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SHAREHOLDERS AGREEMENT

 

SHAREHOLDERS AGREEMENT
 
THIS SHAREHOLDERS AGREEMENT (the “Agreement”) is made and entered into as of February 20, 2008 by and among those shareholders of NIS Group Co., Ltd., a Japanese kabushiki kaisha (the “Company”) listed on Schedule I hereto and that are signatories to this Agreement (collectively, “Management Shareholders”),  TPG Izumi AIV 1, L.P., a Delaware limited partnership (“AIV 1”), TPG Izumi AIV 6, L.P., a Delaware limited partnership (“AIV 6”) and TPG Izumi, L.P., a Cayman Islands limited partnership (“Izumi”; collectively with AIV 1 and AIV 6, the “Subscribers”; the Subscribers, the Management Shareholders, and any other party to this Agreement from time to time are collectively referred to as the “Parties”).  Each of the Parties to this Agreement and any other Person who shall become a Party to or agree to be bound by the terms of this Agreement after the date hereof is sometimes hereinafter referred to as a “Shareholder.”
 
 
 
 
 
 
 
 
1.1           Shareholder Obligations.  Commencing as of the Closing Date, and continuing throughout the term of this Agreement, each Shareholder unconditionally and irrevocably agrees that it shall use its best efforts to effectuate, or cause to be effectuated, to the extent permissible under the Company’s Organizational Documents and applicable Law, each of the provisions set forth in this Agreement.  Such efforts by each Shareholder shall include attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings, exercising rights to remove directors, calling shareholder meetings, submitting shareholder proposals and any other actions permissible under the Organizational Documents and applicable Law (whether in such Shareholder’s capacity as a stockholder, director, member of a Board committee or officer of the Company or otherwise).
 

 
 
 

1.1.1                      Nomination Rights.  Subscriber Parties holding a majority of the voting power of all Shares held by Subscriber Parties will be entitled to nominate, and the Board of Directors of the Company shall consist of, at least a majority of the directors of the Company (the “Subscriber Nominees”), at least one (1) of whom shall be a representative director of the Company.  Management Parties holding a majority of the voting power of all Shares held by the Management Parties will be entitled to nominate the remaining directors of the Company (the “Management Shareholder Nominees”; and, together with the Subscriber Nominees, the “Nominees”).  The initial Subscriber Nominees are: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Jun Tsusaka, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.  The initial Management Shareholder Nominee shall be ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
 
 
 
 
1.1.5                      Actions by the Shareholders.  At any meeting (whether annual or special, and at each adjourned or postponed meeting) of the Company’s shareholders, however called, or in any other circumstances (including any action sought by written consent) upon which a vote or other consent or approval is sought, each of the Shares that a Management Shareholder or Management Party beneficially owns or over which such Management Shareholder or Management Party otherwise exercises control shall be caused by them (x) to be counted as present thereat, for purposes of calculating a quorum, and in response to any other request by the Company for written consent, if any, and to be counted as having provided or denied such consent and (y) if Subscriber Parties holding a majority of the voting power of all Shares held by Subscriber Parties inform the Management Parties of their intention to vote against taking any action set forth on Exhibit A hereto, to be voted (including by written consent, if applicable) against the taking of such action; provided, that if the Management Parties inform the Subscriber Parties of their intention to vote against taking any action set forth on Exhibit A hereto, the Subscriber Parties shall vote (including by written consent, if applicable) against the taking of such action.  
 

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2.1.2                      Legal Power; Organization; Qualification of Shareholders.  Each Shareholder is a natural person or a legal entity of the type set opposite such Shareholder’s name on Schedule I hereto.  Each Shareholder who is a natural person is competent and has all requisite power and authority to execute and deliver this Agreement and to consummate the Transactions.  Each Shareholder which is not a natural person has been duly organized, and is validly existing and in good standing, under the laws of its jurisdiction of formation, has all requisite power and authority to execute and deliver this Agreement and to consummate the Transactions, and has taken all necessary corporate or other action to authorize the execution, delivery and performance of this Agreement.
 
2.1.3                      Binding Agreement.  This Agreement has been duly executed and delivered by each Shareholder and, assuming due and valid authorization, execution and delivery by the other Shareholders, this Agreement constitutes a legal, valid and binding obligation of each Shareholder, enforceable against such Shareholder in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws of general application affecting enforcement of creditors’ rights generally and (ii) the availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before which any proceeding therefor may be brought.
 
