Exhibit 10.12
EXECUTION COPY
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USS HOLDINGS, INC.
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EQUITY RIGHTS AGREEMENT
BETWEEN
USS HOLDINGS, INC.
AND
THE INVESTORS LISTED ON SCHEDULE I HERETO
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Dated as of December 19, 1996
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TABLE OF CONTENTS
Page
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1. Definitions; Rules of Construction......................................................................2
(a) Definitions........................................................................................2
(b) Rules of Construction..............................................................................6
2. Covenants; Observation Rights...........................................................................7
(a) Transactions with Affiliates.......................................................................7
(b) Observer Rights....................................................................................7
3. Investor Put Rights.....................................................................................7
(a) Put Notice.........................................................................................7
(b) Put Closing........................................................................................9
4. Company Call Rights.....................................................................................9
(a) Call Notice........................................................................................9
(b) Call Closing......................................................................................10
(c) Adjustment of Fair Value Per Share................................................................10
5. Miscellaneous..........................................................................................11
(a) Amendment and Waiver..............................................................................11
(b) Duration; Termination.............................................................................11
(c) Severability......................................................................................11
(d) Entire Agreement..................................................................................11
(e) Successors and Assigns............................................................................11
(f) Counterparts......................................................................................12
(g) Notices...........................................................................................12
(h) Governing Law; Consent to Jurisdiction............................................................13
(i) Mutual Waiver of Jury Trial.......................................................................13
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EQUITY RIGHTS AGREEMENT
dated as of December 19, 1996,
between USS HOLDINGS, INC.,
a Delaware corporation (the
"Company"), and THE
INVESTORS LISTED ON SCHEDULE
I HERETO (the "Investors").
Simultaneously with the execution and delivery of this Agreement, (a)
the Investors and Chase Manhattan Capital Corporation, a New York corporation
("CMCC"), are entering into a Stock and Note Purchase Agreement (the "Purchase
Agreement"), pursuant to which, among other things, the Investors are purchasing
from CMCC (i) $15,231,177 in aggregate principal amount of 15% Senior
Subordinated Notes due February 9, 2005 (the "Notes"), of U.S. Silica Company, a
Delaware corporation and successor by merger to USS Acquisition, Inc. ("U.S.
Silica"), and (ii) 180,000 shares of Series A Redeemable Preferred Stock, $.0l
par value (the "Series A Preferred Stock"), and 360,000 shares of Series B
Convertible Preferred Stock, $.0l par value (the "Series B Preferred Stock"), of
the Company (all such shares collectively, the "Sale Shares"), and (b) the
Company and the Investors are entering into a Warrant Issuance Agreement (the
"Warrant Agreement") pursuant to which the Company is issuing to the Investors
warrants (the "Warrants") to purchase up to 41,667 shares of Series A Preferred
Stock and 83,334 shares of Series B Preferred Stock (all such shares
collectively, the "Warrant Shares"). The parties are entering into this
Agreement in connection with the Purchase Agreement and the warrant Agreement.
ACCORDINGLY, in consideration of the foregoing and the representations,
warranties, covenants and agreements of the parties contained in this Agreement
and in the Purchase Agreement, the parties agree as follows:
1. Definitions; Rules of Construction. (a) Definitions.
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Capitalized terms used in this Agreement have the meanings ascribed to them
below:
"Affiliate" means, as to any Person, any other Person that, directly or
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indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person; provided, however, that for
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purposes of this definition, the term "control" (including the terms
"controlling," "controlled by" and "under common control with") of a Person
means the possession, direct or indirect, of the power to vote 5% or more of the
Voting Stock of such Person or to direct or cause the direction of the
management and policies of such Person, whether through the ownership of Voting
Stock, by contract or otherwise.
"Applicable Law" means all provisions of laws, statutes, ordinances,
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rules, regulations, permits, certificates, writs, decrees or orders of any
Governmental Authority applicable to (a) the Person in question or any of its
assets or property or (b) the transaction or event in question.
"Board" and "Board of Directors," unless otherwise specified, means the
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Board of Directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or a day for
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which banks are authorized or required to he closed in New York, New York.
