STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT (this "Agreement") dated January 12,
2000 is by and between XXXXXXXXXXXX.XXX INC., a Delaware corporation (the
"Company"), and U.S. BANCORP XXXXX XXXXXXX INC. (the "Stockholder").
RECITALS
A. The Stockholder owns in excess of 5% of the voting capital stock of
the Company (the "Common Stock").
B. The Stockholder desires to exchange 1,500,000 shares of Common
Stock (the "Common Shares") for 1,500 shares of Series A Non-Voting
Convertible Preferred Stock, $0.01 par value per share, of the Company (the
"Preferred Shares").
C. The Company desires to issue the Preferred Shares in exchange for
the Common Shares.
NOW THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Effective upon execution of this Agreement, (a) the Company will
issue to the Stockholder the Preferred Shares in consideration of the
transfer by the Stockholder to the Company of the Common Shares, duly
endorsed for transfer or accompanied by a stock power duly executed in
blank, and (b) the Stockholder will acquire the Preferred Shares in
exchange for the Common Shares.
2. The Stockholder represents and warrants to, and agrees with, the
Company that the following representations and warranties are, as of the
date of this Agreement, true, correct and complete:
(A) The execution, delivery and performance by the Stockholder
of this Agreement and the effectuation of the transactions contemplated
hereby are within its corporate power and have been duly authorized by all
proceedings required to be taken under its certificate of incorporation and
the laws of the State of Delaware.
(B) The Stockholder is the beneficial and record owner of the
Common Shares free and clear of all liens, pledges or other encumbrances.
(C) The Stockholder acknowledges that the Preferred Shares
issued to it and the shares of Common Stock into which the Preferred Shares
are convertible will not be registered under the Securities Act of 1933, as
amended (the "Securities Act"), and may not be sold, transferred or
otherwise distributed in the absence of such registration or an applicable
exemption therefrom. The Stockholder further acknowledges that the Company
has not granted it and does not hereby grant it any right to have the
Preferred Shares or the shares of Common Stock into which the Preferred
Shares are convertible registered for sale in accordance with the
Securities Act.
3. The Company represents and warrants to, and agrees with, the
Stockholder that the following representations and warranties are, as of
the date of this Agreement, true, correct and complete:
(A) The execution, delivery and performance by the Company of
this Agreement and the effectuation of the transactions contemplated hereby
are within its corporate power and have been duly authorized by all
proceedings required to be taken under its certificate of incorporation and
the laws of the State of Delaware.
(B) The designations, rights and preferences of the Preferred
Shares are as set forth in the Certificate of Designation attached hereto
as Exhibit A.
(C) Upon execution of this Agreement and completion of the
transactions contemplated herein in accordance with the terms of this
Agreement, the Preferred Shares will be duly issued, fully paid and
non-assessable.
4. (A) The Stockholder agrees to indemnify the Company and its
affiliated companies and its and their officers, directors, employees,
agents and representatives for and against all claims, actions, costs,
expenses, damages, reasonable attorneys fees and other losses ("Claims")
made, arising or paid with respect to (i) the issuance of the Preferred
Shares or (ii) the exchange of the Preferred Shares for the Common Shares
to the extent said Claims are not actually paid by the Company's liability
and officers and directors insurance policies, and except to the extent
that such Claims arise from the negligent or willful misconduct of the
Company. Said indemnification shall, without limiting the generality of the
foregoing, include any deductibles or retentions under said insurance
policies and any increase in premiums charged to the Company as a result of
said Claims. The Company makes no representation or warranty as to
coverage, or the scope thereof, of any insurance policies it now has or may
in the future have.
(B) The Company agrees to, and to the extent it is reasonably
able, to cause its affiliated companies and its and their officers,
directors, employees, agents and representatives to first pursue recovery
of any Claims under the applicable insurance policies.
5. (A) All claims for indemnification under this Agreement shall be
asserted and resolved as follows in this Section 5.
(B) A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (i) notify the Stockholder of any Claim
that could give rise to a right of indemnification under this Agreement and
(ii) transmit to the Stockholder a written notice ("Claim Notice")
describing in reasonable detail the nature of the Claim, a copy of all
papers served with respect to that Claim (if any), an estimate of the
amount of damages attributable to the Claim to the extent feasible (which
estimate shall not be conclusive of the final amount of such Claim) and the
basis for the Indemnified Party's request for indemnification under this
Agreement. The failure to promptly deliver a Claim Notice shall not relieve
the Stockholder of its obligations to the Indemnified Party with respect to
the related Claim except to the extent that the resulting delay is
materially prejudicial to the defense of that Claim.