2.1.4                      No Shareholder Conflict or Default.  Neither the execution and delivery of this Agreement nor the consummation by any Shareholder of any of the Transactions will result in a violation of, or a default under, or conflict with, or require any consent, approval or notice under, any contract, trust, commitment, agreement, obligation, understanding, arrangement or restriction of any kind to which any Shareholder is a party or by which any Shareholder is bound or to which any of the Shares are subject.  Consummation by each Shareholder of the Transactions will not violate, or require any consent, approval or notice under, any provision of any judgment, order, decree, statute, law, rule or regulation applicable to any Shareholder or any of the Shares.
 
 
 
 
 

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any option, right or warrant to acquire Shares, and (b) 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 for any Shares, by combination, recapitalization, reclassification, merger, consolidation or otherwise.  In the event of any change in the capitalization of the Company, as a result of any stock split, stock dividend or stock combination, the provisions of this Agreement shall be appropriately adjusted.
 
 
4.3           Amendment; Waiver; Representatives.  This Agreement may be amended, modified, supplemented or terminated only by a written instrument signed by each of (i) the Subscriber Parties and (ii) the Management Parties.  No provision of this Agreement may be waived orally, but only by a written instrument signed by the Party against whom enforcement of such waiver is sought.  Shareholders shall be bound from and after the date of the receipt of a written notice from their respective Representative setting forth such amendment or waiver by any consent authorized by this Section 4.3, whether or not the Shares shall have been marked to indicate such consent; no alteration, modification or impairment shall be implied by reason of any previous waiver, extension of time, delay or omission in exercise, or other indulgence.  For purposes of this Agreement, the Parties hereto shall designate and appoint representatives (each, a “Representative”) as provided in this Section 4.3.  The Subscriber Parties hereby designate and appoint ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (or any successor designated in writing by the Subscriber Parties holding Shares that constitute, on a Fully Diluted basis, a majority of the voting power of all Shares held by all of the Subscriber Parties) as Representative on behalf of the Subscriber Parties; and the Management Parties hereby designate and appoint ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (or any successor designated in writing by Management Parties holding Shares that constitute, on a Fully Diluted basis, a majority of the voting power Shares held by all of the Management Parties) as Representative on behalf of the Management Parties.  Each Representative shall have the authority to receive any notices, settle any claims, agree to any amendments, and grant any consents or waivers on behalf of the Parties that such Representative represents.  The Parties hereto shall be entitled to deal exclusively with the respective Representatives with respect to matters arising out of this Agreement, and the Parties hereto shall be entitled to deliver any notices to the respective Representatives and rely on any action of the respective Representatives with respect to actions taken under this Agreement on behalf of the Parties hereto.
 
 
 

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Shareholders may request regarding such holder’s beneficial ownership of shares of any class of the Company’s Capital Stock.
 
 
 
 
If to any Subscriber Party, to:
 
c/o TPG Capital, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ #▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Legal Counsel
Facsimile No.: ▇▇▇.▇▇▇.▇▇▇▇
Telephone: ▇▇▇.▇▇▇.▇▇▇▇

with a copy (which shall not constitute notice) to:
 
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
Tokyo-to Minato-ku ▇▇▇▇▇▇▇▇ ▇-▇-▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ 106-6021
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone No.: ▇▇▇.▇▇▇▇.▇▇▇▇
Facsimile No.: 813.3568.2626

If to any Management Party, to:
 
Shuho Co., Ltd.
▇▇▇▇▇ Park Building 3F
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇
▇-▇, ▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇-▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇-▇▇▇▇
▇▇▇▇▇

with a copy (which shall not constitute notice) to:
 

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Nissin Building Co., Ltd.
NIS Group Head Office Building 4th Floor
7-6, 5-chome, Chifune-machi
Matsuyama, Ehime 790-8584
Japan

 
 
 
 
5.4           Place of Arbitration.  The place of arbitration shall be Singapore.  The procedural Law of the arbitration shall be the Law of the State of New York applicable to international arbitration as the subject matter of this arbitration agreement relates to more than one country.
 
 
5.5.1                      The Award shall be final and binding upon the Parties as from the date rendered, and shall be the sole and exclusive remedy between the Parties regarding any Disputes submitted to the Tribunal.  Judgment upon any Award may be entered in any court having jurisdiction thereof.
 
5.5.2                      The Parties waive any rights of application or appeal to any court or tribunal of competent jurisdiction to the fullest extent permitted by Law in connection with any question of Law arising in the course of arbitration or with respect to any Award made except for actions to enforce this Agreement to arbitrate or an arbitral Award and except for actions seeking interim or other provisional relief to prevent irreparable harm or in aid of arbitration proceedings in any court of competent jurisdiction.
 

