EXHIBIT 4.2
SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, dated as of
February 13, 2004 (the "Agreement"), by and among NATIONAL FINANCIAL PARTNERS
CORP., a Delaware corporation ("NFP" or the "Company"), APOLLO INVESTMENT FUND
IV, LP, a Delaware limited partnership ("Apollo"), and each of the stockholders
of NFP set forth on the signature page hereto (together with Apollo, the
"Stockholders"). Certain other Persons (as defined below) having employment and
other business relationships with NFP and its Affiliates (as defined below) may
be issued shares of common stock, par value $0.10 per share (the "Common Stock")
of NFP (or other equity securities of NFP) or securities convertible into or
exchangeable for Common Stock (or other equity securities of NFP) and, if so
issued, NFP, without the consent of any other party hereto, (i) may amend this
Agreement to allow any such Person, if NFP so chooses, to become an additional
Stockholder hereunder, subject to such Person (as used herein, "Person" shall
mean an individual, corporation, partnership, joint venture, trust,
unincorporated organization, government (or any department or agency thereof) or
other entity) becoming a signatory to this Agreement or (ii) may require such
Person to become a party to one or more other stockholders agreements to be
entered into among NFP, such Person and such other stockholders as may become
party thereto in accordance with the terms of any such agreement or agreements.
Only the parties signatory hereto are subject to the terms hereof and no
stockholder of NFP not signatory hereto shall be subject to the terms hereof.
RECITALS
WHEREAS, each Stockholder acquired the shares of Common Stock to which
this Agreement relates from NFP as consideration (including any contingent
consideration received by such Stockholder at any time) in connection with the
acquisition of a business with which such Stockholder was affiliated or
associated, or as compensation or awards in connection with an employment
relationship or other affiliation with NFP, or as a permitted transferee of a
Person acquiring Common Stock in such a fashion, or, in the case of Apollo,
through equity investments in the Company prior to the date hereof (such shares
of Common Stock sometimes being collectively referred to herein as the "Covered
Shares");
WHEREAS, NFP and its other then existing stockholders entered into a
stockholders agreement, dated as of October 27, 1998 and amended and restated as
of May 14, 2003 (the "Original Stockholders Agreement") relating to the sale,
assignment, transfer, encumbrance or other disposition of the Covered Shares,
and for certain rights (including, without limitation, registration rights) and
obligations (including, without limitation, certain transfer restrictions
intended to provide for the maintenance of an orderly market for the Common
Stock and alignment of the interests of NFP with those of stockholders who are
affiliated with NFP);
WHEREAS, NFP, desiring to strengthen and enhance its corporate
governance practices, has proposed certain further amendments to the Original
Stockholders Agreement;
WHEREAS, Section 4.7 of the Original Stockholders Agreement permits
amendment thereof by a written instrument signed by NFP, by Apollo and by
Stockholders holding a majority of the outstanding shares of Common Stock held
by all Stockholders at the time of such amendment;
WHEREAS, NFP, Apollo and the other Stockholders listed on the
signature page hereto by this Agreement, amend and restate each and every term
and provision of the Original Stockholders Agreement.
NOW, THEREFORE, in consideration of the premises and of the terms and
conditions contained herein, the parties hereto agree as follows:
ARTICLE I
VOTING
Section 1.1 No Voting or Conflicting Agreements
No Stockholder shall grant any proxy or enter into or agree to be
bound by any voting trust with respect to the Covered Shares nor shall any
Stockholder enter into any stockholder agreements or arrangements of any kind
with any Person with respect to the Covered Shares inconsistent with the
provisions of this Agreement (whether or not such agreements and arrangements
are with other Stockholders or holders of Common Stock that are not parties to
this Agreement). The foregoing prohibition includes, but is not limited to,
agreements or arrangements with respect to the acquisition, disposition or
voting of shares of Covered Shares inconsistent with the provisions of this
Agreement. No Stockholder shall act, for any reason, as a member of a group or
in concert with any other Persons in connection with the acquisition,
disposition or voting of shares of Covered Shares in any manner which is
inconsistent with the provisions of this Agreement.
ARTICLE II
RESTRICTIONS ON TRANSFERS OF STOCK
Each Stockholder hereby severally and not jointly covenants and agrees with
NFP as follows:
Section 2.1 General Prohibition on Transfers
(a) Prohibition on Transfers Generally. Such Stockholder shall not, at
any time, directly or indirectly, sell, assign, contract to sell, pledge,
hypothecate, grant an option to purchase, encumber or otherwise transfer
(including by engaging in any hedging, short sale or other transaction which is
designed to or which reasonably could
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be expected to lead to or result in a sale or disposition of any Covered Shares
by such Stockholder even if such shares would be disposed of by someone other
than such Stockholder) any Covered Shares, other than to NFP or Affiliates of
NFP (any such transaction, whether or not for consideration, being referred to
hereinafter as a "Transfer" and all Persons to whom a Transfer is made,
regardless of the method of Transfer, shall be referred to collectively as
"Transferees" and individually as a "Transferee"), unless such Transfer is made
in accordance with Section 2.3, 2.5 and 2.8 and Article III, as applicable. For
the purposes of this Agreement, "Affiliate" of a Person shall mean Persons
controlled by, controlling or under common control with such Person.
(b) Recordation. NFP shall not record upon its books, and shall cause
any transfer agent appointed by NFP not to permit, any Transfer of Covered
Shares held or owned by any of the Stockholders or any other Person to any other
Person except Transfers in accordance with this Agreement.
(c) Obligations of Transferees. No Transfer of Covered Shares by a
Stockholder pursuant to clauses (A) and (B) of Section 2.3.1 shall be effective
unless (x) the Transferee (including a Permitted Transferee (as defined below)
pursuant to Section 2.3) shall have executed an appropriate document in form and
substance satisfactory to NFP in its reasonable judgment confirming that (i) the
Transferee takes such shares subject to all the terms and conditions of this
Agreement to the same extent as its transferor was bound by and entitled to the
benefits of such provisions (except as specifically provided herein), (ii) the
Transferee agrees to comply with the obligations of a "Stockholder" under
Section 3.7 to the same extent as its transferor was bound by and entitled to
the benefits of such provisions (except as specifically provided therein) and
(iii) any certificates representing shares shall bear legends, substantially in
the form required by Section 2.7, and (y) such document shall have been
delivered to and approved by NFP prior to such Transferee's acquisition of
shares of Common Stock that were, prior to such acquisition, Covered Shares.
