EXHIBIT A
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT, dated as of April 2, 1996 (the "Agreement"), by and
among THE TRAVELERS INSURANCE GROUP INC., a Connecticut corporation ("TIGI"),
TRAVELERS/AETNA PROPERTY CASUALTY CORP., a Delaware corporation ("TAP"), X.X.
XXXXXX CAPITAL CORPORATION, a New York corporation ("Xxxxxx"), AETNA LIFE AND
CASUALTY COMPANY, a Connecticut stock insurance corporation ("Aetna"), THE
TRIDENT PARTNERSHIP L.P., a Cayman Islands exempted limited partnership
("Trident"), and FUND AMERICAN ENTERPRISES HOLDINGS, INC., a Delaware
corporation ("Fund American"). Capitalized terms used but not otherwise defined
shall have the meanings ascribed to them in Section 12 hereof.
W I T N E S S E T H:
WHEREAS, the parties hereto desire to provide for, among other things,
certain matters concerning the management of TAP, the ownership and transfer of
the Common Stock and certain registration rights.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the parties, intending to be legally
bound hereby, hereto agree as follows:
SECTION 1. BOARD OF DIRECTORS. From and after the date hereof until the
termination of this Agreement pursuant to Section 11 hereof:
(a) So long as the Minority Stockholders, in the aggregate, shall continue
to beneficially own at least 52% of the shares of Class A Common Stock purchased
by the Minority Stockholders pursuant to the Stock Purchase Agreements, Trident
shall have the right to designate one nominee to the Board of Directors of TAP;
Provided that so long as (i) Xxxxxx or one of its Affiliates is a financial
advisor to Trident and (ii) Xxxxxxx Xxxxxxx ("Xxxxxxx") is an employee of
Xxxxxx, Xxxxxxx shall be nominated by Trident to the Board of Directors of TAP,
and any member of the Travelers Affiliated Group that may, at such time, hold
shares of Common Stock, shall vote the shares of Common Stock of TAP held by
them in favor of Xxxxxxx.
(b) If the requirements of the proviso contained in Section 1(a) hereof are
no longer met, then any member of the Travelers Affiliated Group that may, at
such time, hold shares
of Common Stock shall vote the shares of Common Stock of TAP held by them in
favor of another nominee designated by Trident only if such other nominee is
found to be reasonably satisfactory to both the Board of Directors of TAP and
the members of the Travelers Affiliated Group that, at such time, hold shares of
Common Stock.
(c) The power to nominate a director for election pursuant to this Section
1 shall include the power to remove such director. If a vacancy is created by
reason of the death, removal or resignation of a nominee, Trident shall
designate a replacement to be appointed by the remaining directors then in
office to fill such vacancy until the next annual meeting of the stockholders of
TAP. If the replacement is found to be reasonably satisfactory to both the Board
of Directors of TAP and the members of the Travelers Affiliated Group that, at
such time, hold shares of Common Stock, then such members of the Travelers
Affiliated Group that may, at such time, hold shares of Common Stock, shall vote
the shares of Common Stock of TAP held by them in favor of the replacement.
(d) Notwithstanding the foregoing, the provisions of this Section 1 shall
not apply and shall be of no force or effect (i) to the extent that the same
conflict with or are prohibited by any present or future applicable law, rule or
regulation or conflict with any present or future rule, regulation or guideline
of any securities exchange or interdealer quotation system on or through which
any securities of TAP are listed, traded or quoted and (ii) from and after such
time that a Change of Control of Trident or Xxxxxx shall have occurred.
SECTION 2. APPROVAL OF FUNDAMENTAL EVENTS.
(a) Subject to the provisions of Section 2(c) below, so long as the
Minority Stockholders shall continue to beneficially own, in the aggregate, at
least 50% of the shares of Class A Common Stock purchased by them pursuant to
the Stock Purchase Agreements, TAP will not take any of the following actions
without the affirmative vote of at least a majority of the shares of Class A
Common Stock then beneficially owned, in the aggregate, by the Minority
Stockholders; provided, however, that such consent shall not be required in any
circumstance where any of the following actions are required to be taken by any
state insurance department or other regulatory body having jurisdiction over the
operations of TIGI, TAP or any direct or indirect subsidiary of TAP:
(i) the liquidation, dissolution or winding-up of TAP or any
Material Subsidiary (as defined below) of TAP that is not a direct or
indirect wholly owned subsidiary of TAP;
(ii) a sale or other disposition of all or substantially all of
the assets of TAP or any Material Subsidiary (as defined below) of
TAP, other than to TAP or to a direct or indirect wholly owned
subsidiary of TAP;
(iii) the merger or consolidation of TAP or any Material
Subsidiary of TAP, other than any such merger or consolidation between
or among any of TAP (so long as TAP shall be the surviving
corporation) and any wholly owned direct or indirect subsidiary of
TAP;
(iv) any affirmative action that would result in a fundamental
change in the nature of the business conducted by TAP or any Material
Subsidiary of TAP, other than actions compelled by law, rule,
regulation, order or decree;
(v) the entry into by TAP or a Material Subsidiary of TAP of any
material transaction or series of related transactions with an
Affiliate of TAP or an Affiliate of any Material Subsidiary of TAP,
other than (A) transactions which are on terms substantially the same
as or more favorable to TAP than those that would be available from an
unaffiliated third party, (B) transactions between or among any of TAP
and its direct or indirect subsidiaries, (C) the issuance, sale,
repurchase or redemption of any indebtedness or preferred stock of TAP
in accordance with the terms of any agreements or instruments
governing or relating to such indebtedness or preferred stock, (D) as
specifically set forth in or otherwise described in this Agreement,
the Stock Purchase Agreements and the Servicing Agreements; provided
that, in the case of clause (A) above (if such transaction involves in
excess of $20 million) or in the case of clause (C) above (regardless
of the valuation of the transaction), the terms of such transaction or
series of related transactions shall have been previously disclosed to
the Board of Directors of TAP; and provided further that transactions
between TAP or a Material Subsidiary of TAP with an Affiliate thereof
(except for transactions of the type described in clauses (B) or (D)
above) that are not material individually shall be on terms that are
fair and reasonable to TAP when considered
in the aggregate with all other transactions with such Affiliates that
are not material individually; and
(vi) any amendment to the restated certificate of incorporation
or restated by-laws of TAP which adversely affects the Minority
Stockholders' rights pursuant to this Agreement.
(b) For purposes hereof, a Material Subsidiary of TAP means a subsidiary of
TAP which, together with its subsidiaries, meets any of the following
conditions:
(i) TAP's and its other subsidiaries' investments in and advances
to the subsidiary exceed 10 percent of the total assets of TAP and its
subsidiaries consolidated as of the end of the most recently completed
fiscal quarter for which financial information is available;
(ii) TAP's and its other subsidiaries' proportionate share of the
total assets (after intercompany eliminations) of the subsidiary
exceeds 10 percent of the total assets of TAP and its subsidiaries
consolidated as of the end of the most recently completed fiscal
quarter for which financial information is available; or
(iii) TAP's and its subsidiaries' equity in the income from
continuing operations before income taxes, extraordinary items and
cumulative effect of a change in accounting principle of the
subsidiary exceeds 10 percent of such income of TAP and its
subsidiaries consolidated for the most recently completed fiscal
quarter for which financial information is available.
(c) The provisions of this Section 2 shall cease to have any further force
or effect on and after the later to occur of (i) the consummation of an initial
public offering of shares of Common Stock or any transaction or event as a
result of which any Common Stock is listed on a national securities exchange or
registered under Section 12 of the Exchange Act (an "Initial Public offering")
and (ii) the expiration or early termination of the Restricted Period (as
defined below). In addition, the provisions of this Section 2 shall not apply
and shall be of no force or effect to the extent that the same is prohibited by
any present or future applicable law, rule or regulation or conflicts with any
present or future rule, regulation or guideline of any securities exchange or
interdealer quotation system on or through which any securities of TAP are
listed, traded or quoted.
SECTION 3. RESTRICTIONS ON TRANSFER OF SHARES.
(a) Members of the Travelers Affiliated Group shall have the absolute right
to transfer shares of Common Stock, subject to the provisions of Section 3(h)
hereof.
(b) Each of the Minority Stockholders hereby agree that for a period of
eighteen (18) months from the date hereof (subject to early termination pursuant
to Section 3(h)(ii), the "Restricted Period"), it will not, directly or
indirectly, offer, sell, assign, transfer, convey, pledge, hypothecate, encumber
or otherwise dispose of any or all of the Shares or any interest therein except
(i) to a Permitted Transferee or (ii) as otherwise may be explicitly provided
for in this Agreement.
If at any time a Minority Stockholder must dispose of any or all of the
Shares to comply with applicable laws or to satisfy governmental regulatory
requirements (including, without limitation, bank and insurance regulatory
requirements) or any order or decree of any governmental authority applicable to
such Minority Stockholder (including, without limitation, banking or insurance
authorities), such Minority Stockholder shall first offer such shares for sale
to TAP, and, if TAP determines riot to purchase such shares of Common Stock, to
TIGI (or another member or members of the Travelers Affiliated Group), by
written notice which shall set forth the number of shares of Common Stock to be
sold by such Minority Stockholder, the price at which they are offered, and any
other terms and conditions of the offer. If TAP or TIGI (or such other member or
members of the Travelers Affiliated Group), as the case may be, fails to accept
such offer or rejects such offer within 30 days after receipt of such notice,
then notwithstanding the restrictions of this Section 3(b), such Minority
Stockholder may, subject to the provisions of the Securities Act of 1933, as
amended (the "Securities Act"), sell such shares of Common Stock to a third
party purchaser (a "Third Party Purchaser") on terms that are no less favorable
to such Minority Stockholder than the terms offered to TAP or TIGI (or such
other member or members of the Travelers Affiliated Group), as the case may be;
provided, however, that the foregoing terms, conditions and waiting periods are
subject to the terms of any judicial, regulatory or administrative judgment or
decree pursuant to which such Minority Stockholder is disposing of any or all of
the Shares; provided further, that if such Third Party Purchaser shall be (i) a
company that is primarily engaged in the property and casualty insurance
business in the United States, or (ii) a company a "significant subsidiary" of
which (as such term is defined in Rule 1-02 of Regulation S-X under the
Securities Act) is pri
xxxxxx engaged in the property and casualty insurance business in the United
States, or (iii) a person who "controls" such a company within the meaning of
Rule 1-02 of Regulation S-X under the Securities Act (each, a "Competitor"),
then such Minority Stockholder shall notify TAP and TIGI (or such other member
or members of the Travelers Affiliated Group) of its intention to sell such
shares of Common Stock to a Competitor, and TAP and TIGI (or such other member
or members of the Travelers Affiliated Group), as the case may be, shall have an
additional 15 days during which any of them may agree to purchase such shares of
Common Stock from such Minority Stockholder at the price per share offered to
such Minority Stockholder by the Competitor.
