is a Qualified Transferee (as defined below), (x) such Transfer is made
in compliance with the provisions of Section 2.2(a) (if applicable), (y) such
Person (if not then an Investor) executes and delivers a Joinder Agreement and
(z) such sale is consummated on or prior to the 120th day (or, if such day is
not a business day, the next succeeding business day) after the submission of
the Transfer Notice. "Qualified Transferee" means any Person that (i) is not, in
the judgment of the Executive Committee, a competitor of the Company (other than
a Strategic Investor or one of its Affiliates), (ii) is a bona fide purchaser
with full financing to purchase the Offered Securities, (iii) is not a convicted
felon, (iv) has not been found liable for fraud or fraudulent misrepresentation
and (v) has not been sanctioned by or found guilty of violating the rules and
regulations of the Commission or any other federal or state regulatory agency,
including without limitation any such agency which regulates the conduct of the
insurance or financial services businesses.
(d) Cooperation by Company. The Company agrees, promptly following a
written request therefor, to execute and deliver all documents, agreements and
instruments and to take all commercially reasonable actions within its control
to cooperate with and give effect to any transaction or series of related
transactions to which this Section 2.1 applies. The Company shall cancel and
retire any Capital Stock purchased or acquired by the Company or any of its
Subsidiaries pursuant to Section 2.1(c).
(e) Expiration. The provisions contained in this Section 2.1 shall
expire at the closing of a Public Offering, as such term is defined in the
Certificate of Designations with respect to the Company's Series R Preferred
Stock as in effect on the date hereof (a "Public Offering").
SECTION 2.2 Tag-Along and Take-Along Provisions. (a) Tag-Along. If one or
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more Investors (the "Selling Investor") shall receive and determine to accept
any bona fide written offer (a "Notice of Offer") from a Buyer (including a
Buyer designated by the Company in an Offer Notice submitted under Section 2.1
(c) or a Buyer proposing a Control Sale Transaction) to purchase or otherwise
Transfer for value, in one transaction or a series of related transactions,
Capital Stock representing 20% or more of the Total Voting Power owned by all
Investors, each other Investor owning any Capital Stock ("Other Investors")
shall have the right to participate in such transaction or transactions in the
manner set forth in this Section. The Selling Investor shall, promptly after its
receipt of a Notice of Offer, send a
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copy thereof to the Company and the Other Investors owning any Capital Stock.
Each Other Investor shall have the right to cause the Selling Investor to
condition its sale to the Buyer of any Capital Stock owned by the Selling
Investor on the simultaneous purchase by the Buyer of such amount of Capital
Stock owned by such Other Investor as each such Other Investor (an "Electing
Investor") may designate by written notice delivered to the Selling Investor
within 5 days following the date on which the Notice of Offer is received by
such Electing Investor; provided, however, that no Electing Investor may so
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designate for purchase a number of shares of the Company's Capital Stock greater
than that number owned by such Electing Investor (assuming the exercise of all
unexercised Warrants), multiplied by a fraction the numerator of which is the
number of shares of the Company's Capital Stock owned by the Selling Investor
which are subject to the offer of the Buyer (assuming the exercise of such
Selling Investor's unexercised Warrants, if any) and the denominator of which
is the total number of shares of the Company's Capital Stock then outstanding
and owned by the Selling Investor (assuming the exercise of such Selling
Investor's unexercised Warrants, if any). The purchase price for the Company's
Capital Stock subject to the Notice of Offer and the terms of such purchase
shall be the same for each Electing Investor's sale as are applicable to the
Selling Investor's sale and shall be set forth in such Notice of Offer;
provided, that if any combination of Existing Warrants, Series W Warrants,
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shares of Preferred Stock (whether different series thereof or of the same
series but having different dates of issuance) and/or shares of Common Stock is
to be Transferred, the relative purchase prices of such Warrants, Preferred
Stock and Common Stock shall be adjusted, if necessary, to reflect the excess of
the Liquidation Preference of the Preferred Stock (as defined in the applicable
certificate of designations) over its original issue price and the exercise
prices of the Existing Warrants and Series W Warrants, as applicable. Unless the
Selling Investor is Transferring Capital Stock in a Control Sale Transaction,
any Transfer made by a Selling Investor to which this Section 2.2(a) applies
must be made in compliance with Section 2.1(c) and consummated within the
120-day period after submission of the Transfer Notice (it being understood and
agreed that an Electing Investor shall not be deemed to be a Selling Investor or
Transferor for purposes of Section 2.1(c) or this Section 2.2(a) of this
Agreement in connection with any Transfer of its Capital Stock as an Electing
Investor pursuant to this Section 2.2(a)). This Section 2.2(a) shall not apply
if a Selling Investor has exercised take-along rights under Section 2.2(b).
(b) Take-Along. If one or more Investors shall receive and determine
to accept any bona fide offer from any Person (other than the Company) for the
sale or Transfer for value of more than 50%, in the aggregate, of the Total
Voting Power in one transaction or a series of related transactions (a "Control
Sale Transaction"), then, at the written request to each other Investor of such
Investors holding at least 50% of the Total Voting Power, each other Investor
shall agree to sell to such Person the same proportionate share of the Capital
Stock owned by such Investor as the requesting Investors agree to sell (in
proportion to the requesting Investors' aggregate ownership), in each case,
based on Total Voting Power, for an
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amount equal to the same per security purchase price (on a security by security
basis), and on the terms as are applicable to the requesting Investors' sale;
provided, that the terms of such offer would provide each Investor an amount
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which is not less than the amount which such Investor would receive in a
liquidation of the Company, taking into account the exercise price of any
outstanding Warrants, (assuming that the liquidation proceeds are equal to the
consideration payable per share of Capital Stock in such offer multiplied by the
aggregate amount of Capital Stock then existing, on a fully diluted basis); and
provided, further, that any Capital Stock to be sold by non-requesting Investors
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pursuant to this Section 2.2(b) shall be apportioned among shares of any class
or series of Common Stock or Preferred Stock or Existing Warrants or Series W
Warrants at the election of the requesting Investors (following consultation
with the non-requesting Investors). No transferee of Capital Stock in a Control
Sale Transaction shall be required to execute and deliver a Joinder Agreement.
(c) Cooperation by Company. The Company agrees, promptly following a
written request therefor, to execute and deliver all documents, agreements and
instruments and to take all commercially reasonable actions within its control
to cooperate with and give effect to any transaction or series of related
transactions to which this Section 2.2 applies.
(d) Expiration. The provisions contained in this Section 2.2 shall
expire upon the closing of a Public Offering.
SECTION 2.3 Transfers to Comply with Laws. Notwithstanding any contrary
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provision herein, no Investor may Transfer or offer to Transfer any Capital
Stock (or solicit any offers to Transfer any Capital Stock), except in
compliance with the 1933 Act and in compliance with any applicable state
securities laws and rules and regulations promulgated thereunder.
SECTION 2.4 Closing. The closing of any purchase of Capital Stock pursuant
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to Section 2.1(c) (if to the Company or its designee) or 2.2 hereof shall take
place at the offices of the Company (or at such other location as to which the
parties shall mutually agree) concurrently with the closing of all related
purchases of Capital Stock by the Person or Persons purchasing such Capital
Stock.
