Exhibit 4.2
AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT
among
▇▇▇▇▇▇ Corporation,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and each Investor set forth
on the signature pages hereof
Dated as of November 1, 1995
TABLE OF CONTENTS*
Page
----
ARTICLE I
DEFINITIONS
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
MANAGEMENT OF THE COMPANY
2.1 Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . 10
2.3 Observers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.4 Compensation Committee. . . . . . . . . . . . . . . . . . . . . . 10
2.5 Termination of Article II . . . . . . . . . . . . . . . . . . . . 11
ARTICLE III
RESTRICTIONS ON TRANSFERABILITY
3.1 General Restrictions. . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Legend on Share Certificates. . . . . . . . . . . . . . . . . . . 11
3.3 Permitted Transferees; Transferees to Become Bound. . . . . . . . 12
3.4 Adverse Persons . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.5 Transfers by Regulation Y Stockholders. . . . . . . . . . . . . . 13
3.6 Termination of Certain Provisions of Article III. . . . . . . . . 14
ARTICLE IV
RIGHTS TO COMPEL A SALE;
RIGHTS TO PARTICIPATE IN A SALE
4.1 Rights to Compel a Sale . . . . . . . . . . . . . . . . . . . . . 14
4.2 Rights to Participate in a Sale . . . . . . . . . . . . . . . . . 15
---------------------------
* The Table of Contents is not part of this Agreement.
i
Page
----
4.3 Rights to Participate in an Open Market Sale. . . . . . . . . . 17
ARTICLE V
REGISTRATION RIGHTS
5.1 Demand Registration . . . . . . . . . . . . . . . . . . . . . . 19
5.2 Incidental Registration . . . . . . . . . . . . . . . . . . . . 20
5.3 Reduction of Offering . . . . . . . . . . . . . . . . . . . . . 21
5.4 Filings; Information. . . . . . . . . . . . . . . . . . . . . . 22
5.5 Registration Expenses . . . . . . . . . . . . . . . . . . . . . 26
5.6 Indemnification by the Company. . . . . . . . . . . . . . . . . 26
5.7 Indemnification by Holders of Registrable Stock . . . . . . . . 27
5.8 Conduct of Indemnification Proceedings. . . . . . . . . . . . . 28
5.9 Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.10 Participation in Underwritten Registrations . . . . . . . . . . 31
5.11 Rule 144. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.12 Holdback Agreements . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VI
OTHER AGREEMENTS
6.1 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 33
6.2 Noncompetition. . . . . . . . . . . . . . . . . . . . . . . . . 34
6.3 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.4 Notices of Acquisitions . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VII
MISCELLANEOUS
7.1 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . 36
7.2 Binding Effect; Benefit . . . . . . . . . . . . . . . . . . . . 36
7.3 Assignability . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.4 Amendment; Waiver; Termination. . . . . . . . . . . . . . . . . 37
7.5 Specific Performance. . . . . . . . . . . . . . . . . . . . . . 37
7.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.7 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.8 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.9 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.10 Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . 39
ii
AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT dated as of November 1,
1995 among ▇▇▇▇▇▇ Corporation, a Delaware corporation (the "Company"), ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") and each Investor set forth
on the signature pages hereof (the "Investors").
W I T N E S S E T H :
WHEREAS, the Investors, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ have previously acquired
certain shares of the Company's capital stock;
WHEREAS, the Company is contemplating an initial public offering (the
"Initial Public Offering"), in connection with which all of the Company's
existing capital stock will be converted into Voting Common Stock and Nonvoting
Common Stock (each as defined herein);
WHEREAS, in connection with the Initial Public Offering, the parties
hereto wish to amend and restate, effective as of the closing of the Initial
Public Offering, the Shareholders Agreement dated as of August 26, 1992 (the
"Old Shareholders Agreement");
WHEREAS, in connection with the Initial Public Offering, the Amended
and Restated Management Stock and Voting Agreement dated as of August 26, 1992
among ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and the Company (the "Management Stock Agreement") is
also being amended;
WHEREAS, the Company has in the past granted and may in the future
grant from time to time, pursuant to its 1992 Long-Term Stock Incentive Plan
(the "1992 Plan"), to certain employees (each, with the exception of ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇, an "Employee Grantee") shares of or options to purchase Voting
Common Stock; and
WHEREAS, each grant under the 1992 Plan to an Employee Grantee
requires that the Employee Grantee become a
party to the Company's Employee-Shareholders Agreement dated as of November 1,
1995 (the "Employee-Shareholders Agreement");
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. (a) The following terms, as used herein, have the
following meanings:
"Adverse Person" means, as determined in the sole discretion of the
Board of Directors of the Company in its good faith judgment, any transferee (or
any Affiliate of such transferee) (i) that intends to cause, or is reasonably
likely to cause, a material adverse impact on the business or prospects of the
Company, ▇▇▇▇▇▇ or ▇▇▇▇▇▇ Re, including but not limited to any action that in
the good faith judgment of the Board of Directors would have a reasonable
likelihood of resulting in a downgrade of the then current claims-paying rating
assigned by the Rating Agencies to ▇▇▇▇▇▇ or ▇▇▇▇▇▇ Re or (ii) that is a
competitor of the Company, Amerin, Amerin Re or any of their direct or indirect
subsidiaries.
"Affiliate" means with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. For the purpose of this definition, the term "control" (including
with correlative meanings, the terms "controlling", "controlled by", and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"▇▇▇▇▇▇" means ▇▇▇▇▇▇ Guaranty Corporation, an Illinois stock
insurance company and a wholly-owned subsidiary of the Company, and any
successor or successors thereto.
"▇▇▇▇▇▇ Re" means ▇▇▇▇▇▇ Re Corporation, an Illinois stock insurance
company and a wholly-owned
2
subsidiary of the Company, and any successor or successors thereto.
"Board of Directors" means the Board of Directors of the Company.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City are authorized by law to close.
"Cash Equivalents" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States federal government or issued by
any agency thereof and backed by the full faith and credit of the United States
of America, in each case maturing within one year from the date of acquisition
thereof; (ii) marketable direct obligations of any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from either Rating Agency or (iii) commercial paper maturing no more than one
year from the date of creation thereof and, at the time of acquisition, having
the highest rating obtainable from either Rating Agency.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Voting Common Stock and the Nonvoting Common
Stock.
"Compensation Committee" has the meaning set forth in Section 2.4.
"Convertible Securities" means any evidences of indebtedness, shares
of stock, options, warrants or other securities which are convertible into or
exchangeable, with or without payment of additional consideration of cash or
property, for shares of Voting Common Stock or rights to acquire shares of
Voting Common Stock, either immediately or on a specified date or on the
happening of a specified event.
"Demand Registration" means a Demand Registration as defined in
Section 5.1.
"Duly Endorsed" means duly endorsed in blank by the Person or Persons
in whose name a stock certificate is
3
registered or accompanied by a duly executed stock assignment separate from the
certificate with the signature guaranteed by a commercial bank or trust company
or a member of a national securities exchange or of the National Association of
Securities Dealers, Inc.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exiting Holder" means ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ or any Investor who, together
with his or its Permitted Transferees who have agreed to be bound by this
Agreement, holds Shares that constitute or are convertible or exchangeable into
or for Registrable Stock (without regard to any restrictions on conversion or
exchange by a Regulated Stockholder) the sale of which would reasonably be
expected to yield gross proceeds of (i) in the case of any Investor, less than
$5 million, (ii) in the case of ▇▇▇▇▇▇▇▇, less than $2.5 million and (iii) in
the case of ▇▇▇▇▇▇▇, less than $1.25 million, in each case who desires to sell
all Registrable Stock he or it holds and who is unable to utilize Rule 144 under
the Securities Act (or any successor rule thereto) to effectuate a sale of such
Voting Common Stock within a three-month period.
"▇▇▇▇▇▇▇▇ Family Trusts" means the ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ 1989 Trust, the
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 1989 Trust and the ▇▇▇▇▇▇ ▇. ▇▇▇▇ 1990 Trust.
"Incidental Registration" means an Incidental Registration as defined
in Section 5.2.
"Majority Shareholders" has the meaning set forth in Section 4.1(a).
"▇▇▇▇▇▇ Capital" means ▇.▇. ▇▇▇▇▇▇ Capital Corporation, a Delaware
corporation, together with its Affiliates.
"MSLEF" means The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Leveraged Equity Fund II, L.P., a
Delaware limited partnership.
"Nonvoting Common Stock" means Nonvoting Common Stock, par value $.01
per share, of the Company.
4
"Open Market Sale" means a sale conducted in accordance with Section
4.3 and pursuant to Rule 144 under the Securities Act (or any successor rule
thereto); PROVIDED that any such sale shall comply with the manner of sale
limitations contained in Rule 144(f) under the Securities Act as in effect on
the date of this Agreement.