No transfer of any or all of the Shares may be made by a Minority
Stockholder to any Permitted Transferee unless (i) such transfer is made in
conformity with all applicable requirements of federal and state securities laws
and (ii) such Permitted Transferee shall have agreed in writing that it, as a
stockholder, and the shares of Common Stock it acquires, shall be bound by and
be entitled to the benefits of all the provisions of this Agreement applicable
to the shares of Common Stock acquired by such Permitted Transferee. Any
purported transfer of any or all of the Shares without compliance with the
applicable provisions of this Agreement shall be void and of no effect, and the
purported transferee shall have no rights hereunder. In the event of such
noncomplying transfer, TAP shall not transfer any such shares of Common Stock on
its books or recognize the purported transferee as a stockholder for any purpose
until all applicable provisions of this Agreement have been complied with.
(c) Each certificate for Shares and each certificate issued in exchange for
or upon transfer of Shares shall bear a legend in substantially the following
form until such shares of Common Stock are sold through a public offering or
are, based on an opinion of counsel satisfactory to TAP, otherwise freely
tradeable under the Securities Act:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not be
sold or otherwise transferred absent such registration or an opinion of
counsel satisfactory to Travelers/Aetna Property Casualty Corp. ("TAP")
that such registration is not required. The transfer of the securities
represented by this certificate is subject to the conditions specified
in the Shareholders Agreement, dated as of April 2, 1996, among
the stockholders listed therein, a copy of which has been placed on
file by TAP at its principal place of business and its registered
office. TAP reserves the right to refuse the transfer of such
securities until such conditions have been fulfilled with respect to
such transfer."
TAP agrees that the counsel referred to in this Section 3(c) may be an
employee of a Minority Stockholder.
(d) Each Minority Stockholder agrees that in the event of a public offering
of shares of Common Stock or any securities convertible into or exchangeable for
shares of Common Stock, including, but not limited to, an initial public
offering of shares of Common Stock, it shall, if and to the extent requested of
such Minority Stockholders and any member of the Travelers Affiliated Group
owning shares of Common Stock by the managing underwriter of any such offering,
agree not to offer, sell, contract to sell, or grant any options or warrants to
purchase or otherwise dispose of any or all of the Shares or any securities into
or for which the Shares are convertible or exchangeable (other than pursuant to
such public offering), for such period (not to exceed 180 days from the date of
the final prospectus filed by TAP with the Securities and Exchange Commission
(the "Commission")) as may be requested by the managing underwriter, except with
the prior written consent of the managing underwriter of such public offering;
provided that substantially the same restrictions are applicable to each member
of the Travelers Affiliated Group who then owns shares of Common Stock.
(e) From and after the expiration or early termination of the Restricted
Period, the restrictions imposed by the foregoing provisions of this Section 3
(other than the second paragraph of Section 3(b)) shall expire. Thereafter, the
Minority Stockholders shall have the absolute right to transfer the Shares
subject only to (i) the right of first refusal of TAP and the members of the
Travelers Affiliated Group pursuant to Sections 3(b) and 3(f) hereof, (ii) the
drag along rights of the members of the Travelers Affiliated Group pursuant to
Section 3(g) hereof and (iii) compliance with all applicable laws, rules and
regulations.
(f) From and after the expiration or early termination of the Restricted
Period, if at any time a Minority Stockholder determines to sell any or all of
the Shares (other than to a Permitted Transferee) such Minority Stockholder
shall offer (the "Offer") such shares of Common Stock (the "Offered
Shares") for sale to TAP, and, if TAP determines not to purchase all of the
Offered Shares, to TIGI (or another member or members of the Travelers
Affiliated Group), stating the number of Shares subject to the Offer, the price
at which they are offered and any other terms and conditions of the Offer, and
TAP and/or TIGI (or such other member or members of the Travelers Affiliated
Group), as the case may be, shall then have the option to purchase, at the price
and on the terms offered or on such other terms and conditions as the parties
may agree upon, all of the Offered Shares. The option shall be exercisable by
notice given to such Minority Stockholder within 40 days after receipt of the
notice from such Minority Stockholder. If within that 40-day period TAP or TIGI
(or such other member or members of the Travelers Affiliated Group) does not
exercise the option to purchase all of the Offered Shares, at any time within 90
days (or such longer period as is necessary to obtain requisite governmental or
regulatory approvals which are being diligently pursued in good faith) after the
expiration of such option, such Minority Stockholder may, subject to the
provisions of the Securities Act, transfer the Offered Shares to a Third Party
Purchaser on terms that are no less favorable to such Minority Stockholder than
the terms offered to TAP or TIGI (or such other member or members of the
Travelers Affiliated Group); provided that if such transfer is not completed
within such 90-day period (or such longer period during which approvals are
being pursued), the Offered Shares shall again be subject to this Section 3(f)
and such Minority Stockholder may not sell, assign, transfer, convey, pledge,
hypothecate, encumber or otherwise dispose of any shares of Common Stock
pursuant to this Section 3(f) for a period of 3 months after the expiration of
such period; provided further, that if such Third Party Purchaser shall be a
Competitor, then such Minority Stockholder shall notify TAP and TIGI (or such
other member or members of the Travelers Affiliated Group) of its intention to
sell such shares of Common stock to a Competitor, and TAP and TIGI (or such
other member or members of the Travelers Affiliated Group), as the case may be,
shall have an additional 15 days during which any of them may agree to purchase
such shares of Common Stock from such Minority Stockholder at the price per
share offered to such Minority Stockholder by the Competitor.
Notwithstanding the foregoing, nothing in this Section 3(f) shall afford
any rights to TAP or any member of the Travelers Affiliated Group in the case of
a sale of any shares of Common Stock by a Minority Stockholder (i) pursuant to a
registered public offering of Common Stock, (ii) pursuant to Rule 144 under the
Securities Act or (iii) to an Affiliate of such Minority Stockholder.
(g) Right to Compel Transfer. If at any time prior to an Initial Public
Offering any one or more members of the Travelers Affiliated Group (the
"Travelers Sellers") determine to sell shares of Common Stock, as a result of
which the members of the Travelers Affiliated Group shall own, in the aggregate,
less than 50% of the voting power of the Outstanding Voting Stock at such time,
the Travelers Sellers may require all of the Minority Stockholders to sell, and
each Minority Stockholder hereby agrees to sell, that number of shares
calculated as set forth below for a purchase price per share of Common Stock and
on terms and conditions no less favorable than those agreed to by the Travelers
Sellers in connection with the sale of shares of Common Stock by the Travelers
Sellers. For purposes of this Section 3(g), the maximum number-of shares of
Common Stock that all Minority Stockholders in the aggregate shall be required
to sell pursuant hereto shall equal the product of (i) the total number of
shares of Common Stock then beneficially owned by all Minority Stockholders in
the aggregate, multiplied by (ii) a fraction, the numerator of which shall be
the total number of shares of Common Stock proposed to be sold by the Travelers
Sellers, and the denominator of which shall be the total number of shares of
Common Stock owned by all of the members of the Travelers Affiliated Group and
the number of shares of Common Stock that shall be sold by each Minority
Stockholder shall equal the product of (x) the number of shares to be sold by
all Minority Stockholders in the aggregate multiplied by (y) a fraction, the
numerator of which shall be the total number of shares of Common Stock then
beneficially owned by such Minority Stockholder and the denominator of which
shall be the total number of shares of Common Stock then beneficially owned in
the aggregate by all Minority Stockholders.
(h) Right to Inclusion, Other Rights.
(i) If at any time for any reason, the Travelers Sellers sell or
otherwise transfer or enter into an agreement to sell or otherwise
transfer shares of Common Stock, and after giving effect to such sale
or transfer the Travelers Affiliated Group would own, in the
aggregate, less than 80% of the outstanding Common Stock at such time,
subject to the provisions of paragraph (iii) below, prior to effecting
any sale or transfer of such shares of Common Stock each Minority
Stockholder may require the Travelers Sellers to include in such sale
or transfer on the same terms such number of Shares owned by such
Minority Stockholder and requested by such Minority Stockholder to be
included therein, but not to exceed that number of Shares equal to the
product of (x) the total number of Shares
then beneficially owned by such Minority Stockholder, multiplied by
(y) a fraction, the numerator of which shall be the total number of
shares of Common Stock proposed to be sold or transferred by the
Travelers Sellers, and the denominator of which shall be the total
number of shares of Common Stock owned by all of the members of the
Travelers Affiliated Group (it being understood that the issuance by
TAP of additional shares of Common Stock shall not be deemed to be a
sale or transfer of shares of Common Stock by the Travelers Sellers
for purposes of this Section 3(h)(i)). Prior to the occurrence of a
sale, transfer or agreement described in this Section 3(h)(i), the
Travelers Sellers shall give prompt notice of their intention to
effect such sale, transfer or agreement to the Minority Stockholders.
(ii) If at any time for any reason the Travelers Sellers sell or
otherwise transfer or enter into an agreement to sell, or otherwise
transfer, shares of Common Stock, and after giving effect to such sale
or transfer the members of the Travelers Affiliated Group would own,
in the aggregate, less than 50% of the outstanding Common Stock at
such time, each Minority Stockholder may require the Travelers Sellers
to include in such sale or transfer on the same terms all of such
Minority Stockholder's Shares. If at any time for any reason, the
members of the Travelers Affiliated Group cease to beneficially own,
in the aggregate, more than 50% of the outstanding Common Stock then
(A) the Restricted Period shall automatically terminate upon the
consummation of the event which causes such ownership level and (B)
all restrictions imposed by this Section 3 on the transferability of
the Shares of any Minority Stockholder shall expire upon the
consummation of the event which causes such ownership level (it being
understood that the issuance by TAP of additional shares of Common
Stock shall not be deemed to be a sale or transfer of shares of Common
Stock by the Travelers Sellers for purposes of this Section 3(h)(ii)).
Prior to the occurrence of a sale, transfer or agreement described in
this Section 3(h)(ii), the Travelers Sellers shall give prompt notice
of their intention to effect such sale, transfer or agreement to the
Minority Stockholders.
