EXHIBIT 4.2
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SECOND AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
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dated as of _______, 1997
among
ARM FINANCIAL GROUP, INC.
and
CERTAIN OF ITS STOCKHOLDERS
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms.................................... 2
ARTICLE II
RESTRICTIONS ON TRANSFER
SECTION 2.01. General Restriction...................................... 7
SECTION 2.02. Legends.................................................. 7
SECTION 2.03. Certain Information...................................... 7
SECTION 2.04. Improper Sale or Encumbrance............................. 7
SECTION 2.05. Distributions by Morgan Stanley Stockholders............. 7
ARTICLE III
REGISTRATION RIGHTS
SECTION 3.01. Registration Upon Request................................ 8
SECTION 3.02. Incidental Registration.................................. 12
SECTION 3.03. Registration Procedures.................................. 13
SECTION 3.04. Preparation; Reasonable Investigation.................... 16
SECTION 3.05. Indemnification.......................................... 17
SECTION 3.06. Contribution............................................. 19
SECTION 3.07. Nominees of Beneficial Owners............................ 20
ARTICLE IV
CERTAIN AGREEMENTS REGARDING THE BOARD
SECTION 4.01 Nomination of Directors................................... 21
ii
Page
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Effective Date........................................... 22
SECTION 5.02. Representations.......................................... 22
SECTION 5.03. Specific Performance..................................... 22
SECTION 5.04. Amendments and Waivers................................... 22
SECTION 5.05. Notices.................................................. 22
SECTION 5.06. Benefit; Successors and Assigns.......................... 23
SECTION 5.07. Distributions By Oldarm and New Arm...................... 23
SECTION 5.08. Miscellaneous............................................ 23
SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT, dated as of
__________, 1997, among ARM FINANCIAL GROUP, INC., a Delaware corporation (the
"COMPANY"), and each of the other parties signatory hereto.
W I T N E S S E T H:
WHEREAS, the Company, The Morgan Stanley Leveraged Equity Fund II,
L.P., a Delaware limited partnership ("MSLEF II"), Morgan Stanley Capital
Partners III, L.P., Morgan Stanley Capital Investors, L.P. and MSCP III 892
Investors, L.P., each a Delaware limited partnership (the "MSCP ENTITIES" and,
together with MSLEF II, the "MORGAN STANLEY STOCKHOLDERS"), John Franco
("FRANCO"), Martin H. Ruby ("RUBY"), Oldarm, L.P. (formerly known as Analytical
Risk Management, Ltd.), a Kentucky limited partnership ("OLDARM"), and New Arm,
LLC, a Kentucky limited liability company ("NEW ARM") are parties to an Amended
and Restated Stockholders' Agreement, dated as of June 14, 1995 (the
"STOCKHOLDERS' AGREEMENT");
WHEREAS, MSLEF II, Franco and Ruby in the aggregate hold shares of the
Class A Common Stock, par value $.01 per share, of the Company (the "OLD CLASS A
COMMON STOCK"), and the Class B Common Stock, par value $.01 per share, of the
Company (the "OLD CLASS B COMMON STOCK" and, together with the Old Class A
Common Stock, the "OLD COMMON STOCK"), representing at least 66-2/3% of the
outstanding shares of Old Common Stock held by all the Stockholders (as defined
herein);
WHEREAS, Oldarm holds all the outstanding shares of Old Class B Common
Stock;
WHEREAS, Franco and Ruby in the aggregate hold a majority of the
shares of Old Common Stock held by all the Employee Stockholders (as defined
herein);
WHEREAS, the Company expects to consummate its Initial Public Offering
(as defined herein) shortly following the execution of this Second Amended and
Restated Stockholders' Agreement;
WHEREAS, in connection with the Initial Public Offering, the Company
will amend and restate its Certificate of Incorporation and effect a
recapitalization pursuant to which (i) each outstanding share of Old Class A
Common Stock and Old Class B Common Stock will be converted into one share of
the Class A Convertible Common Stock, par value $.01 per share, of the Company
(the "CLASS A COMMON STOCK"); (ii) the Morgan Stanley Stockholders will convert
certain of their shares of Class A Common Stock into shares of the Class B
Convertible Non-Voting Common Stock, par value $.01 per share, of the Company
(the "CLASS B COMMON STOCK" and, together with the Class A Common Stock, the
"COMMON STOCK"); and (iii) each outstanding share of Common Stock will be split
into ___ shares;
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WHEREAS, in connection with the Initial Public Offering, the Company,
the Morgan Stanley Stockholders, Franco, Ruby, Oldarm and New Arm wish to amend
and restate in its entirety the Stockholders' Agreement; and
WHEREAS, the execution of this Second Amended and Restated
Stockholders' Agreement constitutes the consent of (a) the Company, (b)
Stockholders holding shares of Old Common Stock representing at least 66-2/3% of
the outstanding shares of Old Common Stock held by all the Stockholders, (c)
Stockholders holding a majority of the shares of Old Class B Common Stock held
by all the Stockholders and (d) Employee Stockholders holding a majority of the
shares of Old Common Stock held by all the Employee Stockholders, thereby
binding all the Stockholders to this Second Amended and Restated Stockholders'
Agreement in accordance with Section 5.03 of the Stockholders' Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the parties hereto hereby agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"AFFILIATE" means, with respect to any specified Person, any other
Person, other than the Company or any Subsidiary, that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, such specified Person.
"AGREEMENT" or "THIS AGREEMENT" means this Second Amended and Restated
Stockholders' Agreement, dated as of __________, 1997, among the Company and
each of the other parties signatory hereto, and all amendments hereto made in
accordance with the provisions of Section 5.04.
"BENEFICIAL OWNER" or "BENEFICIALLY OWN" has the meaning given such
term in Rule 13d-3 under the Exchange Act.
"BOARD" means the Board of Directors of the Company.
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized by law to be closed in the City of
New York.
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"CERTIFICATE OF INCORPORATION" means the Certificate of Incorporation
of the Company, as amended from time to time.
"CLASS A COMMON STOCK" has the meaning specified in the recitals to
this Agreement.
"CLASS B COMMON STOCK" has the meaning specified in the recitals to
this Agreement.
"COMMISSION" means the Securities and Exchange Commission, and any
successor commission or agency having similar powers.
