Exhibit 10.10
SUBSCRIPTION AGREEMENT
FOR
SERIES Y CONVERTIBLE PREFERRED STOCK
SUBSCRIPTION AGREEMENT (the "Agreement") dated as of January 16, 2002 by
and between U.S.I. HOLDINGS CORPORATION, a Delaware corporation (the "Company"),
and SOVEREIGN BANCORP, INC. or its affiliates (the "Purchaser").
R E C I T A L S :
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The Purchaser desires to subscribe for and acquire from the Company, and
the Company desires to sell to the Purchaser, the Shares (as hereinafter
defined).
A G R E E M E N T :
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The parties hereto agree as follows:
SECTION 1. Definitions. As used in this Agreement, the following terms
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shall have the meanings set forth below:
"Acquisition" means acquisition of a Person or certain assets of a Person
engaged in the insurance, insurance agency, brokerage or related services or
financial services business.
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
"Affiliate" has the meaning set forth in the Shareholders' Agreement.
"Agreement" has the meaning set forth in the preamble.
"Assets" has the meaning set forth in Section 3(a)(xxiii).
"Audited Financial Statements" has the meaning set forth in Section
3(a)(vi).
"Benefit Plan" means each (a) "employee welfare benefit plan," as defined
in Section 3(1) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), maintained by the Company or any of its Subsidiaries or to
which the Company or any of its Subsidiaries contributes or is required to
contribute and (b) "employee pension benefit plan," as defined in Section 3(2)
of ERISA, presently maintained by the Company or any of its Subsidiaries or to
which the Company or any of its Subsidiaries contributes or is required to
contribute.
"By-laws" means the Amended and Restated By-laws of the Company as in
effect immediately prior to the execution of the Other Subscription Agreement
and in the form attached hereto as Exhibit A.
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"Certificate of Designations" means the Company's Certificate of
Designations of Series Y Preferred Stock in the form annexed hereto as Exhibit
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B.
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"Closing" has the meaning set forth in Section 2(b).
"Closing Date" means the date or dates on which the Closing occurs pursuant
to Section 2(b).
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the voting common stock of the Company, par value $.01
per share.
"Company" has the meaning set forth in the preamble.
"Encumbrances" means liens, pledges, encumbrances, claims, security
interests, charges, voting trusts, voting agreements, other agreements, rights,
options, warrants or restrictions or claims of any kind, nature or description.
"ERISA" has the meaning set forth in the definition of "Benefit Plan."
"Exchange Act" has the meaning set forth in Section 3(a)(xxii).
"Executive Committee" has the meaning set forth in the Shareholders'
Agreement.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"Indemnified Party" has the meaning set forth in Section 7(b).
"IRS" has the meaning set forth in Section 3(a)(xv)(C).
"Material Adverse Effect" has the meaning set forth in Section 3(a)(i).
"Non-Voting Common Stock" means the non-voting common stock of the Company,
par value $.01 per share.
"Operative Documents" means this Agreement, the Certificate of
Designations, the Shareholders' Agreement and the other agreements, documents
and instruments to be executed and delivered by the Company in connection
herewith and therewith.
"Options" has the meaning set forth in Section 3(a)(v)(2).
"Other Subscription Agreement" means the Subscription Agreement by and
among the Company, Ceridian Corporation and The Xxxx Xxxxxx Life Insurance
Company dated as of December 27, 2001.
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"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" has the meaning set forth in the Shareholders' Agreement.
"Public Offering" has the meaning set forth in the Certificate of
Designations.
"Purchase Price" means $7.00 for each Share.
"Purchaser" has the meaning set forth in the preamble.
"Requisite Securityholders" means securityholders of the Company that hold
in the aggregate more than 90% of the Total Voting Power of the Company (as
defined in the Shareholders' Agreement), provided that such securityholders
include all securityholders having the right to designate a member or members of
the Board of Directors of the Company.
"SEC" has the meaning set forth in Section 4(b).
"Series Y Preferred Stock" means the Series Y Convertible Preferred Stock
of the Company, par value $.01 per share.
"Shareholders" "Agreement" means the Shareholders' and Warrantholders'
Agreement as amended as of the closing date of the Other Subscription Agreement
and in the form attached hereto as Exhibit C.
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"Shares" means the shares of Series Y Preferred Stock which shall be issued
to the Purchaser at the Closing, the number of which is set forth opposite the
Purchaser's name on the signature page hereto.
"Subsidiary" means any corporation or limited liability company with
respect to which a specified Person (or Subsidiary thereof) owns a majority of
the common stock or has the power to vote or direct the voting of sufficient
securities to elect a majority of the directors.
"Transfer" has the meaning set forth in the Shareholders' Agreement.
"Unaudited Financial Statements" has the meaning set forth in Section
3(a)(vi).
"Warrantholders" "Agreement" means the Warrantholders' Agreement, dated as
of March 12, 1996, between the Company and the other parties thereto, as
amended.
SECTION 2. Subscription for and Purchase of Shares.
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(a) Subscription for Shares; Purchase Price. At the Closing, upon the terms
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and subject to the conditions hereinafter set forth, the Purchaser shall
purchase from the Company and the Company shall issue and sell to the Purchaser
the number of Shares set forth opposite the Purchaser's
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name on the signature page hereto for the Purchase Price multiplied by such
number of Shares. The maximum aggregate number of Shares to be purchased is
357,143 for an aggregate purchase price of $2,500,001.
(b) Closing. The closing (the "Closing") of the purchase and sale of the
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Shares contemplated to be issued at the Closing under Section 2(a) shall take
place at such times and places as the parties hereto shall mutually agree upon,
provided that all of the conditions to Closing set forth in Section 5 shall have
been satisfied or waived. At the Closing,(i) the Company shall deliver to the
Purchaser a certificate representing the Shares,(ii) the Purchaser and the
Company shall execute and deliver the other documents contemplated by Section 5
and (iii) the Purchaser shall deliver the Purchase Price in immediately
available funds to the Company with respect to the Shares.
(c) Legend. Each certificate representing Shares shall bear substantially
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the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED BY THE
HOLDER SOLELY FOR ITS OWN ACCOUNT AND FOR THE PURPOSE OF INVESTMENT AND NOT
WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION OF ANY SUCH
SECURITIES.
"THE SECURITIES MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF (EACH SUCH ACTION, A "TRANSFER")
UNLESS (A) SUCH TRANSFER COMPLIES WITH THE PROVISIONS OF THE STOCK
SUBSCRIPTION AGREEMENT DATED AS OF JANUARY 14, 2002 AND THE SHAREHOLDERS'
AND WARRANTHOLDERS' AGREEMENT, DATED AS OF SEPTEMBER 17, 1999, AS EACH OF
SUCH MAY BE AMENDED, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF
U.S.I. HOLDINGS CORPORATION (TOGETHER WITH ITS SUCCESSORS, THE "COMPANY")
AND WHICH WILL BE MAILED TO A SECURITYHOLDER WITHOUT CHARGE WITHIN FIVE
(5) DAYS AFTER RECEIPT BY THE COMPANY OF A WRITTEN REQUEST THEREFOR FROM
SUCH SECURITYHOLDER, (B) EITHER (1) THE TRANSFER IS PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND THE RULES AND REGULATIONS IN EFFECT THEREUNDER (THE "ACT"), OR
(2) THE COMPANY SHALL HAVE BEEN FURNISHED WITH AN OPINION OF COUNSEL, WHICH
OPINION OF COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT NO REGISTRATION IS REQUIRED BECAUSE OF THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND (C) SUCH TRANSFER SHALL BE IN
COMPLIANCE WITH ANY APPLICABLE STATE OR FOREIGN SECURITIES OR "BLUE SKY"
LAWS.
"U.S.I. HOLDINGS CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH
SECURITYHOLDER WHO SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL OR
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OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF OR OTHER
SECURITIES OF THE COMPANY AND THE QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS."
(d) Blue Sky Compliance. The Company shall comply with all state or foreign
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securities or "blue sky" laws which might be applicable to the sale of the
Shares to the Purchaser hereunder. If, at any time that a holder of Shares seeks
to acquire shares of Common Stock upon the conversion of shares, and the
issuance of such securities upon conversion may not be lawfully made without the
registration or qualification of such Common Stock under any applicable state or
foreign securities or "blue sky" laws, the Company shall promptly use its best
efforts to effect such registration or qualification, and such action shall not
count as a registration under the Shareholders' Agreement.
SECTION 3. Representations and Warranties of the Company.
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(a) The Company represents and warrants to the Purchaser that, except as
otherwise provided below, as of the Closing Date:
(i) Organization and Good Standing. Schedule 3(a)(i) sets forth a list
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of all of the Company's Subsidiaries, all of which are active, except as
set forth on such Schedule. Each of the Company and its Subsidiaries (other
than the inactive Subsidiaries set forth on Schedule 3(a)(i)) is a
corporation or limited liability company duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
organization. Each of the Company and its Subsidiaries (other than the
inactive Subsidiaries set forth on Schedule 3(a)(i) and as otherwise set
forth on Schedule 3(a)(i)) is duly qualified or licensed and in good
standing as a foreign corporation or limited liability company, and
authorized to do business, in each jurisdiction in which the ownership or
leasing of its respective properties or the character of its respective
operations makes such qualification necessary, except where failure to
obtain such qualification, license, authorization or good standing would
not individually or in the aggregate reasonably be expected to have a
material adverse effect upon the financial condition, business, results of
operations or prospects of the Company and its Subsidiaries taken as a
whole (a "Material Adverse Effect"). Each of the Company and its
Subsidiaries (other than the inactive Subsidiaries set forth on Schedule
3(a)(i)) has all requisite corporate or other power and authority to carry
on its respective businesses as presently conducted, except where a lack of
such corporate or other power or authority would not reasonably be expected
to have a Material Adverse Effect.