Section 2.2 Compliance with Securities Laws
Such Stockholder shall not Transfer any Covered Shares, unless (a) the
Transfer is pursuant to an effective registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), and in compliance with any other
applicable federal securities laws and state securities or "blue sky" laws or
(b) such Stockholder shall have furnished NFP at its request with an opinion of
counsel, which opinion and counsel shall be satisfactory to NFP in its
reasonable judgment, to the effect that no such registration is required because
of the availability of an exemption from registration under the Securities Act
and under any applicable state securities or "blue sky" laws and that the
Transfer otherwise complies with this Agreement and any other applicable federal
securities laws and state securities or "blue sky" laws.
Section 2.3 Permitted Transfers
Section 2.3.1 Stockholders. The restrictions contained in Sections
2.1(a) with respect to Transfers by such Stockholder of Covered Shares shall not
apply
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(A) if such Stockholder is an individual, to any Transfer: (i) to or among such
Stockholder's spouse, children, grandchildren or other living descendants, or to
a trust or family partnership of which there are no principal (i.e., corpus)
beneficiaries or partners other than the grantor or one or more of such
Stockholder, spouse or described relatives and, provided, in the case of a
trust, that the existing beneficiaries and/or trustee(s) and/or grantor(s) of
such trust have the power to act with respect to the trust's assets without
court approval and, in the case of a family partnership, that the partners
thereof have the power to act with respect to the partnership's assets without
court approval and the partnership is not permitted to (x) distribute assets to
Persons who are not among the relatives listed above or (y) have partners who
are not among the relatives listed above; (ii) to a legal or personal
representative of such Stockholder in the event of the death or Disability of
such Stockholder; and (iii) pursuant to a qualified domestic relations order; or
(B) to any Transfer by such Stockholder of such Stockholder's Covered Shares to
a management company or manager of a subsidiary of NFP, to any Affiliate
thereof, to any Principal (as such term is defined in the management agreement
between such Stockholder and NFP) or other employee of such a management company
or to any Principal that is a party to the management agreement between such
Stockholder and NFP, if applicable, or, with the prior written approval of NFP,
to another Principal in connection with succession planning (or the financing
thereof) by the transferor Stockholder with respect to the management of one of
NFP's operating subsidiaries. Notwithstanding the foregoing, no Transfer may be
effected pursuant to this Section 2.3.1 unless NFP is satisfied, in its sole
discretion, either that the proposed Transferee is an "Accredited Investor" (as
defined in Rule 501 promulgated under the Securities Act) or that such other
conditions as NFP may deem appropriate are satisfied. As used in this Agreement,
"Disability" means that the Stockholder is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to be long-continued and of indefinite
duration.
Section 2.3.2 Permitted Transfers. Transfers permitted pursuant to
clauses (A) and (B) of Section 2.3.1 or under Section 2.8(i) are referred to
herein as "Permitted Transfers". Transferees to whom a Permitted Transfer may be
effected are referred to herein as "Permitted Transferees." Any such Permitted
Transfers shall be subject to the terms of this Agreement, including, without
limitation, compliance with Section 2.1(c).
Section 2.3.3 Transfer by Permitted Transferees. The restrictions
contained in Sections 2.1(a) of this Agreement with respect to Transfers by such
Stockholder of Covered Shares shall not apply to any Transfer by a Permitted
Transferee of a Stockholder to such Stockholder or to another Permitted
Transferee of such Stockholder, and any such Transferee shall also be a
"Permitted Transferee," subject to the provisions of Section 2.3.2.
Section 2.4 [RESERVED]
Section 2.5 Tag-Along Rights
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Section 2.5.1 Tag-Along Buyer. In the event that Apollo proposes to
sell any shares of Common Stock owned by it (the "Apollo Shares") in one
transaction or a series of related transactions (a "Covered Transaction") such
that following such sale more than 10% of the then outstanding shares of Common
Stock will have been sold to one holder or group of related holders, then Apollo
shall first give written notice (the "Tag-Along Notice") to each Stockholder,
stating that Apollo desires to make such sale, referring to Section 2.5,
specifying the number of shares of Common Stock proposed to be sold and
specifying the per share price (the "Tag-Along Price"), and the material terms
pursuant to which such sale is proposed to be made (together with the Tag-Along
Price, the "Tag-Along Terms"). Notwithstanding the foregoing, the provisions of
this Section 2.5 shall not apply to (i) a transfer by Apollo to any Affiliate of
Apollo that agrees to be bound by the terms of this Agreement or (ii) a transfer
of Common Stock pursuant to a registration statement filed with the Securities
and Exchange Commission (the "SEC").
Section 2.5.2 Exercise of Tag-Along Option.
(a) Option. Upon receipt of the Tag-Along Notice, each Stockholder
shall have the option for 30 days following receipt of the Tag-Along Notice to
participate in the Covered Transaction with respect to a number of Covered
Shares (the "Tag-Along Shares") held by it equal to the product of (1) the
quotient of (A) the aggregate number of shares of Common Stock to be sold by
Apollo in the Covered Transaction divided by (B) the aggregate number of shares
of Common Stock then owned by Apollo times (2) the number of Covered Shares then
owned by such Stockholder, for the same Tag-Along Price and otherwise on the
same Tag-Along Terms; provided, that in the event that the consideration for the
Common Stock consists in whole or in part of securities, then no Stockholder or
any other Person shall be entitled to any rights under this Section 2.5 unless
NFP is satisfied, in its sole discretion, that such Stockholder or other Person
is an "Accredited Investor" (as defined in Rule 501 promulgated under the
Securities Act).
(b) Failure to Exercise Option. If the Tag-Along Notice shall be duly
given and if a Stockholder shall not exercise its option to sell Covered Shares
in the Covered Transaction, then Apollo shall be free, for a period of 120 days
from the 30th day following the giving of the Tag-Along Notice, to sell the
Apollo Shares (together with any Tag-Along Shares) to any Proposed Transferee,
as long as all of the Apollo Shares are sold at a price equal to or greater than
95% of the Tag-Along Price and on all other material terms not more favorable,
in the aggregate, to the Proposed Transferee than the Tag-Along Terms.