SECTION 2.5 Standstill. At any time prior to the Company having any Capital
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Stock registered pursuant to the 1933 Act, each Investor (together with any
Persons acquiring Capital Stock from such Investor in a Transfer permitted by
Section 2.1(b)) hereby agrees that it will not, as the result of any direct or
indirect acquisition or series of related acquisitions, at any time hold more
than 49% of the Total Voting Power without the prior written consent of the
Executive Committee; provided, that this Section 2.5 shall not apply to any
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acquisition of Capital Stock in a Control Sale Transaction; and provided,
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further, that nothing in this Section 2.5 shall operate or be construed so as to
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prevent an unrelated exercise of (x) Warrants, (y)
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preemptive rights contained in the Series W Warrant Agreement, the Existing
Warrant Agreement or in any certificate of designations relating to any series
of Preferred Stock or (z) conversion rights with respect to any capital stock of
the Company held by such Investor.
SECTION 2.6 Cooperation to Cure Regulatory Problems. Each Investor agrees,
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if requested by the Company, to use commercially reasonable efforts (including
without limitation voting to approve amendments to the Company's Certificate of
Incorporation) to cooperate with the Company and any Investor that is a
Regulated Holder to the extent necessary to avoid or cure a Regulatory Problem,
including without limitation by (i) cooperating in connection with any exchange
by an Investor that is a Regulated Holder of voting Capital Stock for non-voting
Capital Stock or (ii) facilitating a Transfer of Capital Stock by an Investor
that is a Regulated Holder; provided, that any such Transfer contemplated by the
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foregoing clause (ii) must nevertheless be made in compliance with all
applicable provisions of this Agreement. No Investor shall be required under
this Section 2.6 to take any action that could adversely affect in any respect
such Investor's rights under this Agreement or as a securityholder of the
Company. In the event of any conflict or inconsistency between any provision of
this Section 2.6 and any other provision of this Agreement, the Company's
Certificate of Incorporation or the Amended and Restated Bylaws, such other
provision shall control and govern the rights and responsibilities of the
parties hereto to the extent of such conflict or inconsistency.
ARTICLE III
VOTING
SECTION 3.1 Board of Directors. (a) Board Composition. Subject to Sections
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3.3 and 3.6, from and after the date hereof each of the Investors severally
agrees that in exercising its voting rights on the election of directors,
whether or not at an annual or special meeting of the Company, whether by
written consent, proxy or otherwise, and whether or not at an adjourned meeting,
such Investor shall vote its shares of the Company's Capital Stock for, and the
Company and each Investor will take all other necessary actions within their
respective control to cause, the nomination and the election of the following
individuals to the Board of Directors of the Company:
(i) two directors who are officers of the Company designated by the
most senior executive officer of the Company;
(ii) three directors designated by CapZ;
(iii) eight directors, one designated by each of Chase, CCC, Chubb,
Equitable, Orion, UNUMProvident, Travelers and Zurich;
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(iv) two directors designated by Saratoga;
(v) one director designated by Conning; and
(vi) one director designated by Bellwether.
(b) Series R and Series W Expansion Rights. In connection with the
exercise of rights ("Expansion Rights") granted to the holders of Series R
Preferred Stock in accordance with Section 2(e) of the certificate of
designations attached hereto as Exhibit B-1 or the holders of Series W Preferred
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Stock in accordance with Section 2(e) of the certificate of designations
attached hereto as Exhibit B-2, each Investor consents to such Expansion Rights
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and agrees to vote its shares of the Company's Capital Stock for, and the
Company and each Investor will take all other necessary actions within their
respective control to cause, (i) the increase in size of the Board of Directors
of the Company and nomination and election of additional directors designated by
the Person or Persons exercising Expansion Rights and (ii) the corresponding
decrease in size of the Board of Directors of the Company and removal of
additional directors designated by the Person or Persons exercising Expansion
Rights at such time as the circumstances giving rise to the exercise of such
Expansion Rights no longer exist.
(c) Additional Rights. Notwithstanding any contrary provision of this
Agreement or the By-laws of the Company, if less than all but five of all of the
directors then serving on the Board of Directors of the Company (whether or not
present) affirmatively vote or act by written consent against, or otherwise take
any action in any way inconsistent with or not in furtherance of or in the
absence of, or fail to take any necessary action to give effect to, any
recommendation, action or decision of the Executive Committee, each Investor
agrees to vote its shares of the Company's Capital Stock in favor of, and the
Company and each Investor will take all other necessary actions within their
respective control to cause, any measures necessary (including without
limitation amendments or modifications to the Certificate of Incorporation or
By-laws of the Company, increases in the size of the Board of Directors, the
nomination and election of additional members of the Board of Directors and any
necessary stockholder meetings, votes or written consents) to be taken so as to
ensure that (x) in the case of a Full Board Matter, the recommendation of the
Executive Committee with respect to such Full Board Matter is submitted to the
stockholders of the Company entitled to vote thereon with the favorable
recommendation of the Board of Directors and (y) in all other cases, the
recommendation, action or decision of the Executive Committee is ratified,
confirmed, effected and furthered by the Board of Directors and any actions of
the Board of Directors against or in any way inconsistent or not in furtherance
of such recommendation, action or decision are repealed.
(d) Replacement of Designees. Each Person entitled to designate a
member of the Board of Directors shall have the right to remove its designee at
any time and, in the event
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of such removal or in the event of the death, incapacity or resignation of any
such designee, designate a nominee to replace any such designee. If at any time,
as the result of the Board of Directors filling a vacancy on the Board pursuant
to the By-laws of the Company, the composition of the Board of Directors is
other than as provided in Section 3.1(a)(as such composition may be changed
from time to time in accordance with Section 3.3), each Investor agrees to vote
its shares of the Company's Capital Stock in favor of, and the Company and each
Investor will take all other necessary actions within their respective control
to cause, any measures necessary (including without limitation amendments or
modifications to the Certificate of Incorporation or By-laws of the Company,
increases in the size of the Board of Directors, the nomination and election of
additional members of the Board of Directors and any necessary stockholder
meetings, votes or written consents) to be taken so as to ensure that the
composition of the Board of Directors is as provided in Section 3.1(a), as such
composition may be changed from time to time in accordance with Section 3.3.
Each of the Investors and the Company agrees to take any and all actions within
its control to give effect to the two preceding sentences. Except as expressly
provided in this Section 3.1, Section 3.2 or Section 3.3, no Person shall have
the right to designate any additional members of the Board of Directors of the
Company under any circumstances.
(e) Committees. One of the directors designated by CapZ shall have the
right, upon the request of CapZ, to serve as a member of each committee of the
Board of Directors of the Company (other than the Executive Committee, which is
separately addressed in Section 3.4).
(f) Lost Designation Rights. If a Designation Right to designate a
member or members of the Board of Directors terminates pursuant to Section 3.3,
each Investor agrees to vote its shares of the Company's Capital Stock for, and
the Company and each Investor will take all other necessary actions within their
respective control to cause, the removal of the director or directors designated
by the Person or Persons losing such Designation Right and replacement of such
director or directors in accordance with Section 3.3(d).
SECTION 3.2 Actions Requiring Greater than Majority Vote. (a) Changes in
--------------------------------------------
Board of Directors. The parties hereto agree that (i) the composition of the
Board of Directors may be changed (provided, that no such change resulting in
--------
the loss of any Designation Right, other than pursuant to Section 3.3, shall be
effective unless such change is approved in writing by the holder of such
Designation Right) and the size of the Board of Directors increased only by a
vote of two-thirds of the Total Voting Power except as expressly contemplated by
Section 3.1 and 3.3 and this Section 3.2 and (ii) the By-laws shall provide that
the size of the Board of Directors may not be decreased except pursuant to
Section 3.1(b). The parties agree to amend this Agreement to give binding effect
to any changes in the size or composition of the Board of Directors effected
pursuant to clause (i) of the immediately preceding sentence.