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(a)           When a reference is made in this Agreement to a section or article, such reference shall be to a section or article of this Agreement unless otherwise clearly indicated to the contrary.  Whenever the words “include”, “includes” or “including” are used in this Agreement they shall be deemed to be followed by the words “without limitation.”  The words “hereof”, “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, paragraph, exhibit and schedule references are to the articles, sections, paragraphs, exhibits and schedules of this Agreement unless otherwise specified.  The meaning assigned to each term defined herein shall be equally applicable to both the singular and the plural forms of such term, and words denoting any gender shall include all genders.  Where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning.
 
(b)           A reference to any Party to this Agreement or any other agreement or document shall include such Party’s successors and permitted assigns.
 
(c)           A reference to any legislation or to any provision of any legislation shall include any amendment to, and any modification or re-enactment thereof, any legislative provision substituted therefor and all regulations and statutory instruments issued thereunder or pursuant thereto.
 
(d)           The Parties have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement.
 
 

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“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person.
 
“Agreement” shall have the meaning set forth in the preamble to this Agreement.
 
“AIV 1” shall have the meaning forth in the preamble to this Agreement.
 
“AIV 6” shall have the meaning forth in the preamble to this Agreement.
 
“Award” shall have the meaning set forth in Section 5.3.
 
“Board” shall have the meaning set forth in Section 1.1.1.
 
“Capital Stock” means any and all shares (including the Shares), interests, rights to purchase (other than convertible or exchangeable indebtedness that is not itself otherwise capital stock), warrants, options, participations or other equivalents of or interests (however designated) in stock issued by that corporation.
 
“Closing Date” means the date of the closing of the Investment Agreement.
 
“Company” shall have the meaning set forth in the recitals to this Agreement.
 
“control” means the power to direct the management and policies of a Person, directly or through one or more intermediaries, whether through the ownership of voting securities, by contract, or otherwise, provided, that with respect to ownership interests the Company and its Subsidiaries, a beneficial owner of 10% or more of the total voting power normally entitled to vote in the election of directors, managers or trustees, as applicable, shall for such purposes be deemed to possess control.
 
“Consent” means any consent, approval, authorization, waiver, permit, grant, franchise, concession, agreement, license, certificate, exemption, order, registration, declaration, filing, report or notice of, with or to any Person.
 
“Disputes” shall have the meaning set forth in Section 5.1.
 
“Equity Interests” means Capital Stock or partnership, participation or member­ship interests and all warrants, options or other rights to acquire Capital Stock or partnership, participation or membership interests or units (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock or partnership, participation or membership interests or units).
 
“Fully Diluted” means at any time, with respect to Shares and without duplication, (a) all Shares then outstanding and (b) all shares of common stock issuable upon the exercise of all options, warrants, convertible securities, exchangeable securities and other outstanding rights to acquire common stock, with or without consideration, but only to the extent that the applicable Person is then entitled to exercise such rights to acquire common stock pursuant to the terms of such rights.
 
“Governmental Approval” means any Consent of, with or to any Governmental Authority.
 

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“Governmental Authority” means any nation or government, any state, prefecture, city, region or other political subdivision thereof; any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including, without limitation, any government authority, agency, department, board, commission or instrumentality of any nation or any political subdivision thereof; any court, tribunal or arbitrator; and any self-regulatory organization.
 
“ICC” shall have the meaning set forth in Section 5.1.
 
“ICC Rules” shall have the meaning set forth in Section 5.1.
 
“Investment Agreement” shall have the meaning set forth in the recitals to this Agreement.
 
“Izumi” shall have the meaning forth in the preamble to this Agreement.
 
“Law” means all applicable provisions of all (a) constitutions, treaties, statutes, laws, codes, rules, regulations, ordinances or orders of any Governmental Authority, (b) Governmental Approvals and (c) orders, decisions, injunctions, judgments, awards and decrees of or agreements with any Governmental Authority.
 
“Management Parties” means the Management Shareholders and their Affiliates (and with respect to Management Shareholders who are natural persons their respective spouses, any direct or adopted lineal descendants and ancestors and any trusts solely for the benefit of any or all of the foregoing).
 
“Management Shareholder Nominees” shall have the meaning set forth in Section 1.1.1.
 
“Management Shareholders” shall have the meaning set forth in the preamble to this Agreement.
 
“Nominees” shall have the meaning set forth in Section 1.1.1.
 
“Organizational Documents” means, as to any Person, its certificate or articles of incorporation, by-laws and other organizational documents.
 
“Parties” shall have the meaning set forth in the preamble to this Agreement.
 
“Person” or “person” means any corporation, individual, limited liability company, limited partnership, joint stock company, joint venture, partnership, unincorporated association, governmental regulatory entity, country, state or political subdivision thereof, trust, municipality or other entity.
 
“Representative” shall have the meaning set forth in Section 4.3.
 
