INVESTORS AGREEMENT
INVESTORS AGREEMENT, dated as of November 19, 1998 (this "Agreement"),
between United Road Services, Inc., a Delaware corporation (the "Company") and
Charter URS LLC ("Charterhouse").
WHEREAS, the Company and Charterhouse have entered into the Purchase
Agreement, dated of even date herewith (the "Purchase Agreement"), pursuant to
which the Company is issuing and selling $43,500,000 aggregate principal amount
of 8% Convertible Subordinated Debentures due 2008 of the Company (the
"Debentures") to Charterhouse at the First Closing (as defined in the Purchase
Agreement) and, subject to the approval of the stockholders of the Company, the
Company will issue and sell an additional $31,500,000 aggregate principal amount
of Debentures at the Second Closing (as defined in the Purchase Agreement) so
that $75 million in aggregate principal amount of Debentures will be
outstanding;
WHEREAS, the Debentures are convertible at any time at the option of
the Holder, in part or in whole, into shares of common stock, par value $.001
per share, of the Company (the "Common Stock") as provided for in the Purchase
Agreement; and
WHEREAS, the execution and delivery of this Agreement is a condition to
the closing of the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions.
As used in this Agreement, the following terms shall have the
meanings set forth below:
1.1 Capitalized terms used herein but not otherwise defined
shall have the meanings ascribed to them in the Purchase Agreement.
1.2 "Converted Shares" means the shares of Common Stock
actually received by Charterhouse upon conversion of some or all of the
Debentures.
1.3 "Initial Interest" means the aggregate number of shares of
Common Stock into which the Debentures held by Charterhouse or its Permitted
Transferees may be converted as of the Second Closing, provided, however, that
if the Second Closing does not occur "Initial Interest" shall mean the aggregate
number of shares of Common Stock into which the Debentures held by Charterhouse
or its Permitted Transferees may be converted as of the First Closing.
1.4 "Investor Nominee" means any person nominated by
Charterhouse or its Permitted Transferee to serve as a director on the Company
Board pursuant to this Agreement.
1.5 "Liquidation" means the liquidation under applicable
bankruptcy or reorganization legislation, or the dissolution or winding up, of
the Company.
1.6 "Permitted Transferee" means any person to whom
Charterhouse may transfer the Debentures or the Converted Shares pursuant to
Section 4.2 provided that such Debentures or Converted Shares are transferred in
a transaction that is not registered pursuant to the Securities Act.
1.7 "Shares" means, at any time, the aggregate amount of (i)
the Converted Shares then held by Charterhouse or its Permitted Transferees,
(ii) the Converted Shares Charterhouse or its Permitted Transferees then have
the right to receive upon a conversion of all Debentures then held by them,
(iii) any other shares of Common Stock then held by Charterhouse and its
Permitted Transferees and (iv) any shares of Common Stock Charterhouse or its
Permitted Transferees have the right to receive upon the exercise of options or
warrants or upon the conversion of convertible securities of the Company (other
than the Debentures) then held by them.
1.8 "Share Price" means, as of any date, the closing price of
the Common Stock as reported in The Wall Street Journal on the last day of
trading immediately preceding such date.
1.9 "Stockholders" mean all the holders of Common Stock and
"Stockholder" shall mean any such Person.
1.10 "Transfer" means to sell, assign, transfer (voluntarily
or involuntarily) exchange (by merger or otherwise) or otherwise dispose of or
to ▇▇▇▇▇ ▇ ▇▇▇▇, encumbrance, pledge or other form of security interest.
2. Corporate Governance.
2.1 Initial Composition.
2.1.1 Effective at the First Closing, the Company
shall cause theCompany Board to be increased from eight directorships to ten
directorships (one of which new directorships shall be for an initial term
expiring at the Company's annual meeting of Stockholders in 2000 and the other
shall be for an initial term expiring at the Company's annual meeting of
Stockholders in 2001). Effective at the First Closing, the Company Board shall
appoint the Investor Nominees to fill the two vacancies created in accordance
with this Section 2.1.1.
2.1.2 Effective at the Second Closing, the Company
shall cause the Company Board to be increased from ten directorships to eleven
directorships (which new
directorship shall be for an initial term expiring at the Company's annual
meeting of Stockholders in 2001). Effective at the Second Closing, the Company
Board shall appoint an Investor Nominee to fill the vacancy created in
accordance with this Section 2.1.2.
2.2 Election of Directors.
2.2.1 If the Second Closing does not occur:
(a) So long as Charterhouse and its Permitted
Transferees beneficially own Shares that represent at least 50% in the aggregate
of the Initial Interest, Charterhouse and its Permitted Transferees collectively
shall have the right to nominate two persons for election to the Company Board;
(b) So long as Charterhouse and its Permitted
Transferees beneficially own Shares that represent at least 17% but less than
50% in the aggregate of the Initial Interest, Charterhouse and its Permitted
Transferees collectively shall have the right to nominate one person for
election to the Company Board;
(c) If at any time Charterhouse and its
Permitted Transferees beneficially own Shares that represent less than 17% in
the aggregate of the Initial Interest, Charterhouse and its Permitted
Transferees shall no longer be entitled to nominate any persons for election to
the Company Board.