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(b) Changes in Executive Committee Structure. The parties hereto agree
that the By-laws of the Company shall provide that an affirmative vote of at
least all but two of all of the directors then serving on the Board of Directors
(whether or not present) shall be required to disband, change the size or
composition of, or diminish the responsibilities of, the Executive Committee
(including without limitation by creating any committee of the Board of
Directors other than the Audit Committee and the Compensation Committee existing
on the date hereof and having only the powers customarily assigned to committees
of such type). If at any time the composition of the Executive Committee is
other than as set forth in Section 3.4 (as such composition may be changed from
time to time in accordance with Section 3.3), or if the Board of Directors takes
any action in any way inconsistent with or not in furtherance of the first
sentence of this Section 3.2(b), each Investor agrees to vote its shares of the
Company's Capital Stock in favor of, and the Company and each Investor will take
all other necessary actions within their respective control to cause, any
measures necessary (including without limitation amendments or modifications to
the Certificate of Incorporation or By-laws of the Company, increases in the
size of the Board of Directors, the nomination and election of additional
members of the Board of Directors and any necessary stockholder meetings, votes
or written consents) to be taken so as to ensure that the composition of the
Executive Committee is as provided in Section 3.4 (as such composition may be
changed from time to time in accordance with Section 3.3) and that the Executive
Committee is constituted as provided in Exhibit C.
---------
(c) Conflicts with Executive Committee. The parties hereto agree that
the By-laws of the Company shall provide as set forth in sentences (1) and (2)
of this Section 3.2(c): (1) An affirmative vote of at least all but five of all
of the directors then serving on the Board of Directors (whether or not present)
shall be required to overrule or take any position in any way inconsistent with
or not in furtherance of, or fail to take any necessary action to give effect
to, any recommendation, action or decision of the Executive Committee or to take
any action with respect to a Full Board Matter in the absence of a
recommendation by the Executive Committee. (2) An affirmative vote of at least
all but five of all of the directors then serving on the Board of
Directors (whether or not present) shall be required to decline to follow any
recommendation of the Executive Committee with respect to a Full Board Matter or
take any position in any way inconsistent with or not in furtherance of such
recommendation of the Executive Committee with respect to a Full Board Matter.
If the Board of Directors receives a recommendation of the Executive Committee
with respect to a Full Board Matter, and does not vote on such recommendation
within 5 business days (unless a motion not to vote on such recommendation is
carried by an affirmative vote of at least all but two of all of the directors
then serving on the Board of Directors (whether or not present)), then each
Investor agrees to vote its shares of the Company's Capital Stock in favor of,
and the Company and each Investor will take all other necessary actions within
their respective control to cause, any measures necessary (including without
limitation amendments or
-15-
modifications to the Certificate of Incorporation or By-laws of the Company,
increases in the size of the Board of Directors, the nomination and election of
additional members of the Board of Directors and any necessary stockholder
meetings, votes or written consents) to be taken so as to ensure that such
recommendation is voted on by the Board of Directors.
(d) Amendments of Section 3.2. The parties hereto agree that any
amendment to any of the provisions of this Section 3.2 or any provision of the
By-laws relating thereto shall require the affirmative vote of 90% of the Total
Voting Power.
SECTION 3.3 Transfer of Board Seats; Loss of Designation Rights. (a) By
---------------------------------------------------
Strategic Investors. The parties hereto agree that a Strategic Investor may
transfer its Designation Right upon the transfer of such Strategic Investor's
shares of Series N Preferred Stock, Series O Preferred Stock, Series R Preferred
Stock, Series T Preferred Stock, Series W Preferred Stock or Series W Warrants
to another Investor so long as greater than 50% of the voting power of the
Capital Stock held as of the date hereof by such Strategic Investor is
transferred to such Investor. Such Designation Right shall be transferable by
each Investor to whom it is transferred upon the transfer to another Investor of
Capital Stock held by the transferring Investor so long as greater than 50% of
the voting power of the Capital Stock held by the transferring Investor
immediately after it acquired such Designation Right from such Strategic
Investor or its direct or indirect transferee is transferred to such other
Investor.
(b) By Financial Investors. The Designation Rights of each Financial
Investor (as such Designation Rights exist on the date hereof) shall be
non-transferable and shall terminate and be automatically transferred as
provided in Section 3.3(d) at such time as such Financial Investor (together
with any Persons acquiring Capital Stock from such Person in a Transfer
permitted by Section 2.1(b)) holds less than 50% of the voting power of the
Capital Stock held as of the date hereof by such Financial Investor.
(c) By CapZ. The parties hereto agree that CapZ may, upon the transfer
of CapZ's Capital Stock to another Investor, (i) transfer its Designation Right
to designate one member of the Board of Directors and one member of the
Executive Committee to such Investor so long as greater than 25% of the voting
power of the Capital Stock held as of the date hereof by CapZ is transferred to
such Investor and (ii) transfer its Designation Right in whole or in part to
such Investor so long as greater than 50% of the voting power of the Capital
Stock held as of the date hereof by CapZ is transferred to such Investor. Such
Designation Right shall be transferable by each Investor to whom it is
transferred upon the transfer to another Investor of Capital Stock held by the
transferring Investor so long as greater than 50% of the voting power of the
Capital Stock held by the transferring Investor immediately after it acquired
such Designation Right from CapZ or its direct or indirect transferee is
transferred to such other Investor.
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(d) Loss of Designation Rights. Except as provided in Section 3.3(b),
any Designation Right held by a Non-Management Investor shall terminate
immediately at such time as such Non-Management Investor (together with any
Persons acquiring Capital Stock from such Non-Management Investor in a Transfer
permitted by Section 2.1(b)) holds less than 2% of the voting power of the
Capital Stock; provided, in the case of CapZ and each Strategic Investor, that
--------
no such termination shall occur except in connection with a Transfer of Capital
Stock (other than a Transfer permitted by Section 2.1(b)). Upon such
termination, such Designation Right (i) if it entitles the holder to thereof to
designate a member of the Board of Directors, will be transferred automatically
to the Non-Management Investor holding the largest percentage of the voting
power of the Capital Stock who is not directly or through an Affiliate then
entitled to designate a member of the Board of Directors and (ii) if it entitles
the holder thereof to designate a member of the Executive Committee from among
the directors of the Company, will be transferred automatically to the
Non-Management Investor holding the largest percentage of the voting power of
the Capital Stock who is not directly or through an Affiliate (or indirectly by
operation of clause (ii) of Section 3.4) then entitled to designate a member of
the Executive Committee; provided, in each case, that no such termination and
--------
automatic transfer shall occur if the Non-Management Investor to whom the
Designation Right would otherwise be transferable holds less than 2% of the
voting power of the Capital Stock.
(e) Voting Power. For purposes of determining the "voting power" of
Capital Stock held by any Person under this Section 3.3, the parties shall
assume the exercise of any unexercised Warrants and conversion of any Preferred
Stock held by such Person.