"Permitted Transferee" of any Person shall mean
(i) in the case of any Shareholder (other than those described in
clauses (ii) through (iv) below), a person that is an Affiliate of such
Shareholder, it being understood that for purposes of this provision in the
case of any Shareholder or Permitted Transferee thereof that is a trust
established under an employee benefit plan subject to ERISA, any trust
(under a plan having the same sponsor as, or a successor sponsor to, such
plan) that is a successor to the assets held by such trust or any other
trust established directly or indirectly under such plan or any other such
plan having the same sponsor (or a successor sponsor) (an "Affiliated
Employee Benefit Trust") shall be deemed an Affiliate of such Shareholder
or Permitted Transferee thereof;
(ii) in the case of MSLEF, (A) any general or limited partner of MSLEF
(a "MSLEF Partner") and any corporation, partnership, Affiliated Employee
Benefit Trust or other entity which is an Affiliate of any MSLEF Partner
(collectively, the "MSLEF Affiliates"), so long as the transfer to such
entities is a distribution in kind pursuant to the MSLEF limited
partnership agreement in proportion to their interests (including, in the
case of the general partner, its carried interest) in MSLEF's investment in
the Company; (B) any current or former managing director, director, officer
or employee of MSLEF or a MSLEF Affiliate (collectively, "MSLEF
Associates"); (C) the heirs, executors, administrators, testamentary
trustees, legatees or beneficiaries of any MSLEF Affiliate or MSLEF
Associate; and (D) a trust, two-thirds of the beneficiaries (measured by
beneficial interest therein) of which, or a corporation or partnership,
two-thirds of the stockholders or general or limited partners (measured by
percentage of equity or partnership interests) of which, consist of MSLEF,
MSLEF Affiliates, MSLEF Associates, their spouses or their lineal
descendants, PROVIDED that such entity is controlled by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
Co. Incorporated or any
5
of its Affiliates or any employees, officers, managing directors or
directors thereof, and PROVIDED, FURTHER, that unless such entity is an
investment fund in which the interests of the parties to this Agreement
other than MSLEF do not exceed 50%, the interest of any of the parties
hereto therein shall not exceed their proportionate interests in MSLEF, and
PROVIDED, FURTHER, that no beneficiary, stockholder or partner other than
MSLEF, any MSLEF Affiliate or any MSLEF Associate shall hold more than 10%
of the interest or equity of such trust, corporation or partnership;
(iii) in the case of a Regulation Y Stockholder, the ultimate parent
corporation (a "Parent") of such Regulation Y Stockholder or any
wholly-owned direct or indirect subsidiary of such Stockholder or such
Parent; and
(iv) in the case of any Senior Manager, a person that is his parent,
spouse, sibling or lineal descendant (whether by birth or adoption), any
▇▇▇▇▇▇▇▇ Family Trust or beneficiary thereof and any trust that is for the
exclusive benefit of such Senior Manager or such persons.
"Person" shall mean an individual, a partnership, a corporation, a
trust, a joint venture, an unincorporated organization or a government or any
department or agency thereof.
"Rating Agencies" means Standard & Poor's Rating Service, a division
of ▇▇▇▇▇▇-▇▇▇▇, Inc., and ▇▇▇▇▇'▇ Investors Service.
"Readily Marketable Securities" means those securities that are (i)(A)
debt or equity securities or other interests of any Person that are traded on a
national securities exchange or on the Nasdaq Stock Market or otherwise actively
traded over-the-counter or (B) debt securities of an issuer that has debt or
equity securities that are so traded and in which a nationally recognized
securities firm has agreed to make a market and (ii) not subject to restrictions
on transfer as a result of any applicable contractual provisions or the
provisions of the Securities Act or, if subject to restrictions under the
Securities Act, are also subject to registration rights reasonably acceptable to
the holders of a majority of the Shares that are not held by Majority
Shareholders (as defined in Section 4.1(a)).
6
"Registrable Stock" means any shares of Voting Common Stock until (i)
a registration statement covering such shares of Voting Common Stock has been
declared effective by the Commission and such shares have been disposed of
pursuant to such effective registration statement, (ii) such shares are sold
under circumstances in which all of the applicable conditions of Rule 144 (or
any similar provisions then in force) under the Securities Act are met or under
which such shares may be sold pursuant to Rule 144(k) or (iii) such shares are
otherwise transferred, the Company has delivered a new certificate or other
evidence of ownership for such shares not bearing the legend required pursuant
to this Agreement and such shares may be resold without subsequent registration
under the Securities Act.
"Regulated Stockholder" shall have the meaning given to it in the
Company's Amended and Restated Certificate of Incorporation.
"Regulation Y Stockholder" means (i) any Shareholder that is subject
to the provisions of Regulation Y of the Board of Governors of the Federal
Reserve System (12 C.F.R. Part 225) or any successor to such regulation
("Regulation Y"), so long as such Shareholder shall hold, and only with respect
to, Nonvoting Common Stock (or Voting Common Stock into which such Nonvoting
Common Stock has been or may be converted), (ii) any Affiliate of a Regulation Y
Stockholder that is a transferee of any such shares of Common Stock of the
Company, so long as such Affiliate shall hold, and only with respect to, such
shares or shares issued upon conversion of such shares and (iii) any Person to
which such Regulation Y Stockholder or any of its Affiliates has transferred
such shares, so long as such transferee shall hold, and only with respect to,
any such shares transferred by such stockholder or Affiliates or any shares
issued upon conversion of such shares but only if such Person is (or any
Affiliate of such Person is) subject to the provisions of Regulation Y.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Holder" means a Shareholder which is selling Registrable
Stock, or Shares that upon conversion or exchange will constitute Registrable
Stock (without regard to any restrictions on conversion or exchange by any
particular holder) pursuant to a registration statement under the Securities
Act.
7
"Senior Manager" means ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇.
"Shareholder" means each Investor, Senior Manager and each other
Person who from time to time agrees pursuant to Section 3.3 to be bound by this
Agreement, for so long as he or it continues to hold any Shares.
"Shares" means, at the time of any determination, all shares of Common
Stock then held by the Shareholders.
"Transfer" has the meaning set forth in Section 3.1, and "transfer"
used as a noun shall have a correlative meaning.
"Underwriter" means a securities dealer who purchases any Registrable
Stock or Shares convertible into or exchangeable for Registrable Stock as
principal and not as part of such dealer's market-making activities.
"Voting Common Stock" means Voting Common Stock, par value $.01 per
share, of the Company.
(b) Certain other terms are defined in the preamble and recitals
hereto. Such terms shall have the meanings assigned therein.
ARTICLE II
MANAGEMENT OF THE COMPANY
SECTION 2.1 SHALL NOT BE ENFORCEABLE BY ▇▇▇▇▇▇ CAPITAL OR ITS
TRANSFEREES, NOR SHALL ▇▇▇▇▇▇ CAPITAL AND ITS TRANSFEREES BE DEEMED A PARTY TO
SUCH PROVISIONS, AND SUCH PROVISIONS MAY BE AMENDED (OTHER THAN TO ADD ▇▇▇▇▇▇
CAPITAL AS A PARTY THERETO), WAIVED OR TERMINATED WITHOUT THE CONSENT OR
PARTICIPATION OF ▇▇▇▇▇▇ CAPITAL OR ITS TRANSFEREES.
2.1 BOARD OF DIRECTORS. (a) SIZE, NOMINATIONS, VACANCIES AND
REMOVAL. The Board of Directors shall initially consist of 8 members. The
Shareholder or Shareholders entitled to designate any particular director shall
have the power to remove that director with or without cause and to appoint a
director to replace such director. Each Shareholder agrees to vote the Voting
Common Stock held by it and to take or cause to be taken such other action as
may be necessary to effectuate the provisions of this Article II.
8
(b) BASIC RULES ON COMPOSITION OF BOARD. The members of the Board of
Directors shall, subject to the provisions of Section 2.1(c), be selected as
follows:
(i) Each of MSLEF and Aetna Life Insurance Company (acting together
with its Permitted Transferees who have agreed pursuant to Section 3.3 to
be bound by this Agreement) shall be entitled at any time to designate one
member of the Board of Directors so long as it (together with its Permitted
Transferees who have agreed pursuant to Section 3.3 to be bound by this
Agreement) holds at such time at least 2.5% of the outstanding Common Stock
at that time. This MSLEF director shall be a Class I Director, and the
Aetna director shall be a Class III Director (as such terms are defined in
the Company's Amended and Restated Certificate of Incorporation).
(ii) MSLEF (acting together with its Permitted Transferees who have
agreed pursuant to Section 3.3 to be bound by this Agreement) shall be
entitled at any time to designate a second member of the Board of Directors
(in addition to the member appointed pursuant to clause (i)) so long as it
(together with its Permitted Transferees who have agreed pursuant to
Section 3.3 to be bound by this Agreement) holds at such time at least 5.0%
of the outstanding Common Stock at that time. Such director shall be a
Class II Director (as defined in the Company's Amended and Restated
Certificate of Incorporation).