(c) Sale Agreement. Each Stockholder electing to sell Tag-Along Shares
(a "Tag-Along Seller") agrees to cooperate in consummating such a sale,
including, without limitation, by becoming a party to the sales agreement and
all other appropriate related agreements, delivering at the consummation of such
sale, stock certificates and other instruments for such Covered Shares duly
endorsed for transfer, free and clear of all liens and encumbrances, and voting
or consenting in favor of such transaction (to the extent a vote or consent is
required) and taking any other necessary or appropriate action in furtherance
thereof, including the execution and delivery of any other appropriate
agreements, certificates, instruments and other documents. The
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foregoing notwithstanding, in connection with such sale, a Tag-Along Seller
shall not be required to make any representations and warranties with respect to
NFP or NFP's business or with respect to any other seller. In addition, each
Tag-Along Seller shall be severally responsible for its proportionate share of
the expenses of sale incurred by the sellers in connection with such sale and
the obligations and liabilities incurred by the sellers in connection with such
sale. Such obligations and liabilities shall include (to the extent such
obligations are incurred) obligations and liabilities for indemnification
(including, without limitation, for (x) breaches of representations and
warranties made in connection with such sale by NFP or any other seller with
respect to NFP or NFP's business, (y) breaches of covenants and (z) other
matters), and shall also include amounts paid into escrow or subject to
holdbacks, and amounts subject to post-closing purchase price adjustments. The
foregoing notwithstanding, (1) without the written consent of a Tag-Along
Seller, the amount of such obligations and liabilities for which such Tag-Along
Seller shall be responsible shall not exceed the gross proceeds received by such
Tag-Along Seller in such sale and (2) a Tag-Along Seller shall not be
responsible for the fraud of any other seller or for any indemnification
obligations and liabilities for breaches of representations and warranties made
by any other seller with respect to Apollo's or such other seller's (i)
ownership of and title to shares of capital stock of NFP, (ii) organization,
(iii) authority and (iv) conflicts and consents.
(d) Proposed Transferee. "Proposed Transferee" means a Person or group
(as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), other than any Stockholders or their Affiliates
(whether any such Affiliate is such prior to or upon consummation of such
Transfer), to whom Common Stock is proposed to be Transferred pursuant to the
terms of this Section 2.5.
(e) No Liability. Notwithstanding any other provision contained in
this Section 2.5, there shall be no liability on the part of NFP or Apollo in
the event that the sale pursuant to this Section 2.5 is not consummated for any
reason whatsoever. The decision whether to effect a sale pursuant to this
Section 2.5 shall be in the sole and absolute discretion of Apollo.
Section 2.6 [RESERVED]
Section 2.7 Restrictions on Transfers of Stock
Section 2.7.1 Legends. Any stock certificates for Covered Shares or
any book-entry statement representing Covered Shares that are uncertificated,
whether outstanding on the date hereof or acquired prior to the date when the
applicable restrictions are terminated pursuant to Section 2.7.3, subject to the
provisions of this Agreement, shall bear endorsements or legends reading
substantially as follows:
(a) The securities [represented by this certificate][to which this
statement relates] have not been registered under the Securities Act, or
under the securities laws of any state and may not be transferred, sold or
otherwise disposed of except while such a registration is in effect or
pursuant to an exemption from registration under said Act and applicable
state securities laws.
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(b) The securities [represented by this certificate][to which this
statement relates] are subject to the terms and conditions set forth in a
Second Amended and Restated Stockholders Agreement, dated as of January
[_], 2004, copies of which may be obtained from the issuer or from the
holder of this security. No transfer of such securities will be made by the
issuer or any transfer agent appointed by the issuer unless accompanied by
evidence of compliance with the terms of such agreement.
Section 2.7.2 Copy of Agreement. A copy of this Agreement shall be
filed with the corporate secretary of NFP and kept with the records of NFP and
shall be made available for inspection by any Stockholder of NFP at the
principal executive offices of NFP.
Section 2.7.3 Termination of Restrictions. The restriction referred to
in the endorsement required pursuant to Section 2.7.1(a) shall cease and
terminate as to any particular Covered Shares (a) when, in the opinion of
counsel for NFP, such restriction is no longer required in order to assure
compliance with the Securities Act or (b) when such shares shall have been
effectively registered under the Securities Act. NFP or NFP's counsel, at their
election, may request from such Stockholder a certificate or an opinion of such
Stockholder's counsel with respect to any relevant matters in connection with
any Transfer or the removal of the endorsement set forth in Section 2.7.1(a)
from such Stockholder's stock certificates, any such certificate or opinion of
counsel to be reasonably satisfactory to NFP and its counsel. The restrictions
referred to in Section 2.7.1(b) shall cease and terminate as to any particular
Covered Shares when, in the opinion of counsel for NFP, the provisions of this
Agreement are no longer applicable to such shares or this Agreement shall have
terminated in accordance with its terms. Any other restrictions referred to in
any other legends required pursuant to Section 2.7.1 shall cease and terminate
when, in the reasonable opinion of counsel for NFP, such restrictions are no
longer applicable. Whenever such restrictions shall cease and terminate as to
any Covered Shares, if such Stockholder holds any such shares then such
Stockholder shall be entitled to receive from NFP, without expense (other than
applicable transfer taxes, if any, if such unlegended shares are being delivered
and transferred to any Person other than the registered holder thereof), new
certificates for a like number of shares of Common Stock not bearing the
relevant legend(s) set forth or referred to in Section 2.7.1.
Section 2.8 Prohibitions on Transfer.
(a) Notwithstanding any other provision of this Agreement, and in
addition to any restrictions imposed by law, including, without limitation,
Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and except as
permitted by Sections 2.3.1 and 2.5, such Stockholder shall not Transfer,
including in accordance with Rule 144 under the Securities Act, any Covered
Shares owned by such Stockholder, except that, at such Stockholder's election
(and after having given effect to the fact that, if such Stockholder was party
to the Original Stockholders Agreement as of September 17, 2003, the date of the
initial public offering of the Common Stock (the "IPO"), then such Stockholder
was entitled, pursuant thereto, to Transfer up to 20% of the Applicable Total
Shares of such Stockholder in the IPO, plus any shares the underwriters of the
IPO
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elected to purchase as part of the over allotment option granted to them by the
stockholders of NFP):
(i) during the period from and including March 15, 2004 through and
including December 17, 2004, in connection with an underwritten offering of
Common Stock by NFP, such Stockholder may Transfer the aggregate of any
Holdover Amount plus up to 20% of the Applicable Total Shares of such
Stockholder;
(ii) if, during the period described in clause (i), NFP does not
consummate an underwritten public offering, during the period from and
including December 18, 2004 through and including September 16, 2005,
subject to the provisions of any lockup agreement entered into from time to
time in accordance with Section 3.7 hereof, each Stockholder may Transfer
the aggregate of any Holdover Amount plus up to 20% of the Applicable Total
Shares of such Stockholder; and
(iii) in each period specified in the table set forth below (each
such period, together with the periods referred to in clauses (i) and (ii)
above, a "Transfer Period"), subject to the provisions of any lockup
agreement entered into from time to time in accordance with Section 3.7
hereof, such Stockholder may Transfer the aggregate of any Holdover Amount
plus the percentage of the Applicable Total Shares of such Stockholder
specified in the table set forth below for such Transfer Period.