"COMMON STOCK" has the meaning specified in the recitals to this
Agreement.
"COMPANY" has the meaning specified in the preamble to this Agreement.
"CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH"), with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the affairs or management of a
Person, whether through the ownership of voting securities, as trustee or
executor, by contract or otherwise, including, without limitation, the
ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
"EMPLOYEES" means employees, directors and consultants of the Company
and the Subsidiaries.
"EMPLOYEE PLAN" means any equity incentive plan, agreement, bonus,
award, stock purchase plan, stock option plan or other stock arrangement with
respect to any Employees.
"ENCUMBRANCE" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any kind,
including, without limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"FULLY DILUTED SHARES" means the aggregate of (i) the number of shares
of Common Stock issued and outstanding (other than shares of Common Stock held
in the
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treasury of the Company or held by any Subsidiary) and (ii) the number of shares
of Common Stock issuable upon (x) the exercise of any then exercisable
outstanding options, warrants or similar instrument (other than such instruments
held by the Company or any Subsidiary) and (y) the exercise of any then
exercisable conversion or exchange rights, with respect to any outstanding
securities or instruments (other than such securities or instruments held by the
Company or any Subsidiary).
"INITIAL PUBLIC OFFERING" means the Public Offering of Class A Common
Stock intended to be effected shortly following execution of this Agreement
pursuant to the Registration Statement on Form S-1 (File No. 333-14693), filed
by the Company with the Commission.
"INITIATING HOLDERS" has the meaning specified in Section 3.01(a).
"MORGAN STANLEY STOCKHOLDERS" has the meaning specified in the
recitals to this Agreement.
"MSCP ENTITIES" has the meaning specified in the recitals to this
Agreement.
"MSLEF II" has the meaning specified in the recitals to this
Agreement.
"NEW ARM" has the meaning specified in the recitals to this Agreement.
"OLDARM" has the meaning specified in the recitals to this Agreement.
"PERMITTED TRANSFEREE" means (a) in the case of MSLEF II or any MSCP
Entity, any Affiliate of MSLEF II or such MSCP Entity or, in the case of
distributions only, any partner of MSLEF II or of any such MSCP Entity, (b) in
the case of any Stockholder who is a natural person and who is a signatory to
this Agreement on the date hereof, (i) a Person who is the issue or spouse of
such Stockholder and to whom Shares are transferred from such Stockholder (A) by
will or the laws of descent and distribution or (B) by gift without
consideration of any kind, or (ii) a partnership, corporation or trust the
entire beneficial interest in which is owned by such Stockholder or by such
Stockholder and one or more other Stockholders or by the issue or spouse of such
Stockholder and to which Shares are transferred from such Stockholder without
consideration of any kind, (c) the Company or any Subsidiary, (d) MSLEF II or
any MSCP Entity, (e) any charitable foundation all the trustees and directors of
which are Stockholders or otherwise Permitted Transferees, (f) in the case of
any Stockholder which is a trust or estate and which is either a signatory to
this Agreement as of the date hereof or is a Permitted Transferee established
after the date hereof by a Stockholder who is a natural person and who is a
signatory to this Agreement as of the date hereof (a "QUALIFIED TRUST OR
ESTATE"), (i) the Person who is the settlor of such Qualified Trust or (ii) a
Person who is the issue, spouse or estate of such settlor and to whom Shares
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are transferred from such Qualified Trust as a trust or estate distribution, or
(g) any Person with respect to which the Board shall have adopted a resolution
stating that the Board has no objection if a Sale of Shares is made to such
Person.
"PERSON" means any individual, partnership, firm, corporation,
association, trust, estate, unincorporated organization or other entity, as well
as any syndicate or group that would be deemed to be a person under Section
13(d)(3) of the Exchange Act.
"PUBLIC OFFERING" means an underwritten public offering of equity
securities of the Company pursuant to an effective registration statement under
the Securities Act.
"REGISTRABLE SECURITIES" means all Restricted Shares, at any time
outstanding, held by the Morgan Stanley Stockholders or their Permitted
Transferees, if any. As to any particular Registrable Securities that have been
issued, such securities shall cease to be Registrable Securities when (i) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of under such registration statement, (ii) such securities shall have
been distributed to the public pursuant to Rule 144, (iii) such securities shall
have been otherwise transferred or disposed of, and new certificates therefor
not bearing a legend to the effect set forth in the first paragraph of the form
of legend required by Section 2.02(a) hereof restricting further transfer shall
have been delivered by the Company, and subsequent transfer or disposition of
such securities shall not require their registration or qualification under the
Securities Act or any similar state law then in force or (iv) such securities
shall have ceased to be outstanding.
"REGISTRATION EXPENSES" means all out-of-pocket expenses incident to
the Company's performance of or compliance with Article III, including, without
limitation, all registration and filing fees (including filing fees with respect
to the National Association of Securities Dealers, Inc.), all fees and expenses
of complying with state securities or "blue sky" laws (including reasonable fees
and disbursements of underwriters' counsel in connection with any "blue sky"
memorandum or survey), all printing expenses, all listing fees, all registrars'
and transfer agents' fees, the fees and disbursements of counsel for the Company
and of its independent public accountants, including the expenses of any special
audits and/or "cold comfort" letters required by or incident to such performance
and compliance, the reasonable fees and disbursements of one outside counsel
retained by the holders of Registrable Securities being registered (which
counsel shall be satisfactory to the holders of a majority of the shares of
Registrable Securities being registered), but excluding underwriting discounts
and commissions and applicable transfer taxes, if any, which shall be borne by
the sellers of the Registrable Securities being registered in all cases.
"RESTRICTED SHARES" means all Shares other than (a) Shares that have
been registered under a registration statement pursuant to the Securities Act,
(b) Shares with
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respect to which a Sale has been made in reliance on and in accordance with Rule
144 or (c) Shares with respect to which the holder thereof shall have delivered
to the Company either (i) an opinion, in form and substance satisfactory to the
Company, of counsel, who shall be satisfactory to the Company, or (ii) a "no
action" letter from the staff of the Commission, to the effect that subsequent
transfers of such Shares may be effected without registration under the
Securities Act.
"RULE 144" means Rule 144 (or any successor provision) under the
Securities Act.
"SALE" means any sale, assignment, transfer, distribution or other
disposition of Shares or of a participation therein, whether voluntarily or by
operation of law.