(ii) Charter Documents. Attached as Schedule 3(a)(ii) are copies of
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the Certificates of Incorporation of the Company and USI Insurance Services
Corp., a Delaware corporation ("USIIS"), and copies of the By-laws of the
Company and USIIS. Such copies are true, correct and complete and contain
all amendments as of the date hereof. No action has been taken to amend or
authorize the amendment of the Certificate of Incorporation or By-laws of
either the Company or USIIS, except for the filing of the Certificate of
Designations and the adoption of the amendment to the By-laws contemplated
by this Agreement as of the Closing Date.
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(iii) Corporate Authorizations. The Company has full corporate power
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and authority to execute and deliver the Operative Documents and to perform
its obligations under the Operative Documents. The execution and delivery
by the Company of the Operative Documents and the performance of its
obligations thereunder have been duly and validly authorized by the Board
of Directors of the Company or its shareholders, and no other corporate
proceedings on the part of the Company are necessary for the execution and
delivery of the Operative Documents and the performance of its obligations
thereunder.
(iv) Enforceability. The Operative Documents constitute the valid,
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binding and enforceable obligations of the Company, except as such
enforceability may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting
creditors' rights generally, (b) general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or
at law) and (c) considerations of public policy by a court of competent
jurisdiction.
(v) Capitalization.
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(1) Capital Stock. Schedule 3(a)(v) sets forth as of September 30,
2001 with respect to each class of Common Stock (if applicable) and each
series of Preferred Stock (A) the number of authorized shares of such
class or series, (B) the number of issued and outstanding shares of such
class or series, (C) the related liquidation preference and related excess
of liquidation preference over the respective original issue price of such
series and (D) the number of shares of Common Stock issuable upon
conversion of each then outstanding share of such series (including without
limitation any shares to be issued on account of any excess of liquidation
preference over the original issue price thereof). As of the Closing Date,
the only shares of Series Y Preferred Stock that will be issued and
outstanding will be the Shares, provided that the Series Y Preferred Stock
issued pursuant to the Other Subscription Agreement shall also be issued
and outstanding as of the Closing Date. All of the issued and outstanding
capital stock of the Company has been duly authorized and validly issued,
is fully paid and nonassessable and was issued in compliance with valid
exemptions from all otherwise applicable federal, state and foreign laws
requiring the registration or qualification of the sale or offer of such
securities. As of the Closing Date, the authorized capital stock of the
Company consists of 232,000,000 shares, consisting of 87,000,000 shares of
preferred stock, 135,000,000 shares of voting common stock and 10,000,000
shares of non-voting common stock.
(2) Warrants, Options and Other Rights. Set forth on Schedule 3(a)(v)
is a summary of all outstanding warrants to acquire shares of capital stock
of the Company, setting forth the number and type of shares of capital
stock for which such warrants are currently exercisable, the exercise price
therefor and the duration thereof. Except as otherwise as set forth in
Schedule 3(a)(v), there are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights or
other contracts or commitments or preemptive rights that could require the
Company or any Subsidiary to issue, sell or otherwise cause to become
outstanding any of its capital stock or any other debt or equity security
("Options"), and there are no outstanding securities convertible into or
exchangeable
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for shares of such capital stock or any other debt or equity security
(other than commitments to issue Common Stock or Non-Voting Common Stock
upon conversion of outstanding series of preferred stock and commitments to
issue Series H preferred stock upon conversion of outstanding Series I
non-voting preferred stock, and vice versa). The Company has reserved a
sufficient number of shares of authorized and unissued shares to permit the
full exercise of all warrants, the conversion in full of all outstanding
shares of preferred stock and the exercise, conversion and/or exchange of
all of the outstanding Options.
(3) Stock of Subsidiaries. Except as set forth on Schedule 3(a)(v),
all of the issued and outstanding capital stock of each of the Company's
Subsidiaries is owned by the Company or its Subsidiaries, in each case free
and clear of any Encumbrances or other contractual restrictions on
transfer or voting, and all shares of such capital stock are duly and
validly issued, fully paid and nonassessable.
(4) Fair Market Value. The Board of Directors of the Company has
determined that the price to be paid for the Shares is equal to the "Fair
Market Value" of such securities, as defined in, and for purposes of, each
certificate of designations relating to any series of Preferred Stock of
the Company.
(vi) Financial Statements. Except as set forth on Schedule 3(a)(vi),
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each of (x) the audited consolidated balance sheets of the Company and its
Subsidiaries as of December 31, 2000 and December 31, 1999 and the audited
consolidated statements of operations, cash flows and stockholders' equity
of the Company for the twelve month periods ending on such dates (together,
the "Audited Financial Statements") and (y) the unaudited consolidated
balance sheet of the Company and its Subsidiaries as of September 30, 2001
and the unaudited consolidated statements of operations, cash flows and
stockholders' equity of the Company and its Subsidiaries for the nine
months ended September 30, 2001 (together, the "Unaudited Financial
Statements"), true and correct copies of all of which are attached hereto
as Schedule 3(a)(vi), (a) are in accordance with the books and records of
the Company, (b) have been prepared in accordance with generally accepted
accounting principles consistently applied and (c) present fairly the
financial condition of the Company and its Subsidiaries as of the date
thereof, provided that, with respect to clause (b), the Unaudited Financial
Statements lack footnotes and are subject to changes resulting from
customary year-end and purchase accounting adjustments. Except as set forth
on Schedule 3(a)(vi), as of the dates reflected in the Audited Financial
Statements and the Unaudited Financial Statements, neither the Company nor
any Subsidiary had any liability, contingent or otherwise, which was not
adequately reflected or reserved against in the Unaudited Financial
Statements that could materially and adversely affect the financial
condition of the Company or its Subsidiaries.
(vii) No Material Adverse Change. Except as set forth on Schedule
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3(a)(vii), since December 31, 2000, the business of the Company and its
Subsidiaries has been operated in the ordinary course, and there has been
no material adverse change in the financial condition, business, results of
operations or prospects of the Company and its Subsidiaries taken as a
whole (a "Material Adverse Change"); nor have there been (i) any dividends
paid on, or any redemptions of, any shares of capital stock of the Company,
(ii) incurrence of any indebted-
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ness by the Company or any of its Subsidiaries for (a) borrowed money
(including, without limitation, capital leases) in the aggregate in excess
of $ 1,000,000 or (b) notes issued to sellers in connection with
Acquisitions except as set forth on Schedule 3(a)(vii) or (iii) incurrence
of any material Encumbrance upon any of the assets or properties of the
Company.
(viii) Conflicting Agreements. Assuming the validity of the
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representations given in Section 4 of this Agreement by the Purchaser, the
execution and delivery by the Company of the Operative Documents, the
consummation by the Company of the transactions contemplated thereby and
the performance by the Company of its obligations thereunder do not and
will not (a) conflict with or violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge or
other restriction of any government, administrative or governmental agency
or court to which the Company is subject, (b) conflict with or violate any
provision of the Certificate of Incorporation or By-laws of the Company as
amended as contemplated by this Agreement as of the Closing Date, (c)
(except for the agreements set forth on Schedule 3(a)(viii), as to which
requisite consents, waivers or amendments have been or will be obtained or
entered into prior or subsequent to the Closing Date) conflict with, result
in a breach of, constitute a default (or an event which, with notice or
lapse of time, or both, has the potential of constituting a default) under,
give rise to a right of, or result in, the acceleration or termination of,
result in the loss of a material benefit under, or require any notice
under, (i) any note, bond, agreement, document or instrument relating to
any indebtedness or debt of the Company, (ii) any agreement, document or
instrument relating to any equity securities of, or interests in, the
Company or (iii) any other material agreement, contract, lease, instrument
or other arrangement not included in (i) or (ii), in each case, to which
the Company or any of its Subsidiaries is a party or to which any of their
respective properties or assets are subject, (d) result in the creation or
imposition of any material Encumbrance upon any of the assets or properties
of the Company, (e) (except for the agreements set forth on Schedule
3(a)(viii), as to which requisite consents, waivers or amendments have been
or will be obtained or entered into prior or subsequent to the Closing
Date) result in the triggering of any anti-dilution provisions in any
agreement relating to any equity securities of, or interests in, the
Company or (f) result in the adjustment or change of the conversion or
exercise price or conversion ratio (in each case, except for any effect on
a determination of market price of the Company's Common Stock) of any
outstanding preferred stock or Options.