SECTION 3.4 Executive Committee. The parties hereto agree that there shall
-------------------
be established and maintained under all circumstances, notwithstanding any vote
other than an affirmative vote of at least all but two of all of the directors
then serving on the Board of Directors (whether or not present), an Executive
Committee of the Board of Directors to consist of 9 directors (the "Executive
Committee"), which Executive Committee shall have the power and authority, and
conduct its business in accordance with the terms, set forth in Exhibit C. By
---------
executing and delivering this Agreement or a Joinder Agreement, each party
hereto, in its capacity as a stockholder of the Company, expressly approves,
ratifies and consents to the resolutions set forth in Exhibit C. Subject to
---------
Section 3.3, the parties hereto shall take all necessary actions and measures to
be taken so as to ensure that the Executive Committee consists of the following
directors:
(i) the directors designated by each of Travelers, CCC, Zurich,
Equitable and Chase;
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(ii) one director from among the directors designated pursuant to
Section 3.1(a) by the Financial Investors, to be designated by Financial
Investors holding a majority of the Capital Stock held by all Financial
Investors, voting as a class;
(iii) one director who is designated in accordance with Section
3.1(a)(i), to be designated by the most senior executive officer of the
Company; and
(iv) two of the directors designated by CapZ in accordance with
Section 3.1(a)(ii), to be designated by CapZ.
If a Designation Right to designate a member or members of the Executive
Committee terminates pursuant to Section 3.3, the Company and each Investor will
take all necessary actions within their respective control to cause the removal
of the member or members of the Executive Committee designated by the Person or
Persons losing such Designation Right and replacement of such member or members
in accordance with Section 3.3(d). No Investor shall be entitled, nor shall the
Company grant any rights to any Investor, to designate a representative of such
Investor to participate as an observer at any regular or special meeting of the
Executive Committee.
SECTION 3.5 Company Cooperation; Directors Expenses. The parties hereto
---------------------------------------
will do all things within their respective control to assure compliance with the
provisions hereof and not to cooperate in any course of action designed to
contravene any provision of this Article III or to deny any stockholder the
benefit of any such provision. The Company agrees to pay all reasonable
out-of-pocket expenses of each director incurred in connection with such service
as a director and with attendance at meetings of the Board of Directors or any
committee thereof (including, without limitation, all travel, lodging and other
related expenses).
SECTION 3.6 Termination. Notwithstanding anything to the contrary set forth
-----------
above, the provisions of this Article III shall terminate upon the closing of a
Public Offering.
ARTICLE IV
REGISTRATION AND RELATED RIGHTS
SECTION 4.1 Demand Registration. (a) Demand Rights. The Company agrees
-------------------
that, at any time after the earlier of (i) a Public Offering or (ii) September
17, 2002, upon written demand from Investors holding greater than 20% of the
Total Voting Power, the Company shall file a registration statement under the
1933 Act, covering the aggregate number of Registrable Securities as requested
by such Investors in such notice, with the Commission as soon as reasonably
practicable following receipt of such notice, and use its best efforts to cause
such registration statement to be declared effective under the 1933 Act (the
"Demand
-18-
Registration"). In the event a valid demand is made hereunder, the Company shall
promptly provide notice thereof to each of the other Investors, who shall then
have the right, for a period of twenty days from delivery of such notice, to
elect in a writing delivered to the Company to have their Registrable Securities
included in such registration statement on the basis as if they had been part of
the group that actually made such demand.
(b) Underwriter. A Demand Registration shall, at the election of
either the demanding holders or the Company, be underwritten and the Company
shall have sole discretion in the selection of the underwriter or underwriters
to manage such Demand Registration.
(c) Cutbacks. If the managing underwriter or underwriters of a Demand
Registration advise the Company in writing that in its or their opinion the
number of Registrable Securities proposed to be sold in such Demand Registration
exceeds the number which can be sold, or adversely affects the price at which
the Registrable Securities are to be sold, in such offering, the Company will
include in such registration only the number of Registrable Securities, if any,
which, in the opinion of such underwriter or underwriters, can be sold in such
offering or which will not adversely affect the price thereof. In the event that
the contemplated distribution does not involve an underwritten offering, the
determination that the inclusion of such Registrable Securities shall adversely
affect the price or the number of securities which may be sold in such offering
shall be made by the Company in its reasonable judgment upon advice and
consultation with a nationally recognized investment banker. The securities
included in such Demand Registration shall be apportioned (i) first, to any
Registrable Securities that the requesting Investors propose to sell, (ii)
second, pro rata among any Registrable Securities that any other Investors
propose to sell pursuant to Section 4.2, according to the total number of
Registrable Securities requested for inclusion by said selling security holders,
or in such other proportions as shall mutually be agreed to among such selling
security holders and (iii) third, to any Capital Stock that the Company proposes
to sell.
(d) Postponement by Company. The Company may defer the filing (but not
the preparation) of a registration statement required by this Section 4.1 if (i)
at the time the Company receives the Demand Registration request or at any time
before it files the Demand Registration, the Company or any of its subsidiaries
is engaged in confidential negotiations or other confidential business
activities, disclosure of which would be required in such registration statement
(but would not be required if such registration statement were not filed), and
the Board of Directors of the Company determines in good faith that such
disclosure would be materially detrimental to the Company and its shareholders
or would have a material adverse effect on any such confidential negotiations or
other confidential business activities, or (ii) prior to receiving a request
for a Demand Registration, the Board of Directors of the Company had determined
to effect a registered public offering of the Company's securities for
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its account and the Company had taken substantial steps (including, but not
limited to, selecting a managing underwriter for such offering) and is
proceeding with reasonable diligence to effect such offering. A deferral of the
filing of a registration statement pursuant to this Section 4.1(d) shall be
lifted, and the requested registration statement shall be filed forthwith, if,
in the case of a deferral pursuant to clause (i) of the preceding sentence, the
negotiations or other activities are disclosed or terminated, or, in the case of
a deferral pursuant to clause (ii) of the preceding sentence, the proposed
registration for the Company account is abandoned. In order to defer the filing
of a Demand Registration, the Company shall promptly deliver to each requesting
Investor a certificate signed by an executive officer of the Company stating the
reason, in general terms, for such deferral and an approximation of the
anticipated delay. The Company may defer the filing of a Demand Registration
only for 90 days in any twelve-month period unless the Company has filed a
registration statement within such twelve-month period, in which case the
Company may defer the filing of a Demand Registration for 270 days from the
effective date of such registration statement.
SECTION 4.2 Piggyback Registration. (a) Piggyback Rights. Subject to the
----------------------
provisions of Section 4.2(c), if at any time the Company proposes to register
any of its Capital Stock under the 1933 Act in connection with the offering of
such Capital Stock by the Company or holders of such Capital Stock (except
pursuant to a registration statement filed on Form S-4 or on Form S-8 or such
other forms as shall be prescribed under the 1933 Act for the same purposes or
for any exchange offer) (a "Piggyback Registration"), the Company shall at such
time provide promptly to each Investor written notice of its intention so to do.
Upon the written request of any Investor given within (x) 10 days after the
expiration of the 20-day period provided for in Section 4.1(a), in the case of a
demand registration thereunder, and (y) 10 days after the providing of any such
notice by the Company, in all other cases, the Company shall use reasonable
efforts to cause to be registered under the 1933 Act all of the Registrable
Securities held by such Investor that have been so requested to be registered,
subject to the provisions of Section 4.2(c).
(b) Underwriter. If the Company in its sole discretion decides a
Piggyback Registration shall be underwritten, the Company shall have sole
discretion in the selection of any underwriter or underwriters to manage such
Piggyback Registration.