(iii) A majority in number of the Investors (other than ▇▇▇▇▇▇ Capital
and MSLEF), acting together with their respective Permitted Transferees who
have agreed pursuant to Section 3.3 to be bound by this Agreement, shall at
any time be entitled to designate a representative or employee of any
Investor as an additional member of the Board of Directors; PROVIDED that
no more than two members of the Board of Directors shall be
representatives, employees or affiliates of any Investor or its Permitted
Transferees who have agreed pursuant to Section 3.3 to be bound by this
Agreement. Such director shall be a Class III Director (as defined in the
Company's Amended and Restated Certificate of Incorporation).
(iv) So long as ▇▇▇▇▇▇▇▇ continues to be employed by the Company,
▇▇▇▇▇▇ or ▇▇▇▇▇▇ Re, ▇▇▇▇▇▇▇▇ shall be entitled to be a member of the Board
of Directors;
9
PROVIDED that for the duration of any disability that makes him unable to
participate in meetings of the Board of Directors, he shall be entitled to
designate a member of the Board of Directors in his stead. Such director
shall be a Class I Director (as defined in the Company's Amended and
Restated Certificate of Incorporation).
(v) So long as the Voting Common Stock is listed for trading on a
national securities exchange or on the Nasdaq Stock Market, the Board of
Directors shall include at least two independent directors. One such
director shall be a Class II Director, and the other such director shall be
a Class III Director (each, as defined in the Company's Amended and
Restated Certificate of Incorporation).
(c) Notwithstanding anything contained in Section 2.1(b), any
Shareholder, together with its Permitted Transferees who have agreed pursuant to
Section 3.3 to be bound by this Agreement, holding at least two-thirds of the
Shares (which Shares also constitute a majority of the outstanding shares of
Common Stock) shall be entitled to designate at least two-thirds of the members
of the Board of Directors.
(d) The Shares held by ▇▇▇▇▇▇ Capital and its transferees shall not be
taken into account in determining any percentages required for the amendment,
waiver or termination of Sections 2.1(a) through 2.1(c).
2.2 TRANSACTIONS WITH AFFILIATES. Any transaction between the
Company, ▇▇▇▇▇▇ or ▇▇▇▇▇▇ Re on the one hand and any Shareholder or Affiliate of
any Shareholder on the other (other than transactions pursuant to the terms of
the Management Stock Agreement) shall be made on an arm's length basis and shall
require the approval of the majority of the disinterested members of the Board
of Directors in addition to any other approval required by the Company's Amended
and Restated Certificate of Incorporation, the Company's By-laws or applicable
law.
2.3 OBSERVERS. Each Investor that does not have a representative on
the Board of Directors shall be permitted to designate a person as an observer
to be present at each meeting of the Board of Directors.
2.4 COMPENSATION COMMITTEE. As provided in Section 3.11(d) of the
Company's By-laws, the Board of
10
Directors shall establish and maintain at all times a Compensation Committee
(the "Compensation Committee") of the Board of Directors. The Compensation
Committee shall consist of two members: (i) a director designated by MSLEF (or
if MSLEF is no longer entitled to nominate a director pursuant to Section
2.1(b)(i), by a majority in number of the Investors (other than ▇▇▇▇▇▇ Capital))
and (ii) ▇▇▇▇▇▇▇▇ (or if ▇▇▇▇▇▇▇▇ is no longer employed by the Company, a
director designated by a majority in number of the Investors (other than ▇▇▇▇▇▇
Capital)). The Board of Directors shall not take action relating to executive
compensation, including setting salaries, approving employment agreements,
establishing stock incentive plans and bonus plans and the making of awards
thereunder or on any other matters within the authority of the Compensation
Committee unless such action shall have been recommended to the Board of
Directors by the unanimous vote of the Compensation Committee.
2.5 TERMINATION OF ARTICLE II. If at any time less than 20% of the
outstanding Common Stock is held by Shareholders and Employee Grantees, then all
of the provisions of Article II shall terminate.
ARTICLE III
RESTRICTIONS ON TRANSFERABILITY
3.1 GENERAL RESTRICTIONS. Each Shareholder agrees that it will not,
directly or indirectly, offer, sell, assign, transfer, grant a participation in,
pledge or otherwise dispose of ("transfer") any Shares (or solicit any offers to
buy or otherwise acquire, or to take a pledge of any Shares), except in
compliance with the Securities Act and this Agreement. In addition, except in a
transfer permitted by the first sentence of Section 3.3 or otherwise as provided
in Section 4.1 or pursuant to a merger, reorganization or consolidation of the
Company, no Shareholder may transfer any Shares other than in a sale for cash
without the consent of each other Shareholder (other than any Employee Grantee).
3.2 LEGEND ON SHARE CERTIFICATES. (a) In addition to any other
legend that may be required pursuant to the Management Stock Agreement or
otherwise, each certificate for Shares that is issued to any Shareholder shall
bear a legend in substantially the following form:
11
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND
MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH.
THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AS SET FORTH IN THE AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT DATED AS OF NOVEMBER 1, 1995, COPIES
OF WHICH MAY BE OBTAINED UPON REQUEST FROM ▇▇▇▇▇▇
CORPORATION AND ANY SUCCESSOR THERETO."
(b) If any shares of Common Stock shall cease to be, or be convertible
into or exchangeable for, Registrable Stock, the Company shall, upon the written
request of the holder thereof, issue to such holder a new certificate evidencing
such shares without the first sentence of the legend required by Section 3.2(a)
endorsed thereon. If any shares of Common Stock cease to be subject to any
restrictions on transfer set forth in this Agreement, the Company shall, upon
the written request of the holder thereof, issue to such holder a new
certificate evidencing such shares without the second sentence of the legend
required by Section 3.2(a) endorsed thereon.
3.3 PERMITTED TRANSFEREES; TRANSFEREES TO BECOME BOUND.
Notwithstanding anything in this Agreement to the contrary, any Shareholder may
at any time transfer any or all of its Shares to one or more of its Permitted
Transferees without the consent of the Board of Directors or any other
Shareholder or group of Shareholders so long as the transfer to such Permitted
Transferee is not in violation of applicable federal or state or foreign
securities laws. No party to this Agreement shall issue or transfer any shares
of Common Stock to any Person (whether or not a Permitted Transferee), unless
such transferee shall have agreed in writing to be bound by the terms of this
Agreement; PROVIDED that neither (x) Permitted Transferees of MSLEF (other than
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and its Affiliates) nor (y) transferees that
acquire such shares of Common Stock (i) in a public offering registered under
the Securities Act, (ii) in an Open Market Sale or (iii) from the Company
pursuant to the 1992 Plan as Employee Grantees who are or become parties to the
Employee-Shareholders Agreement, shall be subject to this requirement.
12
3.4 ADVERSE PERSONS. No Shareholder shall transfer any Shares to any
Adverse Person without the Board of Directors' consent, which may be withheld in
its absolute discretion; PROVIDED that this restriction shall not apply to any
Open Market Sale or any sale in a registered public offering pursuant to Article
V.
3.5 TRANSFERS BY REGULATION Y STOCKHOLDERS. Notwithstanding the
termination of any provision of this Agreement or anything to the contrary that
may be contained in this Agreement, in addition to any other restrictions on
transfer that may apply pursuant to this Agreement, no Shareholder that is a
Regulation Y Stockholder may transfer any Nonvoting Common Stock, except (i) to
the Company, (ii) to any other Shareholder or Shareholders pursuant to a right
of first offer extended to all Shareholders pro rata in accordance with the
provisions of this Agreement, (iii) to any Person or group of Persons who own,
prior to giving effect to the proposed transfer, 50% or more of the outstanding
Voting Common Stock, (iv) to the Parent of such Regulation Y Stockholder or any
wholly-owned direct or indirect subsidiary of such Parent (a "Controlled
Subsidiary"), (v) in connection with any merger, consolidation, reorganization
or sale of shares of the Company representing 50% or more of the outstanding
Voting Common Stock (a "reorganization"), (vi) in conjunction with a sale of
shares by any other Shareholder or Shareholders pursuant to Section 4.2,
provided that the Regulation Y Stockholder did not initiate such sale of shares
(a "joined sale"), (vii) in a registered public offering or an open market sale
pursuant to Rule 144 under the Securities Act (or any successor rule thereto),
in each case in accordance with the provisions of this Agreement, (viii) in a
private sale (otherwise than to the Company, another Person pursuant to clause
(ii) or (iii) above, a Parent, a Controlled Subsidiary of such Parent or in a
joined sale or reorganization); PROVIDED that the Regulation Y Stockholder
(A) shall have first offered to the Company the right to purchase all of such
Nonvoting Common Stock being sold pursuant to a written offer which shall have
been open to acceptance for a period of at least 10 days, for cash at a price
which did not exceed the price obtained in the private sale, and (B) shall not
knowingly sell or otherwise transfer to any single Person or group of Persons
acting in concert a number of shares of Nonvoting Common Stock that, if
converted into Voting Common Stock would represent more than 2 percent of the
Voting Common Stock of the Company then outstanding, or (ix) upon the advice of
counsel to such Regulation Y Stockholder that such sale or other transfer is
13
permitted under the laws and regulations applicable to such Regulation Y
Stockholder.