(ix) No Default or Violation. Except as set forth on Schedule
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3(a)(ix), neither the Company nor any of its Subsidiaries is (a) in default
under or in violation of or, upon (x) the expiration of any applicable cure
period, (y) the receipt of any required notice or (z) the consummation of
the transactions contemplated by the Operative Documents, would be in
default under or in violation of, any indenture, loan or credit agreement
or any other agreement or instrument to which it is a party or by which it
or any of its properties or assets is bound, except such defaults as would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, or (b) in violation of any order, judgment, writ,
injunction or decree of any court, arbitrator or governmental body, except
for such violations as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
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(x) Brokers' Fees. The Company has no liability or obligation to pay
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any fees or commissions to any investment banker, broker, finder, agent or
advisor in connection with the transactions contemplated by this Agreement.
(xi) Tangible Assets. The Company and each of its Subsidiaries own or
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lease all material buildings, computers, equipment and other tangible
assets necessary for the conduct of their respective businesses as
presently conducted. To the knowledge of the Company, each such tangible
asset is in good operating condition and repair (subject to normal wear and
tear) and is suitable for the purposes for which it presently is used. The
Company has no knowledge of any dispute or claim made by any other person
concerning such right, title and interest in such tangible assets. To the
extent that any material tangible assets are leased, the leases with
respect thereto are valid and enforceable, and the Company and its
Subsidiaries that are parties thereto and, to the knowledge of the Company,
any other parties thereto are not in default of any material obligations
pursuant to such leases.
(xii) Legal Compliance. Except as set forth on Schedule 3(a)(xii), the
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Company and each of its Subsidiaries have complied and are in compliance
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings and charges thereunder) of
federal, state, local and foreign governments (and all agencies thereof)
and of any self-regulatory agencies that regulate the Company and/or its
Subsidiaries, except for any non-compliance therewith which, individually
or in the aggregate, would not reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has
received any notification of any asserted present or past failure by it to
comply with such laws, rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings or charges which, individually or in
the aggregate, would reasonably be expected to have a Material Adverse
Effect.
(xiii) Licenses and Permits. Except as set forth on Schedule
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3(a)(xiii), the Company and each of its Subsidiaries hold all material
licenses, permits, approvals, certificates of inspection, other
authorizations, filings and registrations which are necessary for such
entities to operate their businesses as presently conducted (collectively,
the "Permits"). The Permits are in good standing, and the Company has no
knowledge that any disciplinary proceeding in respect thereof is pending.
There is no proceeding pending or, to the knowledge of the Company,
threatened or probable of assertion to revoke or limit any such Permit
which would reasonably be expected to result in a Material Adverse Effect.
None of the transactions contemplated by the Operative Documents will
terminate, violate or limit the effectiveness of any such Permit. With
respect to renewal of Permits, the Company and its Subsidiaries have taken,
in a timely manner, all action known or anticipated to be required to be
taken by the Company and its Subsidiaries reasonably necessary to secure
the renewal of the Permits prior to the date of their respective
expirations. The Company believes that it should be able to secure the
renewals of the Permits prior to the date of their respective expirations.
(xiv) Litigation; Proceedings. Except as set forth on Schedule
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3(a)(xiv), there are no actions, suits, proceedings, investigations or
claims (whether or not purportedly on behalf of the Company or any of its
Subsidiaries) pending or, to the knowledge of the Company,
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threatened against the Company or any of its Subsidiaries, or the assets,
business or goodwill of the Company or any of its Subsidiaries, in any
court or before any arbitrator of any kind or before or by any governmental
or regulatory body or agency which could reasonably be expected to have a
Material Adverse Effect or adversely affect or question the transactions
contemplated by the Operative Documents. Except as set forth on Schedule
3(a)(xiv), there is no outstanding order, writ, injunction or decree of or
stipulation with any court, arbitrator or governmental or regulatory body
or agency against the Company or any of its Subsidiaries, or the assets,
business or goodwill of the Company or any of its Subsidiaries.
(xv) Tax Matters.
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(A) All federal, state and local income, and all other material
federal, state and local, tax returns and tax reports required as of the
date hereof to be filed by the Company or any of its Subsidiaries for
taxable periods ending prior to the date hereof and as of the Closing Date,
have been or will be duly and timely filed prior to the due date (as such
due date may be lawfully extended) by the Company or any of its
Subsidiaries, as applicable, with the appropriate governmental agencies,
and all such returns and reports are true, correct and complete in all
material respects.
(B) All federal, state and local income, and all material federal,
state and local profits, franchise, sales, use, occupation, property,
excise, payroll, withholding, employment, estimated and other taxes of any
nature, including interest, penalties and other additions to such taxes
("Taxes"), payable by, or due from, the Company or any of its Subsidiaries
for all periods prior to the date hereof and as of the Closing Date, have
been fully paid or adequately reserved for by the Company or any of its
Subsidiaries, as applicable, or, with respect to Taxes required to be
accrued, the Company has properly accrued or will properly accrue such
Taxes in the ordinary course of business consistent with past practice of
the Company.
(C) The federal income tax returns of the Company and its Subsidiaries
have not been audited by the Internal Revenue Service ("IRS") for the years
ended December 31, 1998, 1999 and 2000, respectively. To the knowledge of
the Company, (a) except as set forth on Schedule 3(a)(xv), neither the
Company nor any of its Subsidiaries has received any notice of any assessed
or proposed claim or deficiency against it in respect of, or of any present
dispute between it and any governmental agency concerning, any Taxes which
would reasonably be expected to have a Material Adverse Effect, (b) except
as set forth on Schedule 3(a)(xv), no examination or audit of any material
tax return or report of the Company or any of its Subsidiaries by any
applicable taxing authority is currently in progress and (c) there are no
outstanding agreements or waivers extending the statutory period of
limitation applicable to any tax return or report of the Company or any of
its Subsidiaries.
(xvi) Reservation of Stock. As of the Closing Date, the Company shall
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have reserved for issuance a sufficient number of shares of Common Stock to
permit the conversion in full of all Shares into Common Stock. Such Common
Stock when issued upon such conversion will be duly authorized, fully paid
and nonassessable.
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(xvii) Transactions with Affiliates. Except as set forth on Schedule
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3(a)(xvii), there are no agreements or understandings relating to the
provision of services or the investment of equity, and there are no loans,
advances or commitments to make loans or advances, between the Company or
any of its Subsidiaries, on the one hand, and the directors or officers of
the Company or any Affiliate (excluding Subsidiaries) of the Company, on
the other hand.
(xviii) Status of Shares. The Shares, upon issuance by the Company
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following receipt of the consideration provided for herein and satisfaction
of the other conditions set forth herein, will be duly authorized, fully
paid and nonassessable. Neither the Company nor any of its Affiliates (as
defined in Rule 501(b) of Regulation D under the Act) has, directly or
through any agent, (i) sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any "security" (as defined in the Act)
which is or could be integrated with the sale of the Shares in a manner
that would require the registration under the Act of the Shares or (ii)
engaged in any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Act) in connection with the
offering of the Shares or in any manner involving a public offering within
the meaning of Section 4(2) of the Act. Assuming the accuracy of the
representations and warranties of the Purchaser in Section 4 hereof, it is
not necessary in connection with the offer, sale and delivery of the Shares
to the Purchaser in the manner contemplated by this Agreement to register
any of the Shares under the Act.
(xix) Employee Benefits.
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(a) All of the Benefit Plans and any related trust agreements or
annuity contracts (or any other funding instruments) have been administered
and maintained to date in compliance with the provisions of ERISA and the
Code, where required, and all other applicable laws, rules and regulations,
except where such noncompliance would not reasonably be expected to have a
Material Adverse Effect. A favorable determination as to the qualification
under the Code of each of the Benefit Plans intended to be so qualified,
and each amendment thereto (where required by law), has been made by the
IRS or application for such determination has been made with respect
thereto. No act or omission has occurred that would reasonably be expected
to cause the loss of qualified status for any Benefit Plan intended to be
qualified.
(b) No Benefit Plan which constitutes an "employee welfare benefit
plan," as defined in Section 3(1) of ERISA ("Welfare Benefit Plan"), is
funded by means of a VEBA or is otherwise subject to the funding rules of
Sections 419 and 419A of the Code. Each Welfare Benefit Plan is in
compliance in all material respects with the group health plan continuation
coverage (COBRA) requirements of Section 4980B of the Code to the extent
such Section is applicable to any such Welfare Benefit Plan. No Welfare
Benefit Plan provides medical or other welfare benefits to retired or
former employees of the Company or any of its Subsidiaries (other than
COBRA continuation coverage, where applicable). Except as set forth on
Schedule 3(a)(xix) and except for agreements with producers pursuant to
which such producers are paid on their retained book of business for
periods following separation of service and Benefit Plans intended to be
qualified under Section 401 (a) of the Code, neither the Company nor any of
its Subsidiaries has made, or has any program or policy providing for, any
promise
-12-
or offer with respect to post-retirement benefits, either directly or
indirectly to any of its current or former employees.
(c) To the knowledge of the Company, no plan fiduciary of any Benefit
Plan has engaged in any transaction in violation of Section 406(a) or (b)
of ERISA or any "prohibited transaction" (as defined in Section 4975(c)(1)
of the Code) for which no exemption exists under Section 407 or 408 of
ERISA or Section 4975(d) of the Code which violation or "prohibited
transaction" would reasonably be expected to cause a Material Adverse
Effect. No litigation concerning any such plan is pending or, to the
knowledge of the Company, threatened, nor, to the knowledge of the Company,
is there outstanding any complaint to the United States Department of Labor
concerning any such plan.