(C) The Indemnified Party, and/or its insurance carrier(s)
pursuant to the terms of any relevant insurance policy, shall have full
control of such defense. Notwithstanding the foregoing, if the Stockholder
has delivered a written notice to the Indemnified Party to the effect that
the Stockholder disputes its potential liability to the Indemnified Party
under Sections 4 and 5 and if such dispute is resolved in favor of the
Stockholder, the Stockholder shall not be required to bear the costs and
expenses of the Indemnified Party's defense pursuant to this Section 5 or
of the Stockholder's participation therein at the Indemnified Party's
request. The Stockholder may participate in, but not control, any defense
or settlement controlled by the Indemnified Party pursuant to this Section
5(c), and the Stockholder shall bear its own costs and expenses with
respect to such participation.
(D) Payments of all amounts owing by the Stockholder pursuant
to any Claim under Sections 4 and 5 shall be made (i) with respect to
reasonable attorneys fees and other expenses of defense, as incurred and
(ii) with respect to other Claims, within 30 days after the latest of (A)
the settlement of that Claim, (B) the expiration of the period for appeal
of a final adjudication of that Claim or (C) the expiration of the period
for appeal of a final adjudication of the Stockholder's liability to the
Indemnified Party under this Agreement.
6. Execution of this Agreement shall be deemed to be the Stockholder's
written consent, to the extent required by Section 5(h) of the Underwriting
Agreement, dated October 7, 1999, between the Company and the Stockholder
and Credit Suisse First Boston Corporation as representatives of the
several underwriters named in Schedule A thereto for the Company to issue
the Preferred Shares.
7. Each party represents and warrants to the other that such person
has not directly or indirectly employed or become obligated to pay any
broker, finder or similar agent in connection with the transactions
contemplated hereby and agrees to indemnify the other party against all
claims arising for fees and commissions of brokers or similar agents
employed or promised payment by such person.
8. This Agreement constitutes the entire agreement and understanding
between the parties on the subject matter hereof and supersedes all prior
agreements and understandings, both written and oral, relating to the
subject matter of this Agreement.
9. Each party will pay all fees, costs and expenses incurred by it
connection with the transactions contemplated herein, including, without
limitation, the fees and expenses of attorneys, accountants and other
persons, and no portion thereof shall be paid by the other party hereto,
except if otherwise specifically provided herein.
10. This Agreement, and the rights and obligations of the parties
hereto, shall be governed and construed and enforced accordance with the
substantive laws of the State of New York without regard to the conflicts
of laws provisions thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
U.S. BANCORP XXXXX XXXXXXX INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Managing Director
XXXXXXXXXXXX.XXX INC.
By: /s/ Xxxxxx X. XxXxxxxx
-----------------------------------------
Name: Xxxxxx X. XxXxxxxx
Title: Senior Vice President, General
Counsel and Secretary
With regard to consent to the waiver of
the lock-up provisions contained in
Section 5(h) of the Underwriting
Agreement, dated October 7, 1999, on
behalf of the several Underwriters listed
on Schedule A of such Underwriting
Agreement
U.S. BANCORP XXXXX XXXXXXX INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Managing Director
EXHIBIT A
CERTIFICATE OF DESIGNATION
CERTIFICATE OF DESIGNATION
OF THE
SERIES A NON-VOTING CONVERTIBLE PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
OF
XXXXXXXXXXXX.XXX INC.
______________________
PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
______________________
The undersigned officers of XxxxXxxxxxxx.Xxx Inc. (the "Corporation"),
a corporation organized and existing under the General Corporation Law of
the State of Delaware, in accordance with the provisions of Section 103
thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Restated Certificate of Incorporation of the said Corporation, the
said Board of Directors on November 12, 1999, adopted the following
resolution creating a series of shares of Preferred Stock designated as
Series A Non-Voting Convertible Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Amended and Restated Certificate of Incorporation (the "Restated
Certificate"), a series of Preferred Stock of the Corporation be and it
hereby is created, and that the designation and amount thereof and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board by provisions of the Restated Certificate and the
General Corporation Law of the State of Delaware (the "DGCL"), the issuance
of a series of Preferred Stock, which shall consist of 1,500 shares of the
2,000,000 shares of Preferred Stock which the Corporation now has authority
to issue, be, and the same hereby is, authorized, and the Board hereby
fixes the powers, designations, preferences and relative participating,
optional and other special rights, and the qualifications, limitations and
restrictions thereof, of the shares of such series (in addition to the
powers, designations, preferences and relative participating, optional and
other special rights, and the qualifications, limitations and restrictions
thereof, set forth in the Restated Certificate which may be applicable to
the Preferred Stock) authorized by this resolution as follows:
Section 1. Designation of Series A Non-Voting Convertible
Preferred Stock. The designation of such series of Preferred Stock
authorized by this resolution shall be "Series A Non-Voting Convertible
Preferred Stock." The Series A Non-Voting Convertible Preferred Stock (the
"Series A Preferred") is issuable solely in whole shares that shall entitle
the holder thereof to participate in the distributions and to have the
benefit of all other rights of holders of Series A Preferred, as set forth
herein and in the Restated Certificate.