--------------------------------------------------------------------------------
Transfer Period % of Applicable Total Shares
--------------------------------------------------------------------------------
Sept. 17, 2005 to Sept. 16, 2006 20%
--------------------------------------------------------------------------------
Sept. 17, 2006 to Sept. 16, 2008 20%
--------------------------------------------------------------------------------
After Sept. 16, 2008 Any remaining shares
--------------------------------------------------------------------------------
(iv) In any underwritten offering of Common Stock by NFP,
participation in any such offering by such Stockholder is subject to
cutback in accordance with Section 3.3.2 and the other provisions of this
Agreement, including, without limitation, Section 3.8.
(b) As used in this Section, the following phrases shall have the
following meanings:
As of the Cut-Off Date, "Applicable Total Shares" means, the sum of
(i) all Covered Shares owned of record by such Stockholder as of the Cut-Off
Date and (ii) all Covered Shares issuable to such Stockholder upon the exercise
of stock options held by such Stockholder that are exercisable as of the Cut-Off
Date.
As of any date after the Cut-Off Date, "Applicable Total Shares"
means:
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(A) the amount calculated with respect to such Stockholder as of the
Cut-Off Date;
(B) plus, the sum of (i) all Covered Shares acquired by such
Stockholder after the Cut-Off Date and at least ten business days
before the first day of the applicable Transfer Period and (ii)
all Covered Shares issuable to such Stockholder upon the exercise
of options held by such Stockholder that became exercisable after
the Cut-Off Date and on or prior to the first day of the
applicable Transfer Period;
(C) less, the number of Covered Shares that have been Transferred by
such Stockholder, on or after the Cut-Off Date and at least ten
business days before the first day of the applicable Transfer
Period, to a Permitted Transferee in accordance with Section 2.3.1
hereof.
"Cut-Off Date" means September 17, 2003.
"Holdover Amount" means, as of any date, the aggregate of any Covered
Shares that such Stockholder was permitted to Transfer either (i) in the IPO, if
such Person was a Stockholder at the Cut-Off Date, in accordance with the
provisions of the Original Stockholders Agreement as in effect at such time or
(ii) in any completed Transfer Period, if such Person was a Stockholder at such
time, and that in either such case were not so Transferred, including shares not
so Transferred by reason of a prior cutback in accordance with Section 3.3.2.
Notwithstanding anything to the contrary contained herein:
(i) if at any time after the Cut-Off Date a Stockholder transfers
100% of the Covered Shares held by it to a Stockholder as a Permitted
Transferee pursuant to Section 2.3.1 of this Agreement, then, solely for
the purpose of calculating the "Applicable Total Shares" and "Holdover
Amount" relating to such transferred Covered Shares, each reference to
"such Stockholder" contained in the foregoing definitions of "Applicable
Total Shares" and "Holdover Amount" shall be deemed to be a reference to
the transferring Stockholder and such calculations shall be made without
giving effect to such transfer.
(ii) if at any time after the Cut-Off Date such
Stockholder transfers 100% of the Covered Shares held by it at such time
to a Permitted Transferee pursuant to Section 2.3.1 of this Agreement,
then from and after such time (x) for the purpose of calculating
"Applicable Total Shares", the amount calculated with respect to such
Stockholder as of the Cut-Off Date shall be deemed to be zero and (y) such
Stockholder's Holdover Amount as of such time shall be deemed to be zero.
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(iii) if at any time after the Cut-Off Date a Stockholder
transfers fewer than 100% of the Covered Shares held by it to such
Stockholder as a Permitted Transferee pursuant to Section 2.3.1 of this
Agreement and if, in connection with such transfer, both Stockholders and
NFP shall have agreed in writing to calculate the "Applicable Total
Shares" and the "Holdover Amount" relating to the Covered Shares held by
each such Stockholder in a manner other than as provided herein, then the
"Applicable Total Shares" and the "Holdover Amount" relating to such
transferred Covered Shares held by each such Stockholder shall be
calculated as provided in such written agreement; provided, however, that
under no circumstances shall such writing be deemed to cause either the
aggregate "Applicable Total Shares" or the aggregate "Holdover Amount"
relating to the Covered Shares held by both Stockholders to be greater
than would obtain in the absence of such written agreement.
(c) Notwithstanding anything to the contrary contained herein,
"Covered Shares" shall not be deemed to include shares of Common Stock (i) that
were purchased by such Stockholder from NFP in an underwritten public offering;
(ii) that were purchased by such Stockholder in the open market after September
17, 2003; or (iii) that are subject to a vesting schedule or a lock-up or other
similar restrictions on transfer as set forth either in a separate agreement or
arrangement between such Stockholder and NFP or in a Company compensation,
benefit or award plan or policy.
(d) Notwithstanding any other provisions of this Agreement, if such
Stockholder is an individual, then upon the death of such Stockholder and the
subsequent determination by the Board of Directors that the provisions of this
Article II may result in undue hardship including, without limitation, because
of an obligation to pay estate taxes, the Board of Directors may authorize the
estate or legal representative of such Stockholder to Transfer some or all of
the Covered Shares owned by such Stockholder subject to such terms and
conditions as are determined by the Board of Directors.
(e) At any time after March 15, 2004, the Board of Directors may, in
its sole discretion, modify the provisions of this Section to (i) increase the
percentage of Applicable Total Shares that may be sold by such Stockholder in
any transfer period or (ii) decrease the period of time that Covered Shares will
remain subject to the provisions of this Section.
(f) Notwithstanding any other provisions of this Agreement, the Board
of Directors, in its sole discretion, may waive the provisions of this Section
in connection with any business combination, restructuring, recapitalization or
other extraordinary transaction that has been approved by a majority of the
Board of Directors.
(g) Notwithstanding any other provisions of this Section, after March
15, 2004, such Stockholder may enter into a bona fide pledge with a commercial
bank or other lending institution with respect to any Holdover Amount, provided
that such Stockholder has provided NFP with written notice not less than three
business days prior to consummation of such pledge.
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(h) The provisions of this Section 2.8 shall no longer apply to such
Stockholder if the Common Stock is no longer listed on a national securities
exchange or quoted on Nasdaq (as defined below).
(i) In connection with a Transfer that is otherwise permitted under
this Section 2.8, such Stockholder may enter into an agreement with a
"charitable organization," as defined under Section 501(c)(3) of the Internal
Revenue Code, pursuant to which, immediately prior to such Transfer, such
Stockholder may Transfer by gift to such charitable organization a percentage of
the Applicable Total Shares such Stockholder is otherwise eligible to Transfer
in the relevant Transfer Period. Such charitable organization shall be permitted
to sell all such shares of Common Stock received by it simultaneous with such
Transfer; in each case subject to the following conditions: (i) such Stockholder
may make only one such gift in each Transfer Period and in each case such gift
must be to a single charitable organization, unless NFP elects to permit all
Stockholders to make gifts to more than one charitable organization; (ii) NFP
shall notify such Stockholder of the maximum percentage of Applicable Total
Shares such Stockholder may Transfer by gift to a charitable organization in
each Transfer Period at least 30 days prior to the commencement of such Transfer
Period and such Stockholder may not gift any shares in accordance with this
Section 2.8(i) in such Transfer Period in excess of such percentage; (iii) the
Stockholder must inform NFP in writing of its intended gift to a charitable
organization not less than 30 days (or with such other lesser notice as shall be
permitted by NFP as specified in writing by NFP) prior to the Permitted
Transfer; and (iv) NFP has the right to receive prior to the date of the
Permitted Transfer such documentation from the charitable organization and/or
the Stockholder as NFP, in its sole discretion, deems appropriate in connection
with any such gift, including evidence substantiating the charitable
organization's status. NFP may, in its sole discretion and from time to time,
suspend this Section 2.8(i).
ARTICLE II
REGISTRATION RIGHTS
Section 3.1 Certain Definitions
(a) "Register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the automatic
effectiveness or the declaration or ordering of effectiveness of such
registration statement or document.
(b) "Registrable Securities" shall mean the shares of Common Stock;
provided, however, that any shares of Common Stock that are sold to the public
pursuant to a registered public offering or pursuant to Rule 144 under the
Securities Act or another exemption from the registration requirements of the
Securities Act pursuant to which the shares of Common Stock are thereafter
freely tradeable without restriction under the Securities Act, or that cease to
be outstanding, shall cease to be Registrable Securities; provided further,
however, that any Registrable Securities acquired by any Stockholder or
Affiliate thereof from another Stockholder or
11
Affiliate thereof shall continue to be Registrable Securities.
(c) "Includable Registrable Securities" shall mean the maximum number
of Registrable Securities that may be Transferred by a particular Stockholder as
of the applicable date of determination in accordance with Section 2.8.
Section 2.2 [RESERVED]
Section 3.3 Piggyback Registration
Section 3.3.1 Registration Rights. If NFP proposes to register for
sale by NFP any shares of Common Stock or any Apollo Shares (including any
shares owned by an affiliate to which the Apollo Shares may have been
transferred) under the Securities Act in connection with the public offering of
such securities solely for cash (other than any registration of public sales or
distributions of securities issued pursuant to a registration statement on Form
S-8 or S-4 or any similar form), NFP shall, at each such time, promptly give
written notice of such registration to each Stockholder that holds Registrable
Securities. Upon the written request of any Stockholder given within the time
period specified by the Board of Directors (which period shall be not more than
10 days and not less than 5 days) after mailing of such notice by NFP, NFP
shall, subject to the provisions of Section 3.8, use its reasonable efforts to
include or, in the case of an underwritten offering, cause the underwriter or
underwriters to include, in the offering, on the same terms and conditions as
the securities of NFP included in such offering, all of the Includable
Registrable Securities that each such Stockholder has requested to be
registered, provided, however, that if, at any time after giving written notice
of its intention to register any shares and prior to the effective date of the
registration statement filed in connection with such registration, NFP shall
determine for any reason not to register or to delay registration of such
shares, NFP may, at its election, give written notice of such determination to
each Stockholder who has requested registration pursuant to this Section 3.3
and, thereupon, (x) in the case of a determination not to register, NFP shall be
relieved of its obligation to register any Registrable Securities in connection
with such registration and of all liability in connection therewith (other than
liability under Section 3.9 and expenses contemplated by Section 3.6) and (y) in
the case of a determination to delay such registration, NFP shall be permitted
to delay registration of any Registrable Securities requested to be included in
such registration statement for the same period as the delay in registering such
other shares. In the case of any registration of Registrable Securities in an
underwritten offering pursuant to this Section 3.3, all Stockholders proposing
to distribute their shares pursuant to this Section 3.3 shall, at the request of
NFP, enter into an agreement in customary form with the underwriter or
underwriters selected by NFP.
Section 2.3.2 Cutback. If applicable, notwithstanding any other
provision of this Section 3.3, if, in the case of a registration pursuant to
Section 3.3.1 relating to an underwritten offering, the underwriter advises NFP
that marketing factors require a limitation of the number of shares to be
underwritten, then NFP shall so advise all Stockholders holding Includable
Registrable Securities which would otherwise be
12
included pursuant to this Section 3.3, and the number of shares of Includable
Registrable Securities that may be included in the underwriting shall be
allocated pro rata among all Stockholders participating in such registration
based on the number of shares of Includable Registrable Securities the
participating Stockholders have requested to be included in such registration.
All shares initially proposed to be sold by NFP (prior to the exercise of any
rights under this Section 3.3) shall be included in any registration pursuant to
this Section 3.3 before any Registrable Securities of Stockholders are included.
Section 3.4 Obligations of NFP. Whenever required under Section 3.3 to
effect the registration of any Registrable Securities on behalf of any
Stockholder, NFP shall, as expeditiously as reasonably possible: prepare and
file with the SEC a registration statement (on a form selected by NFP for which
NFP is eligible) with respect to such Registrable Securities and use its
reasonable efforts to cause such registration statement to become effective;
and, upon the request of the Stockholders of a majority of the Registrable
Securities registered thereunder, keep such registration statement effective for
up to 90 days in the case of an underwritten offering, or 120 days in any other
case, unless the distribution of the securities registered thereunder has been
earlier completed; and shall:
(a) prepare and file with the SEC as expeditiously as is reasonably
practicable such amendments and supplements to such registration statement and
the prospectus used in connection with such registration statement and any
documents incorporated therein by reference or by filing any other requested
document, and use its reasonable efforts to cause each such amendment to become
effective, as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement;
(b) furnish to each Stockholder selling Registrable Securities and
each underwriter, if any, of such shares such reasonable number of copies of the
registration statement and of a prospectus, including a preliminary prospectus,
in conformity with the requirements of the Securities Act, including, in each
case, all supplements, amendments and exhibits thereto, and such other documents
as they may reasonably request in order to facilitate the disposition of
Registrable Securities owned by them, and NFP hereby consents to the use of any
such prospectus by the selling Stockholders and the underwriter, if any, in
connection with any offer and sale covered thereby;
(c) use its reasonable efforts to register or qualify the securities
covered by such registration statement under the securities or blue sky laws of
such jurisdictions as shall be reasonably requested by the selling Stockholders
(in light of the intended plan of distribution of such selling Stockholders) or
any managing underwriters, and do any and all other acts and things which may be
reasonably necessary or desirable to consummate the disposition of the
securities in such jurisdictions; provided, that NFP shall not be required (i)
to register or qualify the Registrable Securities in any jurisdiction if such
registration or qualification in such jurisdiction would subject NFP to
unreasonable burden or expense or would unreasonably delay the commencement of
an underwritten offering or (ii) in connection therewith or as a condition
thereto, to qualify
13
to do business, subject itself to taxation in respect of doing business or file
a general consent to service of process or register as a broker or dealer in any
such states or jurisdictions where it has not otherwise done so;
(d) in the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Stockholder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement, including, without limitation, furnishing
any opinion of counsel (in form and substance as is customarily given by counsel
to selling stockholders and addressed to the underwriters, NFP and the
Stockholders requesting registration of Registrable Securities) and entering
into a reasonable and customary lockup agreement pursuant to Section 3.7
reasonably requested by the managing underwriter;
(e) promptly notify each Stockholder that holds Registrable Securities
covered by such registration statement, (i) when such registration statement or
any posteffective amendment or supplement thereto becomes effective, (ii) of the
issuance by the SEC or any state securities authority of any stop order,
injunction or other order or requirement suspending the effectiveness of such
registration statement (and take all reasonable action to prevent the entry of
such stop order or to remove it if entered, or the initiation of any proceedings
for that purpose) or (iii) of the happening of any event as a result of which
the registration statement, as then in effect, the prospectus related thereto or
any document included therein by reference includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing and promptly file such amendments and supplements
which may be required on account of such event and use its reasonable efforts to
cause each such amendment and supplement to become effective;
(f) promptly furnish counsel for each underwriter, if any, and for the
selling Stockholders of Registrable Securities copies of any written request by
the SEC or any state securities authority for amendments or supplements to a
registration statement and prospectus or for additional information;
(g) use reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of a registration statement at the earliest
possible time;
(h) cooperate with the selling Stockholders of Registrable Securities
and the underwriter, if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold and not bearing
any restrictive legends; and enable such Registrable Securities to be in such
denominations (consistent with the provisions of the governing documents
thereof) and registered in such names as the selling Stockholders or the
underwriter, if any, may reasonably request at least five business days prior to
any sale of Registrable Securities;
(i) make available for inspection by any underwriters participating in
any disposition pursuant hereto and any counsel or accountant retained by such
14
underwriters, all relevant financial and other records, pertinent corporate
documents and properties of NFP and cause the respective officers, directors and
employees of NFP to supply all information reasonably requested by any such
representative, underwriter, counsel or accountant in connection with a
registration pursuant hereto; provided, however, that, with respect to records,
documents or information which NFP determines, in good faith, to be confidential
and as to which NFP notifies such underwriters, counsel or accountants in
writing of such confidentiality, such underwriters, counsel or accountants shall
not disclose such records, documents or information unless (i) the release of
such records, documents or information is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction, (ii) such records, documents
or information have previously been generally made available to the public or
(iii) the disclosure of such records, documents or information is necessary, in
the written opinion of outside legal counsel, to avoid or correct a material
misstatement or omission in the registration statement and then only after
reasonable request has been made to NFP to make such disclosure and NFP has
denied such request;
(j) within a reasonable time prior to the filing of any registration
statement, any related prospectus, any amendment to such a registration
statement or amendment or supplement to such a prospectus, provide copies of
such document to the selling Stockholders who hold Registrable Securities and
their counsel and to the underwriter or underwriters, if any; make such
reasonable changes in any such document prior to or after the filing thereof as
the counsel to the Stockholders or the underwriter may request; and make
available for discussion of such document such of the representatives of NFP as
shall be reasonably requested by the Stockholders who hold Registrable
Securities being registered or by any underwriter;
(k) within a reasonable time prior to the filing of any document which
is to be incorporated by reference into a registration statement filed pursuant
hereto or a related prospectus, provide copies of such document to counsel for
the selling Stockholders of Registrable Securities; make such reasonable changes
in such document prior to or after the filing thereof as counsel for such
selling Stockholders shall request; and make available for discussion of such
document such of the representatives of NFP as shall be reasonably requested by
such counsel;
(l) comply with all applicable rules and regulations of the SEC, and
make generally available to its security holders, as soon as reasonably
practicable after the effective date of the registration statement (and in any
event within 16 months thereafter), an earnings statement (which need not be
audited) covering the period of at least 12 consecutive months beginning with
the first day of NFP's first calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;
(m) provide a CUSIP number for all Registrable Securities, not later
than the effective date of the related registration statement;
(n) use its reasonable efforts to (i) cause all such Registrable
Securities covered by such registration statement to be listed on the principal
securities exchange on
15
which similar securities issued by NFP are then listed (if any), if the listing
of such Registrable Securities is then permitted under the rules of such
exchange, or (ii) if no similar securities are then so listed, cause all such
Registrable Securities to be listed on a national securities exchange or secure
designation of all such Registrable Securities as a National Association of
Securities Dealers, Inc. Automated Quotation System ("Nasdaq") "national market
system security" within the meaning of Rule 11Aa2-1 of the SEC, as determined by
NFP, or, failing that, secure Nasdaq authorization for such shares and, without
limiting the generality of the foregoing, take all actions that may be required
by NFP as the issuer of such Registrable Securities in order to facilitate the
managing underwriter's arranging for the registration of at least two market
makers as such with respect to such shares with the National Association of
Securities Dealers, Inc. (the "NASD"); and
(o) cooperate and assist in any filings required to be made with the
NASD and in the performance of any due diligence investigation by any
underwriter, if any (including any "qualified independent underwriter" that is
required to be retained in accordance with the rules and regulations of the
NASD).
Each Stockholder agrees that upon receipt of any notice from NFP of the
happening of any event of the kind described in clause (iii) of paragraph (e) of
this Section 3.4, such Stockholder will discontinue such Stockholder's
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Stockholder's receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph (e)
of this Section 3.4 and, if so directed by NFP, will deliver to NFP (at NFP's
expense) all copies, other than permanent file copies, then in such
Stockholder's possession of the prospectus covering such Registrable Securities
that was in effect at the time of receipt of such notice. In the event NFP shall
give any such notice, the applicable 90 or 120 day period mentioned in the first
paragraph of this Section 3.4 shall be extended by the number of days during
such period from and including the date of the giving of such notice to and
including the date when each Stockholder then selling Registrable Securities
covered by such registration statement shall have received the copies of the
supplemented or amended prospectus contemplated by paragraph (e) of this Section
3.4.
Section 3.5 Furnish Information
It shall be a condition precedent to the obligations of NFP to take
any action pursuant to this Agreement with respect to a selling Stockholder that
such selling Stockholder shall promptly furnish to NFP such information as shall
reasonably be requested by NFP in order to effect the registration of its
Registrable Securities.
Section 3.6 Expenses of Registration
NFP shall bear all expenses incurred in connection with each of the
registrations, filings or qualifications pursuant to Section 3.3 for each
Stockholder, including, without limitation, all registration, filing and listing
fees, including such fees of the SEC, the NASD and other agencies; fees and
expenses of compliance with federal
16
and state securities laws (including, without limitation, reasonable fees and
disbursements of counsel for the underwriters in connection with state
securities qualifications of the Registrable Securities under the laws of such
jurisdictions as the managing underwriters may reasonably designate); printing
(including, without limitation, expenses of printing or engraving any
certificates for the Registrable Securities in a form eligible for deposit with
The Depository Trust Company and otherwise meeting the requirements of any
securities exchange on which they are listed and of printing registration
statements and prospectuses), shipping and delivery expenses; fees and
disbursements of counsel for NFP (and not counsel for any selling Stockholder,
except for reasonable fees and disbursements of a single counsel for the selling
Stockholders as a group designated by selling Stockholders holding a majority of
the Registrable Securities to be registered); fees and disbursements of all
independent public accountants of NFP (including, without limitation, the
expenses of any annual or special audit and "cold comfort" letters required by
the managing underwriters); fees and expenses of other Persons reasonably
necessary in connection with the registration, including any experts, retained
by NFP; internal expenses of NFP (including, without limitation, all salaries
and expenses of its employees performing legal or accounting duties); and fees
and expenses incurred in connection with the listing of the Registrable
Securities on each securities exchange on which the securities of the same class
are then listed; provided, however, that underwriting discounts and commissions
relating to the Registrable Securities shall be borne and paid ratably by the
sellers of such Registrable Securities (based upon the amount of Registrable
Securities to be sold by each such seller).
Section 3.7 Lockup Agreement
With respect to any underwritten offering of securities of NFP (whether or
not a registered public offering, and whether involving a sale by NFP or by any
other person), each Stockholder, regardless of whether such Stockholder
participates in the applicable offering, hereby agrees that, unless it receives
notice from NFP that this Section 3.7 shall not apply to such offering, such
Stockholder shall not, during the 14-day period prior to, and during the 180-day
period (or such shorter period as the managing underwriters have agreed with NFP
or the sellers in the purchase, underwriting or similar agreement entered into
in connection with such offering, as the managing underwriters have agreed as to
Apollo, or as the managing underwriters may otherwise permit) (such period, the
"Lock-Up Period") beginning on the date of the final prospectus or other
offering document, (i) offer, sell, contract to sell, pledge, grant any option
to purchase, make any short sale or otherwise transfer or dispose of (any such
transaction, a "Disposition") any shares of Common Stock, or any securities
convertible into, exchangeable for or that represent the right to receive shares
of Common Stock, whether now owned or hereinafter acquired, owned directly by
the Stockholder (including holding as a custodian) or with respect to which the
Stockholder has beneficial ownership within the rules and regulations of the SEC
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of any shares of Common Stock, whether any such swap or transaction
is to be settled by delivery of shares of Common Stock or other securities, in
cash or otherwise, unless such Disposition is (x) made in accordance with
Section 2.3,
17
2.8(d), 2.8(f) or 2.8(i), as applicable or (y) made with the prior written
consent of each lead managing underwriter of the relevant offering.
The foregoing restriction is expressly agreed to preclude each Stockholder
from engaging during the Lock-Up Period in any hedging or other transaction
which is designed to or which reasonably could be expected to lead to or result
in a Disposition of any shares of Common Stock even if such shares would be
disposed of by someone other than the Stockholder. Such prohibited hedging or
other transactions would include without limitation any short sale or any
purchase, sale or grant of any right (including without limitation any put or
call option), with respect to any shares of Common Stock or with respect to any
security that includes, relates to, or derives any significant part of its value
from such shares. Each Stockholder also agrees and consents to the entry during
the Lock-Up Period of stop transfer instructions with NFP's transfer agent and
register against the transfer of any shares of Common Stock held by such
Stockholder except in compliance with the foregoing restrictions. Each
Stockholder understands that NFP and each lead managing underwriter will be
relying upon this Section 3.7 in proceeding toward consummation of any offering.
Each Stockholder further understands that this Section 3.7 is irrevocable and
shall be binding upon the Stockholder's heirs, legal representatives,
successors, and assigns.
Section 3.8 Underwriting Requirements
In connection with any offering involving any underwriting of securities in
an offering described in Section 3.3, NFP shall not be required to include any
Stockholder's Registrable Securities in such underwriting unless such
Stockholder accepts the terms of the underwriting as agreed upon between NFP and
the underwriters, only in such quantities and on such terms as set forth in
Section 3.3.
Section 3.9 Indemnification.
(a) In the event of any registration of any Registrable Securities pursuant
to this Article III, NFP shall indemnify and hold harmless, to the fullest
extent permitted by law, the seller of any Registrable Securities covered by
such registration statement, its directors, officers, fiduciaries, employees and
stockholders or general and limited partners (and the directors, officers,
fiduciaries, employees and stockholders or general and limited partners
thereof), each other individual, partnership, joint venture, corporation, trust,
unincorporated organization or government or any department or agency thereof
(each, a "Person") who participates as an underwriter or a qualified independent
underwriter, if any, in the offering or sale of such securities, each director,
officer, fiduciary, employee and stockholder or general and limited partner of
such underwriter or qualified independent underwriter, and each other Person
(including any such Person's directors, officers, fiduciaries, employees and
stockholders or general and limited partners), if any, who controls such seller
or any such underwriter or qualified independent underwriter, within the meaning
of the Securities Act, against any and all losses, claims, damages or
liabilities, joint or several, actions or proceedings (whether commenced or
threatened) in respect thereof ("Claims") and expenses (including reasonable
fees and expenses of counsel and any amounts paid in any settlement effected
18
with NFP's consent, which consent shall not be unreasonably withheld or delayed)
to which each such indemnified party may become subject under the Securities
Act, the Exchange Act or otherwise, insofar as such Claims or expenses arise out
of or are based upon any of the following actual or alleged statements,
omissions or violations (each, a "Violation"): (i) any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement under which such securities were registered pursuant to this Agreement
under the Securities Act or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) any untrue statement or alleged untrue statement of
a material fact contained in any preliminary, final or summary prospectus or any
amendment or supplement thereto, together with the documents incorporated by
reference therein, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or (iii) any violation by NFP of any federal, state or common
law rule or regulation applicable to NFP and relating to action required of or
inaction by NFP in connection with any such registration, and NFP will reimburse
any such indemnified party for any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
Claim as such expenses are incurred; provided, that NFP shall not be liable to
any such indemnified party in any such case to the extent such Claim or expense
arises out of or is based upon any Violation which occurs in reliance upon and
in conformity with information furnished to NFP or its representatives by or on
behalf of such indemnified party stating that such information is for use
therein. Such indemnity and reimbursement of expenses shall remain in full force
and effect regardless of any investigation made by or on behalf of such
indemnified party and shall survive the transfer of such securities by such
seller.