(iii) In the case of any sale or other transfer described in
Section 3(h)(i) hereof where the number of shares of Common Stock
desired to be sold or otherwise transferred by the Travelers Sellers
plus the number of the Shares desired to be sold or otherwise
transferred by
all of the Minority Stockholders exceeds the number of shares of
Common Stock desired to be purchased by such third party or parties
(or which can be sold pursuant to a public offering), the shares of
Common Stock and Shares to be sold or otherwise transferred to such
third party or pursuant to such public offering shall include first,
the shares of Common Stock to be sold by the Travelers Sellers and the
Minority Stockholders, respectively, allocated pro rata in proportion
to the total number of shares of Common Stock desired to be sold or
transferred by the members of the Travelers Affiliated Group, in the
aggregate, and the total number of Shares desired to be sold or
transferred by the Minority Stockholders, in the aggregate and second,
any shares of Common Stock to be sold or otherwise transferred by
others, allocated pro rata in proportion to the number of shares of
Common Stock desired to be sold by such others.
(i) Rights Upon Transfer. A transferee of Shares from a Minority
Stockholder shall not succeed to the rights of such Minority Stockholder
pursuant to Section 1 hereof, except in the case of a transferee that is an
Affiliate of such Minority Stockholder. A Minority Stockholder may transfer the
rights of such Minority Stockholder pursuant to Section 4 hereof (x) to not more
than three (3) transferees and (y) only to the extent that any such rights
remain under Section 4(b) hereof, taking into consideration any requests which
have been made to register shares of Common Stock under the Securities Act
pursuant to such Section 4(b) prior to such transfer. A transferee of shares
from a Minority Stockholder shall succeed to the rights of such Minority
Stockholder pursuant to Section 3(h) hereof only if there has not been an
Initial Public Offering and the requirements of subclause (x) in the immediately
preceding sentence have been met; provided that, for all purposes of such
provisions referred to in this sentence and the immediately preceding sentence
such transferee shall become a Minority Stockholder and all references therein
to Minority Stockholders shall include such transferee.
(j) Minority Stockholder Put/Registration Option.
(i) If (I) prior to the fifth anniversary of the date of this
Agreement there shall not have occurred an Initial Public Offering and
(II) on such fifth anniversary any Minority Stockholder then continues
to own 50% or more of the shares of Common Stock it acquired pursuant
to its respective Stock Purchase Agreement (without subtracting, for
purposes of determining whether such percentage is so
owned, any shares of Common Stock that such Minority Stockholder has
transferred to an Affiliate or that such Minority Stockholder was
required to transfer pursuant to Section 3(g) hereof), then such
Minority Stockholder shall have the one-time right (with the election
of alternative W or (y) to be made uniformly for all requesting
Minority Stockholders by TIGI) to either (x) require TIGI or TAP, as
TIGI may determine (the "Purchaser"), to purchase pursuant to this
Section 3(j) all, but not less than all, of such shares then owned and
originally purchased by such Minority Stockholder pursuant to its
respective Stock Purchase Agreement (the "Put Option Shares") or (y)
request a registration of the Put Option Shares (a registration
request pursuant to this clause (y) shall not be deemed to be one of
the four demand registrations otherwise available to the Minority
Stockholders pursuant to Section 4(b)(i) hereof) in accordance with
the registration procedures and other provisions set forth in Sections
4(c)-(g) hereof.
(ii) A Minority Stockholder may exercise its rights under this
Section 3(j) by giving TIGI and TAP written notice, not earlier than
30 days prior to the fifth anniversary of the date of this Agreement
and not later than 30 days after the fifth anniversary of the date of
this Agreement, specifying the number of Put Option Shares held by
such Minority Stockholder (and in the event that TIGI later elects the
option referred to in clause (x) of Section 3(j)(i) hereof, the
desired Date of Purchase (as defined below)). The process of selecting
and determining the Independent Appraiser and determining the Purchase
Price Per Share shall begin immediately following the Notice Date.
Within 20 days after receipt of such notice from such Minority
Stockholder, subject to any extension required in connection with the
selection of the Independent Appraiser and/or reasonably required by
the Independent Appraiser in connection with its determination of the
Purchase Price Per Share, TIGI shall notify such Minority Stockholder
in writing whether, assuming TIGI elects the option referred to in
clause (x) of the preceding paragraph, TIGI or TAP will be the
Purchaser and the Purchase Price Per Share. Unless either (1) a
Minority Stockholder notifies TIGI prior to the Date of Purchase (as
defined below) of its intention not to sell all of its Put Option
Shares, in which case such Minority Stockholder shall have no further
rights pursuant to this Section 3(j) or (2) the Purchaser notifies a
Minority Stockholder prior to the Date of Purchase of its intention
not to purchase all of
such Minority Stockholder's Put Option Shares, in which case such
Minority Stockholder may immediately request a registration of all or
a portion of such Put Option Shares in accordance with clause (y) of
Subsection 3(j)(i) hereof, the Put Option Shares shall be purchased,
at a per share purchase price equal to the Purchase Price Per Share,
on the Date of Purchase.
(iii) The purchase of any Put Option Shares required to be made
pursuant to this Section 3(j) shall take place at the offices of the
Purchaser indicated in Section 12(a) hereof, or at such place in New
York City as the Minority Stockholder and the Purchaser shall agree,
at 9:00 a.m., New York time, on the Business Day specified in the
Minority Stockholder's notice given under Section 3(j)(ii) hereof (the
"Date of Purchase"); provided, however, that such Business Day shall
not be earlier than the fifth Business Day following the latest of the
(w) fifth anniversary of the date of this Agreement, (x) the 30th
calendar day following the Notice Date, (y) date upon which the
Independent Appraiser notifies in writing the relevant parties hereto
of the Purchase Price Per Share and provides such other information as
to the basis of the determination of the Purchase Price Per Share as
may be reasonably requested by such parties and (z) the date upon
which any governmental or other regulatory consents or approvals
required to lawfully consummate the sale of the Put Option Shares are
obtained, it being understood that each relevant party who must obtain
such consents or approvals shall promptly notify the other relevant
parties in writing as each such consent or approval has been obtained.
(iv) On the Date of Purchase, the Minority Stockholder shall
deliver to the Purchaser certificates representing the Put Option
Shares to be sold on such date duly endorsed for transfer to the
Purchaser and the Purchaser shall deliver to the Minority Stockholder
the Purchase Price for the Put Option Shares, payable in United States
dollars by bank check or wire transfer to an account specified by the
Minority Stockholder not less than two Business Days prior to the Date
of Purchase.
(v) Each Minority Stockholder and the Purchaser shall use their
best efforts to comply as soon as practicable with all Federal, state
and foreign laws and regulations and stock exchange listing
requirements and to obtain all necessary regulatory approvals
necessary to con
summate any purchase and sale of the Put Option Shares pursuant to
this Section 3(j).
(vi) All costs, fees and expenses of each investment banking firm
and the Independent Appraiser ("Appraisal Costs") shall be divided
equally between the Minority Stockholders who give notice pursuant to
Section 3(j)(ii) hereof, collectively, on the one hand, and the
Purchaser, on the other hand; provided that in the event that (1) the
Purchaser determines not to purchase the Put option Shares or (2) any
Minority Stockholder determines not to sell its Put Option Shares
pursuant to Section 3(j)(ii) hereof, the Purchaser in the case of (1)
shall pay all Appraisal Costs or such Minority Stockholder in the case
of (2) shall pay, in addition to its share of the Minority
Stockholders' half of the Appraisal Costs, a portion of the
Purchaser's half of the Appraisal Costs equal to one-half of the
Appraisal Costs multiplied by a fraction, the numerator of which is
the number of Put Option Shares held by such Minority Stockholder and
the denominator of which is the total number of Put Option Shares
requested to be purchased or registered by Minority Stockholders
pursuant to Section 3(j)(i) hereof.
(k) If at any time when a Minority Stockholder owns any Shares, TAP
determines to purchase or redeem any shares of Common Stock owned by any
Minority Stockholder or any member of the Travelers Affiliated Group (such
Stockholder whose shares of Common Stock are proposed to be purchased or
redeemed is hereinafter referred to as the "Initial Seller"), TAP will offer to
each Minority Stockholder the opportunity to include in such purchase or
redemption Shares beneficially owned by such Minority Stockholder on the same
terms such number of Shares owned by such Minority Stockholder and requested by
such Minority Stockholder to be included therein, but not to exceed the number
of Shares equal to the product of (x) the total number of Shares beneficially
owned by the Minority Stockholder, multiplied by (y) a fraction, the numerator
of which shall be the total number of shares of Common Stock proposed to be
purchased or redeemed by TAP, and the denominator which shall be, in the case
where the Initial Seller is a member of the Travelers Affiliated Group, the
total number of shares of Common Stock beneficially owned by such member of the
Travelers Affiliated Group or, in the case where the Initial Seller was a
Minority Stockholder, the total number of Shares beneficially owned by such
Minority Stockholder.
SECTION 4. REGISTRATION RIGHTS.
As set forth in this Section 4, from and after the expiration or early
termination of the Restricted Period, the Minority Stockholders shall have
certain rights with respect to the registration of the Shares under the
Securities Act (the "Registrable Shares"). In the case of a registration
pursuant to Section 4(b) hereof, the Minority Stockholders may make the written
request referred to therein on a date not earlier than 45 days prior to the
expiration of such Restricted Period.
(a) Piggyback Registration.
(i) Right to Piggyback. Whenever (x) TAP proposes to register any
shares of its Voting Stock or any Common Stock (or securities
convertible into or exchangeable or exercisable for such stock) under
the Securities Act for its own account or the account of any
stockholder of TAP (other than offerings pursuant to employee plans,
or noncash offerings in connection with a proposed acquisition,
exchange offer, recapitalization or similar transaction), (y) the
registration statement covering such Voting Stock or such Common Stock
or other securities is to be declared effective following the
expiration or early termination of the Restricted Period, and (z) the
registration form required to be used may be used for the registration
of Registrable Shares (a "Piggyback Registration"), TAP will give
prompt written notice to all of the Minority Stockholders' and to all
other holders of Registrable Shares, of its intention to effect such a
registration and will, subject to Sections 4(a)(iii) and 4(g) hereof
include in such registration all Registrable Shares of Common Stock
with respect to which the Minority Stockholders request in writing to
be so included within 15 days after the receipt of TAP's notice;
provided, however, that TAP shall not be required to deliver the
foregoing notice or include any such shares in any registration in
connection with an Initial Public Offering unless either (x) such
Initial Public Offering involves the sale or such other transfer of
Common Stock for the account of members of the Travelers Affiliated
Group and upon consummation of such offering the members of the
Travelers Affiliated Group would own, in the aggregate, less than 80%
of the outstanding Common Stock or (y) upon consummation of such
Initial Public Offering the members of the Travelers Affiliated Group
would own, in the aggregate, less than 50% of the outstanding Common
Stock.