"SECURITIES" means shares of Common Stock, rights, options or warrants
to purchase shares of Common Stock and securities of any type whatsoever
convertible into or exchangeable for shares of Common Stock.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"SHARE" means any share of Common Stock.
"STOCKHOLDER" means each Person (other than the Company) who shall be
a party to this Agreement, whether in connection with the execution and delivery
hereof as of the date hereof or otherwise, so long as such Person shall
beneficially own any Shares or any options, warrants or similar rights to
acquire Shares.
"STOCKHOLDERS' AGREEMENT" has the meaning specified in the recitals to
this Agreement.
"SUBSIDIARY" means any and all corporations, partnerships, joint
ventures, associations and other entities controlled by the Company directly or
indirectly through one or more intermediaries.
"THIRD PARTY" means, with respect to any Stockholder, any other
Person, including, without limitation, any Person which is a Permitted
Transferee (other than the Company, any Subsidiary or any Affiliate of such
Stockholder which is a Permitted Transferee).
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ARTICLE II
RESTRICTIONS ON TRANSFER
SECTION 2.01. GENERAL RESTRICTION. No Stockholder shall, directly or
indirectly, make or solicit any Sale of, or create, incur, solicit or assume any
Encumbrance with respect to, any Share, except in a Public Offering, in
accordance with Rule 144 or otherwise in compliance with the Securities Act,
applicable state securities law and this Agreement.
SECTION 2.02. LEGENDS. (a) The Company shall affix to each
certificate evidencing Restricted Shares a legend in substantially the following
form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO REGISTRATION OF
TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF THE ISSUER
UNLESS SUCH TRANSFER IS MADE IN CONNECTION WITH AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH ACT DOES NOT APPLY."
(b) In the event that any Shares shall cease to be Restricted Shares,
the Company shall, upon the written request of the holder thereof, issue to such
holder a new certificate evidencing such Shares without the legend required by
Section 2.02(a) endorsed thereon; PROVIDED, HOWEVER, that such holder shall
furnish the Company such certifications, legal opinions or other information as
the Company may reasonably require to confirm that the legend is not required on
such certificate.
SECTION 2.03. CERTAIN INFORMATION. Following the Initial Public
Offering, the Company shall file all reports and other information required to
be filed by Section 13 or 15(d) under the Exchange Act, as the case may be, as
shall be necessary in order that the conditions to the availability of Rule 144
in connection with any Sale of shares of Common Stock by a Stockholder shall be
met.
SECTION 2.04. IMPROPER SALE OR ENCUMBRANCE. Any attempt not in
compliance with this Agreement to make any Sale of, or create, incur or assume
any Encumbrance with respect to, any Shares shall be null and void and the
Company shall not give any effect in the Company's stock records to such
attempted Sale or Encumbrance.
SECTION 2.05. DISTRIBUTIONS BY MORGAN STANLEY STOCKHOLDERS. The
shares of Class A Common Stock held by MSLEF II or any MSCP Entity shall not be
distributed to
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any person if such distribution would constitute a presumptive change of control
(whether as defined under Section 1501 of the New York Insurance Law or under
the insurance laws of any state to which the Company is then subject) of the
Company unless evidence reasonably satisfactory to the Company is provided by
such limited partner that such limited partner has complied with the
requirements of Section 1506 of the New York Insurance Law or such other
insurance laws.
ARTICLE III
REGISTRATION RIGHTS
SECTION 3.01. REGISTRATION UPON REQUEST. (a) If the Company shall
receive written request from the Morgan Stanley Stockholders and their
respective Permitted Transferees, if any, requesting that the Company effect the
registration under the Securities Act of shares of Common Stock and specifying
the intended method of disposition thereof, the Company thereupon will use its
best efforts to effect, as expeditiously as possible, the registration under the
Securities Act of the Registrable Securities which the Company has been so
requested to register by the Morgan Stanley Stockholders and their respective
Permitted Transferees, if any, all to the extent necessary to permit the
disposition (in accordance with the Morgan Stanley Stockholders' and such
Permitted Transferees' intended method thereof as aforesaid) of the Registrable
Securities so to be registered; PROVIDED, HOWEVER, that
(i) with respect to any registration statement filed, or to be filed,
pursuant to this Section 3.01, if the Board determines that in its good
faith judgment it would (because of the existence of, or in anticipation
of, any acquisition involving the Company or any of its Subsidiaries or
financing activity, or the unavailability for reasons beyond the Company's
control of any required financial statements, or any other event or
condition of similar significance to the Company) be significantly
disadvantageous (a "DISADVANTAGEOUS CONDITION") to the Company or any of
its Subsidiaries or its stockholders for such a registration statement to
be maintained effective, or to be filed and become effective, and setting
forth the general reasons for such judgment, the Company shall be entitled,
upon the giving of a written notice (a "DELAY NOTICE") to such effect to
each Morgan Stanley Stockholder and Permitted Transferee included or to be
included in such registration statement, to cause such registration
statement to be withdrawn and the effectiveness of such registration
statement terminated, or, in the event no registration statement has yet
been filed, shall be entitled not to file any such registration statement,
until, in the judgment of the Board, such Disadvantageous Condition no
longer exists (notice of which the Company shall promptly deliver to the
Morgan Stanley Stockholders and Permitted Transferees with respect to which
any such registration statement has been filed, or
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was to have been filed). Upon the request of any Morgan Stanley
Stockholder or Permitted Transferee included or to be included in such
registration statement, the Company will disclose to such holder the nature
of such Disadvantageous Condition in reasonable detail; PROVIDED that such
Person shall have executed a confidentiality agreement in a form reasonably
satisfactory to the Company. Upon the receipt of any notice of the
existence of a Disadvantageous Condition, each Morgan Stanley Stockholder
and Permitted Transferee selling Registrable Securities pursuant to an
effective registration statement will forthwith discontinue use of the
prospectus contained in such registration statement and, if so directed by
the Company, each such holder will deliver to the Company all copies, other
than permanent file copies then in such holder's possession, of the
prospectus then covering such Registrable Securities current at the time of
receipt of such notice and, in the event no registration statement has yet
been filed, all drafts of the prospectus covering such Registrable
Securities. Notwithstanding the foregoing provisions of this subparagraph
(i): (A) the Company shall not be entitled to delay any registration of
Registrable Securities requested pursuant to this Section 3.01 by reason of
any existing or anticipated Disadvantageous Condition for a period of more
than 90 consecutive days from the giving of its Delay Notice with respect
to such Disadvantageous Condition, as above provided, and this subparagraph
(i) shall have no further force or effect from and after the end of such
90-day period with respect to any registration statement filed or otherwise
required to be filed pursuant to this Section 3.01, or with respect to any
other obligation of the Company pursuant to this Article III with respect
to the request to which such registration statement relates; (B) no
registration statement filed and subsequently withdrawn by reason of any
existing or anticipated Disadvantageous Condition as hereinabove provided
shall count as one of the three registration statements referred to in the
limitation in the following subparagraph (ii); and (C) the Company shall be
entitled to serve only one Delay Notice within any twelve-month period, or
with respect to any two consecutive registrations requested pursuant to
this Section 3.01.