(d) No other entity which is a member of the same controlled group of
organizations (within the meaning of Section 414(b), (c) or (m) of the
Code) as the Company maintains, contributes to or is obligated to
contribute to any plan that is subject to Title IV of ERISA or Section 412
of the Code or that is a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA.
(e) All Benefit Plans, related trust agreements or annuity contracts
(or any other funding instruments) are legally valid and binding and in
full force and effect, and there are no material defaults thereunder. None
of the rights of the Company or its Subsidiaries thereunder will be
impaired by the consummation of the transactions contemplated by this
Agreement, and all of the rights of the Company and its Subsidiaries
thereunder will be enforceable by the Company and its Subsidiaries after
the Closing Date without the consent or agreement of any other party. The
Company and each of its Subsidiaries have the right to amend and terminate
any of their Benefit Plans, subject to the requirements of ERISA and the
Code.
(f) All contributions and premium payments required with respect to
the Benefit Plans have been made when due, and the Company intends to make
such contributions and premium payments in accordance with its ordinary
course of business.
(g) Other than EBITDA-based and revenue-based bonuses and the
preferred incentive shares for management purchased under various stock
subscription agreements, Schedule 3(a)(xix) lists or refers to each
deferred compensation plan, bonus plan, stock option plan, "phantom" stock
plan and employee stock purchase plan of the Company and its Subsidiaries
and includes a description of all other employee benefit plans, agreements,
arrangements or commitments of the Company and its Subsidiaries.
(h) Schedule 3(a)(xix) sets forth the amounts currently projected by
the Company to be payable in respect of "growth-based bonuses" for the next
five fiscal years. Such projections constitute the Company's best estimate
of the information purported to be shown therein, and the Company is not
aware of any fact or information that would lead it to believe that such
projections are incorrect or misleading in any material respect.
-13-
(xx) Consents and Approvals; No Violation. Except as set forth on
------------------------------------
Schedule 3(a)(xx), there is no requirement applicable to the Company or any
of its Subsidiaries to make any filing with, or to obtain any permit,
authorization, consent or approval of, any government or regulatory
authority or any other Person in connection with the execution and delivery
by the Company of the Operative Documents and the performance by the
Company of the transactions contemplated thereby.
(xxi) Intellectual Property. The Company owns or has the right to use
---------------------
pursuant to license, sublicense, agreement or permission all material
trademarks, patents, copyrights, trade names, service marks, software and
know-how ("Intellectual Property") necessary for the operation of its
businesses as presently conducted. To the knowledge of the Company, the
Company has not interfered with or otherwise come into conflict with any
material Intellectual Property rights of third parties, nor has any third
party interfered with, infringed upon, misappropriated or otherwise come
into conflict with any material Intellectual Property rights of the
Company. There is no existing claim or, to the knowledge of the Company,
any basis for any claim against the Company (a) that any of its operations,
activities or products infringe the Intellectual Property or other property
rights of others or (b) that the Company is wrongfully or otherwise using
the property rights of others, which would or could reasonably be expected
to have a Material Adverse Effect.
(xxii) Subsidiaries and Investments. Except as set forth on Schedule
----------------------------
3(a)(xxii), neither the Company nor any of its Subsidiaries owns or
maintains, directly or indirectly, more than 1% of the capital stock of any
company subject to the reporting requirements of Section 13(a) or 15(d)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or any other equity or ownership or proprietary interest in any other
corporation, partnership, association, trust, joint venture or other
entity.
(xxiii) Title to Assets; Related Matters. The Company and its
--------------------------------
Subsidiaries have good and marketable title to all of their respective
material assets, rights, interests and other properties, real, personal and
mixed, tangible and intangible, including, without limitation, capital
leases and leasehold interests and all of the assets in the unaudited
consolidated balance sheet of the Company and its Subsidiaries as of
September 30, 2001 (collectively, the "Assets"), except those transferred
in the ordinary course of business since September 30, 2001, free and clear
of all Encumbrances, except those specified or referred to on Schedule
3(a)(xxiii) and liens for purchase money financing for furniture and
equipment and taxes not yet due and payable.
(xxiv) Possession. The material tangible assets included within the
----------
Assets are in the possession or control of the Company or one of its
Subsidiaries, and no other Person or entity has a right to possession,
except as specified or referred to in Schedule 3(a)(xxiv), or present
claims of possession of all or any part of such Assets, except the rights
of lessors of leased equipment and leased premises under their respective
contracts and leases.
(xxv) No Undisclosed Liabilities. Neither the Company nor any of its
--------------------------
Subsidiaries has any material liabilities or obligations of any nature,
known, fixed or contingent, matured
-14-
or unmatured, other than those (a) reflected in the Audited Financial
Statements, (b) incurred in the ordinary course of business since the date
of the Audited Financial Statements which could not reasonably be expected
to have a Material Adverse Effect or (c) disclosed specifically on Schedule
3(a)(xxv).
(xxvi) Disclosures. No representation or warranty by the Company
-----------
contained in this Agreement (including the Schedules hereto) and no
information contained in any document provided to the Purchaser or to any
securityholders of the Company in connection with the transactions
contemplated by the Operative Documents by or on behalf of the Company
(except for industry data and other statements specifically attributed to
third party sources and except as any particular document may have been
amended or supplemented on or prior to the date hereof), taken as a whole,
contains an untrue statement of a material fact or omits to state a
material fact necessary in order to make such representation or warranty or
such statement not materially misleading. The financial projections
relating to the Company or any of its Subsidiaries delivered to the
Purchaser constitute the Company's best estimate of the information
purported to be shown therein, and the Company is not aware of any fact or
information that would lead it to believe that such projections are
incorrect or misleading in any material respect.
(xxvii) Books and Records. The books and records of the Company,
-----------------
including, without limitation, any stock and minute books (where
applicable), are complete and correct in all material respects. No action
has been taken which requires the approval of the Board of Directors or the
stockholders of the Company which is not accurately reflected in the
Company's minute books.
(xxviii) No Senior Securities. Except as disclosed on Schedule
--------------------
3(a)(xxviii), the Company has no securities outstanding senior in right of
payment, voting or conversion or senior with respect to any other right to
the Series Y Preferred Stock (other than by virtue of a differential in the
purchase price therefor and rights (including conversion rights) in respect
of accumulated dividends thereon).
(xxix) Material Agreements. Other than as set forth in this Agreement
-------------------
and except as described on Schedule 3(a)(xxix), there are no other material
agreements of the Company and its Subsidiaries (except with respect to
agreements in the ordinary course of the insurance brokerage or financial
services businesses and office leases), including, without limitation, (a)
contracts, agreements or arrangements for Acquisitions, (b) contracts,
agreements or arrangements regarding debt or equity of the Company, (c)
contracts, agreements and arrangements which individually require both a
total future payment or payments or liability in excess of $2,000,000 and a
total current annual payment or payments or liability in excess of $500,000
to or by the Company, (d) agreements pursuant to which the Company and/or
its Subsidiaries offers, markets or sells products of any insurance company
and (e) contracts that grant exclusive dealing arrangements or which, in
any manner, restrict the Company's or its Subsidiaries' operations or
business.
-15-
(xxx) Executive Compensation. Set forth on Schedule 3(a)(xxx) is a
----------------------
list of employees of the Company and its Subsidiaries who are entitled to
receive salary or other guaranteed compensation equal to or in excess of
$300,000 per year pursuant to the employment agreements identified on such
Schedule.
(xxxi) Registration Rights. After giving effect to the transactions
-------------------
contemplated hereby, other than the Shareholders' Agreement and except as
otherwise set forth on Schedule 3(a)(xxxi), the Company is not party to any
agreement with respect to its securities granting any registration rights
to any Person.
(xxxii) Securities. Schedule 3(a)(xxxii) lists all the Persons as of
----------
the date hereof who own debt or equity securities of the Company or any
Subsidiary (and the amounts and percentages of total voting power (on a
fully diluted, as-converted basis) so owned), and identifies each such
Person as a "Management Investor" or "Non-Management Investor" (each, as
defined in the Shareholders' Agreement) after giving effect to the Closing
under this Agreement.
(xxxiii) Real Property. Neither the Company nor any of its
-------------
Subsidiaries owns any material real property.
(xxxiv) Employee Restrictive Covenants. (a) All persons (including
------------------------------
executive officers) who have sold stock or assets to the Company or any of
its Subsidiaries and who, as a result thereof, have become employees of the
Company or of any of its Subsidiaries have entered into employment
agreements restricting their ability to solicit the clients sold in
connection with such Acquisition; and (b) all executive officers of the
Company (including those described in clause (a) above) have (or will at
the Closing have) entered into agreements restricting the use of
confidential information with respect to the Company upon the termination
of employment of such executive officer.