Section 2. Dividend Rights of Series A Preferred. When and
if the Board shall declare a dividend or distribution payable with respect
to the then-outstanding shares of Common Stock of the Corporation, the
holders of the Series A Preferred shall be entitled to the amount of
dividends per share that would be payable on the largest number of whole
shares of Common Stock into which a holder's aggregate shares of Series A
Preferred could then be converted pursuant to Section 3(a) hereof (such
number to be determined as of the record date for the determination of
holders of Common Stock entitled to receive such dividend).
Section 3. Conversion Privileges.
(a) Rights of Conversion. Subject to the other provisions of
this Certificate of Designation, each share of Series A Preferred shall be
convertible, without payment of any additional consideration by the holder
thereof and at the option of such holder, into 1,000 fully paid and
nonassessable shares of Common Stock, plus accrued but unpaid dividends
under Section 2, at the office of the Corporation or any transfer agent for
such stock.
(b) Automatic Conversion.
(i) Subject to the other provisions of this Certificate of
Designation, in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation (a "Liquidation Event"), each
share of Series A Preferred shall automatically, and without the
requirement of further action by the Corporation or the holders, be
converted into 1,000 fully paid and nonassessable shares of Common Stock,
plus accrued but unpaid dividends under Section 2. For purposes of this
Section 3, (A) a merger or consolidation of the Corporation with or into
any other company or companies, or the merger of any other company or
companies into the Corporation, in which consolidation or merger the
stockholders of the Corporation receive distributions in cash or in
securities of another company as a result of such consolidation or merger
or (B) a sale of all or substantially all of the assets of the Corporation,
shall be treated as a Liquidation Event.
(ii) Subject to the other provisions of this Certificate of
Designation, each share of Series A Preferred shall automatically be
converted into 1,000 fully paid and nonasessable shares of Common Stock,
plus accrued but unpaid dividends under Section 2, upon the transfer of
ownership to any person other than a registered bank holding company
subject to the Bank Holding Company Act of 1956, as amended, or any
affiliate of such bank holding company.
(iii) Subject to the other provisions of this Certificate of
Designation, each share of Series A Preferred shall automatically be
converted into 1,000 fully paid and nonasessable shares of Common Stock,
plus accrued but unpaid dividends under Section 2, upon the written consent
of the holders of 662/3% of the outstanding Series A Preferred.
(c) Limits on Conversion. Nothwithstanding any other provision
of this Section 3, if a converting holder of shares of Series A Preferred
is a registered bank holding company subject to the Bank Holding Company
Act of 1956, as amended, or an affiliate thereof, the total number of
shares of Common Stock held by such converting holder, aggregated with any
shares of Common Stock held by any affiliate of such holder, after giving
effect to the proposed conversion shall be less than 5% of the total shares
of Common Stock outstanding immediately after such conversion and in the
event a change in federal law permits a registered bank holding company to
acquire in excess of 5% of the voting shares of the Corporation, such a
holder may convert its shares to Common Stock to the maximum extent
permitted by then current federal law. For purposes of calculating the
total number of shares of Common Stock held by the converting holder and
its affiliates, shares of Common Stock previously held by such converting
holder or its affiliates shall be added to the sum of shares currently held
by the converting holder and its affiliates, unless those shares were sold
through a widely-dispersed public offering, sales in the public secondary
market or through private placements in which no purchasers acquired
individually or in concert with others, more than 2% of the shares of
Common Stock then outstanding.