(ii) the Company shall not be obligated to effect, or pay any
Registration Expenses in connection with, more than three registrations
requested in the aggregate pursuant to this Section 3.01.
Unless the Morgan Stanley Stockholders and their Permitted Transferees, if any,
shall otherwise consent in writing, no other person (including the Company),
shall be permitted to offer any securities under any registration pursuant to
this Section 3.01. A majority of the Morgan Stanley Stockholders or their
Permitted Transferees, if any, requesting a registration under Section 3.01(a)
may, at any time prior to the effective date of the registration statement
relating to such registration, revoke such request, without liability (except as
set forth in Section 3.01(c) hereof) to any of the other Morgan Stanley
Stockholders or Permitted Transferees, by providing a written notice to the
Company revoking such request.
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Notwithstanding anything contained in this Agreement to the contrary, nothing
herein shall be construed as requiring the Company to register any of its
securities other than shares of Class A Common Stock.
(b) REGISTRATION STATEMENT FORM. If, pursuant to a registration
request under this Section 3.01, (i) the Company proposes to effect registration
by filing a registration statement on Form S-3 (or any successor or similar
short-form registration statement), (ii) such registration is in connection with
a Public Offering and (iii) the managing underwriter shall advise the Company in
writing that, in its opinion, the use of another form of registration statement
is of material importance to the success of such proposed offering, then such
registration shall be effected on such other form.
(c) EXPENSES. The Company will pay all Registration Expenses in
connection with three registrations which are requested and become effective
pursuant to this Section 3.01. The Company shall not be liable for Registration
Expenses in connection with a registration that shall not have become effective
due to a revocation by the Morgan Stanley Stockholders or Permitted Transferees
requesting such registration under this Section 3.01. In such event, the
obligation to pay the Registration Expenses in connection with such revoked
registration shall be due and payable by the Morgan Stanley Stockholders and
Permitted Transferees, if any, who initially requested and revoked such
registration and the obligation of the Company to pay all Registration Expenses
in connection with three registrations shall not be affected by such revoked
registration. However, each holder of Registrable Securities shall pay all
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such holder's Registrable Securities pursuant to a
registration requested pursuant to this Section 3.01.
(d) EFFECTIVE REGISTRATION STATEMENT. A registration requested
pursuant to this Section 3.01 shall not be deemed to have been effected unless
the registration statement relating thereto (i) has become effective under the
Securities Act and any of the Registrable Securities of the Morgan Stanley
Stockholders and their Permitted Transferees, if any, included in such
registration have actually been sold thereunder, and (ii) has remained effective
for a period of at least 90 days (or such shorter period in which all
Registrable Securities included in such registration have actually been sold
thereunder); PROVIDED, HOWEVER, that if any effective registration statement
requested pursuant to this Section 3.01 is discontinued in connection with a
Disadvantageous Condition, such registration statement shall be at the sole
expense of the Company and shall not be included as one of the three
registrations which may be requested pursuant to Section 3.01 hereof; and
PROVIDED FURTHER, that if after any registration statement requested pursuant to
this Section 3.01 becomes effective (i) such registration statement is
interfered with by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court solely due to the actions
or omissions to act of the Company and (ii) less than 75% of the Registrable
Securities included in such registration have been sold thereunder, such
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registration statement shall be at the sole expense of the Company and shall not
be included as one of the three registrations which may be requested pursuant to
Section 3.01 hereof.
(e) SELECTION OF UNDERWRITERS. If any requested registration
pursuant to this Section 3.01 is in the form of a Public Offering, the Company
will select Morgan Stanley & Co. Incorporated as the manager or, if Morgan
Stanley & Co. Incorporated so desires, as the co-manager, that will administer
the offering, PROVIDED that Morgan Stanley & Co. Incorporated shall perform such
services as underwriter at the then customary market rates for similar
underwriting services and PROVIDED FURTHER, that Morgan Stanley & Co.
Incorporated will take such steps as are necessary to ensure that, as a result
of such underwriting services, Morgan Stanley & Co. Incorporated, the Morgan
Stanley Stockholders and their respective Affiliates do not beneficially own, in
the aggregate, 50% or more of the outstanding Class A Common Stock. If Morgan
Stanley & Co. Incorporated declines to act as manager or co-manager of such
offering, then Morgan Stanley Stockholders and their Permitted Transferees, if
any, holding a majority of the Registrable Securities which are to be registered
in such offering shall have the right to select the manager or co-managers that
will administer such offering.
(f) PRO RATA PARTICIPATION IN REQUESTED REGISTRATIONS. If a
requested registration pursuant to this Section 3.01 involves a Public Offering
and the managing underwriter shall advise the Company that, in its view, the
number of Registrable Securities requested to be included in such registration
exceeds the largest number of securities which can be sold without having an
adverse effect on such offering, including the price at which such securities
can be sold (the "MAXIMUM OFFERING SIZE"), the Company will include in such
registration, in the priority listed below, up to the Maximum Offering Size:
(i) INITIATING HOLDERS' SECURITIES. FIRST, Registrable Securities
requested to be included in such registration pursuant to Section 3.01(a)
hereof shall be allocated (if necessary for the offering not to exceed the
Maximum Offering Size) PRO RATA among the Morgan Stanley Stockholders and
their Permitted Transferees, if any, requesting registration pursuant to
Section 3.01(a) hereof on the basis of the relative number of Registrable
Securities each such Morgan Stanley Stockholder or Permitted Transferee has
requested to be included in such registration.