2.2.2 If the Second Closing does occur:
(a) So long as Charterhouse and its Permitted
Transferees beneficially own Shares that represent at least 50% in the aggregate
of the Initial Interest, Charterhouse and its Permitted Transferees collectively
shall have the right to nominate three persons for election to the Company
Board;
(b) So long as Charterhouse and its Permitted
Transferees beneficially own Shares that represent at least 25% but less than
50% in the aggregate of the Initial Interest, Charterhouse and its Permitted
Transferees collectively shall have the right to nominate two persons for
election to the Company Board;
(c) So long as Charterhouse and its Permitted
Transferees beneficially own Shares that represent at least 10% but less than
25% in the aggregate of the Initial Interest, Charterhouse and its Permitted
Transferees collectively shall have the right to nominate one person for
election to the Company Board;
(d) If at any time Charterhouse and its
Permitted Transferees beneficially own Shares that represent less than 10% in
the aggregate of the Initial Interest, Charterhouse and its Permitted
Transferees shall no longer be entitled to nominate any persons for election to
the Company Board.
2.2.3 If at any time more Investor Nominees are
serving on the Company Board than are entitled to serve on the Company Board
pursuant to this Section 2.2, the requisite number of Investor Nominees shall
immediately resign from the Company Board so that the correct number of Investor
Nominees are serving on the Company Board.
2.2.4 Notwithstanding anything herein or in the
Purchase Agreement to the contrary, at any time that Charterhouse and its
Permitted Transferees are no longer entitled to nominate persons for election to
the Company Board, the Company Board may be reduced or increased at the option
of the Company.
2.3 Removal and Replacement of Directors.
2.3.1 Removal of Investor Nominees. If at any time
Charterhouse notifies the Company Board of its wish to remove any Investor
Nominee, the Company Board shall vote so as to remove such Investor Nominee
provided that such Investor Nominee can be removed in accordance with the
Company's Bylaws and the Delaware General Corporation Law. Removal of an
Investor Nominee by the Company Board requires the prior written consent of
Charterhouse unless such removal is based upon the gross negligence or wilfull
misconduct of the Investor Nominee.
2.3.2 Replacement of Directors. If at any time, a
vacancy is created on the Company Board by reason of the incapacity, death,
removal (other than by action of the Company's Stockholders) or resignation of
any Investor Nominee, then Charterhouse shall designate an individual to fill
such vacancy. If Charterhouse nominates an Investor Nominee for election to the
Company Board and the Stockholders fail to elect such Investor Nominee,
Charterhouse shall be entitled to designate a substitute Investor Nominee to
fill any vacancy created thereby.
2.3.3 Stockholder Meetings. At each meeting of
Stockholders of the Company at which directors are elected, the nominees for
directors proposed by the Company Board shall include the Investor Nominees
required pursuant to this Agreement.
2.4 Investor Nominees.
2.4.1 The Investor Nominees shall receive notice of
each meeting of the Company Board at the same time and in the same
manner as other members of the Company Board.
2.4.2 The Investor Nominees shall be entitled to
compensation and indemnification rights similar to those of other
non-employee directors of the Company. The Company shall at all times
maintain a directors' and officers' insurance policy covering the
Investor Nominees that provides in the aggregate substantially no less
coverage than the policy covering the current directors of the Company
as of the date of this Agreement.
3. Certain Actions of the Company.
3.1 Actions of the Company. Subject to Section 3.3, the
Company shall not take, approve or otherwise ratify any of the following actions
(whether occurring in one or a series of related transactions) without the
approval of a majority of the Investor Nominees present at a meeting of the
Company Board duly called:
3.1.1 any declaration or payment of any dividend or
other payment to
holders of securities junior in right of payment to the Debentures (other than
scheduled interest and principal payments with respect to any Indebtedness of
the Company);
3.1.2 an increase in the size of the Company Board
(other than pursuant to Section 2.2)
3.1.3 any action (other than the election of
directors) which would require the approval of the Stockholders of the Company
under Delaware General Corporation Law or the rules and regulations of the
National Association of Securities Dealers, Inc. (or, in the event the shares of
common stock are listed on a national securities exchange, the rules and
regulations of such exchange).
3.1.4 adoption of a shareholder rights plan;
provided, however, that approval of a shareholder rights plan by a majority of
the Investor Nominees shall not be unreasonably withheld; and provided further
that Charterhouse agrees that with respect to each of Charterhouse and its
Permitted Transferees, the triggering event under such shareholder rights plan
shall be the beneficial ownership of more than 35.00% of the outstanding Common
Stock of the Company by such entity, unless Charterhouse and such Permitted
Transferees are acting in concert, in which case, the triggering event with
respect to Charterhouse and its Permitted Transferees shall be the beneficial
ownership by Charterhouse and its Permitted Transferees collectively of an
aggregate of more than 35.00% of the outstanding Common Stock.