3.6 TERMINATION OF CERTAIN PROVISIONS OF ARTICLE III. The last
sentence of Section 3.1, the last sentence of Section 3.3, and Section 3.4,
shall terminate automatically at such time as less than 20% of the outstanding
shares of Common Stock are held by Shareholders and Employee Grantees.
ARTICLE IV
RIGHTS TO COMPEL A SALE;
RIGHTS TO PARTICIPATE IN A SALE
4.1 RIGHTS TO COMPEL A SALE. (a) If at any time three or more of the
Persons specified in Section 4.1(b) holding at least 55% of the Shares (other
than Common Stock held by ▇▇▇▇▇▇ Capital and its Permitted Transferees)
(collectively, the "Majority Shareholders"), propose to sell to any Person other
than a Majority Shareholder or an Affiliate of any Majority Shareholder, for
cash, Cash Equivalents or Readily Marketable Securities, all Shares held by them
and their respective Permitted Transferees who have agreed pursuant to Section
3.3 to be bound by this Agreement (the "Sale Offer"), then the Majority
Shareholders may, at their option, require each and every other Shareholder
including ▇▇▇▇▇▇ Capital (the "Remaining Shareholders") to sell all Shares held
by them to such Person for the same consideration per Share and otherwise on the
same terms and conditions upon which the Majority Shareholders sell their
Shares; PROVIDED that no Remaining Shareholder shall be required to sell any
Shares to such Person if such Remaining Holder shall determine in good faith
that such sale would constitute a violation of applicable law or regulation or
otherwise subject such Remaining Shareholder to material liability.
(b) The Persons who may participate in the exercise of rights under
Section 4.1(a) shall include all Investors (other than ▇▇▇▇▇▇ Capital) (each,
together with its Permitted Transferees who have agreed pursuant to Section 3.3
to be bound by this Agreement); PROVIDED that an Investor may not participate in
such exercise if it is a "party in interest" within the meaning of ERISA with
respect to any Remaining Shareholder.
14
(c) The Majority Shareholders shall cause the Sale Offer to be reduced
to writing and shall provide a written notice (the "Sale Notice") of the Sale
Offer to the Company and the Company shall provide written notice of the Sale
Offer to the Remaining Shareholders. The Sale Notice shall contain written
notice of the exercise of the Majority Shareholders' rights pursuant to Section
4.1(a), setting forth the consideration per Share to be paid and the other terms
and conditions of the Sale Offer. Within 20 days following the date of the Sale
Notice, each of the Remaining Shareholders shall deliver to a representative of
the Majority Shareholders designated in the Sale Notice certificates
representing the Shares held by such Remaining Shareholder, Duly Endorsed,
together with all other documents required to be executed in connection with
such Sale Offer or, if such delivery of certificates is not permitted by
applicable law or regulation or an interpretation thereof by a governmental
authority, an unconditional agreement to deliver such Shares pursuant to this
Section 4.1(c) against delivery to such Remaining Shareholder of the
consideration therefor. Such representative shall hold such Shares in trust for
the Remaining Shareholders pending completion or abandonment of such sale. If a
Remaining Shareholder fails to deliver such certificates to the Majority
Shareholders, the Company shall cause the books and records of the Company to
show that such Shares are bound by the provisions of this Section 4.1(c). If,
within 120 days after the Majority Shareholders give the Sale Notice, they have
not completed the sale of all of the Shares, the Majority Shareholders shall
return to each Remaining Shareholder all certificates representing the Shares
that such Remaining Shareholder delivered for sale pursuant hereto. Promptly
after the consummation of the sale of Shares pursuant to this Section 4.1, the
Majority Shareholders shall give notice thereof to the Remaining Shareholders,
shall remit to each of the Remaining Shareholders the total consideration for
the Shares of the Remaining Shareholders sold pursuant thereto, and shall
furnish such other evidence of the completion and time of completion of such
sale and the terms thereof as may be reasonably requested by the Remaining
Shareholders.
4.2 RIGHTS TO PARTICIPATE IN A SALE. (a) No Shareholder (for
purposes of this Section 4.2, the "Selling Shareholder") shall, directly or
indirectly, sell or otherwise dispose of any Shares (other than to a Permitted
Transferee under Section 3.3, in an Open Market Sale, in a registered public
offering or in a transaction as to which Majority Shareholders have exercised
their rights under
15
Section 4.1) without giving prior written notice (a "Section 4.2 Notice") to the
Company and to each other Shareholder of (i) the minimum price of the intended
sale, (ii) the maximum number (and percentage) of the Company's Common Stock
proposed to be sold, and (iii) the maximum number (and percentage) of the
Selling Shareholder's Shares proposed to be sold. The Section 4.2 Notice shall
also identify the Person to whom the Selling Shareholder proposes to sell Shares
and provide an adequate description of any noncash consideration to be paid for
the Shares (if the Shareholders shall have consented to the use of noncash
consideration pursuant to Section 3.1) and of any other material terms of the
proposed sale. Each Shareholder other than the Selling Shareholder shall,
within 30 days of receipt of the Section 4.2 Notice, notify the Company, the
Selling Shareholder and each other Shareholder in writing of the number and
percentage of its Shares it proposes to include in the sale. Delivery of such
notice shall constitute that Shareholder's irrevocable consent to the sale of
the number of Shares specified in such notice or such lesser number as it may be
determined that such Shareholder is permitted to include in such sale pursuant
to Section 4.2(b).
(b) If the total amount of stock proposed to be included in the sale
by all Shareholders constitutes a greater proportion of the Company's Common
Stock than was proposed to be sold as set forth in the Section 4.2 Notice, the
amount of Shares of each Shareholder participating in the sale shall be scaled
back by reducing the number of each Shareholder's Shares to be included in the
sale such that no Shareholder participating in such sale may participate with
respect to a greater percentage of its Shares than any other Shareholder, except
for another Shareholder that is participating with respect to a lower percentage
of its Shares that constitutes all of the Shares covered by its notice given
pursuant to Section 4.2(a).
(c) Unless each Shareholder is to participate in any sale subject to
Section 4.2(a) with respect to the same percentage of its Shares, the price at
which such sale may be made may not exceed the price set forth in the Section
4.2 Notice without the written consent of each Shareholder entitled to
participate who does not participate or who does not participate to the full
extent permitted in such sale. Any Shareholder who fails to respond in writing
to the Selling Shareholder, within five business days after receipt of a written
request for such consent, shall be deemed to have given its consent to such
change in price. If any Shareholder refuses to consent, the Selling Shareholder
may
16
renotify the other Shareholders of the revised terms of sale pursuant to Section
4.2(a), but in such case the other Shareholders will have five business days
(rather than 30 days) to respond to such notice. In addition, under no
circumstances shall the Selling Shareholder sell a percentage of its Shares
greater than the percentage set forth in the Section 4.2 Notice.
(d) After calculating the number of Shares of each Shareholder to be
included in any sale pursuant to Section 4.2(b), the Company shall promptly
notify each Shareholder in writing. Each Shareholder shall deliver to the
Selling Shareholder a certificate or certificates representing the Shares to be
sold, together with a limited power-of-attorney authorizing the Selling
Shareholder to sell such Shares pursuant to the terms described in the Section
4.2 Notice. Upon receipt of all such certificates, the Selling Shareholder
shall consummate the sale as contemplated by the Section 4.2 Notice and the
terms of this Section 4.2.
(e) Promptly after the consummation of the sale of Shares pursuant to
this Section 4.2, the Selling Shareholder shall give notice thereof to the other
Shareholders, shall remit to each of the other Shareholders the total
consideration for the Shares of the other Shareholders sold pursuant thereto,
and shall furnish such other evidence of the completion and time of completion
of such sale and the terms thereof as may be reasonably requested by the other
Shareholders.
(f) If at any time less than 20% of the outstanding Common Stock is
held by the Shareholders and Employee Grantees, the provisions of this Section
4.2 shall terminate.
4.3 RIGHTS TO PARTICIPATE IN AN OPEN MARKET SALE. (a) No Shareholder
(for purposes of this Section 4.3, the "Selling Shareholder") shall, directly or
indirectly, sell or otherwise dispose of any Shares in an Open Market Sale
without giving prior written notice (a "Section 4.3 Notice") to the Company and
to each other Shareholder of (i) either (x) the minimum price of the intended
sale or (y) a formula (based on the market price of the Common Stock) that will
be used to determine the price(s) of the intended sale, which may or may not
include a minimum price for such sale,(ii) the maximum number (and percentage)
of the Company's Common Stock proposed to be sold, and (iii) the maximum number
of the Selling Shareholder's Shares proposed to be sold. The
17
Section 4.3 Notice shall also provide an adequate description of the proposed
manner and timing of sale, including the identity of (and compensation and other
arrangements relating to the sale with) any broker or other agent to be used in
connection with the sale. Each Shareholder other than the Selling Shareholder
shall, within 10 days of receipt of the Section 4.3 Notice, notify the Company,
the Selling Shareholder and each other Shareholder in writing of the number and
percentage of any of its Shares that it proposes to include in the sale.