(ii) Designation of Pricing. TAP may designate a minimum offering
price and maximum underwriting or selling discount or commission at
which shares of Common Stock may be sold.
(iii) Priority. If a registration pursuant to this Section 4(a)
involves an underwritten offering and the managing underwriter advises
TAP in good faith that in its opinion the number of securities
requested to be included in such registration exceeds the number which
can be sold in such offering without having an adverse effect on such
offering, including the price at which such securities can be sold,
then TAP will be required to include in such registration the maximum
number of shares that such underwriter advises can be so sold,
allocated (A) in the case of an offering covered by Section 3(h)
hereof, in accordance with the terms of such Section and (B) in the
case of any other offering (x) first, to the securities TAP proposes
to sell or, if such registration was requested by a member of the
Travelers Affiliated Group, to the securities such member proposes to
sell, (y) second, among the shares of Common Stock requested to be
included in such-registration by the Minority Stockholders, members of
the Travelers Affiliated Group, considered in the aggregate (if such
registration was initiated by TAP), and any other stockholder of TAP
with shares of Common Stock eligible for registration, pro rata, on
the basis of the number of shares of Common Stock such holder requests
be included in such registration, and (z) third, among other
securities, if any, requested and otherwise eligible to be included in
such registration.
(iv) Nothing contained herein shall prohibit TAP from
determining, at any time, not to file a registration statement or,
if-filed, to withdraw such registration or terminate or abandon the
registration related thereto.
(b) Requested Registration.
(i) Right to Request Registration. Upon the written request of
Minority Stockholders owning more than 50% of the shares of Common
Stock then owned in the aggregate by the Minority Stockholders (the
"Requesting Holders"), requesting that TAP effect the registration
under the Securities Act of at least the Minimum Registration Amount
(as defined below), TAP shall use its best efforts to effect, as
expeditiously as possible, following the prompt (but in no event later
than 15 days following the receipt
of such written request) delivery of notice to all holders of Common
Stock with registration rights, the registration under the Securities
Act of such number of shares of Common Stock owned by the Requesting
Holders and requested by the Requesting Holders to be so registered
(subject to Section 4(b)(iii) hereof), together with (1) all other
shares of Common Stock entitled to registration, (2) securities of TAP
which TIGI and other members of the Travelers Affiliated Group
determine to register, and (3) securities of TAP which TAP elects to
register and offer for its own account; provided, however, that TAP
shall not be required to (x) subject to Section 4(b)(ii) below, effect
more than a total of four such registrations pursuant to this
Agreement, (y) file a registration statement relating to a
registration request pursuant hereto within a period of six months
after the effective date of any other registration statement of TAP
requested hereunder or pursuant to which the Requesting Holders shall
have been given an opportunity to participate pursuant to Section 4(a)
hereof and which opportunity they declined or which registration
statement under Section 4(a) hereof included shares of Common Stock
owned by Minority Stockholders or (z) file a registration statement
pursuant to this Section 4(b) prior to the later of (I) the expiration
or early termination of the Restricted Period or (II) an Initial
Public Offering; provided further, that TAP shall not be required to
file a registration statement relating to an offering of Common Stock
on a delayed or continuous basis pursuant to Rule 415 (or any
successor rule to similar effect) promulgated under the Securities Act
if TAP is not, at the time, eligible to register shares of Common
Stock on Form S-3 (or a successor form). For purposes hereof, "Minimum
Registration Amount," shall mean a number of shares of Common Stock,
the sale of which is reasonably expected to yield gross proceeds of at
least $60 million.
Notwithstanding the foregoing, if the Board of Directors of TAP
determines in its good faith judgment, (x) after consultation with a
nationally recognized investment banking firm, that there will be an
adverse effect on a then contemplated public offering of TAP's
securities, (y) that the disclosures that would be required to be made
by TAP in connection with such registration would be materially
harmful to TAP because of transactions then being considered by, or
other events then concerning, TAP, or (z) that registration at the
time would require the inclusion of pro forma or other information,
which requirement TAP is reasonably unable to comply with, then TAP
may de
fer the filing (but not the preparation) of the registration statement
which is required to effect any registration pursuant to this Section
4(b) for a reasonable period of time, but not in excess of 90 calendar
days (or any longer period agreed to by the Minority Stockholders),
provided that at all times TAP is in good faith using all reasonable
efforts to file such registration statement as soon as practicable.
(ii) Effective Registration. A registration requested pursuant to
this Section 4(b) shall not be deemed to have been effected (and,
therefore, not requested for purposes of Section 4(b)(i) above) (w)
unless the registration statement relating thereto has become
effective under the Securities Act, (x) if after it has become
effective such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other
governmental agency or court for any reason other than a
misrepresentation or an omission by a Minority Stockholder and, as a
result thereof, the shares of Common Stock requested to be registered
cannot be completely distributed in accordance with the plan of
distribution, (y) if the conditions to closing specified in the
purchase agreement or underwriting agreement entered into in
connection with such registration are not satisfied or waived other
than by reason of some act or omission by a Minority Stockholder or
(z) if with respect to what would otherwise be deemed the fourth, or
last, request under Section 4(b)(i) hereof, less than all of the
shares of Common Stock that the Minority Stockholders requested be
registered were actually registered due to the operation of Section
4(b)(iii) hereof; provided that clause (z) above may not be invoked by
the Minority Stockholders unless (I) such request includes at least
the Minimum Registration Amount or (II) if such request includes an
amount that is less than the Minimum Registration Amount, Rule 144
under the Securities Act is not available to the Minority Stockholders
for the sale of all of the shares of Common Stock owned by the
Minority Stockholders; and provided further that clause (z) above may
be invoked only at the request of Minority Stockholders meeting the
foregoing requirements and owning more than 50% of the shares of
Common Stock then owned in the aggregate by the Minority Stockholders.
(iii) Priority. If a requested registration pursuant to this
Section 4(b) involves an underwritten offering and the managing
underwriter shall advise TAP that in its
opinion the number of securities requested to be included in
such-registration exceeds the number which can be sold in such
offering without having an adverse effect an such offering, including
the price at which such securities can be sold, then TAP will be
required to include in such registration the maximum number of shares
that such underwriter advises can be so sold, allocated (x) first,
among all shares of Common Stock requested by the minority
Stockholders to be included in such registration, pro rata on the
basis of the number of shares of Common Stock then owned by each of
them (or, if such holder requests that less than all of the shares of
Common Stock owned by such holder be included in such registration,
such lesser number of shares) (y) second, to any securities requested
to be included in such registration by any other stockholder of TAP
having registration rights and (z) third, to any securities TAP
proposes to sell.
(iv) Designation of Pricing. The selling Minority Stockholders
may designate a minimum offering price and a maximum underwriting or
selling discount or commission at which shares of Common Stock may be
sold.
(c) Registration Procedures. If and whenever TAP is required to use its
best efforts to effect or cause the registration of any Registrable Shares under
the Securities Act as provided in this Agreement, TAP shall:
(i) prepare and file with the Commission as expeditiously as
possible but in no event later than 90 days after receipt of a request
for registration with respect to such Registrable Shares, a
registration statement on any form for which TAP then qualifies or
which counsel for TAP shall deem appropriate, which form shall be
available for the sale of the Registrable Shares in accordance with
the intended methods of distribution thereof, and use its best efforts
to cause such registration statement to become effective; provided
that before filing with the Commission a registration statement or
prospectus or any amendments or supplements thereto, including
documents incorporated by reference after the initial filing of any
registration statement, TAP shall (x) furnish to each Minority
Stockholder and to one firm of attorneys selected collectively by the
Minority Stockholders and the holders of other securities covered by
such registration statement, but in no event to more than one such
counsel for all such selling securityholders, copies of all such
documents proposed to be filed, which documents shall be sub
ject to the review of the Minority Stockholders and such counsel, and
(y) notify the Minority Stockholders of any stop order issued or
threatened by the Commission and take all reasonable actions required
to prevent the entry of such stop order or to remove it if entered;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period of not less than 180 days or such
shorter period which shall terminate when all Registrable Shares
covered by such registration statement have been sold (but not before
the expiration of the 90-day period referred to in Section 4(3) of the
Securities Act and Rule 174, or any successor thereto, thereunder, if
applicable), and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such
registration statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in
such registration statement;
(iii) furnish, without charge, to the Minority Stockholders and
each underwriter, if any, such number of copies of such registration
statement, each amendment and supplement thereto (including one
conformed copy to each Minority Stockholder and one signed copy to
each managing underwriter and in each case including all exhibits
thereto), and the prospectus included in such registration statement
(including each preliminary prospectus), in conformity with the
requirements of the Securities Act, and such other documents as the
Minority Stockholders may reasonably request in order to facilitate
the disposition of the Registrable Shares registered thereunder;
(iv) use its best efforts to register or qualify such Registrable
Shares covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as the Minority
Stockholders, and the managing underwriter, if any, reasonably
requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable the Minority Stockholders
and each underwriter, if any, to consummate the disposition in such
jurisdictions of the Registrable Shares registered thereunder;
provided that TAP shall not be required to (x) qualify generally to do
business in any jurisdiction where it would not otherwise be required
to qualify but for this Section 4(c)(iv), (y) subject itself
to taxation in any such jurisdiction or (x) consent to general service
of process in any such jurisdiction;
(v) use its best efforts to cause the Registrable Shares covered
by such registration statement to be registered with or approved by
such insurance regulatory authorities as may be necessary by virtue of
the business and operations of TAP to enable the Minority Stockholders
and other holders, if any, to consummate the disposition of
Registrable Shares registered thereunder;
(vi) immediately notify the managing underwriter, if any, and the
Minority Stockholders at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the happening
of any event which comes to TAP's attention if as a result of such
event the prospectus included in such registration statement contains
an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, and TAP shall promptly prepare and furnish to
the Minority Stockholders and any other holder of securities covered
by such registration statement and prospectus a supplement or
amendment to such prospectus so that as thereafter delivered, such
prospectus shall not contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that if TAP determines in good faith that the disclosure that
would be required to be made by TAP would be materially harmful to TAP
because of transactions then being considered by, or other events then
concerning, TAP, or a supplement or amendment to such prospectus at
such time would require the inclusion of pro forma or other
information, which requirement TAP is reasonably unable to comply
with, then TAP may defer for a reasonable period of time, not to
exceed 90 days, furnishing to the Minority Stockholders and any other
holder of securities covered by such registration statement and
prospectus a supplement or amendment to such prospectus; provided
further, that at all times TAP is in good faith using all reasonable
efforts to file such amendment as soon as practicable;
(vii) use its best efforts to cause all such securities being
registered to be listed on each securities exchange on which similar
securities issued by TAP are then listed, and enter into such
customary agreements including a listing application and
indemnification agreement in
customary form (provided that the applicable listing requirements are
satisfied), and to provide a transfer agent and registrar for such
Registrable Shares covered by such registration statement no later
than the effective date of such registration statement;
(viii) make available for inspection by any of the Minority
Stockholders and any holder of securities covered by such registration
statement, any underwriter participating in any distribution pursuant
to such registration statement, and any attorney, accountant or other
agent retained by such persons (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and
properties of TAP and its subsidiaries (collectively, "Records"), if
any, as shall be reasonably necessary to enable them to exercise their
due diligence responsibility, and cause TAP's and its subsidiaries'
officers, directors and employees to supply all information and
respond to all inquiries reasonably requested by any such Inspector in
connection with such registration statement. Notwithstanding the
foregoing, TAP shall have no obligation to disclose any Records to the
Inspectors in the event TAP determines that such disclosure is
reasonable likely to have an adverse effect on TAP's ability to assert
the existence, of an attorney-client privilege with respect thereto;
(ix) if requested, use its best efforts to obtain a "cold
comfort" letter and a "bring-down cold comfort" letter from TAP's
independent public accountants in customary form and covering such
matters of the type customarily covered by such letters;
(x) enter into a form of underwriting agreement that contains
customary terms and provisions for similar securities offerings;
(xi) make available senior management personnel to participate
in, and cause them to cooperate with the underwriters in connection
with, "road-show" and other customary marketing activities, including
"one-on-one" meetings with prospective purchasers of the Registrable
Shares; and
(xii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earning
statement covering a
period of at least 12 months, beginning with the first month after the
effective date of the registration statement (as the term "effective
date" is defined in Rule 158(c) under the Securities Act), which
earning statement shall satisfy the provisions of Section _11(a) of
the Securities Act and Rule 158 thereunder.
