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Exhibit 10.21
GLOBAL MARKETS ACCESS LTD.
February 26, 1999
The PMI Group, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Re: Securities Purchase Agreement
Gentlemen:
Reference is made to the Securities Purchase Agreement dated
as of February 26, 1999 (the "Agreement"), between The PMI Group, Inc. (the
"Investor") and Global Markets Access Ltd. (the "Company"). All capitalized
terms used but not defined herein shall have the meanings ascribed to such terms
in the Agreement.
In connection with the Agreement, the Investor and the Company
hereby agree and acknowledge that, for so long as the Investor together with its
Affiliates beneficially own at least 1,000,000 Common Shares of the Company
(including for this purpose shares issuable pursuant to the Class B Warrants
held by the Investor and as adjusted for stock splits, reverse stock splits,
stock dividends and similar events), the Investor shall have the right to
designate two individuals for election to the board of directors of the Company,
and so long as the Investor together with its Affiliates beneficially own less
than 1,000,000 Common Shares, but at least 500,000 Common Shares, the Investor
shall have the right to designate one individual for election to the board of
directors. However, if the Investor at any time owns less than 1,000,000 shares,
it shall cause one such individual, and if less then 500,000 shares, both
individuals, to resign from the board of directors. Upon timely receipt by the
Company of the Investor's written exercise of such right, the Company shall, if
received on the date hereof, cause such individual elected as a director of the
Company and if received thereafter, shall cause such individual to be nominated
for election as a director of the Company at the next annual general meeting of
the Company. We advise you that pursuant to the foregoing the Company has today
elected Xxxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx to its board of directors to
serve as Class 2 and Class 3 directors, respectively. The fees and other
compensation paid to such directors in consideration of their services as such
shall not be less that that paid to other non-employee directors serving in
similar positions. In consideration of such right, and for so long as any person
selected by the Investor is a director (and during any period after
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The PMI Group, Inc.
February 26, 1999
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such person's designation by the Investor but before his or her election),
neither the Investor nor any of its Affiliates shall vote or permit any of the
shares of the Company beneficially owned by it to be voted for any other nominee
for election as a director of the Company.
The Company shall, subject to applicable law, use its best
efforts to cause all proxies solicited by management to be voted in favor of
such nominees (subject to any contrary instructions by the shareholder
delivering such proxy).
The Investor may assign its rights hereunder to any transferee
of the required minimum number of shares referred to above or agree to exercise
such right at the direction of any other person; provided that it has received
the prior written consent of the Company, such written consent not to be
unreasonably withheld; and further provided that under no circumstances shall
the Investor and all such transferees be entitled to designate more than two
directors. The Investor further agrees that it shall be reasonable for the
Company to withhold such prior written consent in situations including, but not
limited to, those in which the Investor agrees to assign their right or to act
at the direction of any person or entity directly or indirectly engaged in the
financial guaranty insurance or reinsurance business, or situations in which the
Investor agrees to assign its right or to act at the direction of any person or
entity where such assignment or act would result in any person owning, directly
or indirectly, or being considered to own, 10% or more of the total combined
voting power of all classes of stock of the Company under the "controlled
foreign corporation" rules of the United States Internal Revenue Code. As a
condition of any such assignment or
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The PMI Group, Inc.
February 26, 1999
Page 3
agreement to act at the direction of any other person, such assignee or other
person shall execute an agreement indicating its intention to be bound by the
terms of this letter.
Subject to the Company's Operating Guidelines, the Company shall, and
shall cause each of the Operating Company and the Marketing Company to, use
reasonable efforts following consummation of the purchase and sale under the
Agreement to explore mutually beneficial business relationships with the
Investor, including through offering to the Investor the opportunity to assume
reinsurance from, and cede reinsurance to, the Operating Company and to
participate in reinsurance transactions between the Operating Company and third
parties and by exploring opportunities with the Investor for joint marketing
arrangements and the mutual referral of business.
Very truly yours,
GLOBAL MARKETS ACCESS LTD.
By:/s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
President and Chief Executive Officer
Acknowledged by:
/s/ Xxxxxx X. Xxxxxx
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THE PMI GROUP, INC.