Delivery of such notice shall constitute the Shareholder's consent to the sale
of the number of Shares specified in such notice or such lesser number as may be
allocated to such Shareholder pursuant to Section 4.3(c), its consent to the
proposed manner of sale and its agreement to be bound by the compensation,
expense reimbursement and indemnity terms of the broker or agent effecting such
sale.
(b) Each Shareholder shall deliver to the Selling Shareholder (or a
broker or agent designated by the Selling Shareholder) a certificate or
certificates representing the Shares to be sold, together with a limited
power-of-attorney authorizing the Selling Shareholder (or the applicable broker
or agent) to sell such Shares in accordance with the terms described in the
Section 4.3 Notice.
(c) Any Open Market Sales made by the Selling Shareholder (or by any
broker or agent selected by it) shall be allocated proportionately among the
Shares proposed to be sold by such Selling Shareholder and each other
Shareholder which has, pursuant to Section 4.3(a), notified the Selling
Shareholder of its inclusion of Shares in the Open Market Sale so that the ratio
of the number of Shares actually sold for the account of each participating
Shareholder to the maximum number of Shares proposed to be sold by such
Shareholder is as nearly equal as possible to such ratio with respect to each
other Shareholder.
(d) The Selling Shareholder (or the applicable broker or agent) shall
notify the participating Shareholders in writing periodically as to the progress
and status of such Open Market Sales, shall promptly remit to each of the other
Shareholders the consideration (net of such Shareholder's share of brokerage
fees and expenses and other allocable costs) for the Shares of such other
Shareholder sold, and shall furnish such other evidence of the completion and
time of completion of such sales and the terms thereof as may be reasonably
requested by each other Shareholder. No Shareholder shall have any liability of
any
18
nature to any other Shareholder for any actions or omissions by a broker or
other agent in making any sales or performing the other services specified in
this Section 4.3, whether or not that broker or agent was selected by that
Shareholder.
(e) If a Shareholder notifies the Selling Shareholder (or the
applicable broker or dealer) of such Shareholder's desire to withdraw all or a
portion of its Shares to be sold, the Selling Shareholder (or the applicable
broker or dealer) shall promptly return to such Shareholder all certificates
representing such Shares.
(f) If at any time less than 20% of the outstanding Common Stock is
held by the Shareholders and Employee Grantees, the provisions of this Section
4.3 shall terminate.
ARTICLE V
REGISTRATION RIGHTS
5.1 DEMAND REGISTRATION. (a) Any one or more Shareholders may make a
written request for registration of Registrable Stock under the Securities Act
(a "Demand Registration") held by such Shareholders or Registrable Stock into or
for which Shares held by such Shareholders are convertible or exchangeable
(without regard to any restrictions on conversion or exchange by any particular
holder); PROVIDED that,(i) the Registrable Stock sought to be registered would
constitute at least 10% of the outstanding Common Stock of the Company or (ii)
if the Shareholder or Shareholders making such request includes any Senior
Manager, the Registrable Stock sought to be registered by all Senior Managers,
in the aggregate, would constitute at least 1.0% of the outstanding Common Stock
of the Company. The Company shall not be obligated to effect any Demand
Registration within six months of the date any registration statement with
respect to Voting Common Stock (other than a registration statement on Form S-4
or S-8 or any successor form thereto), including, without limitation, any
registration statement filed in connection with a Demand Registration, becomes
effective. Notwithstanding the foregoing, the Company shall not be obligated to
effect any Demand Registration pursuant to clause (ii) above within twelve
months of the date any other registration statement filed in connection with a
Demand Registration pursuant to clause (ii) above becomes effective. Each
request for a Demand Registration will specify the number of shares of
19
Registrable Stock proposed to be sold and will also specify the intended method
of disposition thereof. Within 10 days after receipt of such request, the
Company will give written notice of such registration request to all other
Shareholders holding Registrable Stock or Shares convertible into or
exchangeable for Registrable Stock (without regard to any restrictions on
conversion or exchange by any particular holder) and include in such
registration all Registrable Stock with respect to which the Company has
received written requests for inclusion therein within 20 Business Days after
the receipt by the applicable holder of the Company's notice. Each request will
also specify the number of shares of Registrable Stock to be registered and the
intended method of disposition thereof. The Company shall also be permitted, at
any time prior to the expiration of such 20 day period, to include Voting Common
Stock or Convertible Securities in such Demand Registration to the extent
consistent with Section 5.3.
(b) The Company may require, and the Shareholders desiring to sell a
majority of shares of the Registrable Stock to be registered in a Demand
Registration may elect, that the offering pursuant to such Demand Registration
be in the form of a firm commitment underwritten offering. In that event, all
Shares to be registered shall be registered for sale only in such underwritten
offering, the Shareholders desiring to sell a majority of shares of the
Registrable Stock to be registered in the Demand Registration shall select the
book-running managing Underwriter in connection with any underwritten offering
and any additional investment bankers and managers to be used in connection with
the offering; PROVIDED that such managing Underwriter and additional investment
bankers and managers must be reasonably satisfactory to the Company.
5.2 INCIDENTAL REGISTRATION. If at any time prior to the tenth
anniversary of the effectiveness of this Agreement the Company proposes to file
a registration statement under the Securities Act with respect to an offering
by the Company of Common Stock or Convertible Securities for its own account or
for the account of any of its respective holders of Common Stock or Convertible
Securities, excluding any registration statement on Form S-4 or S-8 (or any
successor form thereto) or filed in connection with an exchange offer or
offering of securities solely to the Company's existing securityholders, then
the Company shall give written notice of such proposed filing to the
Shareholders holding Registrable Stock
20
or Shares convertible into or exchangeable for Registrable Stock (without regard
to any restrictions on conversion or exchange by any particular holder) as soon
as practicable (but in no event less than 10 days before the anticipated filing
date), and such notice shall offer the Shareholders the opportunity to register
such number of shares of Registrable Stock as each Shareholder may request (an
"Incidental Registration"). The Company shall use its best efforts to cause the
managing Underwriter or Underwriters of a proposed underwritten offering to
permit the Registrable Stock requested to be included in an Incidental
Registration to be included on the same terms and conditions as any similar
securities of the Company included therein.
5.3 REDUCTION OF OFFERING. Notwithstanding anything contained
herein, if the managing Underwriter or Underwriters of an offering described in
Section 5.1 or 5.2 deliver a written opinion to the holders of the Registrable
Stock or Shares convertible into or exchangeable for Registrable Stock (without
regard to any restrictions on conversion or exchange by any particular holder)
included in such offering that the size of the offering that the Shareholders,
the Company and such other Persons intend to make is such that the success of
the offering would be materially and adversely affected by inclusion of the
Registrable Stock requested to be included, then the amount of Registrable Stock
to be offered for the accounts of Shareholders shall be reduced pro rata
(according to the number of shares of Registrable Stock proposed for
registration) to the extent necessary to reduce the total amount of securities
to be included in such offering to the amount recommended by such managing
Underwriter or Underwriters, PROVIDED that (i) no reduction in the number of
shares of Registrable Stock to be offered by one or more Exiting Holders shall
be made unless the amounts of securities to be offered by other Shareholders
and, in the case of a Demand Registration, the number of shares to be offered by
the Company and other Shareholders shall have been reduced to zero, (ii) in the
case of an Incidental Registration, if securities are being offered for the
account of other Persons as well as the Company, then the number of shares of
Registrable Stock intended to be offered by Shareholders shall not be reduced
until the number of shares of Voting Common Stock intended to be offered by such
other Persons is reduced to zero and (iii) in the case of a Demand Registration,
(A) no reduction in the number of shares of Registrable Stock to be offered by
the Shareholders entitled to participate in such Demand Registration shall, if
the Company shall have offered and sold Common Stock or Convertible Securities
pursuant to a
21
registration statement other than on Form S-4 or S-8 (or any successor or
similar form thereto) within the last 12 months, be made unless the amount of
securities to be included by the Company in such Demand Registration pursuant to
the last sentence of Section 5.1(a) shall have first been reduced to zero and
(B) such Shareholders shall in any event in the aggregate be entitled to include
in such Demand Registration Registrable Stock representing at least 25% of the
estimated proceeds of the offering.