It shall be a condition precedent to the obligation of TAP to take any
action pursuant to this Agreement in respect of the shares of Common Stock which
are to be registered at the request of any of the Minority Stockholders that the
Minority Stockholders shall furnish to TAP such information regarding the
securities held by the Minority Stockholders and the intended method of
disposition thereof as TAP shall reasonably request and as shall be required in
connection with the action taken by TAP.
Each of the Minority Stockholders agrees that, upon receipt of any notice
from TAP of the happening of any event of the kind described in Section 4(c)(vi)
hereof, the Minority Stockholders shall discontinue disposition of Registrable
Shares pursuant to the registration statement covering such Registrable Shares
until receipt of the copies of the supplemented or amended prospectus
contemplated by Section 4(c)(vi) hereof or until otherwise notified by TAP, and,
if so directed by TAP, the Minority Stockholders shall deliver to TAP (at TAP's
expense) all copies (including, without limitation, any and all drafts), other
than permanent file copies, then in any Minority Stockholder's possession, of
the prospectus covering such Registrable Shares at the time of receipt of such
notice. In the event TAP shall give any such notice, the period specified in
Section 4(c)(ii) hereof shall be extended by the greater of (x) three months or
(y) the number of days during the period from and including the date of the
giving of such notice pursuant to Section 4(c)(vi) hereof to and including the
date when each of the Minority Stockholders shall have received the copies of
the supplemented or amended prospectus contemplated by Section 4(C)(vi) hereof.
(d) Selection of Underwriters. If any offering pursuant to a registration
statement is to be an underwritten offering, TAP will select a managing
underwriter or underwriters to administer the offering, which may be Xxxxx
Xxxxxx Inc.; provided that in the case of a registration statement pursuant to
Section 4(b) hereof, the Minority Stockholders holding more than 50% of the
shares of Common Stock held by the Minority Stockholders to be included in such
underwritten offering shall select the managing underwriter or underwriters,
and, if such
selection is of a managing underwriter or underwriters other than Xxxxx Xxxxxx
Inc. or X.X. Xxxxxx Securities Inc., subject to the consent of TAP which shall
not be unreasonably withheld.
(e) Registration Expenses. TAP shall pay the following registration
expenses incurred in connection with a registration hereunder: (i) all
registration and filing fees, (ii) fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the Registrable Shares),
(iii) printing expenses, (iv) internal expenses (including without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), (v) the fees and expenses incurred in connection with the
listing of the Registrable Shares on any national securities exchange or
interdealer quotation system, (vi) the reasonable fees and disbursements of
counsel for TAP and customary fees and expenses for independent certified public
accountants retained by TAP (including the expenses of any comfort letters or
costs associated with the delivery by independent certified public accountants
of a comfort letter or comfort letters), (vii) the reasonable fees and
disbursements of not more than one firm of attorneys acting as legal counsel for
(x) all of the selling stockholders, collectively, in respect of a registration
pursuant to Section 4(a) hereof or (y) all of the Minority Stockholders,
collectively, in respect of a registration pursuant to Section 4(b) hereof,
(viii) the fees and expenses of any registrar and transfer agent for the Common
Stock and (ix) the underwriting fees, discounts and commissions applicable to
any shares of Common Stock sold for the account of TAP. Except as otherwise
provided in clause (ix) of this Section 4(e), TAP shall have no obligation to
pay any underwriting fees, discounts or commissions attributable to the sale of
Registrable Shares.
(f) Indemnification, Contribution.
(i) TAP agrees to indemnify and hold harmless each Indemnitee
from and against any and all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation) arising out of
or based upon any untrue statement or alleged untrue statement of a
material fact contained in any prepricing prospectus, registration
statement or prospectus or in any amendment or supplement thereto, or
arising out of or based upon any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such
losses,
claims, damages, liabilities or expenses arise out of or are based
upon any untrue statement or omission or alleged untrue statement or
omission which has been made therein or omitted therefrom in reliance
upon and in conformity with the information relating to-a Minority
Stockholder furnished in writing to TAP by or on behalf of a Minority
Stockholder expressly for use in connection therewith. The foregoing
indemnity agreement shall be in addition to any liability which TAP
may otherwise have.
(ii) If any action, suit or proceeding shall be brought against
an Indemnitee in respect of which indemnity may be sought against TAP,
such Indemnitee shall promptly notify TAP, and TAP shall assume the
defense thereof, including the employment of counsel and payment of
all fees and expenses. The Indemnitee shall have the right to employ
separate counsel in any such action, suit or proceeding and to
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnitee unless (x) TAP has
agreed in writing to pay such fees and expenses, (y) TAP has failed to
assume the defense and employ counsel, or (z) the named parties to any
such action, suit or proceeding (including any impleaded parties
include) both such Indemnitee and TAP, and such Indemnitee shall have
been advised by its counsel that representation of such Indemnitee and
TAP by the same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such representation
by the same counsel has been proposed) due to actual or potential
differing interests between them (in which case TAP shall not have the
right to assume the defense of such action, suit or proceeding on
behalf of such Indemnitee). It is understood, however, that TAP shall,
in connection with any one such action, suit or proceeding or separate
but substantially similar or related actions, suits or proceedings in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of only
one separate firm of attorneys (in addition to any local counsel) at
any time for all such Indemnitees not having actual or potential
differing interests among themselves, and that all such fees and
expenses shall be reimbursed as they are incurred. TAP shall not be
liable for any settlement of any such action, suit or proceeding
effected without its written consent, but if settled with such written
consent, or if there be a final judgment for the plaintiff in any such
action, suit or proceeding, TAP agrees to indemnify and hold harmless
such Indemnitee, to
the extent provided in the preceding paragraph, from and against any
loss, claim, damage, liability or expense by reason of such settlement
or judgment.
(iii) Each of the Minority Stockholders, severally and not
jointly, agree to indemnify and hold harmless TAP, its directors, its
officers who sign the registration statement, and any person who
controls TAP within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, to the same extent as the foregoing
indemnity from TAP to an Indemnitee, but only with respect to
information relating to such Minority Stockholder furnished in writing
by or on behalf of such Minority Stockholder expressly for use in the
registration statement, prospectus or any prepricing prospectus, or
any amendment or supplement thereto. If any action, suit or proceeding
shall be brought against TAP, any of its directors, any such officer,
or any such controlling person based on the registration statement,
prospectus or any prepricing prospectus, or any amendment or
supplement thereto, and in respect of which indemnity may be sought
against any Minority Stockholder pursuant to this Section 4(f)(iii),
such Minority Stockholder shall have the rights and duties given to
TAP by Section 4(f)(ii) hereof (except that if TAP shall have assumed
the defense thereof such Minority Stockholder shall not be required to
do so, but may employ separate counsel therein and participate in the
defense thereof, but the fees and expenses of such counsel shall be at
the Minority Stockholder's expense), and TAP, its directors, any such
officer, and any such controlling person shall have the rights and
duties given to an Indemnitee by Section 4(f)(ii) hereof. The
foregoing indemnity agreement shall be in addition to any liability
which the Minority Stockholders may otherwise have.
(iv) If the indemnification provided for in this Section 4(f) is
unavailable to an indemnified party under paragraphs (i) or (iii)
hereof in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then an indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of TAP and of the Minority
Stockholders in-connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses. The
relative fault of TAP on the one hand and a Minority
Stockholder on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of
a material fact or the omission or alleged omission to state a
material fact relates to information supplied by TAP on the one hand
or by such Minority Stockholder on the other hand and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(v) TAP and the Minority Stockholders agree that it would not be
just and equitable if contribution pursuant to this Section 4(f) were
determined by a pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations
referred to in Section 4(f)(iv) hereof. The amount paid or payable by
an indemnified party as a result of the losses, claims, damages,
liabilities and expenses referred to in Section 4(f)(iv) hereof shall
be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party
in connection with investigating any claim or defending any such
action, suit or proceeding. Notwithstanding the provisions of this
Section 4(f), no Minority Stockholder shall be required to contribute
any amount in excess of the amount by which the proceeds to such
Minority Stockholder exceeds the amount of any damages which such
Minority Stockholder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(vi) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending
or threatened action, suit or proceeding in respect of which any
indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such
action, suit or proceeding.
(vii) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or
contribution under this Section 4(f)
shall be paid by the indemnifying party to the indemnified party -as
such losses, claims, damages, liabilities or expenses are incurred.