(xxxv) Restrictive Agreements. After giving effect to the transactions
----------------------
contemplated hereby and thereby, other than as set forth in the
Shareholders' Agreement and applicable transfer restrictions to ensure
compliance with applicable securities laws, except as set forth on Schedule
3(a)(xxxv) and except for obligations to repurchase securities from
employees upon termination of employment, neither the Company nor, to the
knowledge of the Company, any stockholder will be a party to any agreement
(i) restricting the free disposition or voting of any shares of the issued
and outstanding stock of the Company or (ii) requiring the Company to
repurchase any outstanding securities under any condition, including,
without limitation, any agreement granting rights of first refusal, co-sale
or similar rights.
(xxxvi) HSR Compliance. Sale of the Shares in accordance with the
--------------
terms hereof to the Purchaser will not cause the Purchaser to fail to be in
compliance with the HSR Act.
(b) Any representation or warranty which is stated to be based on "the
knowledge of the Company" or similar words means that none of Xxxxxxx Xxxxx,
Chairman of the Board of Directors and Chief Executive Officer of the Company,
Xxxxx X. Xxxxxx, President and Chief Operating Officer
-16-
of the Company, Xxxxxx Xxxxxx, Senior Vice President and Chief Financial Officer
of the Company, or Xxxxxx X. Newborn, II, Senior Vice President, General Counsel
and Secretary of the Company has, or after due inquiry would be reasonably
likely to have, any knowledge of facts to the contrary.
SECTION 4. Representations and Warranties and Other Agreements of the
----------------------------------------------------------
Purchaser.
---------
(a) Representations and Warranties. The Purchaser represents and warrants
------------------------------
with respect to itself and its Shares that:
(i) It is acquiring such Shares for investment for its own account and
not as an agent or nominee for any other Person.
(ii) It will not Transfer any of the Shares unless (A) such Transfer
complies with the provisions of this Agreement and the Shareholders'
Agreement, (B) either (1) the Transfer is pursuant to an effective
registration statement under the Act or pursuant to Rule 144A under the
Act, or (2) the Purchaser shall have furnished the Company with an opinion
of counsel, which opinion of counsel shall be reasonably satisfactory to
the Company, to the effect that no such registration is required because of
the availability of an exemption from registration under the Act, and (C)
such Transfer shall be in compliance with any applicable state or foreign
securities or "blue sky" laws, subject, nevertheless, to any requirement of
law that the disposition of its property shall be at all times within its
control.
(iii) It has been advised by the Company that: (A) neither the offer
nor sale of any Shares has been registered under the Act or any state or
foreign securities or "blue sky" laws; (B) the Shares are characterized as
a "restricted security" under the Act inasmuch as they are being acquired
from the Company in a transaction not involving a public offering and that
the Shares must be held indefinitely and it must continue to bear the
economic risk of the investment in the Shares unless the offer and sale of
the Shares is subsequently registered under the Act or an exemption from
such registration is available and all applicable state or foreign
securities or "blue sky" laws are complied with; (C) it is not anticipated
that there will be any public market for the Shares in the foreseeable
future; (D) Rule 144 promulgated under the Act is not presently available
with respect to the offers or sales of any securities of the Company, and
the Company has made no covenant to make such Rule available nor has it
made any covenants with respect to other rules by which offers or sales may
be made; (E) when and if the Shares may be disposed of without registration
under the Act in reliance on Rule 144, such disposition may be made only in
limited amounts in accordance with the terms and conditions of such Rule;
(F) if the Rule 144 exemption is not available, public offer or sale of any
Shares without registration will require the availability of another
exemption under the Act or the rules and regulations promulgated
thereunder; (G) a restrictive legend in the form heretofore set forth shall
be placed on the certificates representing the Shares; and (H) a notation
shall be made in the appropriate records of the Company indicating that the
Shares are subject to restrictions on transfer and, if the Company should
at some time in the future engage the services of a stock transfer agent,
appropriate stop transfer restrictions will be issued to such transfer
agent.
-17-
(iv) It either (A) is an "accredited investor" as defined in the Act
or (B) has such knowledge, skill and experience in business, financial and
investment matters so that it is capable of evaluating the merits, risks
and consequences of an investment in the Shares and is able to bear the
economic risk of loss of such investment.
(v) It has been afforded (A) the opportunity to ask such questions as
it has deemed necessary of, and to receive answers from, representatives of
the Company concerning an investment in the Shares and the merits and risks
of investing in the Shares and (B) access to information about the Company
and the Company's financial condition, business, results of operations and
prospects sufficient to enable it to evaluate its investment in the Shares.
(vi) It has duly and validly executed and delivered this Agreement.
(vii) The execution, delivery and performance by it of this Agreement
and the acceptance of the Shares upon payment therefor do not and will not
(a) constitute or result in a breach of or default (or an event which, with
notice or lapse of time, or both, has the potential of constituting a
default) under any material agreement to which it is a party or the
Purchaser's organizational documents, (b) violate any law binding upon it
(except as to the HSR Act as to which the Purchaser makes no
representation) or (c) require the consent of any third party (other than
those, if any, required by the HSR Act).
(viii) It understands that an investment in the Shares is speculative
and involves a high degree of risk and that the achievement of the
financial results shown in any projections provided to it is subject to
numerous contingencies, many of which are not within the Company's
control. The Company has prepared the projections in good faith and
believes that the assumptions underlying the projections are reasonable;
however, there can be no assurance that the results shown in the
projections can be realized and, except to the extent expressly stated in
Section 3(a)(xxvi), neither the Company nor any person acting on its behalf
assume any responsibility for the accuracy or adequacy of such projections.
(b) Disposition. If any of the Shares is to be disposed of by the Purchaser
-----------
in accordance with Rule 144 under the Act or otherwise, the Purchaser shall
promptly notify the Company of such intended disposition and shall deliver to
the Company, at or prior to the time of such disposition, such documentation as
the Company may reasonably request in connection with such disposition and, in
the case of a disposition pursuant to Rule 144, shall deliver to the Company an
executed copy of any notice on Form 144 required to be filed with the Securities
and Exchange Commission (the "SEC").
(c) Source of Funds. The Purchaser represents that at least one of the
---------------
following statements concerning each source of funds to be used to purchase
Shares (respectively, the "Source") is accurate:
(1) the Source is not an "employee benefit plan" as defined in Section
3(3) of ERISA (an "employee benefit plan") that is subject to Title I of
ERISA or a "plan" as defined in Section 4975(e) of the Code;
-18-
(2) the Source is an "insurance company general account" (as such term
is defined under Section V of Prohibited Transaction Class Exemption
95-60), there is no employee benefit plan, treating as a single plan all
plans maintained by the same employer or by an "affiliate" (as such term is
defined under Section V of Prohibited Transaction Class Exemption 95-60) or
by the same employee organization, with respect to which the amount of the
general account reserves and liabilities for all contracts held by or on
behalf of such plan exceed 10% of the total reserves and liabilities of
such general account (exclusive of separate account liabilities) plus
surplus, as set forth in the NAIC Annual Statement filed with the state of
domicile of the insurer, and the conditions of Sections IV(b) and (c) of
Prohibited Transaction Class Exemption 95-60 are satisfied;
(3) the Source is an insurance company pooled separate account, and
either (i) no employee benefit plan or group of plans maintained by the
same employer or employee organization beneficially owns more than 10% of
all assets allocated to such pooled separate account, and such Purchaser
agrees to satisfy the conditions of Sections III(b) and (c) of Prohibited
Transaction Class Exemption 90-1, or (ii) such separate account is
maintained solely in connection with the fixed contractual obligations of
the Purchaser under which the amounts payable or credited to the employee
benefit plan and to any participant or beneficiary (including any
annuitant) of the employee benefit plan are not affected in any manner by
the investment performance of the separate account;
(4) the Source is a bank collective investment fund, within the
meaning of the Prohibited Transaction Class Exemption 91-38, no employee
benefit plan or group of plans maintained by the same employer or employee
organization beneficially owns more than 10% of all assets allocated to
such collective investment fund and the Purchaser agrees to satisfy the
conditions of Sections III(b) and (c) of Prohibited Transaction Class
Exemption 91-38;
(5) the Source is an "investment fund" managed by a "qualified
professional asset manager" or "QPAM" (as defined in Part V of Prohibited
Transaction Class Exemption 00-00 (xxx "XXXX Xxxxxxxxx")), no employee
benefit plan's assets that are included in such investment fund, when
combined with the assets of all other employee benefit plans established or
maintained by the same employer or by an affiliate (within the meaning of
Section V(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization and managed by such QPAM, exceed 20% of the total
client assets managed by such QPAM, the conditions of Part I(c) and (g) of
the QPAM Exemption are satisfied, neither the QPAM nor a person controlling
or controlled by the QPAM (applying the definition of "control" in Section
V(e) of the QPAM Exemption) owns a 5% or more interest in the Company, and
(i) the identity of such QPAM and (ii) the names of all employee benefit
plans whose assets are included in such investment fund have been disclosed
to the Company in writing;
(6) the purchase is made on behalf of an employee benefit plan by an
in-house asset manager and the conditions of Prohibited Transaction Class
Exemption 96-23 are satisfied; or
-19-
(7) the Source is a governmental plan (as defined in Section 3(32) of
ERISA).
(d) Purchaser Is Independent. The Purchaser represents that it has made an
------------------------
investment decision with respect to the Shares independent of any investment
decision made by any other Person with respect to the purchase of Series Y
Preferred Stock. Except for the Shareholders' Agreement, there are no other
agreements or understandings between the Purchaser and any holder of Series Y
Preferred Stock with respect to the conduct of the affairs of the Company and
its Subsidiaries.