(c) Cutbacks. If the managing underwriter or underwriters of a
Piggyback Registration advise the Company in writing that in its or their
opinion the number of Registrable Securities proposed to be sold in such
Piggyback Registration exceeds the number which can be sold, or adversely
affects the price at which the Registrable Securities are to be sold, in such
offering, the Company will include in such registration only the number of
Registrable Securities, if any, which, in the opinion of such underwriter or
underwriters, can be sold in such offering or which will not adversely affect
the price thereof. In the event that the contemplated distribution does not
involve an underwritten offering, the determination
-20-
that the inclusion of such Registrable Securities shall adversely affect the
price or the number of securities which may be sold in such offering shall be
made by the Company in its reasonable judgment upon advice and consultation with
a nationally recognized investment banker. The securities included in such
Piggyback Registration shall be apportioned (A) in the case of the Company
proposing to sell shares of its Capital Stock (i) first, to any Capital Stock
that the Company proposes to sell and (ii) second, pro rata among any
Registrable Securities that any Investors propose to sell, according to the
total number of Registrable Securities requested for inclusion by said selling
security holders, or in such other proportions as shall mutually be agreed to
among such selling security holders and (B) in the case of a Demand
Registration, then as set forth in Section 4.1(c).
SECTION 4.3 Registration Procedures. It shall be a condition precedent to
-----------------------
the obligations of the Company and any underwriter or underwriters to take any
action pursuant to this Article IV, that the Investors requesting a Demand
Registration or inclusion in any Piggyback Registration shall furnish to the
Company such information regarding them, the Registrable Securities held by
them, the intended method of disposition of such Registrable Securities, and
such agreements regarding indemnification, disposition of such securities and
the other matters referred to in this Article IV as the Company shall reasonably
request and as shall be required in connection with the action to be taken by
the Company. With respect to any Demand Registration or Piggyback Registration
which includes Registrable Securities held by an Investor, the Company shall,
subject to the provisions of Section 4.1 and 4.2, as expeditiously as
practicable:
(a) prepare and file with the Commission a registration statement on
the appropriate form prescribed by the Commission and use its best efforts to
cause such registration statement to become effective;
(b) prepare and file with the Commission such amendments,
post-effective amendments and supplements to such registration statement and any
documents required to be incorporated by reference therein as may be necessary
to keep the registration statement effective until the distribution of
Registrable Securities shall have been completed or until the expiration of 180
days after the effective date, whichever is earlier; cause the prospectus to be
supplemented by any required prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the 1933 Act (or any successor rule); and
comply with the provisions of the 1933 Act applicable to it with respect to the
disposition of all Registrable Securities covered by such registration statement
during the applicable period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement or
supplement to the prospectus;
(c) furnish to such Investor at least one conformed copy of the
registration statement and any post-effective amendment thereto, upon request,
and such number of copies
-21-
of the prospectus (including each preliminary prospectus) and any amendments or
supplements thereto, and any exhibits or documents incorporated by reference
therein as the Investor or underwriter or underwriters, if any, may reasonably
request in order to facilitate the disposition of the securities being sold by
the Investor;
(d) on or prior to the date on which the registration statement is
declared effective, use its best efforts to register or qualify, and cooperate
with such Investor, the underwriter or underwriters, if any, and their counsel
in connection with the registration or qualification of, the Registrable
Securities covered by the registration statement for offer and sale under the
securities or blue sky laws of each state and other jurisdiction of the United
States as such managing underwriter or underwriters, if any, may reasonably
request (considering the nature or size of the offering and the expense and time
involved in such qualification or registration), and to do any and all other
acts or things which may be necessary or advisable to enable the disposition
in all such jurisdictions of the Registrable Securities covered by the
applicable registration statement; provided, however, that the Company shall not
-------- -------
be required to qualify generally to do business in any jurisdiction where it is
not then so qualified or to take any action which would subject it to general
service of process in any such jurisdiction where it is not then so subject;
(e) use its best efforts to cause the Registrable Securities covered
by the registration statement to be registered with or approved by such other
governmental agencies or authorities within the United States, including,
without limitation, the National Association of Securities Dealers, Inc. (the
"NASD"), as may be necessary to enable the seller or sellers thereof or the
underwriter or underwriters, if any, to consummate the disposition of such
Registrable Securities;
(f) prior to the effective date of a registration statement covering
Registrable Securities (i) cooperate with the holders of Registrable Securities
to provide certificates for the Registrable Securities in a form eligible for
deposit with The Depository Trust Company and (ii) provide a CUSIP number for
the Registrable Securities to be offered;
(g) use its best efforts to list or have included for trading the
Registrable Securities on any stock exchange or interdealer quotation system
upon which other securities of the Company of the same class are listed or
included for trading;
(h) enter into customary underwriting and other agreements and use
commercially reasonable efforts to obtain cold comfort letters and/or legal
opinion letters in customary form as may be requested by any underwriter or the
holders of at least a majority of the Registrable Securities to be included in
such registration; and
-22-
(i) cooperate in the performance of due diligence regarding the
Company by (A) any underwriter, (B) any holder of at least 5% of the Registrable
Securities to be included in such registration and (C) their respective
attorneys, accountants and other agents.
The Investors, upon receipt of any notice from the Company that the
prospectus prepared pursuant to Sections 4.3(a) and (b) contains an untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein not misleading (which notice the Company will provide
immediately upon obtaining actual knowledge of such facts), will forthwith
discontinue disposition of the Registrable Securities until the Investors
receive copies of a supplemented or amended prospectus or until they are advised
in writing (the "Advice") by the Company that the use of the prospectus may be
resumed, and have received copies of any additional or supplemental filings
which are incorporated by reference in the prospectus, and, if so directed by
the Company, each Investor shall, or shall request the managing underwriter or
underwriters, if any, to deliver to the Company all copies, other than permanent
file copies then in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the time periods mentioned in
Section 4.3(b) shall be extended by the number of days during the period from
and including any date of the giving of such notice to and including the date
when each seller of Registrable Securities covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus contemplated by the immediately preceding sentence or the Advice.
SECTION 4.4 Registration Expenses. In the case of any Demand Registration
---------------------
or Piggyback Registration, the Company shall bear all expenses in connection
with its obligations in connection therewith, including, without limitation, the
expenses of preparing any registration statement; Commission and state "blue
sky" filing, registration and qualification fees and expenses (including,
without limitation, fees and expenses of counsel in connection with blue sky
surveys); fees and expenses associated with filings required to be made with the
NASD; fees and expenses of counsel for the Company and independent public
accountants (including, without limitation, the cost of providing any legal
opinions or "cold comfort" letters); reasonable fees and disbursements of one
counsel for the Investors including Registrable Securities in a registration
pursuant to Section 4.1, such counsel to be selected by Investors holding a
majority of such Registrable Securities; reasonable fees and disbursements of
one counsel for the Investors owning Registrable Securities which Registrable
Securities are included in a registration pursuant to Section 4.2 and which have
an aggregate value of not less than $10,000,000, such counsel to be selected by
Investors holding a majority of such Registrable Securities; and all printing
costs and expenses; provided that the Company shall not be responsible for the
-------- ----
underwriting discounts and commissions or placement fees of underwriters
directly attributable to the Registrable Securities included in such Demand
Registration or Piggyback Registration.
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SECTION 4.5 Participation in Registration. No Investor may participate in
-----------------------------
any Demand Registration or Piggyback Registration hereunder unless such Investor
(a) agrees to sell its securities on the basis provided in any underwriting
arrangements approved by the Company, and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements. Nothing in this Section 4.5 shall be construed to create any
additional rights regarding the registration of Registrable Securities in any
Person otherwise than as set forth in this Article IV.
SECTION 4.6 Delay of Registration. No Investor shall have any right to take
---------------------
any action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Agreement.