The indemnity and contribution agreements contained in this Section
4(f) shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of an Indemnitee, TAP,
its directors or officers, or any person controlling TAP, and (ii) any
termination of this Agreement.
(g) Participation in Underwritten Registrations. A Minority Stockholder may
not participate in any underwritten offering pursuant to Section 4(a) or (b)
hereof unless such Minority Stockholder (i) agrees to sell its Shares on the
basis provided in any underwriting arrangements which, to the extent applicable
solely to the Minority Stockholders, are approved by the Minority Stockholders
in their reasonable discretion or which, to the extent applicable to TAP and the
Minority Stockholders, are approved by TAP in its reasonable discretion and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents (including lock-up agreements)
reasonably required under the terms of such underwriting arrangements which are
not inconsistent with the terms of this Agreement.
(h) Other Registration Rights. TAP agrees that it shall not enter into any
agreement which provides registration rights to any Person that are, or amend
the Intercompany Agreement in such a way as is, inconsistent with the provisions
contained in this Section 4. If TAP does become a party to such an agreement,
TAP agrees that to the extent that the provisions of such agreement conflict
with this Section 4, the provisions of this Section 4 shall control.
SECTION 5. EQUITY PURCHASE RIGHTS.
(a) So long as a Minority Stockholder shall hold all of its Shares or, if
such Minority Stockholder holds less than all of its Shares, so long as the only
Shares transferred by such Minority Stockholder were to Permitted Transferees of
such Minority Stockholder or were transferred pursuant to the drag along rights
of the members of the Travelers Affiliated Group pursuant to Section 3(g)
hereof, then until the earlier to occur of (i) the consummation of an initial
public offering of shares of Common Stock and (ii) the expiration or early
termination of the Restricted Period, if TAP shall issue and sell shares of
Common Stock or any rights, options or warrants to purchase, or securities
convertible into or exchangeable for Common Stock (an "Equivalent") to any
member of the Travelers
Affiliated Group at a price per share or Equivalent (after making appropriate
adjustments in the case of an Equivalent) less than either (x) the price per
share paid by such Minority Stockholder pursuant to its respective Stock
Purchase Agreement (as adjusted for stock splits, stock dividends, combinations,
reclassifications and other similar events affecting the outstanding shares of
Common Stock) or (y) the then book value per share of Common Stock, then such
Minority Stockholder shall have the right to purchase from TAP (or from members
of the Travelers Affiliated Group) shares of Common Stock or Equivalents on the
same terms and at the same purchase price as the members of the Travelers
Affiliated Group are purchasing from TAP, in an amount sufficient to maintain
such Minority Stockholder's relative ownership interest in TAP represented by
the Shares and Equivalents previously acquired by such Minority Stockholder
pursuant to this Section 5; provided, however that, notwithstanding anything to
the contrary contained herein, such Minority Stockholder shall have no such
rights in connection with an issuance and sale by TAP of shares of Common Stock
or Equivalents pursuant to any employee, director, agency or similar benefit
compensation or related plan, arrangement or agreement. For purposes of the
foregoing, a Minority Stockholder's relative ownership interest shall be
determined assuming that such Minority Stockholder owns any Shares that (i)
shall have been transferred to and are then owned by an Affiliate of such
Minority Stockholder and (ii) that have been sold by such Minority
Stockholder-pursuant to Section 3(g) hereof.
(b) In connection with an issuance and sale of shares of Common Stock or
Equivalents by TAP under which Minority Stockholders shall have rights pursuant
to Section 5(a) hereof,
(i) TAP shall deliver written notice to the Minority Stockholders
of any proposed issuance of shares of Common Stock or Equivalents to
members of the Travelers Affiliated Group, including the material
terms and conditions of the offer; and
(ii) within 15 days from the date of receipt of such notice, each
Minority Stockholder shall deliver written notice to TAP if it intends
to exercise its right hereunder, setting forth the number of such
shares of Common Stock or Equivalents such Minority Stockholder
commits to purchase.
SECTION 6. EXCLUSIVITY.
(a) Xxxxxx hereby agrees that until-the earliest to occur of (i) the
consummation of an Initial Public offering, (ii) the expiration or early
termination of the Restricted Period and (iii) such time that the members of the
Travelers Affiliated Group shall beneficially own, in the aggregate, less than
50% of the outstanding Common Stock, that, without TAP's prior written consent,
Xxxxxx shall not, nor will it permit any of its Affiliates to, as a principal,
directly or indirectly, make any investment in the capital stock or any
securities convertible into or exchangeable or exercisable for capital stock of
any other company that is, directly or through its subsidiaries, engaged in
direct and substantial competition with TAP in the property and casualty
insurance business in the United States (a "Competing Investment"), as
reasonably determined by TAP; provided, however, that an investment by Xxxxxx or
any of its Affiliates of less than $20 million shall not be considered a
Competing Investment for purposes of this Section 6(a) so long as Xxxxxx and its
Affiliates shall have no "control" (as defined below) over the management of
such competing entity. For purposes hereof, "control" shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such company, whether through the ownership of voting
securities, by contract or otherwise.
Notwithstanding the foregoing, it is expressly. understood and agreed that
the exercise of Xxxxxx'x rights under this Agreement shall not violate the
provisions of this Section 6(a) and nothing in this Section 6(a) is intended to
prohibit, restrict or limit in any way the ability of Xxxxxx and its Affiliates
to maintain existing investments (including, without limitation, the exercise of
any rights, warrants or options that Xxxxxx or its Affiliates own as of the date
hereof) or to conduct their respective businesses in the ordinary course,
including without limitation, underwriting of securities, investment banking and
advisory activities, money management functions, market making activities,
buying, selling and lending securities, lending and financing activities, making
recommendations with respect to the purchase or sale of securities and the
dissemination of research reports.
(b) For a period beginning on the date of this Agreement and ending on the
Travelers Exclusivity Termination Date (as defined below), TIGI hereby agrees
that TAP shall be the primary vehicle through which the members of the Travelers
Affiliated Group engage in the property and casualty insurance
business in the United States; provided that nothing in this--Section 6(b) shall
at any time prohibit any member of the Travelers Affiliated Group from (1)
making any investment in or acquisition of the capital stock (or similar
ownership interest) or any securities convertible into or exchangeable or
exercisable for capital stock (or similar ownership interest) of any entity, so
long as the business or operations of such entity (whether conducted directly or
through subsidiaries) are primarily conducted outside of the United States or
the business or operations of which, when considered as a whole, primarily
consists of activities other than a property and casualty insurance business in
the United States or (2) making any investment or acquisition provided that such
member of the Travelers Affiliated Group enters into an agreement within 12
months after such acquisition or investment (or such longer period as is
necessary to obtain requisite governmental or regulatory approvals which are
being diligently pursued in good faith) to dispose of such investment or
acquisition (or the portion of the business of the investee or Person acquired
that would otherwise be an investment or acquisition prohibited by this Section
6(b)) to TAP or a Person unaffiliated with Travelers and consummates such
disposition within 24 months after such acquisition or investment (or such
longer period as is necessary to obtain requisite governmental or regulatory
approvals which are being diligently pursued in good faith).
Notwithstanding the foregoing, it is expressly understood and agreed that
nothing in this Section 6(b) is intended to prohibit, restrict or limit in any
way the ability of any member of the Travelers Affiliated Group to conduct their
respective businesses in the ordinary course, including without limitation,
underwriting of securities, investment banking and advisory activities, money
management functions, market making activities, buying, selling and lending
securities, lending and financing activities, making recommendations with
respect to the purchase or sale of securities and the dissemination of research
reports.
For purposes of this Section 6(b), the "Travelers Exclusivity Termination
Date" means the earliest to occur of (x) the date on which the members of the
Travelers Affiliated Group, in the aggregate, no longer beneficially own at
least 50% of the outstanding Common Stock, (y) the date on which the Minority
Stockholders (together with their Affiliates), in the aggregate, no longer
beneficially own at least 50% of the shares of Class A Common Stock purchased by
the Minority Stockholders pursuant to the Stock Purchase Agreements and (z) 30
days following the fifth anniversary of the date of this Agreement.
SECTION 7. RESTRICTIONS ON CERTAIN ACTIONS BY MINORITY STOCKHOLDERS. Each
Minority Stockholder agrees that, for so long as such Minority Stockholder
(together with its Affiliates) owns 50% or more of the shares of Class A Common
Stock purchased by such Minority Stockholder pursuant to its respective Stock
Purchase Agreement, it will not, nor will it permit any of its Affiliates, to,
directly or indirectly, without the prior written consent of TAP, as duly
authorized by a majority of the Board of Directors of TAP:
(a) purchase additional shares of Common Stock, which together with the
shares of Common Stock then held by such Minority Stockholder and its
Affiliates, will constitute more than 9.9% of the shares of Common Stock
outstanding at such time;
(b) "solicit" proxies or consents with respect to the Common Stock under
any circumstances or become a "participant" in any "election contest" relating
to the election of directors of TAP as such terms are defined in Regulation 14A
under the Exchange Act;
(c) initiate, propose or otherwise solicit any holders of Common Stock for
the approval of one or more proposals at any time, or induce or attempt to
induce any other person to initiate any proposal to be voted on by such holders;
(d) form, join or in any way participate in a "group" within the meaning of
Section 13(d)(3) of the Exchange Act with respect to TAP or its Common Stock
(other than a "group" of which such Minority Stockholder is a member as of the
date hereof and disclosed to TAP prior to the date hereof);
(e) arrange, or participate in the arranging of, financing for the purchase
of shares of Common Stock by any individual, partnership or other entity;
(f) propose or disclose any intent to propose any acquisition of shares of
Common Stock, except as provided herein, or any acquisition, business
combination or similar transaction with respect to TAP; or
(g) take any action to encourage or assist any other person to do any of
the foregoing.
Notwithstanding the foregoing, it is expressly understood and agreed that the
exercise of a Minority Stockholder's rights under this Agreement shall not
violate the provisions of this Section 7 and nothing in this Section 7 is
intended to prohibit, restrict or limit in any way the ability of a Minority
Stockholder and its Affiliates to conduct their respective businesses in the
ordinary course underwriting of securities, investment banking or advisory
activities, including without limitation, money management functions, market
making activities, buying, selling and lending securities, lending and financing
activities, making recommendations with respect to the purchase or sale of
securities and the dissemination of research reports.
SECTION 8. REPRESENTATIONS AND WARRANTIES.