SECTION 5. Conditions Precedent to Closing.
-------------------------------
(a) Conditions to the Company's Obligation. The Company's obligation to
--------------------------------------
issue the Shares hereunder is subject to the performance by the Purchaser at or
prior to the Closing Date of all of the agreements of the Purchaser contemplated
to be performed hereunder at or prior to the Closing Date and to the
satisfaction of the further condition that the representations and warranties of
the Purchaser contained in Section 4 hereof shall be true and correct as of the
Closing Date, or to the waiver of such performance or satisfaction.
(b) Conditions to Purchaser's Obligations. The obligations of the Purchaser
-------------------------------------
to purchase the Shares and to execute and deliver the joinder to the
Shareholders' Agreement contemplated by this Agreement are subject to
satisfaction of the following conditions:
(i) the Purchaser shall have received opinions, addressed to it and
dated as of the Closing Date, from Xxxxxx Xxxxxx & Xxxxxxx and Xxxxxx X.
Newborn, II, Esq., General Counsel of the Company, addressing the matters
set forth in Exhibits D-1 and D-2 attached hereto;
------------ ---
(ii) (A) the representations and warranties of the Company contained
in Section 3 shall be true and correct in all respects, or true and correct
in all material respects where such representations and warranties are not
qualified by materiality or Material Adverse Effect, on and as of the
Closing Date with the same effect as though such representations and
warranties had been made as of the Closing Date and (B) there shall have
been no Material Adverse Change;
(iii) the Company shall have complied in all material respects with
all agreements hereunder required to be performed by it at or prior to the
Closing Date;
(iv) the Certificate of Designations shall not have been eliminated
from the Company's Certification of Incorporation;
(v) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling or charge would (A)
prevent consummation of any of the transactions contemplated by any
Operative Document or (B) affect adversely the Company's right to own its
assets and to operate its business; and no such injunction, judgment,
order, decree, ruling or charge shall be in effect;
-20-
(vi) the Company shall have delivered to the Purchaser a certificate,
dated as of the Closing Date, signed on behalf of the Company by the
Chairman of the Board of Directors and Chief Executive Officer of the
Company and by the President and Chief Operating Officer of the Company to
the effect that, to their knowledge, (A) the representations and warranties
of the Company contained in Section 3 are true and correct in all respects,
or true and correct in all material respects where such representations and
warranties are not qualified by materiality or Material Adverse effect, on
and as of the Closing Date with the same effect as though such
representations and warranties had been made as of the Closing Date and (B)
each of the other conditions specified in (ii)-(v) above and (xii)-(xiii)
below has been satisfied;
(vii) the Purchaser shall have received a certificate, dated as of the
Closing Date, signed by the Secretary or an Assistant Secretary of the
Company and certifying that attached thereto is a true, correct and
complete copy of (A) the Company's By-laws and (B) resolutions duly
adopted by the Executive Committee of the Board of Directors of the Company
authorizing the execution and delivery of the Operative Documents;
(viii) the Purchaser shall have received certificates (or copies
thereof) dated as of a recent date from the Secretary of State of the State
of Delaware to the effect that the Company is duly incorporated and in good
standing in such state, stating that the Company owes no franchise taxes in
such state and listing all documents of the Company on file with said
Secretary of State;
(ix) the Purchaser shall have received a copy of the Company's
Certificate of Incorporation, including all amendments thereto, certified
as of a recent date by the Secretary of State of the State of Delaware;
(x) the Purchaser shall have received evidence, reasonably
satisfactory to the Purchaser, of the authority and incumbency of the
persons acting on behalf of the Company in connection with the execution of
any document delivered in connection with this Agreement;
(xi) the Purchaser shall have received the Audited Financial
Statements and the Unaudited Financial Statements;
(xii) each Operative Document and all of the transactions contemplated
thereby shall have been approved by the requisite number of holders of
shares of capital stock or other equity securities of the Company; and
(xiii) the existing securityholders of the Company shall have waived
any preemptive rights such securityholders may have to acquire Series Y
Preferred Stock to the extent necessary to permit the Purchaser to purchase
at least $2,500,001 of Shares.
(c) Conditions to Obligations of the Parties. The obligations of all
----------------------------------------
parties to this Agreement are subject to satisfaction of the additional
conditions that:
-21-
(i) the Company shall have received each of the governmental, third
party, shareholder and other consents, approvals and waivers and entered
into the amendments, in each case as set forth on Schedule 3(a)(viii) and
Schedule 3(a)(ix); and
(ii) there shall not be any law, rule or regulation that would
prohibit the execution, delivery and performance of the Operative
Documents.
SECTION 6. Covenants.
---------
(a) Financial Information. The Company will keep true books of records and
---------------------
accounts in which full and correct entries will be made of all of its business
transactions and will reflect in its financial statements adequate accruals and
appropriations to reserves, all in accordance with generally accepted accounting
principles. Prior to the time when any securities of the Company are registered
under the Exchange Act, the Company will furnish to the Purchaser quarterly
unaudited financial statements with respect to each of the first three fiscal
quarters of each fiscal year within 60 days of the end of each such quarter
certified by the Company's chief operating officer, and audited financial
statements with respect to each fiscal year within 120 days of the end of each
such fiscal year together with the report thereon of an independent firm of
public accountants of national reputation. At such times as the financial
statements are furnished pursuant to this Section, the Company shall also
furnish a certificate or certificates of one or more officers of the Company
stating that, to the knowledge of the officer delivering such certificate, there
is nothing that would cause such officer to believe any condition exists which
would constitute a violation of any of the then applicable covenants contained
herein or in any of the other Operative Documents; provided that if such a
violation exists, such certificate shall specify the nature and period of
existence of such violation.
(b) Exchange Act Reports. If the Company shall, at any time, file a
--------------------
registration statement with respect to Common Stock and/or Preferred Stock
pursuant to the requirements of Section 12 of the Exchange Act, or a
registration statement with respect to Common Stock and/or Preferred Stock
pursuant to the requirements of the Act, the Company will file the reports
required to be filed by it under the Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder, to the extent required from time to
time to enable the Purchaser to sell shares of Preferred Stock or the Common
Stock into which it is convertible, subject to the terms of the Shareholders'
Agreement, without registration under the Act within the limitation of the
exemption provided by Rule 144 under the Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the SEC.
The Company shall provide the Purchaser with 30 days written notice prior to its
initial filing under the Exchange Act.
(c) Compliance with Rule 144 and Rule 144A Information. For so long as any
--------------------------------------------------
of the Shares remain outstanding, the Company will make available at its
expense, upon request, to the Purchaser and any prospective purchaser of the
Shares, the information specified in Rule 144(A)(d)(4) under the Act, unless the
Company is then subject to Section 13 or 15(d) of the Exchange Act. At the
written request of a holder of Shares who proposes to sell any of such Shares in
compliance with Rule 144, the Company shall furnish to such holder, within ten
business days after receipt of such request, a written statement as to whether
or not the Company is in compliance with the filing requirements of the Exchange
Act, or otherwise has publicly available information, as set forth in Rule
144(c).
-22-
(d) Certain Amendments. The Company shall not at any time, without the
------------------
prior written consent of holders of a majority of the voting power represented
by the Shares then outstanding, voting as a class, amend its certificate of
incorporation (except for the filing of the Certificate of Designations) or
By-laws (except as amended as contemplated by this Agreement and as the By-laws
may be amended from time to time in accordance with this provision) in a manner
which would adversely affect the rights of the Purchaser.
(e) Use of Proceeds. The proceeds from the sale of the Shares and certain
---------------
other funds will be used by the Company as set forth on Schedule 6(e). Pending
such uses, proceeds will be invested in high-quality short-term investments
customarily utilized for cash management purposes.
(f) Inspections and Other Information. The Company will permit officers and
---------------------------------
designated representatives of the Purchaser to visit and inspect any of its
properties or assets in whosoever's possession, and to examine its books of
account and discuss its affairs, finances and accounts with, and be advised as
to the same by, its officers and independent accountants (in the presence of
such officers), all upon reasonable notice and at such reasonable times (during
normal business hours) and intervals and to such reasonable extent as the
Purchaser may reasonably request. The Company will provide to the Purchaser such
other information and data with respect to the Company as from time to time may
be reasonably requested by the Purchaser.
(g) Compliance with Laws. The Company will comply, and cause each of its
--------------------
Subsidiaries to comply, in all respects with all applicable laws, ordinances,
rules, regulations and requirements of governmental authorities (including,
without limitation, insurance, securities and environmental laws, ordinances,
rules and regulations) except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings or except where any
noncompliance therewith, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect.