(ii) OTHER SECURITIES. SECOND, the shares of Class A Common Stock
proposed to be sold by any other person (including the Company) to the
extent that the Morgan Stanley Stockholders or their Permitted Transferees,
if any, shall have consented, pursuant to Section 3.01(a) hereof, to the
inclusion in such registration of such securities of such other persons,
shall be allocated (if necessary for the offering not to exceed the Maximum
Offering Size) PRO RATA among all such other persons on the basis of the
relative number of securities each such person has requested to be included
in such registration.
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SECTION 3.02. INCIDENTAL REGISTRATION. (a) If the Company at any
time proposes to register (other than pursuant to Section 3.01) any of its
authorized but unissued shares of Common Stock under the Securities Act on a
form and in a manner that would permit registration of Registrable Securities
for sale to the public under the Securities Act, it will each such time give
prompt written notice to the Morgan Stanley Stockholders and their respective
Permitted Transferees, if any, of its intention to do so, describing such
securities and specifying the form and manner and the other relevant facts
involved in such proposed registration (including, without limitation, whether
or not such registration will be in connection with an underwritten offering of
its Common Stock and, if so, the identity of the managing underwriter and
whether such offering will be pursuant to a "best efforts" or "firm commitment"
underwriting if such disclosure is acceptable to the managing underwriter).
Upon the written request of any Morgan Stanley Stockholder or Permitted
Transferee delivered to the Company within 30 days after such notice shall have
been given to such holder (which request shall specify the Registrable
Securities intended to be disposed of by such holder and the intended method of
disposition thereof), the Company will use its best efforts to effect the
registration under the Securities Act, as expeditiously as is reasonable, of all
Registrable Securities that the Company has been so requested to register by
such Morgan Stanley Stockholder or Permitted Transferee, to the extent requisite
to permit the disposition (in accordance with the intended methods thereof as
aforesaid) of the Registrable Securities so to be registered; PROVIDED, HOWEVER,
that:
(i) if, at any time after giving such written notice of its intention
to register any of such securities proposed to be registered by the Company
and prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine for any
reason not to register such securities, the Company may, at its election,
give written notice of such determination to each Morgan Stanley
Stockholder and Permitted Transferee that has requested to register
Registrable Securities and thereupon the Company shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses
in connection therewith to the extent provided in Section 3.02(b)), without
prejudice, however, to the rights of any one or more Morgan Stanley
Stockholders to request such registration be effected as a registration
under Section 3.01;
(ii) if (A) the registration so proposed by the Company involves an
underwritten offering of the securities so to be registered, to be
distributed by or through one or more underwriters of recognized standing
under underwriting terms appropriate for such a transaction, and (B) the
managing underwriter of such underwritten offering shall advise the Company
that, in its judgment, the number of shares of Registrable Securities and
any other securities proposed to be included in such offering by the
Company should be limited (1) due to market conditions or (2) because the
inclusion of Registrable Securities could adversely impact the purchase
13
price obtained for the securities proposed to be included in such offering
by the Company, then the Company will promptly advise each such Morgan
Stanley Stockholder and Permitted Transferee thereof and may require, by
written notice to each such holder accompanying such advice, that, to the
extent necessary to meet such limitation, all holders of Registrable
Securities proposing to sell shares of Registrable Securities in such
offering shall share PRO RATA in the number of shares of Registrable
Securities to be excluded from such offering, such sharing to be based on
the respective numbers of shares of Registrable Securities as to which
registration has been requested by such holders and that the distribution
of such Registrable Securities as are so excluded be deferred (in case of a
deferral as to a portion of such Registrable Securities, such portion to be
allocated among such holders in proportion to the respective numbers of
shares of Registrable Securities so requested to be registered by such
holders) until the completion of the distribution of such securities by
such underwriters; and
(iii) the Company shall not be obligated to effect any
registration of Registrable Securities under this Section 3.02 that is
incidental to the registration of any of its securities in connection with
any merger or acquisition (or the financing thereof), exchange offer,
dividend reinvestment plan or stock option or other employee benefit plan.
No registration effected under this Section 3.02 shall relieve the Company of
its obligations to effect registrations of Registrable Securities upon the
request of one or more Morgan Stanley Stockholders pursuant to Section 3.01.
(b) The Company will pay all Registration Expenses in connection with
each registration of Registrable Securities effected by it pursuant to this
Section 3.02.
SECTION 3.03. REGISTRATION PROCEDURES. (a) If and whenever the
Company is required to use its best efforts to effect the registration of any
Registrable Securities under the Securities Act as provided in Section 3.01 or
3.02, the Company will as expeditiously as is reasonable:
(i) prepare and file with the Commission on any appropriate form a
registration statement with respect to such Registrable Securities and use
its best efforts to cause such registration statement to become effective;
(ii) prepare and file with the Commission such amendments (including
post-effective amendments) and supplements to such registration statement
and the prospectus used in connection therewith as may be necessary to keep
such registration statement effective and to comply with the provisions of
the Securities Act with respect to the disposition of all Registrable
Securities and other securities covered by
14
such registration statement until the earlier of (A) such time as all such
Registrable Securities and other securities have been disposed of in
accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such registration statement and (B) the
expiration of three months from the date such registration statement first
becomes effective;
(iii) furnish to each seller of such Registrable Securities such
number of conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case including all exhibits),
such number of copies of the prospectus included in such registration
statement (including each preliminary prospectus and any summary
prospectus), in conformity with the requirements of the Securities Act,
such documents incorporated by reference in such registration statement or
prospectus, and such other documents, as such seller may reasonably request
in order to facilitate the sale or disposition of such Registrable
Securities;
(iv) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement
under such other securities or "blue sky" laws of such jurisdictions as
each seller shall reasonably request, and do any and all other acts and
things that may be necessary to enable such seller to consummate the
disposition in such jurisdictions of its Registrable Securities covered by
such registration statement, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified, or to
subject itself to taxation in respect of doing business in any such
jurisdiction, or to consent to general service of process in any such
jurisdiction;
(v) furnish to each seller of Registrable Securities a signed
counterpart, addressed to such seller, of (A) any opinion of counsel for
the Company, dated the effective date of such registration statement (or,
if such registration includes an underwritten public offering, dated the
date of the closing under the underwriting agreement), and (B) any "cold
comfort" letter signed by the independent public accountants who have
issued a report on the Company's financial statements included in such
registration statement, covering substantially the same matters with
respect to such registration statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities and, in the case of the accountants' letter, such other
financial matters as a majority of the holders of Registrable Securities
included in such registration statement may reasonably request;
15
(vi) immediately notify each seller of Registrable Securities covered
by such registration statement at any time when a prospectus relating
thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
then existing or if it is necessary to amend or supplement such prospectus
to comply with law, and at the request of any such seller prepare and
furnish to such seller a reasonable number of copies of a supplement to or
an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities or securities,
such prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing and shall otherwise comply in all material
respects with law and so that such prospectus, as amended or supplemented,
will comply with law.