“Shareholder” shall have the meaning set forth in the preamble to this Agreement.
 
“Shares” means shares of common stock of the Company.
 
“Subsidiary,” with respect to any Person, means (1) a corporation a majority of whose Equity Interests with voting power, under ordinary circumstances, to elect directors is
 

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at the time, directly or indirectly, owned by such Person, by such Person and one or more Subsidiar­ies of such Person or by one or more Subsidiaries of such Person, and (2) any other Person (other than a corporation) in which such Person, one or more Subsidiaries of such Person, or such Person and one or more Subsidiaries of such Person, directly or indirectly, at the date of determination thereof has a majority ownership interest, or (3) a partnership in which such Person or a Subsidiary of such Person is, at the time, a general partner and in which such Person, directly or indirectly, at the date of determination thereof has a majority ownership interest.  Unless the context requires otherwise, Subsidiary means each direct and indirect Subsidiary of Issuer.
 
“Subscriber Parties” means Subscribers and their members and Affiliates and their limited partners, general partners, principals, shareholders and Affiliates.
 
“Subscribers” shall have the meaning set forth in the preamble to this Agreement.
 
“Terminating Nominee” shall have the meaning set forth in Section 1.1.3.
 
 “Transactions” means all the transactions provided for or contemplated by the Investment Agreement.
 
“Tribunal” shall have the meaning set forth in Section 5.2.
 
“Vision” shall have the meaning forth in the recitals to this Agreement.
 
“Warrants” shall have the meaning set forth in the recitals to this Agreement.
 

 
[signature page follows]
 

 

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            SUBSCRIBERS

            TPG ▇▇▇▇▇ ▇▇▇ ▇, ▇.▇.

         By:       TPG ASIA GENPAR V, L.P.
               Its General Partner

           By:      TPG ASIA ADVISORS V, INC.


            By:  /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name:  ▇▇▇▇▇ ▇. ▇▇▇▇
Title:    Vice President and Secretary



            TPG ▇▇▇▇▇ ▇▇▇ ▇, ▇.▇.

            By:       NEWBRIDGE ASIA GENPAR IV, L.P.
             Its General Partner

                 By:     NEWBRIDGE ASIA ADVISORS IV, INC.

 
By:  /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name:  ▇▇▇▇▇ ▇. ▇▇▇▇
Title:    Vice President and Secretary


            TPG IZUMI, L.P.

              By:      TPG ASIA GENPAR V, L.P.
               Its General Partner

               By:     TPG ASIA ADVISORS V, INC.

 
By:  /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name:  ▇▇▇▇▇ ▇. ▇▇▇▇
Title:    Vice President and Secretary

[signatures continued on next page]
 
 
[Shareholders Agreement] 
 
 
MANAGEMENT SHAREHOLDERS
 
 
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
 
 
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
 
 
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
 
 
NISSIN BUILDING CO., LTD.
 
 
By:  /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Name:  ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:    President and Representative Director
 
 
SHUHO CO., LTD.
 
 
By:  /s/ ▇▇▇▇ ▇▇▇▇▇
Name:  ▇▇▇▇ ▇▇▇▇▇
Title:    President and Representative Director

 
 
[Shareholders Agreement] 
 


EXHIBIT A
 

 
MATTERS WITH RESPECT TO WHICH MANAGEMENT PARTIES
 
SHALL VOTE WITH THE SUBSCRIBERPARTIES
 

 
 
1.
Revisions to the Articles of Incorporation of the Company affecting the rights of the Warrants.
 
 
2.
Changes to the capital structure of the Company, including, without limitation, any of the following:
 
 
a.
filing for bankruptcy, liquidation, or similar restructuring;
 
 
b.
issuance of any securities by the Company, including warrants, options and any instrument that is convertible into, or exchangeable for, securities of the Company;
 
 
c.
mergers or acquisitions involving the Company;
 
 
d.
substantial disposal of assets by the Company;
 
 
e.
related party transactions involving the Company; and
 
 
f.
decisions regarding dividend policy.
 

 

 
 
 

SCHEDULE I
 

 
MANAGEMENT SHAREHOLDERS
 

 
Shareholder
Number of Shares
Beneficially
Owned
Individual/Entity Type
     
▇▇▇▇▇ ▇▇▇▇▇▇▇
3,970,137
Individual
     
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
4,481,947
Individual
     
▇▇▇▇ ▇▇▇▇▇▇▇
737,426
Individual
     
Nissin Building Co., Ltd.
16,785,100
Japanese kabushiki kaisha
     
Shuho Co., Ltd.
16,314,763
Japanese kabushiki kaisha

 

 

 


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Filed: March 3rd, 2008

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