(h) Dividends, Distributions and Repurchases. Neither the Company nor its
----------------------------------------
Subsidiaries will, without the prior written consent of the holders of at least
a majority of the voting power represented by the Shares Stock then outstanding,
voting as a class, declare any dividends, make any distributions or redeem or
otherwise repurchase for value its Capital Stock (as defined in the
Shareholders' Agreement) or the capital stock of its Subsidiaries except for (i)
repurchases for the purpose of recapitalizing the Company or any of its
Subsidiaries in which the shares of all equity holders of the recapitalized
entity are repurchased on a pro rata basis, (ii) repurchases of stock owned by
employees of the Company or its Subsidiaries, (iii) dividends or distributions
to another Subsidiary, the Company or pro rata dividends to an owner of capital
stock of a Subsidiary not prohibited under Section 6(i), (iv) installment
payments of redemption notes issued by Subsidiaries of the Company in connection
with the acquisition of such Subsidiaries by the Company and (v) repurchases of
capital stock or warrants by the Company pursuant to Section 2.1(c) of the
Shareholders' Agreement or Section I of the Warrantholders' Agreement.
(i) Issuance of Stock by Subsidiaries. The Company will not permit any
---------------------------------
Subsidiary to, without the prior written consent of the holders of at least a
majority of the voting power represented by the Shares then outstanding, voting
as a class, issue any shares of its capital stock except to the Company, another
Subsidiary or to shareholders, officers or employees of a business purchased in
an
-23-
Acquisition; provided that any such issuance in connection with an Acquisition
shall (i) be approved by the Executive Committee in accordance with the By-laws
of the Company and the Shareholders' Agreement, (ii) be required by the
documents governing such Acquisition and (iii) be effected concurrent with, or
within 30 days of, the closing of such Acquisition.
(j) Retention of Accountants. The Company will continue to retain an
------------------------
independent accountant of nationally recognized standing.
(k) Payment of Taxes. The Company will pay and discharge, and will cause
----------------
each of its Subsidiaries to pay and discharge, all material taxes, assessments
and governmental charges or levies imposed upon it or upon its income or
profits, or upon any properties belonging to it, prior to the date on which
material penalties attach thereto, and all lawful claims which, if unpaid, might
become a lien or charge upon any properties of the Company or any of its
Subsidiaries or cause a failure or forfeiture of title thereto; provided that
neither the Company nor any Subsidiary shall be required to pay any such tax,
assessment, charge, levy of claim that is being contested in good faith and by
proper proceedings timely instituted and diligently conducted if it has
maintained adequate reserves with respect thereto in accordance with generally
accepted accounting principles.
(l) Maintenance of Corporate Existence. The Company will do, and will cause
----------------------------------
each Subsidiary to do, or cause to be done, all things necessary to preserve and
keep in full force and effect its existence, rights and authority, except, in
the case of a Subsidiary, where such failure to keep in full force and effect
such rights and authority would not have a Material Adverse Effect.
(m) Publicity. The Company shall not issue any press release or press
---------
statements concerning the transactions contemplated hereby or by the
Shareholders' Agreement or using the name of the Purchaser or any of its
Affiliates without (i) prior consultation with an opportunity to review by the
Purchaser and (ii) the Purchaser's prior written consent.
(n) Action by Consent. The Company shall not take any action without a
----------------
meeting of shareholders by means of consent in writing pursuant to Article II,
Section 4 of the By-laws of the Company (or any successor provision) unless two
business days' prior written notice of such action has been provided to each
holder of shares of Series Y Preferred Stock, Series W Preferred Stock, Series O
Preferred Stock or Series R Preferred Stock.
(o) Delivery of Notice. The Company will ensure that all notices to be
------------------
delivered hereunder to the Purchaser shall be effected by facsimile transmission
or overnight courier, and shall not treat any such notice as having been
received until confirmation of completed facsimile transmission or receipt from
an overnight courier is received by the Company.
(p) Shareholders' Agreement. The Company shall do all things necessary
-----------------------
within its control to cause any person or entity acquiring shares of capital
stock of the Company or rights, options, warrants or other securities
convertible into or exercisable or exchangeable for shares of capital stock of
the Company at any time after the Closing Date to become party to the
Shareholders' Agreement. In addition, the Company agrees that it will not issue,
or agree or commit to issue, any capital stock
-24-
that is not either "Common Stock" or "Preferred Stock," as such terms are
defined in the Shareholders' Agreement as in existence immediately following the
Closing.
(q) Stamp Tax and Delivery Costs. The Company will pay all federal and
----------------------------
state stamp and other transfer taxes and similar transfer charges, if any, which
may be payable in respect of (i) the sale and issuance of the Shares hereunder
and (ii) the issuance of the Common Stock issuable upon conversion of the
Shares, and will save each holder of the Shares harmless against any loss or
liability resulting from nonpayment or delay in payment of any such tax or
similar transfer charge. The Company will pay all reasonable costs of delivery
to any holder of the Common Stock acquired upon conversion of the Series Y
Preferred Stock.
(r) Lost Securities. Upon receipt by the Company of evidence satisfactory
---------------
to it of the loss, theft, destruction or mutilation of any certificate
representing Series Y Preferred Stock or Common Stock issued upon conversion
thereof and (in the case of loss, theft or destruction) receipt of satisfactory
indemnity or (in the case of mutilation) surrender and cancellation of the
mutilated certificate, the Company will make, and deliver, in lieu of such
certificate, a new certificate of like tenor.
(s) Conversion of Shares. Notwithstanding the provisions set forth in the
--------------------
Certificate of Designations, the Company will not convert into Common Stock any
Shares in any jurisdiction in which such conversion or issuance would be
unlawful or in which the Company would be required to consent to the service of
process under the laws of such jurisdiction; provided, however, that the Company
shall take such action as may reasonably be requested by the Purchaser in any
jurisdiction to register or qualify (or seek an exemption therefrom) the
conversion of the Shares; provided, further, that nothing in this Section 6(s)
shall limit the Company's obligation under Section 2(d) hereof.
(t) Preemptive Rights. The Company will give effect to the preemptive
-----------------
rights for the time and according to the terms as set forth in the Certificate
of Designations and the certificates of designations of the Series O Preferred
Stock, the Series R Preferred Stock and the Series T Preferred Stock,
respectively, in each case as in effect as of the Closing Date, with respect to
the shares of Preferred Stock governed by such certificates of designations and
any shares of Common Stock issuable upon conversion of such Preferred Stock,
whether or not any such shares of Preferred Stock are then outstanding, subject
to the waivers of such preemptive rights with respect to the sale of the Shares
to the Purchaser as more particularly described in Section 5(b)(xvi) hereof.
(u) Information. The Company will furnish concurrently to each holder of
-----------
Series Y Securities copies of all information, documents and reports furnished
pursuant to Sections 6.1(a), 6.1(b), 6.1(c), 6.1 (e), 6.2, 6.7(a) and 6.7(b) of
the Credit Facility to the parties thereto.
(v) Reservation of Stock. The Company covenants and agrees that it will at
--------------------
all times cause to be reserved and kept available out of its authorized and
unissued shares of capital stock such number of Shares and Common Stock as will
be sufficient to permit the conversion of all the Shares into Common Stock in
accordance with the Certificate of Designations. The Company covenants and
agrees that it will take all actions necessary to ensure that all shares of
Common Stock issuable upon conversion of the Shares shall be duly and validly
authorized and issued and fully paid and nonassess-
-25-
able, free of any preemptive rights and free of any lien created by, or arising
out of actions of, the Company or any of its Subsidiaries.
SECTION 7. Indemnification; Survival.
-------------------------
(a) Indemnification Generally. The Company agrees to indemnify, defend and
-------------------------
hold harmless the Purchaser, its Subsidiaries and Affiliates and their
respective officers, directors, employees, agents and controlling persons (each,
a "Purchaser Indemnified Person") from and against any and all losses, claims,
damages, liabilities, expenses (including, without limitation, reasonable
attorneys' fees and disbursements), costs, judgments or amounts paid in
settlement of actions (i) arising out of or resulting from the untruth of any
representation herein or in any certificate delivered hereunder (including,
without limitation, pursuant to Section 5(b)) or the breach of any warranty or
covenant herein or in any certificate delivered hereunder (including, without
limitation, pursuant to Section 5(b)) or the default or breach of any of the
Company's undertakings or covenants under any of the other Operative Documents,
(ii) arising out of or relating to any claim by a third party against a
Purchaser Indemnified Person based on or arising out of (x) any representation
or warranty of the Company that was untrue when made or any breached covenant of
the Company or (y) the use by the Company of the proceeds of the sale of the
Shares or (iii) by virtue of the Purchaser's (and its Affiliates') investments
in the Company (other than losses relating strictly to market risk). The
Purchaser agrees to indemnify, defend and hold harmless the Company, its
Subsidiaries and their respective officers, directors, employees, agents and
controlling persons (each, a "Company Indemnified Person") from and against any
and all losses, claims, damages, liabilities, expenses (including, without
limitation, reasonable attorneys' fees and disbursements), costs, judgments or
amounts paid in settlement of actions arising out of or resulting from the
untruth of any representation of the Purchaser herein or the breach of any
warranty or covenant of the Purchaser herein or relating to any claim by a third
party against a Company Indemnified Person based on or arising out of any action
or any representation or warranty of the Purchaser that was untrue when made or
any breached covenant of the Purchaser. In no event shall the indemnification
obligations of the Purchaser exceed the aggregate Purchase Price of the Shares
purchased by the Purchaser pursuant to this Agreement. Notwithstanding the
foregoing, no representation, warranty, covenant or acknowledgment made herein
by the Purchaser shall in any manner be deemed to constitute a waiver of any
rights granted to it under the Act or state securities laws.