(vii) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earning statement covering
the period of at least 12 months, beginning with the first month of the
first fiscal quarter after the effective date of such registration
statement, which earning statement shall satisfy the provisions of Section
11(a) of the Securities Act;
(viii) use its best efforts to list such securities on each
securities exchange on which shares of Common Stock are then listed, if
such securities are not already so listed and if such listing is then
permitted under the rules of such exchange, and provide a transfer agent
and registrar for such Registrable Securities not later than the effective
date of such registration statement; and
(ix) issue to any underwriter to which any holder of Registrable
Securities may sell such Registrable Securities in connection with any such
registration (and to any direct or indirect transferee of any such
underwriter) certificates evidencing shares of Common Stock without the
legend described in Section 2.02(a).
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company with such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing and as shall be required by law
or by the Commission in connection therewith.
(b) If requested by the underwriters for any underwritten offering of
Registrable Securities on behalf of a holder or holders of Registrable
Securities pursuant to a
16
registration requested under Section 3.01, the Company will enter into an
underwriting agreement with such underwriters for such offering, such agreement
to contain such representations and warranties by the Company and such other
terms and conditions as are customarily contained in underwriting agreements
with respect to secondary distributions, including, without limitation,
indemnities to the effect and to the extent provided in Section 3.05.
(c) If any registration pursuant to Section 3.01 or 3.02 shall be in
connection with an underwritten public offering, each Stockholder agrees, if so
required by the managing underwriters, not to effect any public sale or
distribution (including any sale pursuant to Rule 144) of Securities (other than
as part of such underwritten public offering) within 7 days prior to the
effective date of the registration statement with respect to such underwritten
public offering or 90 days after the effective date of such registration
statement; PROVIDED, HOWEVER, that the 90-day period referred to in this Section
3.03(c) may be extended to up to 180 days upon the underwriters' reasonable
request.
(d) The Company agrees, if so required by the managing underwriters
in connection with an underwritten offering of Registrable Securities pursuant
to Section 3.01 or 3.02, not to effect any public sale or distribution of any of
its equity securities or securities convertible into or exchangeable or
exercisable for any of such equity securities during the 7 days prior to and the
90 days after the effective date of any registration statement with respect to
such underwritten public offering, except as part of such underwritten offering
or except in connection with a stock option plan, stock purchase plan, savings
or similar plan, or an acquisition, merger or exchange offer; PROVIDED, HOWEVER,
that the 90 day period referred to in this Section 3.03(d) may be extended to up
to 180 days upon the underwriters' reasonable request.
(e) It is understood that in any underwritten offering of Registrable
Securities in addition to the shares (the "INITIAL SHARES") the underwriters
have committed to purchase, the underwriting agreement may grant the
underwriters an option to purchase a number of additional shares (the "OPTION
SHARES") equal to up to 15% of the initial shares (or such other maximum amount
as the National Association of Securities Dealers, Inc. may then permit), solely
to cover over-allotments. Shares proposed to be sold by the Company and the
holders of Registrable Securities shall be allocated between initial shares and
option shares as agreed or, in the absence of agreement, pursuant to Section
3.01(f) or 3.02(a)(ii), as the case may be. The number of initial shares and
option shares to be sold by requesting holders shall be allocated PRO RATA among
all such holders on the basis of the relative number of Registrable Securities
each such holder has requested to be included in such registration.
SECTION 3.04. PREPARATION; REASONABLE INVESTIGATION. In connection
with the preparation and filing of each registration statement registering
Registrable Securities under the Securities Act, the Company will give the
holders of Registrable Securities on
17
whose behalf such Registrable Securities are to be so registered and their
underwriters, if any, and their respective counsel and accountants, the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and will give each of them such access
to its books and records and such opportunities to discuss the business of the
Company with its officers and the independent public accountants who have issued
a report on its financial statements as shall be necessary, in the opinion of
such holders and such underwriters or their respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
SECTION 3.05. INDEMNIFICATION. (a) In the event of any registration
of any equity securities of the Company under the Securities Act, the Company
will, and hereby does, indemnify and hold harmless, in the case of any
registration statement filed pursuant to Section 3.01 or 3.02, the seller of any
Registrable Securities covered by such registration statement, its directors and
officers, general and limited partners (and directors and officers thereof and,
if such seller is a portfolio or investment fund, its investment advisors), each
other Person who participates as an underwriter in the offering or sale of such
securities, each officer and director of each such underwriter, and each other
Person, if any, who controls such seller or any such underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
against any losses, claims, damages, liabilities and expenses, joint or several,
to which such seller or any such director or officer or participating or
controlling Person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus included therein, or any amendment or supplement thereto, or any
document incorporated by reference therein, or (ii) 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, and the Company will
reimburse such seller, and each such director, officer, general and limited
partner (and director and officer thereof), investment advisor, underwriter and
controlling Person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; PROVIDED, HOWEVER, that the Company shall not
be liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon (i) an untrue statement or alleged untrue statement or omission
or alleged omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company for use in the preparation thereof by such seller or underwriter, as the
case may be, or (ii) an untrue statement or alleged untrue statement or omission
or alleged omission made in any preliminary prospectus but notified to such
seller
18
or underwriter, as the case may be, prior to any Sale of Registrable Securities
and subsequently corrected by the Company in any final prospectus, amendment or
supplement made available to such seller or underwriter, as the case may be, but
which final prospectus, amendment or supplement was not used by such seller or
underwriter, as the case may be, in the Sale of Registrable Shares that gave
rise to such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such seller or any such
director, officer, general and limited partner (and director and officer
thereof), investment advisor, underwriter or controlling Person and shall
survive the transfer of such securities by such seller.