SECTION 4.7 "Market Stand-Off" Agreement. Each Investor hereby agrees
---------------------------
that during the period of duration specified by the Company and a managing
underwriter of Capital Stock or other securities of the Company, following the
date of the final prospectus covering a Public Offering registered under the
1933 Act, it shall not, to the extent requested by the Company and such managing
underwriter, directly or indirectly sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option to purchase or
otherwise transfer or dispose of (other than to donees who agree to be similarly
bound) any securities of the Company held by it at any time during such period
except Capital Stock included in such registration; provided, however, that all
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executive officers and directors of the Company and all other persons with
registration rights (whether or not pursuant to this Agreement) enter into
similar agreements and such market stand-off time period shall not exceed 180
days following the date of the final prospectus and 30 days prior to the date of
the final prospectus. In order to enforce the foregoing covenant, the Company
may impose stop-transfer instructions with respect to the Registrable Securities
of an Investor (and the shares or securities of every other person subject to
the foregoing restriction) until the end of such period. Notwithstanding the
foregoing, the obligations described in this Section 4.7 shall not apply to a
registration relating solely to employee benefit plans on Form S-8 or similar
forms which may be promulgated in the future or a registration relating solely
to a transaction pursuant to Rule 145 under the 1933 Act.
SECTION 4.8 No Other Registration Rights. The Company confirms that the
----------------------------
registration rights conferred in this Article IV are the only agreements that
the Company has entered into with respect to the subjects covered in this
Article IV, and agrees not to enter into any other agreement with respect to the
subjects covered in this Article IV without the prior consent of two-thirds of
the Total Voting Power.
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ARTICLE V
INDEMNIFICATION AND CONTRIBUTION
SECTION 5.1 Indemnification by the Company. In connection with any
------------------------------
registration statement filed to effect a registration pursuant to this
Agreement, the Company agrees to indemnify and hold harmless, to the fullest
extent permitted by law, each holder of Registrable Securities registered
pursuant to a registration hereunder, its officers, directors and partners, each
underwriter of such Registrable Securities and each person who controls (within
the meaning of the 0000 Xxx) such holder or underwriter against all losses,
claims, damages, liabilities and expenses (as incurred or suffered and
including, but not limited to, any and all expenses incurred in investigating,
preparing or defending any litigation or proceeding, whether commenced or
threatened, or any claim whatsoever) and which arise out of or are based upon
any untrue or alleged untrue statement of a material fact contained in the
registration statement or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or by any untrue or alleged untrue statement of a material fact
included in any prospectus forming a part of such registration statement or
preliminary or summary prospectus or any omission or alleged omission to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as the
same are caused by or contained in any information furnished in writing to the
Company by such holder or underwriter or its representative expressly for use
therein.
SECTION 5.2 Indemnification by Holders of Registrable Securities. In
----------------------------------------------------
connection with any registration statement filed pursuant to this Agreement to
effect a registration, each holder participating in such registration statement
agrees to (and, as a condition precedent to the filing of such registration
statement, the Company may require an undertaking satisfactory to it from each
such participating holder and from any prospective underwriter therefor agreeing
to) indemnify, to the fullest extent permitted by law, the Company and its
officers, directors and agents and each person who controls (within the meaning
of the 0000 Xxx) the Company or such agents against any losses, claims, damages,
liabilities and expenses (as incurred or suffered and including, but not limited
to, any and all expenses incurred in investigating, preparing or defending any
litigation or proceeding, whether commenced or threatened, or any claim
whatsoever) and which arise out of or are based upon any untrue or alleged
untrue statement of a material fact contained in such registration statement or
any omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or by any
untrue or alleged untrue statement of a material fact included in any prospectus
or preliminary or summary prospectus or any omission or alleged omission to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, to the
extent, but only to the extent, that such untrue statement or omission is
contained in any
-25-
information or affidavit with respect to such holder so furnished in writing by
such holder or its representatives to the Company specifically for inclusion in
such registration statement or prospectus. In no event shall the liability of
any holder of Registrable Securities participating in a registration exceed the
aggregate proceeds received by such holder from the sale of the Registrable
Securities included therein.
SECTION 5.3 Conduct of Indemnification Proceedings. Each person entitled to
--------------------------------------
indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
or contribution pursuant to this Agreement and (ii) permit such indemnifying
party to assume the defense of such claim with counsel reasonably satisfactory
to the indemnified party; provided, however, that any person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such person unless (x) the indemnifying party
has agreed in writing to pay such fees and expenses, (y) the indemnifying party
shall have failed to assume the defense of such claim and employ counsel
reasonably satisfactory to such person or (z) in the reasonable judgment of any
such person, based upon advice of its counsel, a conflict of interest may exist
between such person and the indemnifying party with respect to such claims (in
which case, if the indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such person); and provided, further, that an
-------- -------
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim on behalf of all indemnified parties shall not be obligated to pay
the fees and expenses of more than one counsel for all indemnified parties. If
the indemnifying party assumes the defense, or is not pursuant to clause (z)
above entitled to assume the defense, it shall not be subject to any liability
for any settlement or compromise made by the indemnified party without its
consent (but such consent shall not be unreasonably withheld). No indemnifying
or indemnified party will be required to consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to the indemnified party of a
release from all liability in respect to such claim or litigation. In addition,
without the consent of the indemnified party (which consent will not be
unreasonably withheld), no indemnifying party will be permitted to consent to
entry of any judgment or enter into any settlement which provides for any action
on the part of the indemnified party other than the payment of money damages
which are to be paid in full by the indemnifying party. If requested by the
indemnifying party, the indemnified party agrees to cooperate with the
indemnifying party and its counsel in contesting any claim which the
indemnifying party elects to contest.
SECTION 5.4 Contribution. If the indemnification provided for in this
------------
Article V from the indemnifying party is unavailable to an indemnified party
hereunder in respect of
-26-
any losses, claims, damages, liabilities or expenses referred to herein, then
the indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses in such proportion as
is appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which result in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities or
expenses referred to above shall be deemed to include, without limitation, any
legal or other fees, costs or expenses reasonably incurred by such party in
connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5.4 were determined by pro rata allocation
or by any other method of allocation which does not take into account the
equitable considerations referred to in the immediately preceding paragraph. No
person guilty of fraudulent misrepresentation (within the meaning of Section 11
(f) of the 0000 Xxx) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
Notwithstanding any contrary provision of this Section 5.4, no holder of
Registrable Securities participating in any Demand Registration or Piggyback
Registration shall be required to contribute any amount in excess of the
aggregate net proceeds received by such holder from the sale of Registrable
Securities included therein. The obligation of any holder of Registrable
Securities to contribute pursuant to this Section 5.4 shall be several and not
joint.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Notices. All notices, requests and other communications to any
-------
party hereunder shall be in writing (including facsimile or similar writing) and
shall be given to such party at its address or facsimile number set forth on the
signature pages hereof or the signature page of any Joinder Agreement or such
other address or facsimile number as such party may hereafter specify for the
purpose by notice to the party sending the communication. Each such notice,
request or other communication shall be effected by facsimile transmission,
overnight courier or personal delivery, and shall not be deemed given until
confirmation of completed facsimile transmission or receipt from an overnight
courier is received by the notifying party or until delivered, in the case of
personal delivery.
-27-
SECTION 6.2 Additional Parties. Only a Person who signs this Agreement as
------------------
an Investor or executes and delivers a Joinder Agreement shall be deemed to be
an Investor, and any holder of Capital Stock at any time not party to this
Agreement shall, at the request of the Company, be permitted to execute and
deliver a Joinder Agreement. Except to the extent limited in any Joinder
Agreement, each Person that so becomes an Investor after the date hereof shall
be entitled to all rights and privileges of an Investor as if such Person had
been an original signatory to this Agreement.