(b) Indemnification Proceedings in Respect of Third Party Claims. The
------------------------------------------------------------
provisions of this Section 7(b) shall apply to claims for indemnification
pursuant to Section 7(a) based on the assertion of any claim by a third party
against an Indemnified Party (as hereinafter defined). Promptly after receipt by
any party entitled to indemnification pursuant to the provisions of Section 7(a)
(each, an "Indemnified Party") of notice of the commencement of any action, such
Indemnified Party shall, if a claim in respect thereof is to be made against the
party hereto which is obligated for indemnification in respect of such action
pursuant to the provisions of Section 7(a) (the "Indemnifying Party"), notify
the Indemnifying Party in writing of the commencement thereof; provided,
however, that the omission so to notify the Indemnifying Party shall not relieve
it from any liability that it may have to any Indemnified Party except to the
extent that the Indemnifying Party has been materially prejudiced by such
omission. In case any such action shall be brought against any Indemnified
Party, and it shall notify the Indemnifying Party of the commencement thereof,
the Indemnifying Party shall be entitled
-26-
to participate therein and to assume the defense thereof, with counsel
reasonably satisfactory to such Indemnified Party, and, after notice from the
Indemnifying Party to such Indemnified Party of its election so to assume the
defense thereof, the Indemnifying Party shall not be liable to such Indemnified
Party for any legal or other expenses subsequently incurred by such Indemnified
Party in connection with the defense thereof other than reasonable costs of
investigation, unless (i) the employment of separate counsel has been
specifically authorized in writing by the Indemnifying Party, (ii) the
Indemnifying Party has failed to assume the defense and employ counsel
reasonably satisfactory to the Indemnified Party within a reasonable time after
commencement of such action or (iii) the named parties to any such action
(including any impleaded parties) include an Indemnified and an Indemnifying
Party, and the Indemnified Party has been advised in writing by separate counsel
that there may be one or more legal defenses available to such Indemnified Party
which are different from or additional to those available to the Indemnifying
Party (in which case the Indemnifying Party shall not have the right to assume
the defense of such action or proceeding on behalf of the Indemnified Party), it
being understood that the Indemnifying Party shall not, in connection with any
one such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one firm of
attorneys (in addition to any local counsel) for the Indemnified Party, which
firm shall be designated in writing by the Indemnified Party, and that all such
fees and expenses shall be reimbursed as they are incurred upon written request
and presentation of satisfactory invoices. The Indemnifying Party or the
Indemnified Party, as the case may be, shall in any event have the right to
participate at its own expense in the defense of any third party claim which the
other is defending. No Indemnifying Party shall, without the prior written
consent of each Indemnified Party, effect any settlement of any pending or
threatened proceeding in respect of which such Indemnified Party is a party,
unless such settlement (i) includes an unconditional release of such Indemnified
Party from all liability on claims that are the subject matter of such
proceeding, (ii) does not involve equitable or other nonmonetary damages and
(iii) would not, in the reasonable judgment of the Indemnified Party, have a
material adverse effect on the business of the Indemnified Party.
(c) Survival. The representations and warranties of the parties set forth
--------
in this Agreement shall survive the execution and delivery of this Agreement and
the Closing.
SECTION 8. Notification of Changes. The Purchaser shall notify the Company
-----------------------
upon the occurrence of any event prior to Closing Date which would cause any
representation or warranty of the Purchaser contained in this Agreement to be
false or incorrect.
SECTION 9. Termination of Agreement. (a) This Agreement shall terminate
------------------------
upon the mutual written consent of the parties, and (b) the Purchaser shall have
the right to terminate this Agreement, upon written notice to the Company, at
any time after January 31, 2002 in the event the Closing shall not have
occurred.
SECTION 10. Binding Effect. The provisions of this Agreement shall be
--------------
binding upon and shall inure to the benefit of the parties hereto, any
Indemnified Parties that are not parties hereto and the heirs, legal
representatives, successors and assigns of the parties hereto and any such
Indemnified Parties. No transfer of any Shares shall be valid unless the
transferee thereof shall have assumed the
-27-
obligations of its transferor under this Agreement (and, to the extent
applicable, the other Operative Documents) with respect to such Shares in a
written instrument delivered to the Company.
SECTION 11. Recapitalizations, Exchanges, Etc. Affecting the Shares. The
-------------------------------------------------------
provisions of this Agreement shall apply to the full extent set forth herein
with respect to any and all shares of capital stock of the Company or any
successor or assign of the Company (whether by merger, consolidation, sale of
assets or otherwise) which may be issued in respect of, in exchange for, or in
substitution of the Shares, by reason of any stock dividend, split, reverse
split, combination, recapitalization, reclassification, merger, consolidation or
otherwise.
SECTION 12. 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 the Purchaser shall
not assign any rights under this Agreement prior to the Closing Date without
the prior written consent of the Company, and any such purported assignment of
rights hereunder by the Purchaser which has not been consented to by the Company
shall be void. After the Closing Date, the rights of the Purchaser hereunder may
only be assigned in connection with a contemporaneous Transfer of Capital Stock
which is not prohibited by the Shareholders' Agreement; provided that, upon any
such assignment, the assignee shall execute and deliver a Joinder Agreement (as
defined in the Shareholders' Agreement) unless the Shareholders' Agreement
expressly does not require the assignee to do so. The Company may not assign any
rights or obligations under this Agreement without the prior written consent of
the Purchaser, and any such purported assignment of rights or obligations
hereunder by the Company which has not been consented to by the Purchaser shall
be void.
SECTION 13. Applicable Law; Waiver of Jury Trial. THIS AGREEMENT SHALL BE
------------------------------------
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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 16.
SECTION 14. Invalidity of Provisions. The invalidity or unenforceability of
------------------------
any provision of this Agreement in any jurisdiction shall not affect the
validity or enforceability of the remainder of
-28-
this Agreement in that jurisdiction or the validity or enforceability of this
Agreement, including that provision, in any other jurisdiction.
SECTION 15. Headings; Execution in Counterparts. Reproductions. The
--------------------------------------------------
headings and captions contained herein are for convenience of reference only and
shall not control or affect the meaning or construction of any provision hereof.
This Agreement may be executed in counterparts, each of which shall be deemed to
be an original and all of which together shall constitute but one and the same
instrument. Reproductions of this Agreement and all documents relating hereto,
including photocopies or copies on microfilm, microfiche or similar storage
system, shall be deemed to be duplicate originals of this Agreement. This
Agreement may be signed and delivered to the other party by facsimile
transmission; such transmission shall be deemed a valid signature. The Company
agrees that any such reproduction shall be admissible in evidence as the
original itself in any proceeding (whether or not the original is in existence).
SECTION 16. Notices. All notices, requests and other communications to any
-------
party under this Agreement shall be in writing (including facsimile or similar
writing) and shall be given to such party at its address or facsimile number as
set forth in this Section 16. 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.
(a) If to the Company:
U.S.I. Holdings Corporation
00 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxx X. Newborn, II, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(b) If to the Purchaser, to the address listed on the signature page
opposite its name or at such other address as such party shall have specified by
notice in writing to the other party in accordance with this Section 16.
(c) SECTION 17. Amendment. This Agreement may not be amended, modified or
---------
supplemented and no waivers of or consents to departures from the provisions
hereof may be given unless consented to in writing by the Purchaser and the
Company. Unless otherwise specified in such waiver or consent, a waiver or
consent given hereunder shall be effective only in the specific instance and for
the specific purpose for which given. 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.
-29-
SECTION 18. Third Party Beneficiaries. Nothing expressed or implied in this
-------------------------
Agreement is intended or shall be construed to confer upon or give to any third
party (other than any Indemnified Party) any rights or remedies against any
party hereto.
SECTION 19. Legal Expense and Certain Taxes. All sales, use, transfer,
-------------------------------
intangible, excise, documentary, stamp, recording, gross income, gross receipts
and other similar taxes or fees which may be due or payable in connection with
the consummation of the transactions contemplated by the Operative Documents
shall be paid by the Company.
SECTION 20. Certain Actions. The Company agrees that it will not adopt any
---------------
amendment to the constitutive documents of the Company or take any other action
affecting the rights, privileges or obligations of the stockholders of the
Company (in their capacity as stockholders) that could be reasonably expected to
have a disproportionately adverse effect on the Purchaser or any of its
Affiliates (unless the affected party shall have consented in writing to such
amendment or action). The provisions contained in this Section 20 and in Section
6(t) shall expire upon the closing of a Public Offering.
IN WITNESS WHEREOF, the Purchaser and the Company have executed this
Agreement as of the date first above written.
U.S.I. HOLDINGS CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman and Chief Executive
Officer
Number of Shares: 357,143 SOVEREIGN BANCORP, INC.
Purchase Price per Share: $7.00
Aggregate Purchase Price: $2,500,001
Address for Notices: 0000 Xxxxxxxxx Xxxxxxxxx By: /s/ Illegible
---------------------
Xxxxxxxxxx, Xxxxxxxxxxxx 00000 Name: Illegible
Tel: 000 000 0000 Title: SVP, Corporate
Fax: 000 000 0000 Development
Attention: Illegible
[Excluding Schedules and Exhibits]