(b) The Company may require, as a condition to including any
Registrable Securities in any registration statement filed pursuant to Section
3.01 or 3.02, that the Company shall have received an undertaking satisfactory
to it from (i) the prospective seller of such securities, to indemnify and hold
harmless (in the same manner and to the same extent as set forth in Section
3.05(a), except that any such prospective seller shall not in any event be
liable to the Company pursuant thereto for an amount in excess of the net
proceeds of sale of such prospective seller's Registrable Securities so to be
sold) the Company, each such underwriter of such securities, each officer and
director of each such underwriter and each other Person, if any, who controls
the Company or any such underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and (ii) each such underwriter
of such securities, to indemnify and hold harmless (in the same manner and to
the same extent as set forth in Section 3.05(a)) the Company, each officer and
director of the Company, each prospective seller, each officer and director of
each prospective seller and each other Person, if any, who controls the Company
or any such prospective seller within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, with respect to any statement
in or omission from such registration statement, any preliminary prospectus,
final prospectus or summary prospectus included therein, or any amendment or
supplement thereto, if such statement or omission was made in reliance upon and
in conformity with written information furnished by such prospective seller or
such underwriter, as the case may be, to the Company for use in the preparation
of such registration statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Company or any such director, officer or controlling Person and shall
survive the transfer of such securities by such seller.
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding (including any governmental
investigation) involving a claim referred to in Section 3.05(a) or (b), such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action; PROVIDED, HOWEVER, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party
19
of its obligations under the preceding provisions of this Section 3.05, except
to the extent that the indemnifying party is actually prejudiced by such failure
to give notice. In case any such action is brought against an indemnified
party, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such claim (in which case, the indemnifying party shall not be liable for the
fees and expenses of more than one counsel for all sellers of Registrable
Securities, or more than one counsel for the underwriters in connection with any
one action or separate but similar or related actions), the indemnifying party
will be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified, to the extent that it may
wish with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof.
SECTION 3.06. CONTRIBUTION. (a) If the indemnification provided for
in Section 3.05 is unavailable to the indemnified parties in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party and the Company shall contribute to the amounts paid or
payable by such indemnified parties as a result of such losses, claims, damages
or liabilities (i) as between the Company and the holders of Registrable
Securities covered by a registration statement, 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 such holders, on the one hand, and
the underwriters, on the other, from the offering of the Registrable 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 such holders, on the one hand, and of the underwriters,
on the other, in connection with the statements or omissions that 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 holder of Registrable Securities covered by a registration statement, on
the other, in such proportion as is appropriate to reflect the relative fault of
the Company and of each such holder in connection with such statements or
omissions, as well as any other relevant equitable considerations. The relative
benefits received by the Company and such holders, on the one hand, and the
underwriters, on the other, shall be deemed to be in the same proportion as the
total proceeds from the offering (net of underwriting discounts and commissions
but before deducting expenses) received by the Company and such holders bear to
the total underwriting discounts and commissions received by the underwriters.
The relative fault of the Company and such 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 such holders or by the underwriters. The relative
fault of the Company, on the one hand, and of each such holder, on the other,
shall be
20
determined by reference to, among other things, whether the untrue or alleged
untrue statement of 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.
(b) The Company and the holders of Registrable Securities agree that
it would not be just and equitable if contribution pursuant to this Section 3.06
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 that does not
take account of the equitable considerations referred to in the next 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 next preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 3.06 no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages that
such underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no holder of
Registrable Securities shall be required to contribute any amount in excess of
the amount by which the total price at which the Registrable Securities of such
holder were offered to the public exceeds the amount of any damages that such
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. Each Stockholder's obligation to
contribute pursuant to this Section 3.06 is several in the proportion that the
proceeds of the offering received by such Stockholder bears to the total
proceeds of the offering received by all the Stockholders and not joint.
SECTION 3.07. NOMINEES OF BENEFICIAL OWNERS. In the event that any
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election, be treated as the holder of
such Registrable Securities for purposes of any request or other action by any
holder or holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable Securities
held by any holder or holders of Registrable Securities contemplated by this
Agreement. If the beneficial owner of any Registrable Securities so elects, the
Company may require assurances reasonably satisfactory to it of such owner's
beneficial ownership of such Registrable Securities.
21
ARTICLE IV
CERTAIN AGREEMENTS REGARDING THE BOARD
SECTION 4.01 NOMINATION OF DIRECTORS. (a) The Morgan Stanley
Stockholders shall have the right to designate nominees for one-half of the
members of the Board for so long as the total number of shares of Common Stock
owned by the Morgan Stanley Stockholders constitutes at least fifty percent
(50%) of the outstanding Common Stock of the Company. If such percentage
ownership falls below 50%, the number of nominees for director that the Morgan
Stanley Stockholders shall have the right to designate will be reduced to the
number of directors which constitutes a percentage representation on the Board
equal to the Morgan Stanley Stockholders' aggregate percentage ownership of the
outstanding Common Stock; PROVIDED that so long as the Morgan Stanley
Stockholders own at least five percent (5%) of the outstanding Common Stock, the
Morgan Stanley Stockholders shall have the right to designate at least one
nominee for director.
(b) In the event that the Board is classified such that directors
serve staggered terms, then at any meeting at which directors are elected, the
Morgan Stanley Stockholders shall have the right to designate nominees for
election at such meeting such that the number of nominees so designated,
together with incumbent directors who had previously been nominated by the
Morgan Stanley Stockholders, does not exceed the maximum number of nominees for
director that the Morgan Stanley Stockholders may designate pursuant to Section
4.01(a)
(c) In the event of a vacancy on the Board created by the
resignation, renewal or death of a director nominated by the Morgan Stanley
Stockholders, the Morgan Stanley Stockholders shall have the right to designate
the nominee for election to fill such vacancy.
(d) To the extent the Company's proxy statement for any annual
meeting includes a recommendation regarding the election of any other nominees
to the Board, the Company agrees to include a recommendation that the Company's
stockholders vote in favor of the nominees of the Morgan Stanley Stockholders.
(e) The parties to this Agreement agree to take all actions necessary
so that, notwithstanding any other provision of this Agreement, at no time
persons who are nominees of the Morgan Stanley Stockholders shall constitute
more than one half of the members of the Board.