(d) Mechanics of Conversion. Before any holder of Series A
Preferred shall be entitled to convert the same into shares of Common
Stock, such holder shall surrender the certificate or certificates thereof,
duly endorsed, at the office of the Corporation or of any transfer agent
for such stock, and shall give written notice to the Corporation at such
office that such holder elects to convert the same and shall state therein
the name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued; provided, however,
that in the event of an automatic conversion pursuant to Section 3(b), the
outstanding shares of Series A Preferred shall be converted automatically
without any further action by the holders of such shares and whether or not
the certificates representing such shares are surrendered to the
Corporation or its transfer agent; and provided, further, that the
Corporation shall not be obligated to issue certificates evidencing the
shares of Common Stock issuable upon such automatic conversion unless the
certificates evidencing such shares of Series A Preferred are either
delivered to the Corporation or its transfer agent as provided above, or
the holder notifies the Corporation or its transfer agent that such
certificates have been lost, stolen or destroyed and executes an agreement
satisfactory to the Corporation to indemnify the Corporation from any loss
incurred by it in connection with such certificate. The Corporation shall,
as soon as practicable after delivery of the Series A Preferred
certificates, issue and deliver at such office to such holder of Series A
Preferred or its nominee or nominees, a certificate or certificates for the
number of shares of Common Stock to which such holder shall be entitled as
aforesaid. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of surrender of the shares of
Series A Preferred to be converted. The person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date.
(e) Adjustment for Stock Splits and Combinations. If the
Corporation shall at any time or from time to time after the date that the
first share of Series A Preferred is issued (the "Original Issue Date")
effect a subdivision of the outstanding Common Stock, a corresponding
subdivision of the Series A Preferred shall automatically be effected.
Conversely, if the Corporation shall at any time or from time to time after
the Original Issue Date combine the outstanding shares of Common Stock into
a smaller number of shares, a corresponding combination of the Series A
Preferred shall automatically be effected. Any adjustment under this
Section 3(e) shall become effective at the close of business on the date
the subdivision or combination becomes effective.
(f) Adjustment for Reclassification, Exchange and Substitution.
If at any time or from time to time after the Original Issue Date, the
Common Stock issuable upon the conversion of the Series A Preferred is
changed into the same or a different number of shares of any class or
classes of stock, whether by recapitalization, reclassification or
otherwise (other than a subdivision or combination of shares or stock
dividend provided for elsewhere in this Section 3), in any such event each
holder of Series A Preferred shall have the right thereafter to convert
such stock into the kind and amount of stock and other securities and
property receivable upon such recapitalization, reclassification or other
change by holders of the maximum number of shares of Common Stock into
which such shares of Series A Preferred could have been converted
immediately prior to such recapitalization, reclassification or change, all
subject to further adjustment as provided herein or with respect to such
other securities or property by the terms thereof.
(g) Certificates as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the number of shares of Common Stock issuable
upon conversion of a share of Series A Preferred pursuant to this
Section 3, the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and prepare
and furnish to each holder of Series A Preferred a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon
which such adjustment or readjustment is based. The Corporation shall,
upon the written request at any time of any holder of Series A Preferred,
furnish or cause to be furnished to such holder a like certificate prepared
by the Corporation setting forth (i) such adjustments and readjustments and
(ii) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of the
Series A Preferred.
(h) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution, any security or right convertible into or
entitling the holder thereof to receive additional shares of Common Stock,
or any right to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities or property, the Corporation
shall mail to each holder of Series A Preferred at least 10 days prior to
the date specified therein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend, distribution,
security or right, and the amount and character of such dividend,
distribution, security or right.
(i) Issue Taxes. The holders of Series A Preferred shall pay
any and all issue, transfer and other taxes that may be payable in respect
of any issue or delivery of shares of Common Stock on conversion of shares
of Series A Preferred pursuant hereto.
(j) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series A Preferred, such
number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of the Series
A Preferred; and if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of
all then outstanding shares of the Series A Preferred, the Corporation will
take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose, including,
without limitation, engaging in best efforts to obtain the requisite
stockholder approval of any necessary amendment to the Restated
Certificate. All shares of Common Stock which are issuable upon such
conversion shall, when issued, be duly and legally issued, fully paid and
nonassessable and free of all taxes, liens and charges.