3.2 Transactions with Affiliates. Subject to Section 3.3, the
Company shall not take, approve or otherwise ratify any transaction entered into
after the date hereof between the Company, on the one hand, and any Affiliate of
the Company (other than a subsidiary of the Company), on the other hand, without
the approval of the Company Board acting by a majority of the disinterested
directors.
3.3 The rights contained in Sections 3.1 and 3.2 shall
terminate on the earlier of (x) the date on which Charterhouse and its Permitted
Transferee beneficially own Shares that represent less than 10% of the Initial
Interest and (y) the date on which all of the Debentures have been converted
into Common Stock.
4. Standstill; Restriction on Transfer
4.1 Unless previously agreed in writing by the Company, until
the earlier of (x) the date on which Charterhouse or its Permitted Transferees
no longer beneficially owns any
Shares or (y) the maturity date of the Debentures, Charterhouse and its
Permitted Transferees shall not (a) acquire any securities of the Company if,
after such acquisition, Charterhouse would beneficially own more than 35% of the
voting power of the Company's outstanding securities; or (b) except as permitted
pursuant to subsection (a) above, acquire, or attempt to acquire, directly or
indirectly, control of the Company (through a proxy contest or otherwise) or any
of the Company's businesses or assets.
The Company shall be entitled to equitable relief including
injunction, in the event of any breach of the provisions of this Section 4, and
neither Charterhouse nor the Investor Nominees shall oppose the granting of such
relief.
4.2 Except for transfers to an Affiliate of Charterhouse,
Charterhouse shall not Transfer the Debentures or the Converted Shares to any
Person without the prior written consent of the Company, (which consent will not
be unreasonably withheld), and unless any proposed Permitted Transferee agrees
in writing to be bound by the provisions of this Agreement (other than the
provisions of Section 4). A Permitted Transferee of Debentures or the Converted
Shares shall be entitled to all the rights set forth in this Agreement.
5. Miscellaneous.
5.1 Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered personally, or
sent by facsimile, certified, registered or express mail, postage prepaid. Any
such notice shall be deemed given when so delivered personally, or sent by
facsimile, certified, registered or express mail or, if mailed, five days after
the date of deposit in the United States mail, as follows:
(a) if to the Company:
United Road Services, Inc.
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇. ▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
(b) If to Charterhouse:
c/o Charterhouse Group International, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Proskauer Rose LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may, by notice given in accordance with this Section 5.1, designate
another address or person for receipt of notices hereunder.
5.2 Amendment and Waiver.
5.2.1 No failure or delay on the part of any party
hereto in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
parties hereto at law, in equity or otherwise.
5.2.2 Any amendment, supplement or modification of or
to any provision of this Agreement, any waiver of any provision of this
Agreement, and any consent to any departure by any party from the terms of any
provision of this Agreement, shall be effective (i) only if it is made or given
in writing and signed by the Company and Charterhouse and (ii) only in the
specific instance and for the specific purpose for which made or given.
5.3 Specific Performance. The parties hereto intend that each
of the parties has the right to seek damages or specific performance in the
event that any other party hereto wilfully fails to perform such party's
obligations hereunder. Therefore, if any party shall institute any action or
proceeding to enforce the provisions hereof, any party against whom such action
or proceeding is brought hereby waives any claim or defense therein that the
plaintiff party has an adequate remedy at law.
5.4 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
5.5 Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the
benefits of the remaining provisions hereof.
5.6 Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
5.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
5.8 Further Assurances. Each of the parties shall, and shall
cause their respective Affiliates to, execute such instruments and take such
action as may be reasonably required or desirable to carry out the provisions
hereof and the transactions contemplated hereby.
5.9 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective permitted
successors and assigns. This Agreement is not assignable by the Company and may
be assigned by Charterhouse to any Permitted Transferee.
5.10 No Third Party Beneficiaries. This Agreement is not
intended to, and does not, create any rights or benefits of any Person other
than the parties hereto.
5.11 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and all of which
taken together shall constitute one and the same instrument.
5.12 Effectiveness. Notwithstanding anything to the contrary
contained in this Agreement, this Agreement shall not become effective, and
Charterhouse shall have no rights hereunder, unless and until the First Closing
has occurred.
IN WITNESS WHEREOF, the undersigned have executed, or have
caused to be executed, this Agreement on the date first written above.
UNITED ROAD SERVICES, INC.
By:_________________________________
Name:
Title:
CHARTER URS LLC
By:__________________________________
Name:
Title:
INVESTORS AGREEMENT
between
UNITED ROAD SERVICES, INC.
AND
CHARTER URS LLC
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Dated as of November 19, 1998
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