(a) Representations and Warranties of TIGI and TAP. TIGI and TAP hereby
represent and warrant as to itself as follows:
(i) Organization. It is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation, it has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business
as now being conducted, and except, with respect to TAP, for insurance
regulatory approvals which have been applied for by TAP and which
shall have been received by TAP prior to the Closing (as defined in
the Stock Purchase Agreements), all material governmental licenses,
authorizations, permits, consents and approvals required to own, lease
and operate its properties and to carry on its business as now being
conducted and as is contemplated to be conducted after giving effect
to the transactions contemplated by this Agreement.
(ii) Authority, No Conflicts or Violations; Consents and
Approvals. It has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement. The
execution and delivery by it of this Agreement and the consummation by
it of the transactions contemplated hereby (x) have been authorized by
all necessary action on its part, (y) do not and will not requite any
filing with, or permit, authorization, consent or approval from, any
governmental authority (other than pursuant to the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the insurance
regulatory approvals, referred to in paragraph (i) above),
(z) do not and will not (I) conflict with or result in a breach of any
provision of, or constitute a default under, any agreement or
instrument to which it is a party or by which it is bound, (II)
violate any statute, law, regulation or judgment, injunction, order or
decree binding upon it or any of its subsidiaries or (III) violate any
provision of its certificate of incorporation or bylaws, except for
any such conflict, breach, default or violation which would not have a
material adverse effect on the ability of it to consummate the
transactions contemplated hereby.
(iii) Due Execution; Enforceability. This Agreement has been duly
executed and delivered by and oh behalf of it and constitutes its
valid and binding obligation enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and general principles of
equity (regardless of whether enforcement is sought in proceeding at
law or in equity).
(iv) Business. TAP is the primary vehicle through which the
Travelers Affiliated Group engages in the property and casualty
insurance business in the United States.
(b) Representations and Warranties of the Minority Stockholders. Each
Minority Stockholder hereby represents and warrants as to itself as follows:
(i) Organization. Such Minority Stockholder is-duly incorporated
or organized, as the case may be, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as
now being conducted.
(ii) Authority. Such Minority Stockholder has all requisite power
and authority to execute, deliver and perform its obligations under
this Agreement. The execution and delivery by such Minority
Stockholder of this Agreement and the consummation by such Minority
Stockholder of the transactions contemplated hereby (x) have been
authorized by all necessary action on the part of such Minority
Stockholder and (y) do not and will not conflict with or result in a
breach of any provisions of, or constitute a default under, any other
agreement or instrument to which such Minority Stockholder or any of
its subsidiaries is a
party or any order, judgment or decree binding upon such Minority
Stockholder except as would not have a material adverse effect on (x)
such Minority Stockholder's ability to purchase and own the Shares and
(y) such Minority Stockholder's ability to comply with its obligations
under this Agreement and its respective Stock Purchase Agreement.
(iii) Due Execution, Enforceability. This Agreement has been duly
executed and delivered by and on behalf of such Minority Stockholder
and constitutes a valid and binding obligation of such Minority
Stockholder enforceable against such Minority Stockholder in
accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and
subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding
at law or in equity).
SECTION 9. CERTAIN COVENANTS. TIGI hereby agrees that neither it nor any
other member of the Travelers Affiliated Group will effect a Tax Free Spin-Off
(as such term is defined in the TAP Charter) prior to the third anniversary of
the expiration of the Restricted Period.
SECTION 10. REPORTS TO MINORITY STOCKHOLDERS.
(a) Within 45 days after the end of each of the first three fiscal quarters
of a fiscal year, TAP shall deliver to each of the Minority Stockholders
unaudited consolidated balance sheets of TAP and its consolidated subsidiaries
as at the end of such quarter and the related consolidated statements of income
and statements of cash flows for the period from the beginning of such fiscal
year to the end of such quarter, and for the period from the beginning of such
quarter to the end of such quarter, in each case prepared in accordance with
generally accepted accounting principles applied on a basis consistent with the
audited financial statements of TAP and its consolidated subsidiaries, subject
to changes resulting from audit and normal year-end adjustments.
(b) Within 90 days after the end of each fiscal year, TAP shall deliver to
each of the Minority Stockholders audited consolidated balance sheets of TAP and
its consolidated subsidiaries as at the end of such fiscal year and the related
consolidated statements of income and statements of cash flows for such fiscal
year, all in reasonable detail and accompanied by a report thereon of TAP's
independent auditors as to such consolidated financial statements presenting
fairly the financial position of TAP and its consolidated subsidiaries as at the
dates indicated and the results of their operations and cash flows for the
periods indicated in conformity with generally accepted accounting principles
applied on a basis consistent with prior years, as applicable (except as noted
in the notes thereto), and as to such audit having been made in accordance with
generally accepted auditing standards.
(c) If and for so long as TAP shall be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, TAP will (i) provide to
each of the Minority Stockholders promptly following their availability all
annual, quarterly and other reports filed by TAP with the Commission and (ii)
file with the Commission all reports required to be filed thereunder within the
time periods required thereby.
(d) If and for so long as TAP is subject to the reporting requirements of
the Exchange Act, TAP shall take such measures and file such information,
documents and reports as shall be required by the SEC as a condition to the
availability of Rule 144 (or any successor provision) under the Securities Act.
SECTION 11. TERM. This Agreement shall commence on the date first written
above and shall terminate on the earlier of (a) the date on which the Minority
Stockholders no longer own any Shares, (b) the tenth anniversary of the date of
this Agreement or (c) a date on which the parties hereto agree in writing to
terminate this Agreement; provided that at the time a Minority Stockholder no
longer owns any Shares this Agreement shall terminate with respect to such
Minority Stockholder; and provided, further, that the terms and agreements
contained in Section 4(f) hereof shall survive any termination of this Agreement
prior to the full 10 year term and shall be of full force and effect from the
date hereof to and including the date which is ten years from the date hereof.
SECTION 12. CERTAIN DEFINITIONS. Unless otherwise defined herein, the
following capitalized terms shall have the following respective meanings (such
meanings being equally applicable to both singular and plural form of the terms
defined):
"Aetna Stock Purchase Agreement" means the Stock Purchase Agreement, dated
March 11, 1996, by and among Aetna, TAP and TIGI pursuant to which Aetna
subscribed for and purchased 12,571,625 shares of Class A Common Stock from TAP.
"Affiliate" means, with respect to (i) any Person, any other Person that,
directly or indirectly, controls or is controlled by or under direct or indirect
common control with such Person and (ii) any natural person, a spouse, parent,
sibling or descendent of such person. For purposes of this definition, "control"
when used with respect to any Person, shall mean the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. It is
expressly understood and agreed that Xxxxxx, Fund American and Trident (or any
successors thereof) are not for any purpose of this Agreement Affiliates of each
other.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York City are authorized
or obligated by law or executive order to close.
"Change of Control" of any Minority Stockholder means the occurrence of any
one of the following events: (a) after
the date hereof, any "person" or "group" becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of more than 50% of the total voting power of the outstanding voting
stock of such Minority Stockholder or (b) a majority of the board of directors
in office are not Continuing Directors (as defined below) or (c) any sale,
transfer or other conveyance, whether direct or indirect, of all or
substantially all of the assets of such Minority Stockholder in one transaction
or a series of related transactions, if, immediately after such transaction any
Person or "group" is or becomes the "beneficial owner" directly or indirectly of
more than 50% of the total voting power of the outstanding voting stock of such
Minority Stockholder. For purposes herein, "Continuing Director" means any
member of the board of directors (or similar governing body) of such Minority
Stockholder who was (i) a member of such Minority Stockholder's board of
directors (or similar governing body) on the date hereof or (ii) was nominated
for election or elected to such Minority Stockholder's board of directors (or
similar governing body) subsequent to such date with the affirmative vote of a
majority of the Continuing Directors who were members of such Minority
Stockholder's board of directors (or similar governing body) at the time of
election.
"Class A Common Stock" means the Class A common stock, par value $.01 per
share, of TAP.
"Class B Common Stock" means the Class B common stock, par value $.01 per
share, of TAP.
"Common Stock" means, collectively, the Class A Common Stock and the Class
B Common Stock and any other class or series of Common Stock of TAP which may
exist from time to time.
"Exchange Act" means the Securities Exchange Act of 1934.
"Expense Allocation Agreement" means the Expense Allocation Agreement,
dated as of January 1, 1995, by and among The Travelers Insurance Company, a
Connecticut corporation, TIGI and the other parties named therein, as the same
may be amended or modified from time to time in a manner that is not materially
less favorable to TAP taken as a whole.
"Fund American Stock Purchase Agreement" means the Stock Purchase
Agreement, dated March 11, 1996, by and among Fund American, TAP and TIGI
pursuant to which Fund American subscribed for and purchased 3,142,906 shares of
Class A Common Stock from TAP.
"Indemnitee" means each Minority Stockholder, each Person, if any, who
controls a Minority Stockholder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and each director and officer
or general partner of such Minority Stockholder, as the case may be.
"Independent Appraiser" means a nationally recognized investment banking
firm selected by the Purchaser and to which Minority Stockholders owning a
majority of the aggregate number of Put Option Shares do not object; if Minority
Stockholders owning a majority of the aggregate number of Put Option Shares
object to the investment banking firm selected by the Purchaser and, after
consultation for a period not to exceed 10 days, there remains no agreement as
to the selection of the Independent Appraiser, the objecting Minority
Stockholders owning a majority of the Put Option Shares shall select one
nationally recognized investment banking firm and such firm, together with the
firm selected by the Purchaser, shall select a third nationally recognized
investment banking firm which shall be the Independent Appraiser.
"Intercomnany Agreement" means the Intercompany Agreement, by and between
TAP and Travelers, substantially in the form attached hereto as Exhibit A, as
the same (or the terms of the arrangements described therein) may be amended or
modified from time to time in a manner that is not materially less favorable to
TAP, taken as a whole.
"Minority Stockholders" means, collectively, Xxxxxx, Aetna, Trident, Fund
American and, unless the context otherwise requires, any Affiliate of such
Minority Stockholder to whom such Minority Stockholder shall have transferred
any of the Shares.
"Xxxxxx Stock Purchase Agreement" means the Stock Purchase Agreement, dated
March 11, 1996, by and among Xxxxxx, TAP and TIGI pursuant to which Xxxxxx
subscribed for and purchased 12,571,625 shares of Class A Common Stock from TAP.
"Notice Date" means the date on which TAP and TIGI receive the written
notice referred to in Section 3(j)(ii) given by a Minority Stockholder.
"Outstanding Voting Stock" means the shares of Voting Stock issued and
outstanding, and shall not include shares of Voting Stock held by TAP as
treasury stock or by any subsidiaries of TAP.