"Common Stock" means, collectively, all of the Common Stock, $.0l par
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value, of the Company of any class, including the Company's Class A Common Stock
and Class B Common Stock and any other class of capital stock of the Company
hereafter authorized that is not limited to a fixed sum or percentage of par or
stated value with respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Company.
"Common Stock Equivalent" means one share of Common Stock or the right
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to acquire, whether or not such right is immediately exercisable, one share of
Common Stock, whether evidenced by an option, warrant, convertible security or
other instrument or agreement.
"Company" has the meaning ascribed to it in the caption of this
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Agreement.
"Common Equity Value" means, as of the date of determination, the most
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probable value that would be paid for all of the Common Stock Equivalents of the
Corporation on a going concern basis in a single arm's-length transaction
between a willing buyer and a willing seller, without regard to lack of
liquidity of the Company's Securities and without any discount for the lack of
control of the Company exercisable by any Investor, using valuation techniques
then prevailing in the securities industry and assuming full disclosure of all
relevant information and reasonably sufficient time for effectuating such sale
in a competitive and open market under all conditions requisite to a fair sale,
the buyer and the seller each acting prudently and knowledgeably, and assuming
the price is not affected by undue stimulus. Implicit in this definition is the
consummation of a sale and the passing of title from the seller to the buyer
under conditions whereby (1) the buyer and the seller are typically motivated,
(2) both parties are well informed or well advised and acting in what they
consider their own best interests, (3) a reasonable amount of time is allowed
for exposure in the open market, (4) payment is made in terms of cash in U.S.
dollars or in terms of financial arrangements comparable thereto, and (5) the
price represents the normal consideration for the Common Stock Equivalents
unaffected by special or creative financing or sales concessions granted by
anyone associated with the sale.
"Common Equity Value Per Share" means the quotient of (a) the sum of
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(i) the Common Equity Value plus (ii) the aggregate consideration that would be
received by the Corporation if all outstanding Common Stock Equivalents (without
regard to any restrictions on the conversion, exercise or exchange thereof) that
are "in the money" (i.e., those having a conversion, exercise or exchange price
per share of Common Stock equal to or lesser than the quotient of (1) the Common
Equity value divided by (2) the total number of shares of Common Stock
outstanding) were converted, exercised and exchanged for Common Stock, divided
by (b) the total number of shares of Common Stock outstanding after giving pro
forma effect to all such conversions, exercises and exchanges of the outstanding
Common Stock Equivalents described in clause (a)(ii) above. When calculated with
respect to a Security that is directly or indirectly convertible into, or
exercisable or exchangeable for, Common Stock, the "Common Equity Value Per
Share" of such Security shall be an amount equal to the Common Equity Value Per
Share calculated pursuant to the immediately preceding sentence times the number
of Common Stock Equivalents represented by such Security.
"Fair Value Per Share" means, with respect to a share of Series B
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Preferred Stock, an amount equal to the Common Equity Value Per Share for such
share as determined in good faith
by the Board (including a majority of the disinterested members of the Board),
which determination shall be delivered to the Investors in writing; provided,
however, that if the Requisite Investors object to such determination by the
Board within 15 Business Days after delivery of such written determination to
the investors, then the Company and the Requisite Investors shall in good faith
attempt to resolve their differences with respect to, and to agree on, the Fair
Value Per Share. If the Company and the Requisite Investors are unable to reach
agreement on the Fair Value Per Share within 15 Business Days after the
Requisite Investors' delivery to the Company of the Requisite Investors' written
objection to the Board's initial determination of the Fair Value Per Share, then
the Fair Value Per Share shall be determined by an investment banking firm of
national recognition, which firm shall be reasonably acceptable to the Company
and the Requisite Investors. If the Company and the Requisite Investors are
unable to agree upon an acceptable investment banking firm within 10 Business
Days after the date either party proposed that one be selected, the investment
banking firm will be selected by an arbitrator located in the City of New York,
New York, selected by the American Arbitration Association (or if such
organization ceases to exist, the arbitrator shall be chosen by a court of
competent jurisdiction). The arbitrator shall select the investment banking firm
(within ten (10) days of his appointment) from a list, jointly prepared by the
Company and the Requisite Investors, of not more than six investment banking
firms of national standing in the United States, of which no more than three may
be named by the Company and no more than three may be named by the Requisite
Investors. The arbitrator may consider, within the ten-day period allotted,
arguments from the parties regarding which investment banking firm to choose,
but the selection by the arbitrator shall be made in its sole discretion from
the list of six. The Company and the Requisite Investors shall submit to the
investment banking firm their respective calculations of the Fair Value Per
Share, and any supporting arguments and other data as they may desire, within 10
Business Days of the appointment of the investment banking firm, and the
investment banking firm shall as soon as practicable thereafter make its own
calculation of the Fair Value Per Share. The determination of the Fair Value Per
Share by such investment banking firm shall be final and binding upon the
parties. The Company shall pay the fees and expenses of the investment banking
firm and arbitrator (if any) used to determine the Fair Value Per Share. "Fair
Value Per Share" means, with respect to a share of Series A Preferred Stock, an
amount equal to the Series A Liquidation Preference (as defined in the Amended
and Restated Certificate of Incorporation of the Company); provided, however,
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that Fair Value Per Share of a share of Series A Preferred Stock shall not
exceed the amount that would be distributed in respect thereof upon a
Liquidation.
"GAAP" means generally accepted accounting principles in the United
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States, consistently applied.
"Governmental Authority" means any domestic or foreign government or
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political subdivision thereof, whether on a federal, state or local level and
whether executive, legislative or judicial in nature, including any agency,
authority, board, bureau, commission, court, department or other instrumentality
thereof.
"Investors" has the meaning given to it in the caption of this
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Agreement.
"Liquidation" mean any voluntary or involuntary dissolution,
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liquidation and winding up of the business and affairs of the Company.
"Liquidity Event" means any Sale of the Company, Public Offering or
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Liquidation.
"Material Adverse Effect" means a material adverse effect on the
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business, affairs, operations, assets, properties, liabilities, results of
operations, condition (financial or otherwise) or prospects of the Company or
any of its Subsidiaries.
"Note Purchase Agreement" means the Note Purchase Agreement dated as of
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February 9, 1996, among USS Acquisition, Inc., and the investors named therein
relating to the original issuance and sale of the Notes.
"Notes" has the meaning ascribed to it in the Preamble.
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"Person" shall be construed as broadly as possible and shall include an
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individual or natural person, a partnership (including a limited liability
partnership), a corporation, an association, a joint stock, company, a limited
liability company, a trust, a joint venture, an unincorporated organization and
a Governmental Authority.
"Public Offering" means the closing of a public offering of Common
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Stock pursuant to a registration statement declared effective under the
Securities Act, except, that a Public Offering shall not include an offering
made in connection with a business acquisition or an employee benefit plan.
"Purchase Agreement" has the meaning ascribed to it in the Preamble.
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"Qualified Public Offering" has the meaning ascribed to it in the
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Stockholders Agreement.
"Requisite Investors" means Investors that hold more than 50% of the
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outstanding shares of Series B Preferred Stock included in the Shares, with any
shares of Series B Preferred Stock constituting unissued Warrant Shares being
deemed to be outstanding and held by the holders of the Warrants.
"Sale of the Company" means the sale to a third party who is not an
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Affiliate of the Company of outstanding equity securities of the Company
(whether directly or by way of merger, consolidation or other reorganization) in
a transaction in which the Investors have the right to sell all the Shares.
"Sale Shares" has the meaning given to it in the first paragraph of
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this Agreement and includes any and all shares of capital stock of the Company
issued on or with respect to such Sale Shares by way of a stock dividend or
stock split, or by way of a conversion or exchange of such Sale Shares in
accordance with their respective terms.
"Securities" means, with respect to any Person, such Person's
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"securities" as defined in Section 2(l) of the Securities Act of 1933, as
amended, and includes such Person's capital stock or other equity interests or
any options, warrants or other securities that are directly or indirectly
convertible into, or exercisable or exchangeable for, such Person's capital
stock or other equity or equity-linked interests, including phantom stock and
stock appreciation rights.
"Securities Act" means the Securities Act of 1933, as amended, or any
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successor federal statute, and the rules and regulations of the Securities and
Exchange Commission thereunder, all as the same shall be in effect from time to
time.
"Securities and Exchange Commission" means the Securities and Exchange
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Commission or any Governmental Authority succeeding to the functions thereof.
"Shares" means, collectively, the Sale Shares and the Warrant Shares.
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"Stockholders Agreement" means the Stockholders Agreement dated as of
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February 9, 1996, as amended, between the Company and its stockholders named
therein.
"Subsidiary" of any Person, means any corporation, partnership, joint
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venture, limited liability company, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such limited
liability company, partnership or joint venture or (c) the beneficial interest
in such trust or estate is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such Person's other Subsidiaries.
"Voting Stock" means capital stock issued by a corporation, or
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equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or Persons performing similar functions) of such Person, even if such right to
vote has been suspended by the happening of such contingency.
"Warrant Agreement" has the meaning ascribed to it in the preamble to
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this Agreement.
"Warrants" has the meaning ascribed to it in the preamble of this
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Agreement.
"Warrant Shares" has the meaning given to it in the preamble of this
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Agreement and includes any and all shares of capital stock of the Company issued
upon the exercise, conversion or exchange of the Warrants in accordance with its
terms and any and all other shares of capital stock of the Company issued on or
with respect to such Warrant Shares by way of a stock dividend or stock split, a
reorganization or by way of the conversion or exchange of such Warrant Shares in
accordance with their respective terms.
(b) Rules of Construction. The use in this Agreement of the
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term "including" means "including, without limitation." The words "herein,"
"hereof," "hereunder" and other words of similar import refer to this Agreement
as a whole, including the schedules and exhibits, as the same may from time to
time be amended, modified, supplemented or restated, and not to any particular
section, subsection, paragraph, subparagraph or clause contained in this
Agreement. All references to sections, schedules and exhibits mean the sections
of this Agreement and the schedules and exhibits attached to this Agreement,
except where otherwise stated. The title of and the section and paragraph
headings in this Agreement are for convenience of reference only and shall not
govern or affect the interpretation of any of the terms or provisions of this
Agreement. The use herein of the masculine, feminine or neuter form shall
also denote the other forms, as in each case the context may require. The
language used in this Agreement has been chosen by the parties to express their
mutual intent, and no rule of strict construction shall be applied against any
party.
2. Covenants; Observation Rights.
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(a) Transactions with Affiliates. The Company shall not, and
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the Company shall cause its Subsidiaries not to, without the prior written
consent of the Requisite Investors, enter into any transaction with any
Affiliate of the Company on terms less favorable to the Company or such
Subsidiary than would have been obtainable in a comparable arm's-length
transaction with an unrelated third party; provided, however, that the Company
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or any of its wholly-owned Subsidiaries may, without the prior written consent
of the Requisite Investors hereunder, enter into transactions with the Company
and any of its wholly-owned Subsidiaries.
(b) Observer Rights. (i) The Investors (together with their
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permitted transferees) shall have the right to have one individual (the
"Observer"), who shall be designated from time to time by the Requisite
Investors in a writing delivered to the Company, present at all
meetings of the Board of Directors. The Company will give the Observer
reasonable prior notice (it being agreed that the same prior notice
given to the Board of Directors shall be deemed reasonable prior
notice) in any manner permitted in the Company's By-laws for notices to
directors of the time and place of any proposed meeting of the Board of
Directors, such notice in all cases to include true and complete copies
of all documents furnished to the Board of Directors in connection with
such meeting. The Observer will be entitled to be present in person as
an observer at any such meeting or, if a meeting is held by telephone
conference, to participate therein by telephone for the purpose of
listening thereto. The Company will promptly deliver to the Observer
from time to time copies of all written consents executed by the Board
of Directors.
(ii) The Investors acknowledge and agree that all
material, non-public information delivered or made available to the
Investors (including its directors, officers, employees, agents and
representatives) and the Observer under, pursuant to or in connection
with this Agreement shall be subject to the provisions of Section 14.11
of the Note Purchase Agreement as if such information were disclosed
thereunder, and the Investors shall, and shall cause the Observer to,
comply with the provisions of said section with respect to such
information; provided, however, that if the Observer is an officer,
employee or other agent of any Investor, such Investor shall be solely
responsible for any breach thereof by the Observer.
3. Investor Put Rights. (a) Put Notice. Subject to the terms
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and conditions of this Section 3, at any time after the fifth anniversary of the
date hereof and prior to a Liquidity Event, the Requisite Investors may elect to
require the Company to purchase all (but not less than all) of the outstanding
Shares held by the Investors at a price per Share equal to the applicable Fair
Value Per Share (determined as of the date the Put Notice is delivered) by
giving written notice to the Company of such election (the "Put Notice"),
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whereupon Company shall be obligated to purchase, and the Investors
shall be obligated to sell, the Shares, subject to the following conditions:
(i) the Company shall use its best efforts to obtain
all consents, approvals and waivers from third parties (including the
stockholders of the Company) that may be necessary in order to permit
the Company to purchase the Warrant Shares, and in the event that the
Company cannot, after using such best efforts, obtain any such consent,
approval or waiver that is required for the Company to purchase any
Warrant Shares, the Company shall be relieved from its obligation
hereunder to purchase such warrant Shares;
(ii) the Company shall use its commercially
reasonable efforts to obtain all consents, approval, and waivers from
third parties (including the stockholders of the Company) that may be
necessary in order to permit the Company to purchase the Sale Shares,
and in the event that the Company cannot after using such commercially
reasonable efforts obtain any such consent, approval or waiver that is
required for the Company to purchase any Sale Shares, the Company shall
be relieved from its obligation hereunder to purchase such Sale Shares;
(iii) in the event the Company shall not have
sufficient funds on hand to purchase all of the warrant Shares, the
Company shall use its best efforts to obtain such funds from third
party financing sources on reasonable and customary terms to pay in
full in cash the aggregate purchase price required to be paid for the
Warrant Shares pursuant to this Section 3, and if, after using such
best efforts, the Company cannot obtain such funds to purchase all of
the Warrant Shares, the Company shall be obligated hereunder to
purchase, on a pro rata basis from all Investors in proportion to their
holdings of Warrant Shares, only those Warrant Shares that the Company
is able to purchase out of funds on hand and obtained from third party
financing sources, if any;
(iv) in the event the Company shall not have
sufficient funds on hand to purchase all of the Sale Shares, the
Company shall use its commercially reasonable efforts to obtain such
funds from third party financing sources on reasonable and customary
terms to pay in full in cash the aggregate purchase price required to
be paid for the Sale Shares pursuant to this Section 3, and if, after
using such commercially reasonable efforts, the Company cannot obtain
such funds to purchase all of the Sale Shares, the Company shall be
obligated hereunder to purchase, on a pro rata basis from all Investors
in proportion to their holdings of Sale Shares, only those Sale Shares
that the Company is able to purchase out of funds on hand and obtained
from third party financing sources, if any;
(v) in the event that the Company is prohibited or
restricted by Applicable Law from purchasing any Warrant Shares or Sale
Shares, the Company's obligation to purchase such shares hereunder
shall be suspended until such time as the Company is no longer subject
to any such prohibition or restriction and any such purchase permitted
to be made shall first be made of Warrant Shares on a pro rata basis;
(vi) in the event that the Board determines in good
faith that the Company's performance of its obligations under this
Section 3 could reasonably be expected to have a Material Adverse
Effect, the Company may postpone the Put Closing
for such period as the Board may in good faith determine in order to
avoid such Material Adverse Effect; and
(vii) in the event that the Requisite Investors have
delivered a Put Notice to the Company and the Company has given the
Investors written notice prior to 30 days following final determination
of the Fair Value Per Share of the Series B Preferred Stock that the
Company has fixed plans to engage in, or is otherwise attempting to
engage in, a Liquidity Event, then the Company shall not be obligated
to purchase such Shares pursuant to this Section 3 unless and until
such Liquidity Event is abandoned.
(b) Put Closing. Subject to conditions set forth in Section
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3(a), the closing (the "Put Closing") of the Company's purchase of Shares from
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the Investors pursuant to Section 3(a) shall take place on such date (the "Put
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Closing Date") as shall be determined by the Company, but in any event not
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earlier than 10 days and not later than 90 days after the later of (x) the date
on which the final determination of the Fair Value Per Share of the Shares being
repurchased is made and (y) the date on which all of the conditions set forth in
Section 3(a) have been satisfied. The Put Closing shall take place at the
Company's principal executive office or place of business or the office in New
York City of the Company's attorneys. The Company shall send written notice of
the Put Closing (the "Put Closing Notice") to the Investors. The Put Closing
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Notice shall specify the Put Closing Date and the location of the Put Closing.
At the Put Closing, the Company shall pay to each Investor, against the
Company's receipt from such Investor of the certificate or certificates
representing the Shares being repurchased from such Investor duly endorsed or
accompanied by duly executed stock powers and other instruments of transfer
necessary to transfer said Shares to the Company free and clear of all liens,
pledges, encumbrances and other adverse claims, an amount equal to the aggregate
purchase price for all such Shares, by wire transfer of immediately available
funds, or if such investor shall not have specified wire transfer instructions
to the Company prior to the Put Closing Date, by certified or official bank
check made payable to the order of such Investor.
4. Company Call Rights. (a) Call Notice. Subject to the terms
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and conditions of this Section 4, at any time and from time to time after the
sixth anniversary of the date hereof, the Company may elect to purchase all (but
not less than all) of the unexercised Warrants and the Shares held by the
Investors at a price per share equal to the applicable Fair Value Per Share
(determined as of the date the Call Notice is given) of such Warrants
(determined based upon the Fair Value Per Share of the shares issuable upon
exercise of such Warrants less the price payable upon exercise thereof) or
Shares by giving written notice to the Investors of such election (the "Call
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Notice"), whereupon the Company shall be obligated to purchase, and the
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Investors shall be obligated to sell, such Warrants and Shares; provided,
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however, that the Company may at any time prior to 10 days prior to the Call
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Closing Date (as defined below) terminate or abandon its purchase of such
Warrants and Shares hereunder by delivering written notice thereof to the
Investors and paying, or reimbursing the Investors for, the reasonable out-of-
pocket fees and expenses incurred by the Investors in connection with the
determination of Fair Value Per Share as a result of the Company's exercise of
such call rights hereunder (and in the event of any such termination or
abandonment, the provisions of this Section 4 shall thereafter remain and
continue in effect in accordance with their respective terms).
(b) Call Closing. Subject to conditions set forth in Section
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4(a), the closing (the "Call Closing") of the Company's purchase of Warrants and
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Shares from the Investors pursuant to Section 4(a) shall take place on such date
(the "Call Closing Date") as shall be determined by the Company, but in any
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event not earlier than 10 days and not later than 90 days after the date on
which the final determination of the Fair Value Per Share of the Warrants and
Shares being repurchased is made. The Call Closing shall take place at the
Company's principal executive office or place of business or the office in New
York City of the Company's attorneys. The Company shall send written notice of
the Call Closing (the "Call Closing Notice") to the Investors. The Call Closing
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Notice shall specify the Call Closing Date and the location of the Call Closing.
At the Call Closing, the Company shall pay to each Investor, against the
Company's receipt from such Investor of the certificate or certificates
representing the Warrants and Shares being purchased from such Investor duly
endorsed or accompanied by duly executed stock powers and other instruments of
transfer necessary to transfer such Warrants and Shares to the Company free and
clear of all liens, pledges, encumbrances and other adverse claims, an amount
equal to the aggregate purchase price for all such Warrants and Shares, by wire
transfer of immediately available funds, or if such Investor shall not have
specified wire transfer instructions to the Company prior to the Call Closing
Date, by certified or official bank check made payable to the order of such
Investor.
(c) Adjustment of Fair Value Per Share. (i) If a Liquidity
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Event occurs at any time during the first six months following the Call
Closing and the price of a share of Series B Preferred Stock resulting
from such Liquidity Event exceeds the per share purchase price paid by
the Company for shares of Series B Preferred Stock at the Call Closing,
then the Company shall pay each Investor an amount equal to the product
of (A) the amount by which the price of a share of Series B Preferred
Stock resulting from such Liquidity Event exceeds the per share
purchase price paid by the Company for shares of Series B Preferred
Stock at the Call Closing multiplied by (B) the number of Shares of
Series B Preferred Stock purchased by the Company from such Investor at
the Call Closing (including shares of Series B Preferred Stock issuable
upon exercise of unexercised Warrants so purchased). Such payment shall
be made to such Investor within 15 Business Days after the consummation
of such Liquidity Event in the same manner as the payment of the
purchase price at the Call Closing.
(ii) If a Liquidity Event occurs at any time during
the second six months following the Call Closing and the price of a
share of Series B Preferred Stock resulting from such Liquidity Event
exceeds the per share purchase price paid by the Company at the Call
Closing, then the Company shall pay each Investor an amount equal to
50% of the product of (A) the amount by which the price of a share of
Series B Preferred Stock resulting from such Liquidity Event exceeds
the per share purchase price paid by the Company for shares of Series B
Preferred Stock at the Call Closing multiplied by (B) the number of
Shares of Series B Preferred Stock purchased by the Company from such
Investor at the Call Closing (including shares of Series B Preferred
Stock issuable upon exercise of unexercised Warrants so purchased).
Such payment shall be made to such Investor within 15 Business Days
after the consummation of such Liquidity Event in the same manner as
the payment of the purchase price at the Call Closing.
5. Miscellaneous. (a) Amendment and Waiver. The provisions of
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this Agreement may only be amended in writing signed by the Company and the
Investors, and may only be waived in writing by the party to be charged with
such waiver.
(b) Duration; Termination. The provisions of this Agreement
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shall terminate upon the first to occur of (A) a Liquidation, (B) a Sale of the
Company, (C) the written approval of such termination by the Company and the
Investors, and (D) the consummation of a Qualified Public Offering.
(c) Severability. It is the desire and intent of the parties
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hereto that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
(d) Entire Agreement. This Agreement embodies the entire
-------------
agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersedes and preempts any and all prior and contemporaneous
understandings, agreements, arrangements or representations by or among the
parties, written or oral, which may relate to the subject matter hereof in any
way.
(e) Successors and Assigns. (i) Except as otherwise provided
----------------------
herein, this Agreement will bind and inure to the benefit of and be
enforceable by the Company and its successors and assigns and the
Investors and their respective successors and permitted assigns, so
long as each such Person holds Warrants or Shares. Any Investor may
assign and delegate any of its rights and obligations hereunder to any
Permitted Transferees of Warrants or Shares as defined in, and pursuant
to the provisions of the Stockholders Agreement dated as of February 9,
1996, as amended, without the prior written consent of any other party
hereto. None of the provisions hereof shall create, or be construed or
deemed to create, any third party beneficiaries.
(ii) References in this Agreement to an "Investor"
shall mean, collectively, an Investor named herein and the permitted
transferees of Warrants or Shares held by the Investor who have
executed and delivered to the Company a joinder agreement in form and
substance reasonably acceptable to such permitted transferee and the
Company pursuant to which such permitted transferee shall have agreed
to be bound and to comply with the provisions of this Agreement as if
such permitted transferee were an Investor named herein. Whenever any
agreement, consent, approval or waiver of the Investors is required or
requested hereunder, then, unless otherwise expressly provided,
such agreement, consent, approval or waiver shall be deemed to have
been duly given if in a writing signed by the Requisite Investors.
(f) Counterparts. This Agreement may be executed in any number
------------
of counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.
(g) Notices. All notices and other communications which are
-------
required or otherwise delivered hereunder shall be deemed to be sufficient and
duly given if contained in a written instrument (a) personally delivered or sent
by telecopier, (b) sent by nationally recognized overnight courier guaranteeing
next Business Day delivery or (c) sent by first class registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:
(i) if to the Issuer or any Subsidiary to:
USS Holdings, Inc.
c/o D. George Harris & Associates, Inc.
399 Park Avenue
32nd Floor
New York, New York 10022
Telephone: (212) 207-6400
Telecopy: (212) 207-6470
Attention: Donald C. Kilpatrick, Esq.;
(ii) with a copy to;
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004
Telephone: 212-858-1000
Telecopy: 212-858-1500
Attention: Kenneth E. Adelsberg, Esq.; and
(iii) if to any Investor to the address of such
Investor set forth on Schedule I:
(iv) with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Telephone: 212-408-2400
Telecopy: 212-408-2420
Attention: Frederick M. Bachman, Esq.
or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such notice
or communication shall be deemed to have been received (i) when delivered, if
personally delivered or sent by telecopier,
(ii) on the first Business Day after dispatch, if sent by nationally recognized,
overnight courier guaranteeing next Business Day delivery and (iii) on the third
Business Day following the date on which the piece of mail containing such
communication is posted, if sent by mail.
(h) Governing Law; Consent to Jurisdiction. (i) All questions
--------------------------------------
concerning the construction, interpretation and validity of this
Agreement shall be governed by and construed and enforced in accordance
with the domestic laws of the State of New York, without giving effect
to any choice of law or conflict of laws provision or rule (whether in
the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New
York. in furtherance of the foregoing, the internal law of the State of
New York will control the interpretation and construction of this
Agreement, even if under such jurisdiction's choice of law or conflict
of laws analysis, the substantive law of some other jurisdiction would
ordinarily apply.
(ii) The jurisdiction and venue in any action brought
by any party hereto pursuant to this Agreement shall exclusively lie in
any federal or state court located in the City of New York, New York.
The parties further agree that such exclusive jurisdiction and venue
shall lie exclusively with such federal courts if federal rules of
jurisdiction permit such federal court to hear such action. By
execution and delivery of this Agreement, each party hereto irrevocably
submits to the jurisdiction of such courts for himself or itself and in
respect of his or its property with respect to such action. The parties
irrevocably agree that venue would be proper in any such court, and
hereby waive any objection that any such court is an improper or
inconvenient forum for the resolution of such action. The parties
further agree that the mailing by certified or registered mail, return
receipt requested, of any process required by any such court shall
constitute valid and lawful service of process against them, without
necessity for service by any other means provided by statute or rule of
court. The parties agree that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdiction by suit on the judgment or in any other manner provided by
Applicable Law.
(i) Mutual Waiver of Jury Trial. BECAUSE DISPUTES ARISING IN
---------------------------
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM, THE PARTIES
HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING
BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY
DOCUMENTS RELATED HERETO.
IN WITNESS WHEREOF, the undersigned have duly executed this Equity
Rights Agreement as of the date first written above.
USS HOLDINGS, INC.
By: /s/ Donald G. Kilpatrick
---------------------------------
Name: Donald G. Kilpatrick
Title: Vice President
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Mark A. Ahmed
---------------------------------
Name: Mark A. Ahmed
Title: Managing Director
MASSMUTUAL PARTICIPATION INVESTORS
By: /s/
---------------------------------
Name:
Title: Investment Officer
MASSMUTUAL CORPORATE INVESTORS
By: /s/
----------------------------------
Name:
Title: Investment Officer
MASSMUTUAL CORPORATE VALUE PARTNERS LIMITED
By: Massachusetts Mutual Life Insurance Company,
investment manager
By: /s/ Mark A. Ahmed
---------------------------------
Name: Mark A. Ahmed
Title: Managing Director
CHASE VENTURE CAPITAL
ASSOCIATES, L.P.
By: Chase Capital Partners,
its general partner
By: /s/ Jeffrey C. Walker
----------------------------------
Name: Jeffrey C. Walker
Title: General Partner
Schedule I
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Investors
---------
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY - 1
1295 State Street
Springfield, MA 01111
Attn.: Securities Investment Division
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY - 2
129S State Street
Springfield, MA 01111
Attn.: Securities Investment Division
MASSMUTUAL PARTICIPATION INVESTORS
c/o MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
1295 State Street
Springfield, MA 01111
Attn.: Securities Investment Division
MASSMUTUAL CORPORATE INVESTORS
c/o MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
1295 State Street
Springfield, MA 01111
Attn.: Securities Investment Division
MASSMUTUAL CORPORATE VALUE
PARTNERS LIMITED
c/o BANK OF AMERICA TRUST AND BANKING
CORPORATION (CAYMAN) LIMITED
P.O. Box 1092
George Town
Grand Cayman
Cayman Islands, B.W.I.
Attention: Michael Carney
CHASE VENTURE CAPITAL ASSOCIATES, L.P.
380 Madison Avenue
12th Floor
New York, New York 10017-2070
Attention: Richard D. Waters