EXHIBIT 10.17
REGULATORY SIDELETTER
AGREEMENT dated as of March
28, 2002, by and between XX XXXXXX
PARTNERS (BHCA), L.P. ("Investor") and
XXXX XXXXXXX CORPORATION (the
"Company")
WHEREAS, Investor is a regulated entity and an indirect subsidiary of
X.X. Xxxxxx Xxxxx & Co. and in connection therewith Investor is subject to
various regulations that may impose restrictions on the type and terms of
Investor's investment in the Company;
NOW THEREFORE, in connection with the foregoing, the parties hereby
agree as follows:
Section 1. Regulatory Matters Generally.
(a) Regulatory Cooperation.
(i) In the event that Investor reasonably determines that it
has a Regulatory Problem, the Company agrees to take all such actions as
are reasonably requested by Investor in order (A) to effectuate and
facilitate any transfer by Investor of any securities of the Company then
held by Investor to any Person designated by Investor, (B) to permit
Investor (or any of its Affiliates) to exchange all or any portion of the
voting securities then held by such Person on a share-for-share basis for
shares of a class of non-voting securities of the Company, which non-voting
securities shall be identical in all respects to such voting securities,
except that such new securities shall be non-voting and shall be
convertible into voting securities on such terms as are requested by
Investor and reasonably acceptable to the Company in light of regulatory
considerations then prevailing, and (C) to grant Investor or its designee
the reasonable equivalent of any voting rights arising out of Investor's
ownership of voting securities and/or provided for in the Stockholders
Agreement that were diminished as a result of the transfers and amendments
referred to above (provided, that a transfer by Investor of any securities
of the Company then held by Investor to a Person designated by Investor
which is not its Affiliate shall be requested by Investor only after
Investor has reasonably determined that neither the transfer of all or a
portion of the voting securities to an Affiliate of it nor the exchange of
all or a portion of the voting securities for non-voting securities, in
each case as contemplated above and to the extent possible under the
circumstances, will eliminate the Regulatory Problem). If Investor elects
to transfer securities of the Company in order to avoid a Regulatory
Problem to an Affiliate subject to limitations on its voting or total
ownership interest in the Company, the Company and such Affiliate shall
enter into such mutually acceptable agreements as such Affiliate may
reasonably request in order to assist such Affiliate in complying with Laws
to which
it is subject. Such agreements may include restrictions on the redemption,
repurchase or retirement of securities of the Company that would result or
be reasonably expected to result in such Affiliate holding more voting
securities or total securities (equity and debt) than it is permitted to
hold under such laws and regulations.
(ii) In the event Investor has the right to acquire any of the
Company's securities from the Company or any other Person (as the result of
a preemptive offer, pro rata offer or otherwise), and Investor reasonably
determines that it has a Regulatory Problem, at Investor's request the
Company will offer to sell to Investor non-voting securities (or, if the
Company is not the proposed seller, will arrange for the exchange of any
voting securities for non-voting securities immediately prior to or
simultaneous with such sale) on the same terms as would have existed had
Investor acquired the securities so offered and immediately requested their
exchange for non-voting securities pursuant to subsection (i) above.
(iii) In the event that any subsidiary of the Company ever
offers to issue any of its securities to Investor, then the Company will
cause such subsidiary to enter into an agreement with Investor
substantially similar to this Agreement.
(b) Stockholder Cooperation. The Company shall use its best efforts to
cause the provisions attached hereto as Exhibit A to be included in the
Stockholders Agreement.
Section 2. Cross Marketing Activities.
The Company hereby represents and warrants that except as otherwise
disclosed, neither the Company nor any of its subsidiaries (i) offers or
markets, directly or through any arrangement, any product or service of any
depository institution owned by X.X. Xxxxxx Xxxxx & Co., or (ii) permits any of
its products or services to be offered or marketed, directly or through any
arrangement, by or through any depository institution owned by X.X. Xxxxxx Chase
& Co.
Section 3. Lending Activities.
The Company hereby represents and warrants that except as otherwise
disclosed, neither the Company nor any of its subsidiaries currently has or is
expected to have a loan facility, credit facility, debt financing, line of
credit or any other extension of credit from any depository institution owned by
X.X. Xxxxxx Xxxxx & Co.
Section 4. Covenants.
(a) The Company shall give Investor thirty (30) days prior written
notice before taking any affirmative steps which would cause the representations
and warranties contained in Sections 2 or 3 to be untrue.
(b) The Company shall use its best efforts to notify Investor promptly
at any time in which the Company reasonably believes the representations
contained in Sections 2 or 3 to be untrue whether as a result of the Company's
affirmative action or otherwise.
Section 5. Participation Interests.
(a) Notwithstanding anything to the contrary contained in the
Stockholders Agreement or other transaction documents relating to Investor's
purchase and ownership of the Company's securities (collectively, the
"Transaction Documents"), Investor shall be permitted to grant participation
interests in the Company's securities held by Investor to Affiliates of Investor
without prior disclosure or consent of the Company or any other Person.
(b) Notwithstanding anything to the contrary contained in the
Transaction Documents, any and all representations and warranties relating to
Investor's ownership of the Company's securities shall be qualified by the fact
that Investor has granted participation interests in a pro rata portion of its
investments, including its purchase of the Company's securities, to affiliates
of Investor. Such participation interests, however, do not affect Investor's
status as being the sole record owner of the Company's securities held by
Investor.
Section 6. Definitions.
"Affiliate" means, with respect to any Person, (i) a director or
executive officer of such Person or any Person identified in clause (ii) below,
and (ii) any other Person that, directly or indirectly through one or more
intermediaries, Controls, is Controlled by or is under common Control with such
Person. When such term is used in the context of a Regulatory Problem, it also
has the meaning ascribed to it in any Law.
"Banking Regulations" means all federal, state and foreign Laws
applicable to banks, bank holding companies and their Affiliates, including
without limitation, the Bank Holding Company Act and the Federal Reserve Act.
"Control" means, with respect to any Person, the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Law," with respect to any Person, means (i) all provisions of all
laws, statutes, ordinances, rules, regulations, permits, certificates or orders
of any governmental authority applicable to such Person or any of its assets or
property or to which such Person or any of its assets or property is subject,
including, without limitation, Banking Regulations, and (ii) all judgments,
injunctions, orders and decrees of all courts and arbitrators in proceedings or
actions in which such Person is a party or by which it or any of its assets or
properties is or may be bound or subject.
"Person" shall be construed as broadly as possible and shall include an
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.
"Regulatory Problem" means any set of facts or circumstances in which
the Investor's ownership of securities issued by the Company (i) gives rise to a
material violation of Law by Investor or any of its Affiliates, or gives rise to
a reasonable belief by Investor that
such a violation is likely to occur or (ii) gives rise to a limitation in Law
that will impair materially the ability of Investor or any Affiliate to conduct
its business or gives rise to a reasonable belief by Investor that such a
limitation is likely to arise.
"Stockholders Agreement" means the Stockholders Agreement to be entered
into as of the date hereof, among the Company and certain stockholders of the
Company, as amended, supplemented or otherwise modified from time to time.
Section 7. Amendments; Benefit.
The terms and provisions of this Agreement may not be modified or
amended, unless pursuant to a written agreement executed by each of the parties
hereof. This Agreement shall be for the benefit of Investor and its Affiliates
and shall apply to each acquisition of securities issued by the Company to
Investor or its Affiliates.
Section 8. Counterparts, Facsimile Signatures.
This Agreement may be executed in any number of counterparts, including
by means of facsimile, and each counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.
Section 9. Notices. All notices, claims, certificates, requests, demands
and other communications to be given to Investor hereunder or relating to
Investor's investment in the Company shall be addressed to Investor as follows:
c/o X.X. Xxxxxx Partners, LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Office Notices Clerk
(fbo: Xxxxxxxxxxx X. Xxxxxxx)
Section 10. Termination. This Agreement shall terminate and be of no
further force or effect upon the later to occur of (i) the earlier of (A) a
Qualified Public Offering (as that term is defined in the Stockholders
Agreement) or (B) a Qualified Merger (as defined in the Stockholders Agreement)
and (ii) the date on which the Investor owns less than five percent (5%) of the
capital stock, calculated on a fully diluted basis of the Company (or, if a
Qualified Merger has occurred, of the Qualified Public Company (as defined in
the Stockholders Agreement) surviving such Qualified Merger).
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
XXXX XXXXXXX CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
--------------------------
Xxxxxx X. Xxxxxx
Chief Financial Officer
X.X. XXXXXX PARTNERS (BHCA), L.P.
By: JPMP MASTER FUND MANAGER, L.P.
ITS GENERAL PARTNER
BY: JPMP CAPITAL CORP.,
ITS GENERAL PARTNER
By: /s/ Xxxxxxxxxxx Xxxxxxx
--------------------------
Xxxxxxxxxxx Xxxxxxx
Managing Director