SECTION 6.3 Amendments and Waivers. Except as expressly provided in Section
----------------------
3.2, no modification, amendment or waiver of any provision of this Agreement,
nor any consent to any departure from the terms of this Agreement, shall be
effective unless it is in writing and signed by (i) the Requisite
Securityholders and (ii) the Company, if such modification, amendment, waiver or
consent imposes material additional obligations on the Company or could
reasonably be expected to materially adversely affect any of the rights of the
Company hereunder. Any such waiver or consent shall be effective only in the
specific instance and for the purpose given. Any action required under this
Agreement to be taken by "vote" of an Investor or group of Investors need not be
taken with a formal vote or meeting called for such purpose but may be taken by
written consent signed by the requisite Investor or number of Investors entitled
to vote with respect to such action. No failure or delay by any party to this
Agreement in exercising any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
SECTION 6.4 Successors and Assigns. The provisions of this Agreement shall
----------------------
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that no assignment of
-------- -------
rights under this Agreement will be valid unless made in connection with a
contemporaneous Transfer of Capital Stock which is not prohibited by this
Agreement; and provided, further, that upon any such assignment, the assignee
-------- -------
shall execute and deliver a Joinder Agreement unless this Agreement expressly
does not require the assignee to do so. The Company may not assign or otherwise
transfer any of its rights or obligations under this Agreement.
SECTION 6.5 Captions. The captions of this Agreement are included for
--------
convenience of reference only, do not constitute a part hereof and shall be
disregarded in the construction hereof.
SECTION 6.6 Counterparts: Effectiveness. This Agreement may be signed in
---------------------------
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
-28-
SECTION 6.7 GOVERNING LAW; CONSENT TO JURISDICTION, VENUE AND SERVICE OF
------------------------------------------------------------
PROCESS; WAIVER OF JURY TRIAL. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-----------------------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS. EACH PARTY HERETO HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY
FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN ANY SUCH
PROCEEDING BY NOTICE IN THE MANNER SET FORTH IN SECTION 6.l.
SECTION 6.8 Severability. Any term or provision of this Agreement which is
------------
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement, or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
SECTION 6.9 Termination of Certain Agreements. The parties hereto (to the
---------------------------------
extent that they are parties to the documents listed below) acknowledge and
agree that as of the date hereof, the agreements set forth below shall terminate
and be of no further force and effect as against the Company and each of the
respective parties to such agreements: (i) the Amended and Restated
Shareholders' Agreement dated as of July 9, 1998 among the Company and the
parties thereto; and (ii) the Amendment dated as of September 22, 1998 to such
Amended and Restated Shareholders' Agreement.
SECTION 6.10 Entire Agreement. This Agreement constitutes the full and
----------------
entire understanding and agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior negotiations, understandings
and agreements between such parties in respect of such subject matter.
-29-
SECTION 6.11 Injunctive Relief. It is hereby agreed and acknowledged that
-----------------
the remedies at law in respect of the failure by the Company or any Investor to
comply with any of the obligations herein imposed on it would be inadequate and
that, in the event of any such failure, any aggrieved Investor will be
irreparably damaged. Any such Investor shall, upon any finding by a court of
competent jurisdiction that another party has breached any such obligation, be
entitled to injunctive relief, including specific performance, to enforce such
obligation, without the posting of any bond, and if any action should be brought
in equity to enforce any of the provisions of this Agreement, neither the
Company nor any Investor shall raise the defense that there is an adequate
remedy at law.
SECTION 6.12. No Requirement to Exercise Warrants or Convert Capital Stock.
------------------------------------------------------------
No provision of this Agreement requiring an Investor to use its "best efforts"
or "commercially reasonable efforts" or to take any "necessary actions" or
"commercially reasonable actions" or act in accordance with phrases of similar
import shall require such Investor to exercise unexercised Warrants or any
conversion rights with respect to any capital stock of the Company held by such
Investor.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
U.S.I. HOLDINGS CORPORATION
By: /s/ Xxxxxxx Xxxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Chief Financial Officer
U.S.I. Holdings Corporation
00 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Attn: General Counsel
Telephone: (000) 000-0000
Telecopier:(000) 000-0000
NON-MANAGEMENT INVESTOR
-----------------------
CAPITAL Z FINANCIAL SERVICES FUND II, L.P.
By: CAPITAL Z PARTNERS, L.P.,
its general partner
By: CAPITAL Z PARTNERS, LTD.,
its general partner
By: /s/ Illegible
----------------------------------
Name:
Title:
Address: Capital Z Partners Ltd
00 Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel 000.000.0000
Fax 000.000.0000
Attention: Xxx Spass
CAPITAL Z FINANCIAL SERVICES PRIVATE FUND II, L.P.
By: CAPITAL Z PARTNERS, L.P.,
its general partner
By: CAPITAL Z PARTNERS, LTD.,
its general partner
By: /s/ Illegible
----------------------------------
Name:
Title:
Address: Capital Z Partners Ltd
00 Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel 000.000.0000
Fax 000.000.0000
Attention: Xxx Spass
ANNEX A TO SHAREHOLDERS' AND
WARRANTHOLDERS' AGREEMENT
MANAGEMENT INVESTORS:
NON-MANAGEMENT INVESTORS:
EXHIBIT A-1
TO SHAREHOLDERS' AND
WARRANTHOLDERS' AGREEMENT
Form of Joinder Agreement (purchases from the Company)
WHEREAS, [____] (the "Purchaser") is acquiring, pursuant to the terms of
that certain Subscription Agreement, dated [____], between the Company and such
Purchaser (the "Subscription Agreement"), the amount and type Capital Stock (as
defined in the Shareholders' Agreement) of U.S.I. Holdings Corporation (the
"Company") set forth on the signature page below such Purchaser's name (such
securities, together with any securities of the Company acquired upon conversion
or exercise of such securities, the "Securities"), from the Company; and
WHEREAS, the Company and the Purchaser desire to provide for certain
matters relating to the Securities and the rights of the Purchaser; and
WHEREAS, as a condition to the acquisition of the Securities, the Purchaser
has agreed to join in a certain Shareholders' and Warrantholders' Agreement
attached hereto as Exhibit A (the "Shareholders' Agreement"), and
---------
WHEREAS, the execution and delivery of this joinder agreement (the
"Agreement") is a condition precedent to the acquisition of the Securities.
NOW, THEREFORE, the Purchaser hereby agrees for the benefit of the Company
and the other Investors (as defined in the Shareholders' Agreement) as follows:
(a) The Purchaser joins in the Shareholders' Agreement and agrees to
be bound by all of the terms and provisions thereof, as though the Purchaser
were an original party thereto and were included in the definition of
[Management Investor] [Non-Management Investor] as used therein.
(b) The Purchaser consents to the endorsement of the certificate or
certificates to be issued to the Purchaser representing the Purchaser's
Securities as set forth in the Subscription Agreement.
(c) In furtherance of and not in limitation of paragraph (a) above,
and subject to Section 6.12 of the Shareholders' Agreement, the Purchaser
acknowledges and agrees that the Purchaser will vote all Capital Stock (as
defined in the Shareholders' Agreement) held by the Purchaser for, and will take
all other actions within the Purchaser's control to cause the nomination and
election of, the directors set forth in, or designated in accordance with, the
Shareholders' Agreement and fulfill all obligations imposed on the Purchaser
under Article III thereof.
IN WITNESS WHEREOF, the undersigned has executed this agreement as of the
date first written above.