5.4 FILINGS; INFORMATION. Whenever Shareholders request that any
Registrable Stock be registered pursuant to Section 5.1 or Section 5.2 hereof,
the Company will use its best efforts to effect the registration and the sale of
such Registrable Stock in accordance with the intended method of disposition
thereof as quickly as practicable, and in connection with any such request:
(a) The Company will as expeditiously as possible prepare and file
with the Commission a registration statement on any form for which the
Company then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the sale of the
Registrable Stock to be registered thereunder in accordance with the
intended method of distribution thereof, and use its best efforts to cause
such filed registration statement to become and remain effective for a
period of not less than 270 days; PROVIDED that if the Company shall
furnish to the Shareholders making a request pursuant to Section 5.1 a
certificate signed by either its Chairman or the Vice Chairman stating that
in the good faith judgment of the Board of Directors it would be
significantly disadvantageous to the Company or its shareholders for such a
registration statement to be filed as expeditiously as possible, the
Company shall have a period of not more than 90 days within which to file
such registration statement measured from the date of receipt of the
request in accordance with Section 5.1. The right to defer such filing may
not be exercised more than one time in any twelve month period.
(b) The Company will, if requested, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to
each Selling Holder and each Underwriter, if any, of the Registrable Stock
covered by such registration statement copies of such registration
statement as proposed to be filed, and thereafter furnish to such
22
Selling Holder and Underwriter, if any, such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto and documents incorporated by reference
therein), the prospectus included in such registration statement (including
each preliminary prospectus) and such other documents as such Selling
Holder or Underwriter may reasonably request in order to facilitate the
disposition of the Registrable Stock owned by such Selling Holder.
(c) After the filing of the registration statement, the Company will
promptly notify each Selling Holder of Registrable Stock covered by such
registration statement 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.
(d) The Company will use its best efforts to (i) register or qualify
the Registrable Stock under such other securities or blue sky laws of such
jurisdictions in the United States as any Selling Holder reasonably (in
light of such Selling Holder's intended plan of distribution) requests and
(ii) cause such Registrable Stock to be registered with or approved by such
other governmental agencies or authorities as may be necessary by virtue of
the business and operations of the Company and do any and all other acts
and things that may be reasonably necessary or advisable to enable such
Selling Holder to consummate the disposition of the Registrable Stock owned
by such Selling Holder; PROVIDED that the Company will not be required to
(A) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph (d), (B) subject
itself to taxation in any such jurisdiction or (C) consent to general
service of process in any such jurisdiction.
(e) The Company will immediately notify each Selling Holder of such
Registrable Stock, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the occurrence of an
event requiring the preparation of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Stock, such prospectus will not contain an untrue statement of
a material fact or omit to state any material fact
23
required to be stated therein or necessary to make the statements therein
not misleading and promptly prepare and make available to each Selling
Holder any such supplement or amendment.
(f) The Company will enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions as
are reasonably required in order to expedite or facilitate the disposition
of such Registrable Stock.
(g) The Company will make available for inspection by any Selling
Holder of such Registrable Stock, any Underwriter participating in any
disposition pursuant to such registration statement and any attorney,
accountant or other professional retained by any such Selling Holder or
Underwriter (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as shall be reasonably necessary to enable
them to exercise their due diligence responsibility, and cause the
Company's officers, directors and employees to supply all information
reasonably requested by any Inspectors in connection with such registration
statement. Records which the Company determines, in good faith, to be
confidential and which it notifies the Inspectors are confidential shall
not be disclosed by the Inspectors unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in such
registration statement or (ii) the release of such Records is ordered
pursuant to a subpoena or other order from a court of competent
jurisdiction. Each Selling Holder of such Registrable Stock agrees that
information obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company or its Affiliates unless and
until such is made generally available to the public. Each Selling Holder
of such Registrable Stock further agrees that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction,
give notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of the Records deemed
confidential.
(h) The Company will furnish to each Selling Holder and to each
Underwriter, if any, a signed
24
counterpart, addressed to such Selling Holder or Underwriter, of (i) an
opinion or opinions of counsel to the Company and (ii) a comfort letter or
comfort letters from the Company's independent public accountants, each in
customary form and covering such matters of the type customarily covered by
opinions or comfort letters, as the case may be, as the Majority Holders of
the issue of Registrable Stock included in such offering or the managing
Underwriter therefor reasonably requests.
(i) The Company will otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to
its securityholders, as soon as reasonably practicable, an earnings
statement covering a period of 12 months, beginning within three months
after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities
Act.
(j) The Company will use its best efforts to cause all such
Registrable Stock to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
The Company may require each Selling Holder of Registrable Stock to
promptly furnish in writing to the Company such information regarding the
distribution of the Registrable Stock as the Company may from time to time
reasonably request and such other information relating to such Selling Holder as
may be legally required in connection with such registration.
Each Selling Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 5.4(e)
hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Stock pursuant to the registration statement covering such
Registrable Stock until such Selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 5.4(e) hereof, and,
if so directed by the Company, such Selling Holder will deliver to the Company
all copies, other than permanent file copies then in such Selling Holder's
possession, of the most recent prospectus covering such Registrable Stock at the
time of receipt of such notice. If the Company shall give such notice, the
Company shall extend the period during which such registration statement shall
be maintained effective
25
(including the period referred to in Section 5.4(a) hereof) by the number of
days during the period from and including the date of the giving of notice
pursuant to Section 5.4(e) hereof to the date when the Company shall make
available to the Selling Holders of Registrable Stock covered by such
registration statement a prospectus supplemented or amended to conform with the
requirements of Section 5.4(e) hereof.
5.5 REGISTRATION EXPENSES. In connection with any registration
statement required to be filed under Section 5.1 or Section 5.2 hereof, the
Company shall pay the following registration expenses incurred in connection
with the registration hereunder (the "Registration Expenses"): (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 Stock),
(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 Stock, (vi) reasonable fees and disbursements of
counsel for the Company and customary fees and expenses for independent
certified public accountants retained by the Company (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 requested
pursuant to Section 5.4(h) hereof), (vii) the reasonable fees and expenses of
any special experts retained by the Company in connection with such
registration, (viii) reasonable fees and expenses of one counsel (who shall be
reasonably acceptable to the Company) for the Selling Holders selected by
Selling Holders holding the majority of Registrable Stock to be sold for the
account of all Selling Holders in the offering, and (ix) fees payable to the
National Association of Securities Dealers, Inc. The Company shall have no
obligation to pay any underwriting fees, discounts or commissions attributable
to the sale of Registrable Stock, or any out-of-pocket expenses of the Selling
Holders (or the agents who manage their accounts).
5.6 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless each Selling Holder, its officers, directors and agents, and
each Person, if any, who controls such Selling Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages and liabilities caused by any untrue
statement or
26
alleged untrue statement of a material fact contained in any registration
statement or prospectus relating to the Registrable Stock (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by 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 or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
furnished in writing to the Company by such Selling Holder or on such Selling
Holder's behalf expressly for use therein; PROVIDED that the foregoing indemnity
agreement with respect to any preliminary prospectus shall not inure to the
benefit of any Selling Holder from whom the person asserting any such loss,
claim, damage or liability purchased the Registrable Stock if it is determined
that it was the responsibility of such Selling Holder to provide such person
with a current copy of the prospectus and such current copy of the prospectus
would have cured the defect giving rise to such loss, claim, damage or
liability. The Company also agrees to indemnify each Underwriter of the
Registrable Stock, its officers and directors and each person who controls such
Underwriter on substantially the same basis as that of the indemnification of
the Selling Holders provided in this Section 5.6.
5.7 INDEMNIFICATION BY HOLDERS OF REGISTRABLE STOCK. Each Selling
Holder agrees, severally but not jointly, to indemnify and hold harmless the
Company, its officers, directors and agents and each Person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act on the same basis as the foregoing
indemnity from the Company to such Selling Holder, but only with reference to
information related to such Selling Holder or the Selling Holder's plan of
distribution furnished in writing by such Selling Holder or on such Selling
Holder's behalf expressly for use in any registration statement or prospectus
relating to the Registrable Stock, or any amendment or supplement thereto, or
any preliminary prospectus. In case any action or proceeding shall be brought
against the Company or its officers, directors or agents or any such controlling
person, in respect of which indemnity may be sought against such Selling Holder,
such Selling Holder shall have the rights and duties given to the Company, and
the Company or its officers, directors or agents or such controlling person
shall have the rights and duties given to such Selling Holder, by Section 5.6.
Each Selling Holder also agrees to
27
indemnify and hold harmless each Underwriter of the Registrable Stock, its
officers and directors and each person who controls such Underwriter on
substantially the same basis as that of the indemnification of the Company
provided in this Section 5.7. No Selling Holder shall be liable to any Person
under this Section 5.7 for amounts in excess of the net proceeds to it of the
Registrable Stock sold by it.
5.8 CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any proceeding
(including any governmental investigation) shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to Section 5.6 or
Section 5.7, such Person (an "Indemnified Party") shall promptly notify the
person against whom such indemnity may be sought "Indemnifying Party") in
writing and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Party, and
shall assume the payment of all fees and expenses. In any such proceeding, any
Indemnified Party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the Indemnified Party
and the Indemnifying Party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that the Indemnifying Party shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) at any time for all such
Indemnified Parties, and that all such fees and expenses shall be reimbursed as
they are incurred. In the case of any such separate firm for the Indemnified
Parties, such firm shall be designated in writing by the Indemnified Parties.
The Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its consent, but if settled with such consent, or if there be a
final judgment for the plaintiff, the Indemnifying Party shall indemnify and
hold harmless such Indemnified Parties from and against any loss or liability
(to the extent stated above) by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Party
shall have requested an Indemnifying Party to reimburse the Indemnified Party
for reasonable fees and
28
expenses of counsel as contemplated by the second and third sentences of this
Section 5.8 and the Indemnified Party shall be entitled to such reimbursement,
the Indemnifying Party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) reasonable notice of such
settlement offer has been received by the Indemnified Party, (ii) such
settlement is entered into more than 30 business days after receipt by such
Indemnifying Party of the aforesaid request and (iii) such Indemnifying Party
shall not have reimbursed the Indemnified Party for such reasonable fees and
expenses of counsel in accordance with such request prior to the date of such
settlement. No Indemnifying Party shall, without the prior written consent of
the Indemnified Party, effect any settlement of any pending or threatened
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 arising out of such proceeding.
5.9 CONTRIBUTION. If the indemnification provided for in Section 5.6
or Section 5.7 is unavailable to the Indemnified Parties in respect of any
losses, claims, damages or liabilities referred to herein, then each such
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 or liabilities (i) as between the Company and
the Selling Holders on the one hand and the Underwriters on the other, in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Holders on the one hand and the Underwriters on the
other from the offering of the Securities, or if such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits but also the relative fault of the Company and the
Selling Holders on the one hand and of the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations and (ii) as between the Company on the one hand and each Selling
Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of each Selling Holder in connection with such
statements or omissions, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling Holders on the one
hand and the Underwriters on the other shall be deemed to be in the same
29
proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
and the Selling Holders bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the prospectus. The relative fault of the Company and the Selling
Holders on the one hand and of the Underwriters on the other 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 the Company and the Selling
Holders or by the Underwriters. The relative fault of the Company on the one
hand and of each Selling Holder on the other 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 such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Selling Holders agree that it would not be just
and equitable if contribution pursuant to this Section 5.9 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages or liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any reasonable legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 5.9, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or
30
omission or alleged omission, and no Selling Holder shall be required to
contribute any amount in excess of the amount by which the total price at which
the securities of such Selling Holder were offered to the public exceeds the
amount of any damages which such Selling Holder 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. The Selling
Holders' obligations to contribute pursuant to this Section 5.9 are several in
proportion to the proceeds of the offering received by such Selling Holder bears
to the total proceeds of the offering received by all the Selling Holders and
not joint. Notwithstanding any provision to the contrary contained herein, no
Selling Holder shall be liable to any Person under this Section 5.9 for amounts
in excess of the net proceeds to it of the Registrable Stock sold by it.
5.10 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Shareholder may
participate in any underwritten registration hereunder unless such Shareholder
(a) agrees to sell such Shareholder's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and this Article V.
5.11 RULE 144. The Company covenants that it will file any reports
required to be filed by it under the Securities Act and the Exchange Act and
that it will take such further action as any Shareholder may reasonably request,
all to the extent required from time to time to enable Shareholders to sell
Registrable Stock without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any
Shareholder, the Company will deliver to such Shareholder a written statement as
to whether it has complied with such requirements.
5.12 HOLDBACK AGREEMENTS. (a) To the extent not inconsistent with
applicable law, in the case of any underwritten public offering, each
Shareholder agrees not to (1) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or a similar security of the Company, or
any securities convertible into or exercisable or exchangeable for such
securities (whether such shares or any such securities are
31
now owned by the undersigned or are hereafter acquired), or (2) enter into any
swap or other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise, if and to the extent
requested by the managing Underwriter or Underwriters, during the 25 days prior
to, and during the 180-day period beginning on, the effective date of such
registration statement (except as part of such registration) without the consent
of such managing Underwriter or Underwriters.
(b) The Company agrees (i) that, if and to the extent requested by the
managing Underwriter or Underwriters, neither it nor any of its Affiliates will
(A) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of, directly or indirectly,
any shares of Common Stock or a similar security of the Company or any
securities convertible into or exercisable or exchangeable for such securities
or (B) enter into any swap or other agreement that transfers, in whole or in
part, any of the economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (A) or (B) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise, during
the 25 days prior to, and during the 180-day period beginning on, the effective
date of any registration statement (except as part of such registration
statement where consistent with the terms of Section 5.1 or 5.2, as applicable)
or the commencement of a public distribution of Registrable Stock; and (ii) that
any agreement entered into after the date of this Agreement pursuant to which
the Company issues or agrees to issue any privately placed securities shall
contain a provision under which holders of such securities agree not to effect
any transactions described in clauses (A) or (B) above during the periods
described in (i) above (except as part of any such registration, if permitted);
PROVIDED that the provisions of this paragraph (b) shall not prevent (x) the
issuance by the Company of any shares of Common Stock upon the exercise of an
option or warrant or the conversion of a security outstanding on the date hereof
of which the managing Underwriter or Underwriters have been advised in writing
or (y) any shares of Common Stock issued or options to purchase Common Stock
granted pursuant to existing employee benefit plans of the Company, including,
without limitation, the 1992 Plan.
32
ARTICLE VI
OTHER AGREEMENTS
6.1 CONFIDENTIALITY. (a) Each Shareholder hereby agrees that
Confidential Information (as defined below) furnished and to be furnished to it
or him was and will be made available in connection with such Shareholder's
investment in the Company. Each Shareholder agrees that he or it will not use
the Confidential Information in any way to the competitive disadvantage of the
Company, ▇▇▇▇▇▇ or ▇▇▇▇▇▇ Re. Each Shareholder further acknowledges and agrees
that he or it will not disclose any Confidential Information to any Person;
PROVIDED that Confidential Information may be disclosed (i) to such
Shareholder's Representatives (as defined below) in the normal course of the
performance of their duties, (ii) to the extent required by applicable law, rule
or regulation (including complying with any oral or written questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand or similar process to which the Shareholder is subject),
(iii) as necessary in connection with maintaining regulatory approvals,
approvals of the Federal National Mortgage Association or Federal Home Loan
Mortgage Corporation or claims paying ability ratings needed to operate the
business of the Company, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ Re, (iv) to any regulatory entity or
rating agency in the regular course of such Shareholder's dealings with such
entity or agency, as long as such entity or agency is advised of the
confidential nature of such information, (v) to any Person to whom such
Shareholder is contemplating a transfer of his or its Shares, provided that such
transfer would not be in violation of the provisions of this Agreement and as
long as such person is advised of the confidential nature of such information
and agrees to be bound by the provisions hereof, (vi) if the prior written
consent of the Board of Directors shall have been obtained and (vii) by any
Senior Manager in the normal course of exercising his duties as an employee of
the Company, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ Re. Nothing contained herein shall prevent the
use of Confidential Information in connection with the assertion or defense of
any claim by or against the Company or any Shareholder.
(b) "Confidential Information" means the information furnished and to
be furnished to any Shareholder relating to the Purchase Agreement, the
Investment Agreement, the Securities Purchase Agreement and the transactions
contemplated thereby, or to its investment in
33
the Company, including but not limited to the identity of the Shareholders and
their respective Affiliates and the business and operations of the Company,
▇▇▇▇▇▇ and ▇▇▇▇▇▇ Re; PROVIDED that the term "Confidential Information" does not
include information which (i) was or becomes generally available publicly other
than as a result of a disclosure by a Shareholder or his or its partners,
directors, officers, employees, agents, counsel, investment advisers or
representatives (all such persons being collectively referred to as
"Representatives") in violation of the Purchase Agreement or this Agreement,
(ii) becomes available to a Shareholder on a nonconfidential basis from a source
other than the Company, any regulatory or rating agency, or another Shareholder
or his or its Representatives, provided that such source is not, to the best of
such Shareholder's knowledge, bound by a confidentiality agreement with the
Company or another Person or (iii) was lawfully in possession of such
Shareholder prior to January 1, 1992 (except that this clause (iii) shall not
apply to information concerning the identity of the Shareholders and their
respective Affiliates).
(c) Each Shareholder acknowledges and agrees that money damages would
not be a sufficient remedy for any breach of this Section 6.1 by such
Shareholder or any of its or their respective Representatives and that, in
addition to all other remedies that may be available, the Company shall be
entitled to specific performance and injunctive or other equitable relief as a
remedy for any such breach. It is further understood and agreed that no failure
or delay by the Company in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
right, power or privilege hereunder.