(k) Fractional Shares. No fractional share shall be issued upon
the conversion of any share or shares of Series A Preferred. All shares of
Common Stock (including fractions thereof) issuable upon conversion of more
than one share of Series A Preferred by a holder thereof shall be
aggregated for purposes of determining whether the conversion would result
in the issuance of any fractional share. If, after the aforementioned
aggregation, the conversion would result in the issuance of a fraction of a
share of Common Stock, the Corporation shall, in lieu of issuing any
fractional share, pay the holder otherwise entitled to such fraction a sum
in cash equal to the corresponding fraction of the closing price of the
Corporation's Common Stock on the Nasdaq National Market (or any other
national securities exchange on which the Common Stock is then traded) on
the day immediately preceding the conversion. If the Corporation's Common
Stock is not listed on a national securities exchange, then the current
fair market value of the Common Stock shall be as determined in good faith
by the Corporation's Board of Directors.
(l) Notices. Any notice required by the provisions of this
Section 3 shall be in writing and shall be deemed effectively given:
(i) upon personal delivery to the party to be notified, (ii) when
telephonically confirmed if sent by telex or facsimile, (iii) five days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (iv) one day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All notices shall be addressed to each holder of
record at the address of such holder appearing on the books of the
Corporation.
Section 4. Limitation on Issuance of Shares Upon Conversion.
(a) The following definitions shall apply to this Certificate of
Designation:
(i) "Maximum Share Amount" shall mean the number of shares
of the Corporation's Common Stock equal to 19.99% of the Corporation's
Common Stock then outstanding;
(ii) "Excess Shares" shall mean Common Stock of the
Corporation which, upon issuance, results in the beneficial ownership (as
defined in Rule 13(d)-3 of the Securities Exchange Act of 1934) by a holder
of shares of Common Stock in excess of the Maximum Share Amount;
(iii) "Exchange Rules" shall mean the rules or
regulations of Nasdaq or any other principal securities market upon which
the Common Stock of the Corporation is or becomes traded.
(b) Except as provided in Section 4(c) hereof, the Corporation
shall not be obligated to issue upon conversion of the Series A Preferred,
in the aggregate, Excess Shares if such issuance in excess of the Maximum
Shares Amount would constitute a breach or violation of the Corporation's
obligations under the Exchange Rules.
(c) To the extent the Corporation will be required, or it
appears likely to the Board of Directors of the Corporation that the
Corporation will be required, to issue any Excess Shares, the Corporation
shall promptly use its best efforts to obtain stockholder approval in
accordance with Delaware law, the applicable rules of the Securities and
Exchange Commission and the Exchange Rules.
Section 5. Voting Rights.
(a) Holders of Series A Preferred shall not be entitled to vote
with holders of Common Stock, including without limitation in the election
of directors of the Corporation, or as a separate class, except as
otherwise provided by the DGCL and in this Section 5. To the extent that,
under the DGCL, the vote of the holders of the Series A Preferred, voting
separately as a class or series as applicable, is required to authorize a
given action of the Corporation, the affirmative vote or consent of the
holders of at least a majority of the shares of the Series A Preferred
represented at a duly held meeting at which a quorum is present or by
written consent of a majority of the shares of Series A Preferred (except
as otherwise may be required under the DGCL) shall constitute the approval
of such action by the class. Holders of the Series A Preferred shall be
entitled to notice of all shareholder meetings or written consents (and
copies of proxy materials and other information sent to shareholders) with
respect to which they would be entitled as of right under the DGCL which
notice would be provided pursuant to the Corporation's Bylaws and the DGCL.
(b) Notwithstanding the other provisions of this Section 5, at
any time that any shares of Series A Preferred are outstanding, the
Restated Certificate shall not be amended in any manner which would
materially alter or change the powers, preferences or rights of the Series
A Preferred so as to affect them adversely without the affirmative vote of
the holders of a majority of the outstanding Series A Preferred, voting
separately as a class.
Section 6. Status of Converted Stock. In the event any shares of
Series A Preferred shall be converted pursuant to Section 3 hereof, the
shares so converted, redeemed or exchanged shall be cancelled and shall not
be reissuable by the Corporation. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors.
Section 7. Ranking. The shares of Series A Preferred shall rank
on a parity with the Common Stock as to the payment of dividends. The
Series A Preferred Stock shall rank junior to all other series of the
Corporation's Preferred Stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series shall provide
otherwise.
IN WITNESS WHEREOF, XxxxXxxxxxxx.Xxx Inc. has caused this
Certificate of Designation to be executed in its corporate name this 12th
day of January, 2000.
XXXXXXXXXXXX.XXX INC.
By: /s/ Xxxxxx X. XxXxxxxx
------------------------------
Name: Xxxxxx X. XxXxxxxx
Title: Senior Vice President,
General Counsel and Secretary