By:
---------------------------------
Name:
Description of Capital Stock Purchased:
---------------------------------------
EXHIBIT A-2
TO SHAREHOLDERS' AND
WARRANTHOLDERS' AGREEMENT
Form of Joinder Agreement (purchases from Investors)
WHEREAS, [____] (the "Purchaser") is acquiring, pursuant to the terms of
that certain Subscription Agreement, dated [____], between [_______] (the
"Seller") and such Purchaser (the "Subscription Agreement"), the amount and type
of Capital Stock (as defined in the Shareholders' Agreement) of U.S.I. Holdings
Corporation (the "Company") set forth on the signature page below such
Purchaser's name (such securities, together with any securities of the Company
acquired upon conversion or exercise of such securities, the "Securities"), from
the Seller; and
WHEREAS, the Seller and the Purchaser desire to provide for certain matters
relating to the Securities and the rights of the Purchaser; and
WHEREAS, as a condition to the acquisition of the Securities, the Purchaser
has agreed to join in a certain Shareholders' and Warrantholders' Agreement
attached hereto as Exhibit A (the "Shareholders' Agreement"), and
---------
WHEREAS, the execution and delivery of this joinder agreement (the
"Agreement") is a condition precedent to the acquisition of the Securities.
NOW, THEREFORE, the Purchaser hereby agrees for the benefit of the Company
and the other Investors (as defined in the Shareholders' Agreement) as follows:
(a) The Purchaser joins in the Shareholders' Agreement and agrees to
be bound by all of the terms and provisions thereof, as though the Purchaser
were an original party thereto and were included in the definition of
[Management Investor] [Non-Management Investor] as used therein.
(b) The Purchaser consents to the endorsement of the certificate or
certificates to be issued to the Purchaser representing the Purchaser's
Securities as set forth in the Subscription Agreement.
(c) In furtherance of and not in limitation of paragraph (a) above,
and subject to Section 6.12 of the Shareholders' Agreement, the Purchaser
acknowledges and agrees that the Purchaser will vote all Capital Stock (as
defined in the Shareholders' Agreement) held by the Purchaser for, and will take
all other actions within the Purchaser's control to cause the nomination and
election of, the directors set forth in, or designated in accordance with, the
2
Shareholders' Agreement and fulfill all obligations imposed on the Purchaser
under Article III thereof.
3
IN WITNESS WHEREOF, the undersigned has executed this agreement as of the
date first written above.
By:
---------------------------------
Name:
Description of Capital Stock Purchased:
---------------------------------------
EXHIBIT B-1
TO SHAREHOLDERS' AND
WARRANTHOLDERS' AGREEMENT
Certificate of Designations
for Series R Preferred Stock
[See Exhibit 3.29]
EXHIBIT B-2
TO SHAREHOLDERS' AND
WARRANTHOLDERS' AGREEMENT
Certificate of Designations
for Series W Preferred Stock
[See Exhibit 3.34]
EXHIBIT C
TO SHAREHOLDERS' AND
WARRANTHOLDERS' AGREEMENT
Form of Resolutions Establishing Executive Committee
RESOLVED, that the Corporation elects to be governed by the provisions
of Section 141(c)(2) of the General Corporation Law of the State of Delaware
(the "DGCL"); and that an Executive Committee consisting of nine members is
hereby created, effective upon the closing of the initial issuance of shares of
Series W Preferred Stock of the Corporation, which shall have and may exercise
all the powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation, including without limitation, the
powers and authority of the Board of Directors under Section 151(g) of the DGCL
and the powers and authority specifically granted in paragraph 5 below, and may
authorize the seal of the Corporation to be affixed to all papers which
may require it; provided that the Executive Committee shall not have any power
--------
or authority in reference to (i) approving or adopting, or recommending to
stockholders, any action or matter expressly required by the DGCL to be
submitted to stockholders of the Corporation for approval or (ii) adopting,
amending or repealing any by-law of the Corporation (collectively, "Full Board
Matters").
RESOLVED, that the resolutions of the Board of Directors creating an
executive committee dated July , 1998 be rescinded and revoked in their
----
entirety, and that the executive committee constituted thereby be reconstituted
and appointed in accordance with these resolutions.
RESOLVED, that the following shall govern certain aspects of the
governance of the Executive Committee:
1. Regular meetings of the Executive Committee shall be held on such
notice, or without notice, and at such time and place as shall from
time to time be determined by such committee.
2. Special meetings of the Executive Committee may be called by the
Chairman of the Board of Directors or the Chief Executive Officer of
the Corporation on not less than two business days' notice to each
member thereof, either personally, by facsimile or by overnight
courier, and shall be called by the Secretary of the
Corporation in like manner and on like notice on the written request
of two members of the Executive Committee.
3. Attendance of a member of the Executive Committee at any meeting shall
constitute a waiver of notice of such meeting, except where such
director attends for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called
or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Executive Committee need be
specified in or restricted by the scope of the notice or any waiver of
notice of such meeting.
4. At all meetings of the Executive Committee a majority of the total
number of directors then constituting the Executive Committee shall
constitute a quorum for the transaction of business, and the vote of a
majority of the directors present at any meeting at which there is a
quorum shall be the act of the Executive Committee, notwithstanding
any supermajority voting requirement imposed on the Board of Directors
by any provision of the Corporation's constitutive documents. If a
quorum shall not be present at any meeting of the Executive Committee,
the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a
quorum is present.
5. Without in any way limiting the powers and authority delegated to the
Executive Committee by these resolutions, the Executive Committee
shall have the power and authority to:
(i) authorize the creation or issuance of any equity securities of
the Corporation (or instruments, options, warrants or other
rights convertible into or exchangeable or exercisable for equity
securities of the Corporation);
(ii) upon an affirmative vote of all members of the Executive
Committee (whether or not present), declare dividends or other
distributions payable to holders of equity securities of the
Corporation (or instruments, options, warrants or other rights
convertible into or exchangeable or exercisable for equity
securities of the Corporation);
(iii) establish the "Market Price" of the Common Stock of the
Corporation as provided in any certificate of designations of any
Preferred Stock of the Corporation;
(iv) notwithstanding any authority previously delegated to the
Compensation Committee of the Corporation (which delegation is
hereby rescinded to the
extent of such authority), approve any "Management Incentive
Shares" plan or incentive compensation, bonus or stock purchase
or similar plan or changes or amendments thereto as defined in
any certificate of designations of any Preferred Stock of the
Corporation;
(v) make any determination as to the "Fair Market Value" of any
property or securities within the meaning of any certificate of
designations of any Preferred Stock or the warrant agreement
relating to the warrants exercisable for shares of Series W
Preferred Stock of the Corporation;
(vi) register any class of equity securities of the Corporation under
the Securities Act of 1933, as amended, for sale for the account
of the Corporation or defer the filing of any registration
statement required pursuant to the exercise of demand
registration rights granted to securityholders of the
Corporation; and
(vii) make any determination as to whether a "Change of Control" of an
Investor has occurred within the meaning of the definition of
such term in the Shareholders' and Warrantholders' Agreement,
dated as of September 17, 1999, between the Corporation and the
other parties thereto.
6. The Executive Committee shall have no authority to act with respect to
Full Board Matters, except that it shall have the power and authority
to submit recommendations to the Board of Directors of the Corporation
with respect to all Full Board Matters prior to the Board of Directors
of the Corporation taking any action with respect to any such Full
Board Matter.
RESOLVED, that upon the consummation of a Public Offering (as defined
in the Certificate of Designations for the Corporation's Series R Preferred
Stock, as in existence on the date hereof), the Executive Committee be
disbanded.