6.2 NONCOMPETITION. (a) In connection with the acquisition by
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ of shares of Voting Common Stock as set forth in the
Management Stock Agreement and in consideration of Amendment No. 1 to the
Management Stock Agreement (in connection with the Initial Public Offering) and
the lapse following the Initial Public Offering of certain Limitations, as
defined in the Management Stock Agreement, on the Voting Common Stock held by
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, each of ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ agrees that following the
termination of his employment with the Company, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ Re or any of
their respective Affiliates (such that he is no longer employed with any such
entity), (i) in the case of ▇▇▇▇▇▇▇▇, until the date ten
34
(10) years following the date of such termination of his employment and (ii) in
the case of ▇▇▇▇▇▇▇, until the date three (3) years following the date of such
termination of his employment, he will not enter into competitive endeavors and
will not undertake any commercial activity which is competitive with the
Company, ▇▇▇▇▇▇ or ▇▇▇▇▇▇ Re or any of their respective Affiliates, in the
mortgage insurance business, including becoming an employee, owner (except for
passive investments of not more than one percent of the outstanding shares of,
or any other equity interest in, any company or entity listed or traded on a
national securities exchange or in an over-the-counter security market),
officer, agent, consultant or director of any firm or person in any geographic
area which either directly competes with or derives ten percent (10%) or more of
such firm's or person's gross sales, revenues or earnings before taxes from a
line or lines of business which directly competes with the Company, ▇▇▇▇▇▇ or
▇▇▇▇▇▇ Re or any of their respective Affiliates, in the mortgage insurance
business.
(b) It is expressly understood and agreed that although ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ and the Company consider the restrictions contained in this Section 6.2
to be reasonable, if a final judicial determination is made by a court of
competent jurisdiction that the time or territory or any other restriction
contained herein is an unenforceable restriction against ▇▇▇▇▇▇▇▇ and/or
▇▇▇▇▇▇▇, the provisions of this Section 6.2 shall not be rendered void but shall
be deemed amended to apply as to such maximum time and territory and to such
maximum extent as such court may judicially determine or indicate to be
enforceable. Alternatively, if any court of competent jurisdiction finds that
any restriction contained in this Section 6.2 is unenforceable, and such
restriction cannot be amended so as to make it enforceable, such finding shall
not affect the enforceability of any of the other restrictions contained herein.
6.3 ILLEGALITY. (a) In the event of any change in any law or
regulation or interpretation thereof by any governmental authority that makes it
unlawful or otherwise prohibited for any Investor to continue to hold its
investment in the Company, the Company and the Investors will use reasonable
efforts to restructure the Company's capital structure so that such Investor may
continue to hold an interest in the Company that is as similar as possible to
its existing investment in terms both of its economic and corporate governance
rights.
35
(b) In the event that it becomes unlawful for any Investor to continue
to hold some or all of the Shares of any class held by it, or restrictions are
imposed on any such Investor by any statute, regulation or governmental
authority which, in the reasonable judgment of such Investor, make it unduly
burdensome to continue to hold all or a portion of such Shares of any class,
such Investor may sell or otherwise dispose of so much of its Shares as
necessary to make it not unlawful or unduly burdensome on such Investor to
continue to hold the remainder, if any, of the Shares of any class held by it,
and the Company shall assist such Investor in disposing of such Shares in a
prompt and orderly manner, and, at the request of such Investor, shall provide
(and authorize such Investor to provide) financial and other information
concerning the Company to any prospective purchaser of the Shares of any class
owned by such Investor.
6.4 NOTICES OF ACQUISITIONS. In addition to any notices otherwise
required hereunder, each Shareholder agrees to notify MSLEF of the acquisition
by such Shareholder of beneficial ownership of an equity security of the Company
that is registered pursuant to Section 12 of the Exchange Act, within 5 days of
such acquisition. A copy of such notice shall be sent to: ▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attn: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, telecopier: (▇▇▇) ▇▇▇-▇▇▇▇.
ARTICLE VII
MISCELLANEOUS
7.1 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreements and
understandings, oral and written among the parties and hereto with respect to
the subject matter hereof.
7.2 BINDING EFFECT; BENEFIT. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
successors, legal representatives and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto, and their respective heirs, successors, legal
representatives and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
36
7.3 ASSIGNABILITY. This Agreement shall not be assignable by any
party hereto, except that any Person acquiring Shares who is required by the
terms of this Agreement to become a party hereto shall execute and deliver to
the Company an agreement to be bound by this Agreement and shall thenceforth be
a "Shareholder", and any Shareholder who ceases to hold any Shares shall cease
to be bound by the terms hereof, except for the terms of Section 6.1.
7.4 AMENDMENT; WAIVER; TERMINATION. (a) No provision of this
Agreement may be waived except by an instrument in writing executed by the party
against whom the waiver is to be effective. No provision of Article V or this
sentence may be amended or otherwise modified except by an instrument in writing
executed by the Company with the approval of the Board of Directors and by each
of the Shareholders holding Registrable Stock or Shares convertible into or
exchangeable for Registrable Stock (without regard to any restrictions on
conversion or exchange by any particular holder). No provision of Section 6.2
or this sentence may be amended or otherwise modified except by an instrument in
writing executed by (i) the Company, (ii) any Senior Manager adversely affected
by such amendment or modification, and (iii) Investors and their respective
Permitted Transferees who have agreed to be bound by this Agreement holding at
least two-thirds of the Shares held by such Investors and Permitted Transferees.
No other provision of this Agreement may be amended or otherwise modified except
by an instrument in writing executed by the Company with the approval of the
Board of Directors and Shareholders holding at least two-thirds of the Shares.
(b) In addition, (i) no provision of this Agreement that is
specifically applicable to ▇▇▇▇▇▇ Capital or Regulation Y Stockholders in their
capacity as such shall, except as set forth in Section 2.1(d), be amended or
otherwise modified or terminated except with the consent of ▇▇▇▇▇▇ Capital and
(ii) no provision of this Agreement that explicitly protects the Senior Managers
in their capacity as such or their rights under the Management Stock Agreement
may be amended or otherwise modified or terminated except with the consent of
each Senior Manager.
7.5 SPECIFIC PERFORMANCE. Each of the parties hereto acknowledges
and agrees that money damages would not be a sufficient remedy for breach of the
provisions of this Agreement by any of them and that, in addition to all other
remedies that may be available, the other parties hereto
37
shall be entitled to specific performance and injunctive or other equitable
relief as a remedy for any such breach. Each of the parties hereto also
acknowledges and agrees that no failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any right, power or privilege hereunder.
7.6 NOTICES. All notices and other communications given or made
pursuant hereto or pursuant to any other agreement among the parties, unless
otherwise specified, shall be in writing and shall be deemed to have been duly
given or made if sent by telecopy (with confirmation in writing), delivered
personally or sent by registered or certified mail (postage prepaid, return
receipt requested) to the parties at the telecopy number or address set forth
below its name on the signature pages hereof or at such other addresses as shall
be furnished by the parties by like notice, and such notice or communication
shall be deemed to have been given or made upon receipt. Any Person who becomes
a Shareholder shall provide its address and telecopy number to the Company,
which shall promptly provide such information to each other Shareholder.
7.7 HEADINGS. The headings contained in this Agreement are for
convenience only and shall not affect the meaning or interpretation of this
Agreement.
7.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
7.9 EFFECTIVENESS. This Agreement shall become effective
automatically upon, and only upon, (i) execution of this Agreement by the
Company and the Company's receipt of duly executed counterparts of this
Agreement from Shareholders holding at least two-thirds of the Shares and (ii)
the consummation of the Initial Public Offering. Upon the effectiveness of this
Agreement, the terms of this Agreement shall govern the rights and obligations
of the parties with respect to the matters governed hereby and shall supersede
the terms of the Old Shareholders Agreement in their entirety as to all periods
on or after the date of such effectiveness. If the Initial Public Offering
shall not have occurred on or prior to March 31, 1996, this Agreement shall
terminate and have no force and effect, and
38
the Old Shareholders Agreement shall remain in full force and effect.
7.10 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICTS OF LAW RULES OF SUCH STATE.
39
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
▇▇▇▇▇▇ CORPORATION
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Chairman
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chairman
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
40
▇.▇. ▇▇▇▇▇▇ CAPITAL CORPORATION
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Manager and Director
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
THE ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LEVERAGED
EQUITY FUND II, L.P.
By ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LEVERAGED
EQUITY FUND II, INC., as
General Partner
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
41
LEEWAY & CO.
By State Street Bank & Trust
Co., a partner
By:/s/ ▇▇▇▇ ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇
Title: Assistant Vice President
▇▇▇▇ ▇▇▇▇
c/o State Street Bank & Trust Co.
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
AT&T Investment Management Corp.
▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
42
MELLON BANK, N.A., TRUSTEE
for FIRST PLAZA GROUP TRUST
(as directed by General
Motors Investment Management
Corporation)
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Associate Counsel
Mellon Bank, N.A.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Legal Department
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇
General Motors Investment
Management Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
AETNA LIFE INSURANCE COMPANY
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Investment Manager
Aetna Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
43