"Permitted Transferee" means (i) any Affiliate of a Minority Stockholder or
(ii) a transferee to whom a Minority Stockholder transfers shares of Class A
Common Stock in accordance with the second paragraph of Section 3(b) hereof.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust or
unincorporated organization.
"Public Company Stock" means Common Stock which is registered under the
Exchange Act and traded by public stockholders.
"Purchase Price" means, with respect to the aggregate number of Put Option
Shares being sold by a Minority Stockholder, the product of such number of
shares and the Purchase Price Per Share.
"Purchase Price Per Share" of the Put Option Shares means the fair market
value per share of such Put Option Shares, as of the Notice Date, as determined
by the Independent Appraiser. Such fair market value per share shall be
determined with reference to the net selling price (after deducting underwriting
discounts and commissions) that the selling Minority Stockholder would have
received from the sale of such Put Option Shares had such shares been sold
pursuant to an underwritten initial public offering of shares of Common Stock.
"Securities Act" means the Securities Act of 1933.
"Servicing Agreements" means, collectively, the Service Expense
Reimbursement Agreement, the Expense Allocation Agreement, the Tax Sharing
Agreement and the Intercompany Agreement.
"Service Expense Reimbursement Agreement" means the Service Expense
Reimbursement Agreement, dated January 1, 1995, by and between Travelers and The
Travelers Insurance Company, a Connecticut corporation, as the same may be
amended or modified from time to time in a manner that is not materially less
favorable to TAP taken as a whole.
"Shares" means, with respect to a Minority Stockholder, all of the shares
of Common Stock acquired by such Minority Stockholder pursuant to its respective
Stock Purchase Agreement and any shares of Common Stock acquired by such
Minority Stockholder pursuant to Section 5 hereof (including
shares of Common Stock that were acquired upon conversion, exchange or exercise
of an Equivalent).
"Stock Purchase Agreements" means, collectively, the Aetna Stock Purchase
Agreement, the Fund American Stock Purchase Agreement, the Xxxxxx Stock Purchase
Agreement, the TIGI Stock Purchase Agreement, and the Trident Stock Purchase
Agreement.
"Stockholders" means, collectively, TIGI and the Minority Stockholders.
"TAP Charter" means TAP's amended and restated certificate of
incorporation.
"Tax Sharing Agreement" means the TAPC Tax Allocation Agreement, by and
among TAP, TIGI and Travelers, substantially in the form attached hereto as
Exhibit B, as the same may be amended or modified from time to time in a manner
that is not materially less favorable to TAP than the terms contained in Exhibit
B hereto taken as a whole.
"TIGI Stock Purchase Agreement" means the Stock Purchase Agreement, dated
March 11, 1996, by and between TAP and TIGI pursuant to which TIGI subscribed
for and purchased 328,020,170 shares of Class B Common Stock from TAP.
"Travelers" means Travelers Group Inc., a Delaware corporation.
"Travelers Affiliated Group" means Travelers and all of its direct and
indirect subsidiaries now or hereafter existing, other than TAP and its direct
and indirect subsidiaries. For all purposes of this Agreement, the ownership of
shares - of Common Stock by members of the Travelers Affiliated Group shall not
include any shares of Common Stock owned by a member of the Travelers Affiliated
Group not for its own account, including, without limitation, shares of Common
Stock held by mutual or-similar funds or in trading or brokerage accounts.
"Trident Stock Purchase Agreement" means the Stock Purchase Agreement,
dated March 11, 1996, by and among Trident, TAP and TIGI wherein Trident
subscribed for and purchased 4,714,359 shares of Class A Common Stock from TAP.
"Voting Stock" means all equity securities issued by TAP having the
ordinary voting power to vote in the election of directors of TAP, other than
securities having such power only
upon the occurrence of a default or any other extraordinary contingency.
SECTION 13. MISCELLANEOUS.
(a) Notices. All notices and other communications provided for hereunder
shall be dated and in writing and shall be deemed to have been given (i) when
delivered, if delivered personally, sent by confirmed telecopy or sent by
registered or certified mail, return receipt requested, postage prepaid, (ii) on
the next business day if sent by overnight courier and (iii) when received if
delivered otherwise. Such notices shall be delivered to the address set forth
below, or to such other address as a party shall have furnished to the other
party in accordance with this Section 13(a).
If to Xxxxxx, to:
X.X. Xxxxxx Capital Corporation
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx.Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
If to TIGI, to:
c/o The Travelers Insurance Group Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
If to TAP, to:
Travelers/Aetna Property Casualty Corp.
Xxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxx X. Xxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
With copies, in the case of notices to TIGI or TAP, to:
The Travelers Insurance Group Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx 0. Prince III, Esq.,
General Counsel
Phone: (000) 000-0000
Fax: (000) 000-0000
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
If to Aetna, to:
Aetna Life and Casualty Company
000 Xxxxxx Xxxxxx, Xxxx Xxxxx XX00
Xxxxxxxx, Connecticut 06156
Attention: Xxxxxx X. Xxxxx, Xx.
Phone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
If to Trident, to:
Xxxxx & XxXxxxxxx Risk Capital Corp.
00 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
If to Fund American, to:
Fund American Enterprises Holdings, Inc.
00 Xxxxx Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Phone: (802) 640-221l
Fax: (000) 000-0000
(b) Expenses. Each of the parties hereto shall be responsible for their own
costs and expenses incurred in connection with the negotiation, drafting and
performance of this Agreement and the transactions contemplated hereby, except
as provided in Section 4(e) hereof.
(c) Binding Nature of Agreement. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto or their
successors in interest, except as expressly otherwise provided herein.
(d) Descriptive Headings. The descriptive headings of the several sections
and paragraphs of this Agreement are inserted for reference only and shall not
limit or otherwise affect the meaning hereof.
(e) Specific Performance. Without limiting the rights of each party hereto
to pursue any and all other legal and equitable rights available to such party
for the other parties' failure to perform their obligations under this
Agreement, the parties hereto acknowledge and agree that the remedy at law for
any failure to perform their obligations hereunder would be inadequate and that
each of them, respectively, shall be entitled to specific performance,
injunctive relief or other equitable remedies in the event of any such failure.
(f) Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights and duties of the parties shall be governed by,
the laws of the State of Delaware, without regard to the principles of conflicts
of law.
(g) Counterparts. This Agreement may be executed in one or more
Counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
(i) Amendment and Modification. Subject to applicable law, this Agreement
may be amended, modified or supplemented only by written agreement of the
parties hereto at any time with respect to any of the terms contained herein.
(j) Entire Agreement. This Agreement, including any schedules or exhibits
annexed hereto, embodies the entire agreement and understanding of the parties
hereto in respect of the transactions contemplated by this Agreement. There are
no restrictions, promises, representations, warranties, covenants or
undertakings, other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
(k) No Third Party Beneficiaries. Nothing in this Agreement shall convey
any rights upon any person or entity which is not a party or a permitted
assignee of a party to this Agreement.
(l) No Assignment. Neither this Agreement nor any of the rights, interests
or obligations of any party hereto may be assigned by such party without the
prior written consent of the other parties; provided, however, that TIGI may
assign all or any part of its rights (but not its obligations) hereunder
to one or more other members of the Travelers Affiliated Group without the prior
consent of any other party hereto, and each Minority Stockholder may assign all
or any part of its rights (but not its obligations) hereunder to one or more
permitted transferees pursuant to Section 3(i) hereof, subject to the
limitations contained therein, or Affiliates of such Minority Stockholder
without the prior written consent of any other party hereto; and provided,
further, that any assignee hereof shall execute a counterpart to this Agreement
whereby such assignee shall agree to be bound by the terms and conditions
contained herein.
(m) Recapitalization, Dilution Adjustments, etc. In the event that any
capital stock or other securities are issued in respect of, in exchange for, or
in substitution of, any shares of Common Stock by reason of any reorganization,
recapitalization, reclassification, merger, consolidation, spin-off, partial or
complete liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the shares of Common Stock then, in each such
case, appropriate adjustments shall be made so as to fairly and equitably
preserve, as far as practicable, the original rights and obligations of the
parties hereto under this Agreement.
(n) Further Assurances. Each party hereto shall, on notice of request from
any other party hereto, take such further action not specifically required
hereby at the expense of the requesting party, as the requesting party may
reasonably request for the implementation of the transactions contemplated
hereby.
IN WITNESS HEREOF, the parties have caused this Shareholders Agreement to
be executed and delivered as of the date first above written.
TRAVELERS/AETNA PROPERTY CASUALTY CORP.
/s/ signature illegible
---------------------------------
Name:
Title:
THE TRAVELERS INSURANCE GROUP INC.
/s/ signature illegible
---------------------------------
Name:
Title:
X.X. XXXXXX CAPITAL CORPORATION
Name:
Title:
AETNA LIFE AND CASUALTY COMPANY
Name:
Title:
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
Name:
Title:
IN WITNESS HEREOF, the parties have caused this Shareholders Agreement to
be executed and delivered as of the date first above written.
TRAVELERS/AETNA PROPERTY CASALTY CORP.
Name:
Title:
THE TRAVELERS INSURANCE GROUP INC.
Name:
Title:
X.X. XXXXXX CAPITAL CORPORATION
Name:
Title:
AETNA LIFE AND CASUALTY COMPANY
Name:
Title:
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
Name:
Title:
IN WITNESS HEREOF, the parties have caused this Shareholders Agreement to
be executed and delivered as of the date first above written.
TRAVELERS/AETNA PROPERTY CASUALTY CORP.
Name:
Title:
THE TRAVELERS INSURANCE GROUP INC.
Name:
Title:
X.X. XXXXXX CAPITAL CORPORATION
Name:
Title:
AETNA LIFE AND CASUALTY COMPANY
/s/ signature illegible
---------------------------------
Name:
Title:
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
Name:
Title:
IN WITNESS HEREOF, the parties have caused this Shareholders Agreement to
be executed and delivered as of the date first above written.
TRAVELERS/AETNA PROPERTY CASUALTY CORP.
Name:
Title:
THE TRAVELERS INSURANCE GROUP INC.
Name:
Title:
X.X. XXXXXX CAPITAL CORPORATION
Name:
Title:
AETNA LIFE AND CASUALTY COMPANY
Name:
Title:
FUND AMERICAN ENTERPRISES HOLDINGS, INC.
/s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President & Chief
Financial Officer
THE TRIDENT PARTNERSHIP L.P.
BY: TRIDENT CORP.,
as sole General Partner
By: /s/ Xxxxxx Xxxx
----------------------------
Name:
Title:
