OUTSOURCING SOLUTIONS INC.
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
-------------------------------------------
THIS AGREEMENT is made as of April 16, 2001, among Outsourcing Solutions
Inc., a Delaware corporation (the "Company"), Madison Dearborn Capital Partners
III, L.P. (the "Principal Investor"), Madison Dearborn Special Equity III, L.P.
("MDSE"), Special Advisers Fund I, LLC ("SA"), Ares Leveraged Investment Fund,
L.P. ("Ares I"), Ares Leveraged Investment Fund II, L.P., ("Ares II"), DB
Capital Investors, L.P. ("DB"), First Union Merchant Banking 1999, L.L.C.
("FU99"), First Union Capital Partners 2001, L.L.C. ("FUO1"), Abbott Capital
1330 Investors II, L.P. ("Abbott"), Abbott Capital Private Equity Fund III, L.P.
("Abbott III"), BNY Partners Fund, L.L.C. ("BNY"), Heller Financial, Inc.
("Heller"), Magnetite Asset Investors L.L.C. ("Magnetite"), FBR Financial Fund
II, L.P. ("FBR"), Harvest Opportunity Partners, L.P. ("Harvest"), Gryphon
Partners II, L.P. ("GPII"), and Gryphon Partners II-A, L.P. ("GPII-A," and,
together with the Principal Investor, MDSE, SA, Ares I, Ares II, DB, FU99, FU01,
Abbott, Abbott III, BNY, Heller, Magnetite, FBR, Harvest, GPII and any other
Person that executes a counterpart to this Agreement from time-to-time in such
capacity, the "Investors"), each of the stockholders listed on Exhibit A
attached hereto (including stockholders who acquire capital stock of the Company
after the date hereof and execute a counterpart to this Agreement or otherwise
agree to be bound by this Agreement, the "Stockholders"), each of the
optionholders listed on Exhibit B attached hereto (including optionholders who
acquire options to purchase capital stock of the Company after the date hereof
and execute a counterpart to this Agreement or otherwise agree to be bound by
this Agreement, the "Optionholders") and each of the warrantholders listed on
Exhibit C attached hereto (including warrantholders who acquire warrants of the
Company after the date hereof and execute a counterpart to this Agreement or
otherwise agree to be bound by this Agreement, the "Warrantholders"). The
Investors, the Stockholders, the Optionholders and the Warrantholders are
collectively referred to as the "OSI Stockholders" and individually as an "OSI
Stockholder." Capitalized terms used herein are defined in paragraph 12 hereof.
The Company, certain of the OSI Stockholders, and others are parties to a
Stock Subscription and Redemption Agreement dated as of October 8, 1999, as
amended on December 10, 1999 (the "Recapitalization Agreement").
The Company and Ares I, Ares II, DB, FU99 (as assignee of First Union
Investors, Inc.), Abbott, Abbott III, BNY, Heller and Magnetite (collectively
the "Unit Purchasers") are parties to a Purchase Agreement, dated as of December
10, 1999 (the "Purchase Agreement"), wherein, inter alia, the Unit Purchasers
acquired certain shares of Common Stock (the "Unit Common Shares").
The Company, the Principal Investor, and DB, FU99 (as assignee), Abbott,
Abbott III, BNY, FBR and Harvest (collectively the "Co-Invest Purchasers") are
parties to an Assignment and Stock Purchase Agreement, dated as of December 10,
1999 (the "Assignment Agreement") wherein, inter alia, the Co-Invest Purchasers
acquired certain shares of Common Stock (the "Co-Invest Common Shares").
The Company, GPII and GPII-A (GPII and GPII-A shall sometimes be
collectively referred to herein as "Gryphon") and certain other Investors are
parties to a Stock Subscription Agreement, dated as of April 3, 2001 (the
"Subscription Agreement"), wherein, inter alia, GPII, GPII-A and certain other
Investors are each acquiring certain, and GPII and GPII-A may acquire
additional, shares of the Company's Senior Common Stock, par value $0.01 per
share (the "Senior Common Stock").
The Company and the OSI Stockholders (other than Gryphon) previously
entered into a Stockholders Agreement dated December 10, 1999 (the "Original
Agreement").
A condition to GPII's and GPII-A's obligations under the Subscription
Agreement is that the Company and the OSI Stockholders, including GPII and
GPII-A, enter into this Agreement for the purposes, among others, of (i)
amending and restating the Original Agreement, (ii) inducing the Company, GPII
and GPII-A to execute and deliver the Subscription Agreement, (iii) establishing
the composition of the Company's Board of Directors (the "Board"), (iv) assuring
continuity in the management and ownership of the Company, (v) limiting the
manner and terms by which the OSI Stockholders' Common Stock may be transferred,
and (vi) granting certain registration rights to the OSI Stockholders.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Agreement hereby agree as follows:
1. Board of Directors.
(a) From and after the Closing and until the provisions of this paragraph
1 cease to be effective pursuant to 1(d) below, each OSI Stockholder, other than
the Rollover Stockholders, shall vote all of his, her or its OSI Stockholder
Shares which are voting shares and any other voting securities of the Company
over which such OSI Stockholder has voting control (other than Senior Preferred
Stock) and shall take all other necessary or desirable actions within his
control (whether in his, her or its capacity as a stockholder, director, member
of a board committee or officer of the Company or otherwise, and including,
without limitation, attendance at meetings in person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings), and
the Company shall take all necessary or desirable actions within its control
(including, without limitation, calling special board and stockholder meetings),
so that:
(i) the authorized number of directors on the Board to be elected by
the holders of OSI Stockholder Shares shall be established at such number
as shall be determined from time to time in the sole discretion of the
Principal Investor (it being understood that upon the occurrence of a
Voting Rights Triggering Event (as defined in the Certificate of
Designation) the holders of Senior Preferred Stock may elect an additional
two or more directors in accordance with the terms thereof);
(ii) the following individuals shall be elected to the Board by
holders of the OSI Stockholder Shares:
(A) one individual designated by the Principal Investor who is a
member of the Company's management (the "Management Director"),
provided that until the first annual meeting of the Company's
stockholders, Timothy Beffa shall serve as the Management Director;
(B) all other individuals designated by the Principal Investor
(the "Principal Investor Directors"), who shall initially be Paul Wood
and Timothy Hurd; provided that the Principal Investor may authorize
in writing one or more other Persons (each an "Authorized Person") to
designate one or more additional individuals to be elected to the
Board on such terms and conditions as the Principal Investor shall
determine in its sole discretion (provided, that any such Authorized
Person shall consent in writing to such designation and related
obligations pursuant to Section 3(c));
(iii)the removal from the Board (with or without cause) of any
individual designated hereunder by the Principal Investor shall be at the
Principal Investor's written request (or the written request of an
Authorized Person in the case of an individual designated by such
Authorized Person), but only upon such written request and under no other
circumstances, provided that if any director elected pursuant to
subparagraph (ii)(A) above ceases to be an employee of the Company and its
Subsidiaries, he or she shall be removed as a director promptly after his
or her employment ceases; and
(iv) in the event that any individual designated hereunder by the
Principal Investor ceases to serve as a member of the Board during his term
of office, the resulting vacancy on the Board shall be filled by an
individual designated by the Principal Investor (or by an individual
designated by an Authorized Person in the case where the representative
ceasing to serve as a member of the Board was designated by such Authorized
Person), provided that in the event the Management Director ceases to serve
as a member of the Board during his term of office, the resulting vacancy
on the Board shall be filled by a member of the Company's management
designated by the Principal Investor.
(b) The Company shall pay the reasonable out-of-pocket expenses incurred
by each director (including any director elected by holders of the Senior
Preferred Stock in accordance with the Certificate of Designation) in connection
with attending the meetings of the Board and any committee thereof.
(c) If the Principal Investor (or an Authorized Person) fails to designate
an individual to fill a directorship pursuant to the terms of this paragraph 1,
the individual previously holding such directorship shall be elected to such
position, or if such individual fails or declines to serve, the election of an
individual to such directorship shall be accomplished in accordance with the
Company's Bylaws and applicable law; provided that the OSI Stockholders shall
vote to remove any such individual the Principal Investor (or the Authorized
Person, if applicable) so directs in accordance with paragraph 1(a)(iii).
(d) The provisions set forth in this paragraph 1 shall remain in effect
until the consummation of a Qualified Public Offering.
2. Representations and Warranties. Each OSI Stockholder represents and
warrants as to itself that (i) such OSI Stockholder is the record owner of the
number of OSI Stockholder Shares set forth opposite his, her or its name on the
applicable Exhibit attached hereto, (ii) this Agreement has been duly
authorized, executed and delivered by such OSI Stockholder and constitutes the
valid and binding obligation of such OSI Stockholder, enforceable in accordance
with its terms, and (iii) such OSI Stockholder has not granted and is not a
party to any proxy, voting trust or other agreement which is inconsistent with,
conflicts with or violates any provision of this Agreement. No holder of OSI
Stockholder Shares shall grant any proxy or become party to any voting trust or
other agreement which is inconsistent with, conflicts with or violates any
provision of this Agreement. The Company represents and warrants that this
Agreement has been duly authorized, executed and delivered by the Company and
constitutes the valid and binding obligation of the Company, enforceable in
accordance with its terms
3. Restrictions on Transfer of OSI Stockholder Shares.
(a) Transfer of OSI Stockholder Shares. No holder of OSI Stockholder
Shares shall sell, transfer, assign, pledge or otherwise dispose of (whether
with or without consideration and whether voluntarily or involuntarily or by
operation of law) any interest in his, her or its OSI Stockholder Shares (a
"Transfer"), except pursuant to the provisions of this paragraph 3, or, with
respect to any OSI Stockholder other than the Principal Investor and its
Affiliates, with the prior written approval of the Principal Investor, which
approval shall not be unreasonably withheld (but which approval may be
conditioned upon the transferee agreeing to be bound by this Agreement);
provided, however, that the Principal Investor may withhold such approval in its
sole discretion with regard to any proposed Transfer to a Competitor, or an
affiliate of a Competitor, of the Company.
(b) Drag-Along Rights.
(i) If the Board and the holders of a majority of the shares of Common
Stock then outstanding approve a Sale of the Company (an "Approved Sale"), each
OSI Stockholder and each holder of OSI Stockholder Shares shall vote for,
consent to and take all actions required in connection with and raise no
objections against such Approved Sale. If the Approved Sale is structured as a
(A) merger or consolidation, each holder of OSI Stockholder Shares shall waive
any dissenters' rights, appraisal rights or similar rights in connection with
such merger or consolidation or (B) sale of stock, each holder of OSI
Stockholder Shares shall agree to sell all of his OSI Stockholder Shares and
rights to acquire OSI Stockholder Shares, in each case on the same terms and
conditions approved by the Board and applicable to all holders of the Common
Stock then outstanding. Each holder of OSI Stockholder Shares shall take all
necessary or desirable actions in connection with the consummation of the
Approved Sale as requested by the Company.
(ii) The obligations of the holders of OSI Stockholder Shares with
respect to the Approved Sale of the Company are subject to the satisfaction of
the following conditions: (A) upon the consummation of the Approved Sale, each
OSI Stockholder and each holder of OSI Stockholder Shares (in his or her
capacity as such) shall have the right to receive the same terms, conditions and
form of consideration with respect to such OSI Stockholder Shares (and in the
same proportion of the aggregate consideration with respect to such Approved
Sale that such holder would have received if the OSI Stockholder Shares
constituted all of the issued and outstanding capital stock of the Company and
if such aggregate consideration had been distributed by the Company in complete
liquidation pursuant to the applicable rights and preferences set forth in the
Company's Certificate of Incorporation as in effect immediately prior to such
Approved Sale; provided, however, the holders of Senior Common Stock shall be
entitled to a Liquidation Preference (as defined therein) only to the extent
permitted in the Company's Certificate of Incorporation); (B) if any holders of
a class of OSI Stockholder Shares are given an option as to the form and amount
of consideration to be received, each holder of such class of OSI Stockholder
Shares shall be given the same option; and (C) each holder of then currently
exercisable rights to acquire shares of a class of OSI Stockholder Shares shall
be given an opportunity to either (i) exercise such rights prior to the
consummation of the Approved Sale and participate in such sale as holders of
such class of OSI Stockholder Shares or (ii) upon the consummation of the
Approved Sale, receive in exchange for such rights consideration equal to the
amount determined by multiplying (1) the same amount of consideration per share
of a class of OSI Stockholder Shares received by holders of such class of OSI
Stockholder Shares in connection with the Approved Sale less the exercise price
per share of such class of OSI Stockholder Shares of such rights to acquire such
class of OSI Stockholder Shares by (2) the number of shares of such class of OSI
Stockholder Shares represented by such rights assuming such rights were
exercised as of the date of consummation of the Approved Sale; provided,
however, that if the purchaser in any Approved Sale desires to have some or all
OSI Stockholders who are members of the Company's management retain or rollover
some or all of their OSI Stockholder Shares and/or desires to have the Principal
Investor and/or other specified stockholders of the Company retain or rollover
some or all of their OSI Stockholder Shares in order to qualify the Approved
Sale for recapitalization accounting, the foregoing provisions in (A), (B) and
(C) shall not apply to the extent of any such retention or rollover; provided
further, however, that no OSI Stockholder shall be required by this Agreement,
without such OSI Stockholder's written consent, to retain or rollover some or
all of their OSI Stockholder Shares, except in a merger in which all
stockholders are required to be treated equally with respect to such retention
or rollover.
(iii) Each OSI Stockholder will bear, and shall not be required to
bear more than, his or its pro rata share (based upon the number of OSI
Stockholder Shares to be sold) of the costs of any sale of OSI Stockholder
Shares pursuant to an Approved Sale to the extent such costs are incurred for
the benefit of all such holders of OSI Stockholder Shares and are not otherwise
paid by the Company or the acquiring party; provided that no such OSI
Stockholder shall be required to make any such payment unless the Principal
Investor is required to pay its pro rata share. Costs incurred by the holders of
OSI Stockholder Shares on their own behalf will not be considered costs of the
Approved Sale. Each OSI Stockholder transferring OSI Stockholder Shares pursuant
to an Approved Sale shall be obligated to join on a pro rata basis (based on the
number of OSI Stockholder Shares to be sold) in any indemnification or other
obligations that are part of the terms and conditions of the Approved Sale
(other than any such obligations that relate specifically to a particular OSI
Stockholder, such as indemnification with respect to representations and
warranties given by an OSI Stockholder regarding such OSI Stockholder's title to
and ownership of OSI Stockholder Shares). Notwithstanding the foregoing, no OSI
Stockholder shall be obligated in connection with any Approved Sale to agree to
indemnify or hold harmless the transferees in an amount in excess of the net
proceeds paid to such OSI Stockholder in connection with the Approved Sale.
(c) Co-Sale Rights.
(i) In the event that the Principal Investor or its Affiliates (as
defined in paragraph 3(d) but not including its limited partners) or an
Authorized Person or its Affiliates (any of the above the "Transferring Holder")
propose to effect a direct or indirect Transfer (other than a Permitted Transfer
as defined in paragraph 3(d)) of OSI Stockholder Shares, the Transferring Holder
shall promptly give written notice (the "Co-Sale Notice") to the Company and the
other OSI Stockholders at least 30 days prior to the closing of such Transfer.
The Co-Sale Notice shall describe in reasonable detail the proposed Transfer
including, without limitation, the name of, and the number (by class) of OSI
Stockholder Shares to be purchased by, the transferee, the purchase price of
each OSI Stockholder Share to be sold, the number of shares the Transferring
Holder proposes to Transfer, any other terms of the proposed Transfer and the
date the proposed Transfer will be consummated, it being understood that if such
proposed Transfer by the Transferring Holder is in a public offering under the
Securities Act and the provisions of paragraph 6 apply, then this paragraph
3(c)(i) shall not apply.
(ii) Each other OSI Stockholder may elect to participate in the
contemplated Transfer by delivering irrevocable written notice to the
Transferring Holder setting forth the number of OSI Stockholder Shares such OSI
Stockholder desires to sell in the contemplated Transfer within 20 days after
receipt of the Co-Sale Notice. If any OSI Stockholders have elected to
participate in such Transfer (each, a "Participant"), each such Participant
(subject in the case of Optionholders and Warrantholders to the Option or
Warrant being exercisable and to the payment by such holder of the applicable
exercise price) shall be entitled to sell in the contemplated Transfer, at the
same price and on the same terms as the Transferring Holder, a number of OSI
Stockholder Shares equal to the product of (A) the quotient determined by
dividing the percentage of OSI Stockholder Shares owned by such Participant by
the aggregate percentage of OSI Stockholder Shares owned by the Transferring
Holder and all Participants and (B) the number of OSI Stockholder Shares to be
sold in the contemplated Transfer.
For example, if the Co-Sale Notice contemplated a sale of 100 OSI
Stockholder Shares by the Transferring Holder, and if the Transferring
Holder at such time own 30% of all OSI Stockholder Shares and if the
Participants own 20% of all OSI Stockholder Shares, the Transferring Holder
would be entitled to sell 60 shares (30%/50% x 100 shares) and the
Participants would be entitled to sell 40 shares (20% / 50% x 100 shares).
(iii)The Transferring Holder shall use reasonable best efforts to
obtain the agreement of the prospective transferee(s) to the participation of
the Participants in any contemplated Transfer, and the Transferring Holder may
not Transfer any of their respective OSI Stockholder Shares to the prospective
transferee(s) if the prospective transferee(s) declines to allow the
participation of the Participants in accordance with the foregoing formula.
(iv) Each Participant will bear its pro rata share (based upon the
number of shares sold) of the reasonable costs of any sale of OSI Stockholder
Shares pursuant to a sale subject to this paragraph 3(c) to the extent such
costs are incurred for the benefit of all selling OSI Stockholders and are not
otherwise paid by the Company or the acquiring party; provided, that no such OSI
Stockholder shall be required to make any such payment unless the Principal
Investor is required to pay its pro rata share. Costs incurred by the OSI
Stockholders on their own behalf will not be considered costs of the transaction
hereunder.
(d) Permitted Transfers. The restrictions set forth in this paragraph 3
shall not apply with respect to: (i) any Transfer of OSI Stockholder Shares by
any OSI Stockholder to the Company, (ii) any Transfer of OSI Stockholder Shares
by any OSI Stockholder who is a natural person, pursuant to applicable laws of
descent and distribution or among such OSI Stockholder's Family Group or
Affiliates, as applicable, (iii) any Transfer of OSI Stockholder Shares by any
OSI Stockholder or Warrantholder that is a corporation, partnership or limited
liability company, to its Affiliates, (iv) any Transfer of OSI Stockholder
Shares by any Investors, to their respective officers, directors, employees,
partners, members or Affiliates or to other Investors, (v) any Transfer of OSI
Stockholder Shares by any OSI Stockholder, pursuant to a Public Sale, (vi) any
Transfer of OSI Stockholder Shares by any Unit Purchasers and their Affiliates,
of Unit Common Shares to any Person in accordance with the Purchase Agreement,
(vii) any Transfer of OSI Stockholder Shares by any Co-Invest Purchasers and
their Affiliates, of Co-Invest Common Shares to any Person in accordance with
paragraph 8, (viii) any Transfer of OSI Stockholder Shares by the Principal
Investor and its Affiliates, to any Person, provided that immediately after such
transfer the Principal Investor and its Affiliates own not less than 50.1% of
the shares of the Company's Common Stock calculated on a fully-diluted basis and
(ix) any Transfer or Transfers by Gryphon and its Affiliates of an amount not to
exceed, individually or in the aggregate, 100,000 OSI Stockholder Shares
(collectively referred to herein as "Permitted Transferees"); provided that the
restrictions contained in this paragraph 3 shall continue to be applicable to
the OSI Stockholder Shares after any such Transfer (other than a Transfer to the
Company or as provided in paragraph 3(e)); provided, further that the
transferees of such OSI Stockholder Shares (other than in the case of a Public
Sale or in the case where the Company is the transferee) shall have agreed in
writing to be bound by the provisions of this Agreement affecting the OSI
Stockholder Shares so transferred; provided, further that the provision in
subparagraphs 3(d)(ii), (iii) or (viii) shall not apply to Transfers by a
Rollover Stockholder which is a partnership or the Principal Investor to a
partner of such Rollover Stockholder or Principal Investor until such time as
there has been an initial public offering of the Company's securities (in which
event such OSI Stockholder Shares will remain subject to the other terms hereof,
including paragraph 4); provided, further that the restrictions set forth in
this paragraph 3 shall not apply with respect to the execution by an OSI
Stockholder of, and any Transfers pursuant to, the Pledge or the Senior Credit
Pledge. For purposes of this Agreement, "Family Group" means as to any OSI
Stockholder who is a natural person his or her spouse and descendants (whether
natural or adopted) and any trust solely for the benefit of such OSI Stockholder
or his or her spouse and/or descendants, and "Affiliate" of an OSI Stockholder
means any other Person, directly or indirectly controlling, controlled by or
under common control with such OSI Stockholder and any partner of an OSI
Stockholder which is a partnership and any officer, director or member of any
OSI Stockholder which is a corporation or other entity.
Except for transfers permitted by Section 3(d)(iv), any Affiliate of an OSI
Stockholder (other than a natural person) who receives any OSI Stockholder
Shares shall Transfer such OSI Stockholder Shares to the OSI Stockholder from
whom the OSI Stockholder Shares were originally received or acquired within 5
days after ceasing to be an Affiliate of such OSI Stockholder.
Notwithstanding anything in this Agreement to the contrary, no Rollover
Stockholder which is a party to the Pledge shall Transfer any of his, her or its
OSI Stockholder Shares until such time as such OSI Stockholder Shares are no
longer subject to the Pledge, at which time such OSI Stockholder Shares may be
Transferred pursuant to the terms of this paragraph 3.
(e) Termination of Restrictions. The restrictions set forth in this
paragraph 3 shall continue with respect to each OSI Stockholder Share until the
earlier of (i) the date on which such OSI Stockholder Share has been transferred
in a Public Sale, (ii) the date on which such OSI Stockholder Share has been
transferred pursuant to this paragraph 3 (other than a transfer pursuant to
subparagraph 3(d) and other than a transfer approved by the Principal Investor
pursuant to paragraph 3(a) on the condition that the transferee agree to be
bound by this Agreement), (iii) the tenth anniversary of the date of this
Agreement or (iv) the consummation of a Qualified Public Offering.
4 Holdback Agreement. No holder of OSI Stockholder Shares shall effect
any public sale or distribution of any OSI Stockholder Shares or of any other
capital stock or equity securities of the Company (other than the Senior
Preferred Stock), or any securities convertible into or exchangeable or
exercisable for such stock or securities, during the seven days prior to and the
180-day period beginning on the effective date of any underwritten public
offering of capital stock (or securities convertible into or exchangeable for
capital stock) (other than the Senior Preferred Stock) of the Company unless the
underwriters managing the registration otherwise agree. This paragraph 4 shall
remain in effect with respect to each OSI Stockholder Share until earlier of (a)
the date on which such OSI Stockholder Share has been transferred in a Public
Sale, or (b) the ninetieth (90th) day following the closing of a Qualified
Public Offering; provided, however, that for each holder of OSI Stockholder
Shares who is an employee of the Company at the time of a Qualified Public
Offering or who is not an Independent Third Party immediately after such
Qualified Public Offering, the restrictions on the transfer of OSI Stockholder
Shares set forth in this paragraph 4 shall terminate only upon (a) above.
5 Call Upon Termination of Management Stockholder's Employment.
(a) Notwithstanding any other provision of this Agreement to the contrary,
upon the death, disability, retirement or termination of employment (each a
"Call Event") of any Management Stockholder employed immediately prior to such
Call Event by the Company or any of the Company's Subsidiaries, the Company or
its designee shall, on terms and subject to the conditions set forth in this
paragraph 5, have the right (the "Management Call") at the option of the
Company, to purchase all but not less than all of the Call Shares and Vested
Stock Options held by such Management Stockholder, and any Permitted Transferee
of Call Shares or Vested Stock Options of such Management Stockholder, by
delivering written notice to such Management Stockholder or his or her Permitted
Transferees, within 60 days after the occurrence of the Call Event. The offering
price for the Call Shares or Vested Stock Options offered pursuant to this
paragraph 5 shall be equal to the Fair Market Value of such Call Shares or
Vested Stock Options at such time. As used in this Agreement, the "Fair Market
Value" of any OSI Stockholder Shares (including Call Shares) or any Vested Stock
Options shall be as determined in good faith by the Board of Directors of the
Company (without discount for lack of marketability or minority interest).
(b) If the Company shall elect to exercise the Management Call in
accordance with this paragraph 5, the closing of the purchase by the Company
shall take place no later than 45 days after the exercise of the Management
Call, which time in the case of the death of a Management Stockholder may at the
Company's election be extended to provide for probate of such Stockholder's
estate. On the date scheduled for such closing, the price for the OSI
Stockholder Shares or Vested Stock Options subject to the Management Call shall
be paid in full to the Management Stockholder holding such OSI Stockholder
Shares (including, if applicable, such OSI Stockholder Shares held by any
Permitted Transferee of such Management Stockholder) by the Company or its
designee against delivery of a certificate or certificates, as the case may be,
representing the purchased shares in proper form for transfer. In connection
with such closing, such Management Stockholder and/or Permitted Transferee (as
the case may be) shall warrant to the Company or its designee that he, she or it
has good and marketable title to the purchased OSI Stockholder Shares or Vested
Stock Options, free and clear of all claims, liens, charges, encumbrances and
security interests of any nature whatsoever except those under this Agreement.
6 Piggyback Registration Rights.
(a) Right to Piggyback. Whenever the Company proposes to register any of
its Common Stock under the Securities Act (other than a registration on Form S-4
or S-8 or any successor or similar forms) for the account of the Company or any
other Person, and the registration form to be used may be used for the
registration of OSI Stockholder Shares (a "Piggyback Registration"), the Company
will give prompt written notice to all holders of OSI Stockholder Shares of its
intention to effect such a registration and, subject to paragraphs 6(c) and 6(d)
below, will include in such registration all OSI Stockholder Shares with respect
to which the Company has received written requests for inclusion therein within
15 days after the receipt of the Company's notice.
(b) Piggyback Expenses. In all Piggyback Registrations, all costs and
expenses incident to the Company's performance of or compliance with this
paragraph 6, including, without limitation, all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, fees and disbursements of custodians,
fees and disbursements of counsel for the Company, and all independent certified
public accountants, underwriters (excluding discounts and commissions), and
other persons retained or employed by the Company (all such expenses being
herein called "Registration Expenses") will be paid by the Company.
(c) Priority on Registrations. If a Piggyback Registration is an
underwritten registration, and the managing underwriters advise the Company in
writing (with a copy to each party hereto requesting registration of OSI
Stockholder Shares) that, in their opinion, the number of securities requested
to be included in such registration exceeds the number which can be sold in such
offering without adversely affecting the marketability of such offering, the
Company will include in such registration (1) with respect to a primary
registration: (a) first, the securities that the Company proposes to sell, and
(b) second, the OSI Stockholder Shares requested to be included in such
registration pursuant to this Section 6 together with any other holders of
securities to whom registration rights may hereafter be granted, pro rata among
the holders thereof on the basis of the number of OSI Stockholder Shares or
other securities owned by each such holder, and (2) with respect to a secondary
registration: (a) first, the shares of capital stock of the Company of any
stockholder exercising his, her or its right to include his, her or its shares
of Common Stock in a Demand Registration, and (b) second, the OSI Stockholder
Shares requested to be included in such registration pursuant to this Section 6
together with any other holders of securities to whom registration rights may
hereafter be granted, pro rata among the holders thereof on the basis of the
number of OSI Stockholder Shares or other securities owned by each such holder.
If, as a result of the proration provisions of this Section 6(c), any OSI
Stockholder shall not be entitled to include all OSI Stockholder Shares in a
Piggyback Registration that such OSI Stockholder has requested to be included,
such OSI Stockholder may elect to withdraw his request to include its OSI
Stockholder Shares in such registration (a "Withdrawal Election"); provided that
a Withdrawal Election shall be made prior to the effectiveness of the related
registration statement and shall be irrevocable and, after making a Withdrawal
Election, an OSI Stockholder shall no longer have any right to include its OSI
Stockholder Shares in the registration as to which such Withdrawal Election was
made.
(d) Withdrawal by Company. If, at any time after giving notice of its
intention to register any of its securities as set forth in paragraph 6(a) and
before the effective date of such 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 sole discretion, give prompt
written notice of such determination to each holder of OSI Stockholder Shares
and thereupon shall be relieved of its obligation to register any OSI
Stockholder Shares in connection with such registration (but not from its
obligation to pay the Registration Expenses in connection therewith as provided
herein).
7 Grant of Preemptive Rights.
(a) If the Company agrees to issue New Securities to any Person (such
Person an "Acquiring Person") at a subscription, offering, exercise or
conversion price ("Offer Price") lower than either (x) the Fair Market Value (as
defined in paragraph 5(a)) of such New Securities at the time the Company agrees
to issue such New Securities or (y) the applicable Original Purchase Price, then
the Company hereby grants each Rollover Stockholder and each Investor, and/or
its respective Affiliates, as the case may be, so long as such Investor and/or
its Affiliates beneficially owns 35% or more of the OSI Stockholder Shares held
by such Investor or its Affiliates on the date hereof (collectively with the
Rollover Stockholders, the "Right A Holders"), preemptive rights to purchase a
pro rata portion of such New Securities at the same price and on the same terms
and conditions offered to such Acquiring Person. In the event (and on each
occasion) that the Company shall decide to undertake an issuance of New
Securities to an Acquiring Person, the Company will give all Right A Holders
written notice (a "Preemptive Notice") of the Company's decision, describing the
type of New Securities and the terms upon which the Company has decided to issue
the New Securities (including, without limitation, the expected timing of such
issuance which will in no event exceed 60 days after the date of the Preemptive
Notice). For the avoidance of doubt, the OSI Stockholders acknowledge and agree
that no OSI Stockholder has any preemptive rights with respect to any OSI
Stockholder Shares issued or issuable pursuant to the Subscription Agreement.
(b) If the Company issues New Securities to the Principal Investor or its
Affiliates, which issuance (including any prior issuance with respect to which
such Unit Purchaser, Co-Invest Purchaser, GPII or GPII-A had no preemptive
rights hereunder) would either otherwise entitle a Unit Purchaser, Co-Invest
Purchaser, GPII or GPII-A to purchase at least $1.5 million of New Securities
under this paragraph 7(b) or dilute (calculated on a fully diluted basis) the
percentage of beneficial ownership of the Company's Common Stock by a Unit
Purchaser, Co-Invest Purchaser, GPII or GPII-A as of the issue date of the New
Securities by 10% or more, then the Company hereby grants each Unit Purchaser,
Co-Invest Purchaser, GPII or GPII-A and its respective Affiliates (the "Right B
Holders" and collectively with the Right A Holders, the "Rights Holders"),
preemptive rights to purchase a pro rata portion of such New Securities at the
same price and on the same terms and conditions offered to the Principal
Investor or its Affiliates, as applicable. In the event (and on each occasion)
that the Company shall decide to undertake an issuance of New Securities to the
Principal Investor or its Affiliates, the Company will give all Right B Holders
a Preemptive Notice of the Company's decision, describing the type of New
Securities and the terms upon which the Company has decided to issue the New
Securities (including, without limitation, the expected timing of such issuance
which will in no event exceed 60 days after the date of the Preemptive Notice).
(c) Each of the Rights Holders, as applicable, shall have 20 business days
from the date on which it receives a Preemptive Notice to agree to purchase its
pro rata portion of such New Securities for the applicable price and upon the
same terms specified in the Preemptive Notice by giving written notice to the
Company. Each Rights Holder, as applicable, shall have the option to purchase
less than all of its pro rata portion. If, in connection with such a proposed
issuance of New Securities, any Rights Holders shall for any reason fail or
refuse to give such written notice to the Company within such 20-day period,
such OSI Stockholder shall, for all purposes of this paragraph 7, be deemed to
have refused (in that particular instance only) to purchase any of such New
Securities and to have waived (in that particular instance only) all of its
rights under this paragraph 7 to purchase any of such New Securities. Upon
expiration of the offering periods described in this paragraph 7, the Company
shall be entitled to sell such New Securities and other securities which the
Rights Holders, as applicable, have elected not to purchase during the 120 days
following such expiration on terms and conditions no more favorable to the
purchasers thereof than those offered to the applicable Rights Holders. Any New
Securities offered or sold by the Company after such 120-day period must be
reoffered to the applicable Rights Holders, as the case may be, provided that
the applicable Rights Holders continue to meet the requirements set forth in
this paragraph 7. The rights granted by this paragraph 7 shall terminate upon
the consummation of a Qualified Public Offering. Notwithstanding anything herein
to the contrary, no Rights Holder has any preemptive rights with respect to any
New Securities issued in connection with (i) debt or preferred stock financing
(so long as such preferred stock does not constitute New Securities), (ii) the
exercise of options, warrants or other rights or the conversion or exchange of
securities of the Company, (iii) the receipt of paid-in-kind dividends, (iv) a
stock split, stock dividend, stock distribution or recapitalization in which all
similarly situated OSI Stockholders are treated in a similar manner, (v)
issuances to the directors, officers or employees of the Company or any
Subsidiary of the Company pursuant to a benefit plan or similar arrangement or
as an inducement to hire a director, officer or employee of the Company or any
Subsidiary of the Company, provided that such issuances are approved by the
Board of Directors or (vi) issuances to customers or suppliers of the Company,
provided that such issuances are approved by the Board of Directors. As used in
this paragraph 7, the term "pro rata portion" with respect to a Rights Holder
shall mean the aggregate number of New Securities to be issued multiplied by a
fraction, the numerator of which is the number of OSI Stockholder Shares held at
such time by such Rights Holder and the denominator of which is the aggregate
number of OSI Stockholder Shares on a fully diluted basis; provided that in the
case of preemptive rights triggered pursuant to Section 7(a)(y) above, the pro
rata portion shall be based on the number of OSI Stockholder Shares purchased by
the applicable Rights Holder at an applicable Original Purchase Price which is
higher than the Offer Price relative to the total number of OSI Stockholder
Shares then outstanding.
8 First Offer Right. Prior to making any Transfer (other than a
Permitted Transfer) of any Co-Invest Common Shares by a Co-Invest Purchaser or
its assignee, such Person (the "Transferring Stockholder") shall deliver a
written notice (an "Offer Notice") to the Company and the Principal Investor.
The Offer Notice shall disclose in reasonable detail the proposed number of
Co-Invest Common Shares to be transferred, the proposed terms and conditions of
the Transfer and the identity, if known, of the prospective transferee(s).
First, the Company may elect to purchase all (but not less than all) of the
Co-Invest Common Shares specified in the Offer Notice at the price and on the
terms specified therein by delivering written notice of such election to the
Transferring Stockholder and the Principal Investor as soon as practical but in
any event within ten days after the delivery of the Offer Notice. If the Company
has not elected to purchase all of the Co-Invest Common Shares specified in the
Offer Notice within such ten-day period, the Principal Investor may elect to
purchase all (but not less than all) of the Co-Invest Common Shares specified in
the Offer Notice at the price and on the terms specified therein by delivering
written notice of such election to the Transferring Stockholder as soon as
practical but in any event within 5 days after expiration of the Company's
election. If the Company or the Principal Investor has elected to purchase
Co-Invest Common Shares from the Transferring Stockholder, the transfer of such
shares shall be consummated as soon as practical after the delivery of the
election notice(s) to the Transferring Stockholder, but in any event within 10
days after the expiration of the applicable election period. To the extent that
the Company and the Principal Investor have not elected to purchase all of the
Co-Invest Common Shares being offered, the Transferring Stockholder may, within
90 days after the expiration of the election period of the Principal Investor,
transfer such Co-Invest Common Shares to one or more third parties at a price no
less than 95% of the price per share specified in the Offer Notice and on other
terms not materially more favorable to the transferees thereof than offered to
the Company and the Principal Investor in the Offer Notice. Any Co-Invest Common
Shares not transferred within such 90-day period shall be reoffered to the
Company and the Principal Investor under this Section 8 prior to any subsequent
Transfer. The purchase price specified in any Offer Notice shall be payable
solely in cash at the closing of the transaction, or as otherwise agreed to with
the applicable Co-Invest Purchaser. Notwithstanding anything to the contrary in
this Agreement, (a) this Section 8 shall terminate and be of no further force
and effect immediately upon the consummation of a Qualified Public Offering or
at any time the Principal Investor ceases to beneficially own, in the aggregate
with its Affiliates, less than 40% of the outstanding shares of the Company's
Common Stock (on a fully diluted basis) and (b) the rights of the Principal
Investor pursuant to this Section 8 may not be assigned or otherwise transferred
to any Person other than its Affiliates.
9 Power of Attorney.
(a) In order to secure each Stockholder's, Optionholder's and
Warrantholder's obligation to (1) vote his, her or its OSI Stockholder Shares
and other voting securities of the Company in accordance with the provisions of
paragraph 1 (except for Rollover Stockholders) and (2) comply with the
requirements of paragraphs 3(b) and, as applicable, paragraph 5, each
Stockholder, each Optionholder and each Warrantholder hereby irrevocably
appoints the Principal Investor as his, her or its true and lawful
attorney-in-fact, with full power of substitution, to (a) vote all of his, her
or its OSI Stockholder Shares and other voting securities of the Company for the
election and/or removal of directors and all such other matters as expressly
provided for in paragraph 1 (except for Rollover Stockholders) and paragraph
3(b) and (b) take all actions, and execute and deliver all agreements,
certificates or other documents, in each case necessary to implement and give
effect to the agreements set forth in paragraph 3(b) and paragraph 5 hereof in
the name and for the benefit and obligation of such Stockholder, Optionholder or
Warrantholder. The Principal Investor may exercise the irrevocable power of
attorney granted to it hereunder at any time any Stockholder, Optionholder or
Warrantholder fails to comply with the provisions of this Agreement. The power
of attorney granted by each Stockholder, Optionholder and Warrantholder pursuant
to this paragraph 9 is coupled with an interest and is given to secure the
performance of each Stockholder's, Optionholder's and Warrantholder's
obligations to the Principal Investor under this Agreement. Such power of
attorney is irrevocable (subject to paragraph 9(b) below), and shall survive the
death, incompetency, disability, bankruptcy or dissolution of such Stockholder,
Optionholder or Warrantholder and the subsequent holders of his, her or its OSI
Stockholder Shares.
(b) The provisions set forth in paragraph 9(a) above shall terminate upon
the consummation of a Qualified Public Offering.
10 Legend. Each certificate evidencing OSI Stockholder Shares and each
certificate issued in exchange for or upon the transfer of any OSI Stockholder
Shares (if such shares remain OSI Stockholder Shares after such transfer) shall
be stamped or otherwise imprinted with a legend in substantially the following
form:
"The securities represented by this certificate are subject to an Amended
and Restated Stockholders Agreement dated as of April 16, 2001 among the
issuer of such securities (the "Company") and certain of the Company's
stockholders, as amended and modified from time to time. A copy of such
Stockholders Agreement shall be furnished without charge by the Company to
the holder hereof upon written request.
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or any
state securities laws and may not be transferred, sold or otherwise
disposed of except pursuant to an effective registration under the
Securities Act or pursuant to an opinion of counsel, satisfactory to the
Company, to the effect that an exemption from such registration is
available.
The Company shall imprint such legend on certificates evidencing OSI Stockholder
Shares outstanding as of the date hereof. The legend set forth above shall be
removed from the certificates evidencing any shares which cease to be OSI
Stockholder Shares. The parties hereto acknowledge and agree that the legend
required to be placed on certificates representing OSI Stockholder Shares
pursuant to the Original Agreement still applies.
11 Transfer. Prior to transferring any OSI Stockholder Shares (other than
pursuant to a Public Sale or a Sale of the Company) to any Person, the
transferring holders of OSI Stockholder Shares shall cause the prospective
transferee to be bound by this Agreement, in the same capacity as the
transferor, and to execute and deliver to the Company and the other holders of
OSI Stockholder Shares a counterpart of this Agreement. The requirements of this
paragraph 11 shall terminate upon the consummation of a Qualified Public
Offering.
12 Definitions.
"Call Shares" shall mean collectively (i) restricted shares of Common Stock
granted, or (ii) shares of Common Stock received upon the exercise of options
granted, to certain key employees of the Company (or the Company's Subsidiaries)
pursuant to any Company stock option or stock award plan.
"Certificate of Designation" means the Certificate of Designation of the
Powers, Preferences and Relative, Participating, Optional and Other Special
Rights of Class A 14% Senior Mandatorily Redeemable Preferred Stock, Series A,
and Class B 14 % Senior Mandatorily Redeemable Preferred Stock, Series A, and
Qualifications, Limitations and Restrictions Thereof.
"Common Stock" means collectively the Company's Senior Common Stock, par
value $0.01 per share, Voting Common Stock, par value $0.01 per share and
Nonvoting Common Stock, par value $0.01.
"Competitor" means any Person who is engaged in the (i) accounts receivable
management services and outsourcing business, (ii) consumer debt purchasing
business (other than related to asset backed securities or similar investments)
or (iii) credit card business, and shall include, without limitation, Capital
One, Providian, Metris and NCO Group; provided, that no Person or any Affiliate
thereof shall be a Competitor for purposes of this Agreement solely by reason of
(a) the beneficial ownership for investment purposes of (x) less than 15% of the
voting equity securities of any Person engaged, directly or through its
Affiliates, in the business described in clauses (i) or (ii), or (y) less than
50% of the voting equity securities of any Person engaged, directly or through
its Affiliates, in the business described in clause (iii), and (b) being a
lender to any Person, whether or not it is a Competitor.
"Credit Agreement" means the Credit Agreement, dated as of November 30,
1999, among the Company, the various financial institutions and other Persons as
are or may become parties thereto, DLJ Capital Funding, Inc., as the syndication
agent, lead arranger and sole book running manager, Harris Trust and Savings
Bank, as documentation Agent, and Fleet National Bank, N.A., as administrative
agent, as amended, supplemented, replaced, refinanced, amended and restated or
otherwise modified from time to time.
"Demand Registration" with respect to the OSI Stockholders has the meaning
ascribed to it in that certain Amended and Restated Registration Rights
Agreement, dated as of the date hereof, among the Company and the Persons named
therein, relating to the Company's Common Stock.
"Independent Third Party" means any Person who, immediately prior to the
contemplated transaction, does not own together with its affiliates in excess of
10% of the Company's Common Stock on a fully-diluted basis voting capital stock
(a "10% Owner)", who is not controlling, controlled by or under common control
with any such 10% Owner and who is not the spouse or descendent (by birth or
adoption) of any such 10% Owner or a trust for the benefit of such 10% Owner
and/or such other Persons.
"Management Stockholder" shall mean the individuals listed on Exhibit B, it
being understood that any other member of the management of the Company who
becomes a stockholder or optionholder of the Company (including through the
receipt of Call Shares) shall be a Management Stockholder.
"New Securities" means (i) any Common Stock or (ii) any securities of the
Company which are convertible into, or any options, warrants or other rights
which are exercisable or exchangeable for, Common Stock.
"Options" means any options to purchase Common Stock issued by the Company
to Optionholders.
"Original Purchase Price" means, with respect to Gryphon, the purchase
price per share of Senior Common Stock paid by Gryphon pursuant to the
Subscription Agreement, and, with respect to the other OSI Stockholders
(excluding Gryphon), the price per Unit Common Share as set forth in Section
2.04 of the Purchase Agreement. Each such Original Purchase Price shall be
equitably adjusted for stock splits, stock dividends, stock combinations and
similar events.
"OSI Stockholder Shares" means (i) any Common Stock purchased or otherwise
acquired by any OSI Stockholder, (ii) any Common Stock issued or issuable
directly or indirectly to an OSI Stockholder upon exercise of Warrants or
Options or conversion of Senior Common Stock and (iii) any Common Stock issued
or issuable with respect to the securities referred to in clauses (i) and (ii)
above by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. For purposes of this Agreement, any Person who holds Warrants,
Options or Senior Common Stock shall be deemed to be the holder of the OSI
Stockholder Shares issuable directly or indirectly upon exercise of the Warrants
or Options or conversion of Senior Common Stock in connection with the transfer
thereof or otherwise and regardless of any restriction or limitation on the
exercise or conversion thereof. As to any particular OSI Stockholder Shares,
such shares shall cease to be OSI Stockholder Shares when they have been
disposed of in a Public Sale.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Pledge" means, with respect to a Rollover Stockholder, the pledge of such
Rollover Stockholder's OSI Stockholder Shares pursuant to the Pledge Agreement
by and among the Company and the Rollover Stockholder dated as of the date
hereof.
"Public Sale" means any sale of OSI Stockholder Shares to the public
pursuant to an offering registered under the Securities Act or, following a
public offering of any class of Common Stock of the Company registered under the
Securities Act, to the public pursuant to the provisions of Rule 144, or any
successor provision thereto, adopted under the Securities Act.
"Qualified Public Offering" means the issuance and sale in an underwritten
public offering registered under the Securities Act of shares of the Company's
Common Stock having an aggregate offering value of at least $50 million.
"Rollover Stockholders" has the meaning ascribed to it in the
Recapitalization Agreement.
"Sale of the Company" means the sale of the Company to an Independent Third
Party or group of Independent Third Parties pursuant to which such party or
parties acquire (i) capital stock of the Company possessing the voting power
under normal circumstances to elect a majority of the Company's board of
directors (whether by merger, consolidation or sale or transfer of the Company's
capital stock) or (ii) all or substantially all of the Company's assets
determined on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Senior Common Stock" has the meaning set forth in the recitals hereto.
"Senior Credit Pledge" means the pledge by each applicable OSI Stockholder
of its OSI Stockholder Shares pursuant to the Shareholders' Pledge Agreement
(which is Exhibit G-1 of the Credit Agreement), by and among Fleet National
Bank, N.A., in its capacity as administrative agent under the Credit Agreement
and each OSI Stockholder a signatory thereto, as amended, supplemented, amended
and restated or otherwise modified from time to time.
"Senior Preferred Stock" means collectively the Company's Class A 14%
Senior Mandatorily Redeemable Preferred Stock, par value $0.01 per share (or any
series thereof) and the Class B 14% Senior Mandatorily Redeemable Preferred
Stock, par value $0.01 per share (or any series thereof).
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the limited liability company, partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control the managing director or general partner
of such limited liability company, partnership, association or other business
entity.
"Vested Stock Options" shall mean vested and exercisable stock options for
the Common Stock granted to certain key employees of the Company pursuant to any
Company stock option plan.
"Warrants" means any warrants to acquire Common Stock issued by the Company
to Warrantholders.
13 Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any OSI Stockholder Shares in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such OSI Stockholder Shares as the
owner of such shares for any purpose.
14 Amendment and Waiver.
(a) Except as otherwise provided herein, no modification, amendment or
waiver of any provision of this Agreement shall be effective against the Company
or the OSI Stockholders unless such modification, amendment or waiver is
approved in writing by the Company and the holders of at least 50% of the OSI
Stockholder Shares and, with respect to any provision that would, directly or
indirectly, reduce the rights or increase the obligations of any Investors
hereunder, by the Investors (other than the Principal Investor or its
Affiliates) holding a majority of all OSI Stockholder Shares held by the
Investors (other than the Principal Investor or its Affiliates); provided,
however, that no modification, amendment or waiver that affects an OSI
Stockholder in a manner different from any other OSI Stockholder shall be
effective without such OSI Stockholder's consent. The failure of any party to
enforce any of the provisions of this Agreement shall in no way be construed as
a waiver of such provisions and shall not affect the right of such party
thereafter to enforce each and every provision of this Agreement in accordance
with its terms.
(b) The OSI Stockholders acknowledge and agree that upon the execution and
delivery of this Agreement by the requisite holders of OSI Stockholder Shares as
provided in Section 14 of the Original Agreement, the Original Agreement is
terminated and superseded by this Agreement.
15 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
16 Entire Agreement. Except as otherwise expressly set forth herein, this
Agreement, the agreements referred to herein and the other agreements executed
contemporaneously with this Agreement embody the complete agreement and
understanding among the parties hereto with respect to the subject matter hereof
and supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way. Notwithstanding anything to the
contrary, nothing contained in this Agreement shall affect, limit or impair the
rights and remedies of Heller in its capacity as (i) agent and a lender to the
Company or any Subsidiary pursuant to any agreement under which the Company or
any Subsidiary has borrowed money, including without limitation the Credit
Agreement, and (ii) the beneficiary of any and all agreements entered into by
the Company or any Subsidiary for the benefit of Heller, as agent and lender, to
induce Heller to enter into the Credit Agreement.
17 Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the OSI Stockholders and any
subsequent holders of OSI Stockholder Shares and the respective successors and
assigns of each of them, so long as they hold OSI Stockholder Shares; provided
that the rights of the Stockholders and Optionholders under paragraph 1 hereof
may not be assigned without the prior written approval of the Principal
Investor. Notwithstanding anything herein to the contrary, upon the exercise of
its rights under the Senior Credit Pledge with respect to any OSI Stockholder
Shares subject to the Senior Credit Pledge, the Administrative Agent (as defined
in the Senior Credit Pledge) shall succeed to the rights of each applicable OSI
Stockholder and automatically become subject to the obligations of each such OSI
Stockholder pursuant to this Agreement.
18 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be an original and all of which taken together shall
constitute one and the same agreement.
19 Remedies. The Company, the Investors, and the other OSI Stockholders
shall be entitled to enforce their rights under this Agreement specifically, to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights existing in their favor. The parties hereto agree
and acknowledge that money damages would not be an adequate remedy for any
breach of the provisions of this Agreement and that the Company, any Investor,
and any other OSI Stockholder may in its sole discretion apply to any court of
law or equity of competent jurisdiction for specific performance and/or
injunctive relief (without posting a bond or other security) in order to enforce
or prevent any violation of the provisions of this Agreement.
20 Notices. Any notice provided for in this Agreement shall be in writing
and shall be either personally delivered, or mailed by first class mail (postage
prepaid) or sent by reputable overnight courier service (charges prepaid) to the
Company at the address set forth below and to any other recipient at the address
indicated on the schedules hereto and to any subsequent holder of OSI
Stockholder Shares subject to this Agreement at such address as indicated by the
Company's records, or at such address or to the attention of such other person
as the recipient party has specified by prior written notice to the sending
party. Notices shall be deemed to have been given hereunder when delivered
personally, three business days after deposit in the U.S. mail and one business
day after deposit with a reputable overnight courier service. The Company's
address is:
Outsourcing Solutions Inc.
c/o Madison Dearborn Capital Partners, III, L.P.
Suite 3800
Three First National Plaza Chicago, IL 60602
Attention: Timothy M. Hurd
Director
with a copy to:
Kirkland & Ellis
200 E. Randolph
Chicago, IL 60601
Attention: Michael H. Kerr, P.C.
Richard W. Porter
21 Governing Law. All issues and questions concerning the relative
rights of the Company and its stockholders and all other issues and questions
concerning the construction, validity, interpretation and enforceability of this
Agreement and the exhibits and schedules hereto shall be governed by, and
construed in accordance with, the laws of the State of New York, without giving
effect to any choice of law or conflict of law rules or provisions 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 shall control the interpretation and construction of this Agreement (and
all schedules and exhibits hereto), even though under that jurisdiction's choice
of law or conflict of law analysis, the substantive law of some other
jurisdiction would ordinarily apply.
22 Business Days. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or legal holiday in the
state in which the Company's chief-executive office is located, the time period
shall automatically be extended to the business day immediately following such
Saturday, Sunday or legal holiday.
23 Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
24 Bank Holding Company. Notwithstanding anything to the contrary in this
Agreement, DB, First Union Investors, Inc., and Heller or any of their
respective direct or indirect transferees of Unit Common Shares, or any other
OSI Stockholder that is a bank holding company or any affiliate thereof (each, a
"Regulated Holder"), shall not be entitled to vote with the other holders of
Voting Common Stock unless, until and to the extent (x) permitted by the Bank
Holding Company Act of 1956, as amended, and Section 225.2(q)(2)(i) of
Regulation Y promulgated thereunder, and (y) such Regulated Holder provides
written notice thereof to the Corporation.
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement as of the date first written above.
OUTSOURCING SOLUTIONS INC.
By: /s/ Timothy G. Beffa
-------------------------------------
Its: President and Chief Executive Officer
-------------------------------------
MADISON DEARBORN CAPITAL PARTNERS III, L.P.
By: Madison Dearborn Partners III, L.P.
Its: General Partners
By: /s/ Paul R. Wood
-------------------------------------
Its: Managing Director
-------------------------------------
MADISON DEARBORN SPECIAL EQUITY III, L.P.
By: Madison Dearborn Partners III, L.P.
Its: General Partners
By: /s/ Paul R. Wood
-------------------------------------
Its: Managing Director
-------------------------------------
SPECIAL ADVISORS FUND I, LLC
By: /s/ Paul R. Wood
-------------------------------------
Its: Managing Director
-------------------------------------
ARES LEVERAGED INVESTMENT FUND, L.P.
By: Ares Management, L.P.
Its: General Partner
By:
-------------------------------------
Its:
-------------------------------------
ARES LEVERAGED INVESTMENT FUND II, L.P.
By: Ares Management II, L.P.
Its: General Partner
By:
-------------------------------------
Its:
-------------------------------------
MAGNETITE ASSET INVESTORS L.L.C.
By: BLACKROCK FINANCIAL MANAGEMENT, INC.
As Managing Member
By:
-------------------------------------
Name:
Title:
DB CAPITAL INVESTORS, L.P.
By: DB Capital Partners, L.P.
Its: General Partner
DB Capital Partners, Inc.
By: /s/ Jon E. Mattson
-------------------------------------
Name: Jon E. Mattson
Title: Vice President
ABBOTT CAPITAL 1330 INVESTORS II, L.P.
By: Abbott Capital 1330 GenPar II, L.L.C.,
Its: General Partner
By: /s/ Kathryn J. Stokel
-------------------------------------
Name: Kathryn J. Stokel
Title: Managing Director
ABBOTT CAPITAL PRIVATE EQUITY FUND III, L.P.
By: Abbott Capital Management, L.L.C.,
Its: Investment Manager
By: /s/ Kathryn J. Stokel
-------------------------------------
Name: Kathryn J. Stokel
Title: Managing Director
BNY PARTNERS FUND, L.L.C.
By: BNY Private Investment Management, Inc.,
Its: Member Manager
By: /s/ Burton M. Siegel
-------------------------------------
Name: Burton M. Siegel
Title: Senior Vice President
HELLER FINANCIAL, INC.
By:
-------------------------------------
Name:
Title:
FBR FINANCIAL FUND II, L.P.
By:
-------------------------------------
Its:
-------------------------------------
HARVEST OPPORTUNITY PARTNERS, L.P.
By:
-------------------------------------
Its:
-------------------------------------
FIRST UNION INVESTORS, INC.
By:
-------------------------------------
Its:
-------------------------------------
GRYPHON PARTNERS II, L.P.,
a Delaware limited partnership
By: Gryphon GenPar II, LLC
Its: General Partner
By: /s/ R. David Andrews
-------------------------------------
Name: R. David Andrews
Title: President
GRYPHON PARTNERS II-A, L.P.,
a Delaware limited partnership
By: Gryphon GenPar II, LLC
Its: General Partner
By: /s/ R. David Andrews
-------------------------------------
Name: R. David Andrews
Title: President
FIRST UNION MERCHANT BANKING 1999, L.L.C.
By: /s/ Frederick W. Eubank II
-------------------------------------
Its: Partner
-------------------------------------
FIRST UNION CAPITAL PARTNERS 2001, L.L.C.
By: /s/ Frederick W. Eubank II
-------------------------------------
Its: Partner
-------------------------------------
EXHIBIT A: STOCKHOLDERS
-----------------------
Name Number of OSI Stockholder Shares
- ---- --------------------------------
McCown De Leeuw & Company, III, L.P. 219,940.82
McCown De Leeuw & Company III Offshore (Europe), L.P. 18,568.55
McCown De Leeuw & Company III Offshore (Asia), L.P. 4,336.86
Gamma Fund, L.L.C. 4,956.41
Peter C. Rosvall 144,518.39
Heller Financial, Inc. 6,537.91
Chase Equity Associates, L.P. 32,689.57
Clipper Capital Associates, L.P. 757.46
Clipper/Merchant Partners, L.P. 8,388.32
Clipper/Merban, L.P. 9,825.26
Clipper Equity Partners I, L.P. 7,368.95
Clipper/European RE, L.P. 4,912.63
CS First Boston Merchant Investments 1995/1996, L.P. 1,436.95
MLQ Investors 52,303.31
EXHIBIT B: OPTIONHOLDERS
------------------------
Name Number of Options
- ---- -----------------
William Hewitt 10,000
Timothy Beffa 70,175
Patrick Carroll 12,500
Michael DiMarco 50,000
Bryan Faliero 18,750
Eric Fencl 12,000
Dennis Grady 15,000
Jon Mazzoli 10,000
C. Bradford McLeod 15,000
Michael Meyer 25,000
Michael Staed 25,000
Gary Weller 50,000
Michael Aleshire 4,000
David Burton 3,500
Richard Hoffman 2,000
Daniel Picciano 15,000
Daniel Pijut 6,000
John Stetzenbach 5,000
David St. John 5,000
Steven Wendling 10,000
William Cruz 5,000
Robert Freidman 4,000
George Macauley 7,500
Stuart Pim 4,000
Marilyn Popovich 5,000
Gary Praznik 3,000
Peter Pugal 5,000
Geoff Rigabar 9,000
Christopher Shuler 5,000
Karen Stein-Townsend 5,000
Michael Swanson 3,000
Kerry Walbridge 9,000
Stanislaw Wolk 10,000
Geoge Wright 3,000
Scott Yates 9,000
EXHIBIT C: WARRANTHOLDERS
-------------------------
Name Number of Warrants
- ---- ------------------
None