22
ARTICLE V
MISCELLANEOUS
SECTION 5.01. EFFECTIVE DATE. This Agreement shall become effective
on the date (the "EFFECTIVE DATE") of the consummation of the Initial Public
Offering. Until the occurrence of the Effective Date, the Stockholders'
Agreement shall continue in full force and effect.
SECTION 5.02. REPRESENTATIONS. Each of the parties hereto represents
that this Agreement has been duly authorized, executed and delivered by such
party and constitutes a legal, valid and binding obligation of such party,
enforceable against it in accordance with the terms of this Agreement.
SECTION 5.03. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 5.04. AMENDMENTS AND WAIVERS. Any term of this Agreement may
be amended and the observance of any such term may be waived (either generally
or in a particular instance and either retroactively or prospectively) only with
the written consent of (a) the Company and (b) Stockholders holding shares of
Common Stock representing at least 66-2/3% of the then outstanding shares of
Common Stock held by all the Stockholders; PROVIDED, HOWEVER, that no amendment
or waiver not affecting all classes of Common Stock equally shall be effective
without the written consent of Stockholders holding a majority of the shares of
each affected class of Common Stock held by Stockholders; PROVIDED FURTHER that
no amendment or waiver which affects adversely the Employee Stockholders shall
be effective without the written consent of Employee Stockholders holding a
majority of the shares of Common Stock held by all the Employee Stockholders.
For the purposes of this Section 5.04, the term "EMPLOYEE STOCKHOLDER" shall
mean any natural person who is bound to this Agreement on the date hereof and an
employee of the Company on the date of determination or a Qualified Trust whose
settlor is an employee of the Company on the date of determination or a
Qualified Estate. Each Stockholder shall be bound by any amendment or waiver
authorized by this Section 5.04, whether or not such Stockholder shall have
consented thereto.
SECTION 5.05. NOTICES. All notices and other communications provided
for herein shall be in writing and shall be delivered by hand, telecopied or
sent by certified or registered mail, return receipt requested, postage prepaid,
addressed in the manner set forth on the signature pages of this Agreement or,
if not set forth thereon, in the manner set forth on the signature pages of the
Stockholders' Agreement (or in such other manner for a party
23
as shall be specified in a notice given in accordance with this Section 5.05).
All such notices shall be conclusively deemed to be received and shall be
effective, if sent by hand delivery or telecopied, upon receipt, or if sent by
registered or certified mail, on the fifth day after the day on which such
notice is mailed.
SECTION 5.06. BENEFIT; SUCCESSORS AND ASSIGNS. Except as otherwise
provided herein, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Nothing in this Agreement either express or implied is intended to confer on any
person other than the parties hereto and their respective successors and
permitted assigns, any rights, remedies or obligations under or by reason of
this Agreement.
SECTION 5.07. DISTRIBUTIONS BY OLDARM AND NEW ARM. Notwithstanding
any other provision of this Agreement, in the event that Oldarm shall distribute
any Shares to its partners or New Arm shall distribute any Shares to its
members, recipients of Shares in any such distribution who, at the time of such
distribution, are not Employees shall not be bound by any provision of this
Agreement.
SECTION 5.08. MISCELLANEOUS. This Agreement sets forth the entire
agreement and understanding among the parties hereto, and supersedes all prior
agreements and understandings, relating to the subject matter hereof. All
representations and warranties contained herein shall survive the execution and
delivery of this Agreement, regardless of any investigation made by any party
hereto or on such party's behalf. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York. The headings
in this Agreement are for purposes of reference only and shall not limit or
otherwise affect the meaning hereof. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one instrument.
24
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement in their individual capacity or caused it to be duly executed by their
respective authorized signatories thereunto duly authorized as of the day and
year first above written.
ARM FINANCIAL GROUP, INC.
By _______________________________________
Name: John Franco
Title: Co-Chief Executive Officer
By _______________________________________
Name: Martin H. Ruby
Title: Co-Chief Executive Officer
25
THE MORGAN STANLEY LEVERAGED EQUITY FUND II,
L.P.
By: Morgan Stanley Leveraged Equity Fund, Inc.,
as general partner
By _______________________________________
Name:
Title:
c/o Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
33rd Floor
New York, New York 10020
Telecopy: (212) 762-7951
Attention: Mr. Frank V. Sica
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopy: (212) 848-7179
Attention: Christopher D. Dillon, Esq.
26
MORGAN STANLEY CAPITAL PARTNERS III, L.P.
By: MSCP III, L.P., as general partner
By: Morgan Stanley Capital Partners III, Inc.,
as general partner
By _______________________________________
Name:
Title:
c/o Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
33rd Floor
New York, New York 10020
Telecopy: (212) 762-7951
Attention: Mr. Frank V. Sica
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopy: (212) 848-7179
Attention: Christopher D. Dillon, Esq.
27
MORGAN STANLEY CAPITAL INVESTORS, L.P.
By: MSCP III, L.P., as general partner
By: Morgan Stanley Capital Partners III, Inc.,
as general partner
By _______________________________________
Name:
Title:
c/o Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
33rd Floor
New York, New York 10020
Telecopy: (212) 762-7951
Attention: Mr. Frank V. Sica
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopy: (212) 848-7179
Attention: Christopher D. Dillon, Esq.
28
MSCP III 892 INVESTORS, L.P.
By: MSCP III, L.P., as general partner
By: Morgan Stanley Capital Partners III, Inc.,
as general partner
By_______________________________________
Name:
Title:
c/o Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
33rd Floor
New York, New York 10020
Telecopy: (212) 762-7951
Attention: Mr. Frank V. Sica
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopy: (212) 848-7179
Attention: Christopher D. Dillon, Esq.
29
_______________________________________
John Franco
_______________________________________
Martin H. Ruby
OLDARM, L.P.
By: Oldarm GP Partnership, as general partner
By _______________________________________
Name:
Title: General Partner
NEW ARM, LLC
By_______________________________________
Name: John Franco
Title: Manager
By_______________________________________
Name: Martin H. Ruby
Title: Manager
New Arm, LLC
1230 Liberty Bank Lane, Suite 200
Louisville, KY 40222-5763
Telecopy: (502) 451-1805
Attention: David M. Roth, Esq.