(b) Each holder of Registrable Securities that are included in the
securities as to which any registration under Section 3.3 is being effected
(and, if NFP requires as a condition to including any Registrable Securities in
any registration statement filed in accordance with Section 3.3, any
underwriter) shall, severally and not jointly, indemnify and hold harmless (in
the same manner and to the same extent as set forth in paragraph (a) of this
Section 3.9), to the extent permitted by law, NFP, its directors, officers,
fiduciaries, employees and stockholders (and the directors, officers,
fiduciaries, employees and stockholders or general and limited partners thereof)
and each Person (including any such Person's directors, officers, fiduciaries,
employees and stockholders or general and limited partners), if any, controlling
NFP within the meaning of the Securities Act and all other prospective sellers
and their directors, officers, fiduciaries, employees and stockholders or
general and limited partners and respective controlling Persons (including any
such Person's directors, officers, fiduciaries, employees and stockholders or
general and limited partners) against any and all Claims and expenses (including
reasonable fees and expenses of counsel and any amounts paid in any settlement
effected with the consent of the indemnifying party, which consent shall not be
unreasonably withheld or delayed) to which each such indemnified party may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such Claims or expenses arise out of or are based upon any Violation which
occurs in reliance upon and in conformity with information furnished to NFP or
its representatives by or on
19
behalf of such holder or underwriter, if any, stating that such information is
for use in connection with any registration statement, preliminary, final or
summary prospectus or amendment or supplement or document incorporated by
reference into any of the foregoing; provided, however, that the aggregate
amount which any such holder, underwriter or qualified independent underwriter
shall be required to pay pursuant to this Section 3.9(b) and Sections 3.9(c) and
(e) shall be limited to (x) in the case of any such holder, the amount of the
gross proceeds received by such holder upon the sale of the Registrable
Securities pursuant to the registration statement giving rise to such claim and
(y) in the case of any such underwriter, the amount of the total sales price of
the Registrable Securities sold through or by it pursuant to the registration
statement giving rise to such claim. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such
indemnified party and shall survive the transfer of such securities by such
holder.
(c) Indemnification similar to that specified in the preceding paragraphs
(a) and (b) of this Section 3.9 (with appropriate modifications) shall be given
by NFP and each seller of Registrable Securities (and, if NFP requires as a
condition to including any Registrable Securities in any registration statement
filed in accordance with Section 3.3, any underwriter) with respect to any
required registration or other qualification of securities under any state
securities and "blue sky" laws.
(d) Any person entitled to indemnification under this Agreement shall notify
promptly the indemnifying party in writing of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 3.9, but the failure of any indemnified party to
provide such notice shall not relieve the indemnifying party of its obligations
under the preceding paragraphs of this Section 3.9, except to the extent the
indemnifying party is materially prejudiced thereby and shall not relieve the
indemnifying party from any liability which it may have to any indemnified party
otherwise than under this Section 3.9. In case any action or proceeding is
brought against an indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, unless in the reasonable opinion of outside counsel to
the indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, to assume the defense
thereof jointly with any other indemnifying party similarly notified, to the
extent that it chooses, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party
that it so chooses, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that (i) if the indemnifying party
fails to take reasonable steps necessary to defend diligently the action or
proceeding within 20 days after receiving notice from such indemnified party
that the indemnified party believes it has failed to do so, (ii) if such
indemnified party who is a defendant in any action or proceeding which is also
brought against the indemnifying party reasonably shall have concluded that
there may be one or more legal defenses available to such indemnified party
which are not available to the indemnifying party or (iii) if representation of
both parties by the same counsel is otherwise inappropriate under applicable
standards of professional conduct, then, in any
20
such case, the indemnified party shall have the right to assume or continue its
own defense as set forth above (but with no more than one firm of counsel for
all indemnified parties in each jurisdiction, except to the extent any
indemnified party or parties reasonably shall have concluded that there may be
legal defenses available to such party or parties which are not available to the
other indemnified parties or to the extent representation of all indemnified
parties by the same counsel is otherwise inappropriate under applicable
standards of professional conduct) and the indemnifying party shall be liable
for any expenses therefor. No indemnifying party shall, without the written
consent of the indemnified party, which consent shall not be unreasonably
withheld, effect the settlement or compromise of, or consent to the entry of any
judgment with respect to, any pending or threatened action or claim in respect
of which indemnification or contribution may be sought hereunder (whether or not
the indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (A) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (B) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(e) If for any reason the foregoing indemnity is unavailable or is
insufficient to hold harmless an indemnified party under Section 3.9(a), (b) or
(c), then each indemnifying party shall contribute to the amount paid or payable
by such indemnified party as a result of any Claim in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
on the one hand and the indemnified party on the other from the relevant
offering of securities. If, however, the allocation provided in the immediately
preceding sentence is not permitted by applicable law, or if the indemnified
party failed to give the notice required by subsection (d) above and the
indemnifying party is materially prejudiced thereby, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the indemnifying party, on the one hand, and the
indemnified party, on the other hand, as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the Violation relates to information supplied by the
indemnifying party or the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
Violation. The parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 3.9(e) were to be determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the preceding sentences of this
Section 3.9(e). The amount paid or payable in respect of any Claim shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such Claim.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Notwithstanding
anything in this Section 3.9(e) to the contrary, no indemnifying party (other
than NFP) shall be required pursuant to this Section 3.9(e) to contribute any
amount in excess of (x) in the case of an indemnifying party that is a holder of
Registrable Securities, the gross proceeds received by such indemnifying party
from the sale of Registrable Securities in the offering to which the losses,
claims, damages or liabilities of the indemnified parties
21
relate, or (y) in the case of an indemnifying party that is an underwriter, the
amount of the total sales price of the Registrable Securities sold through or by
it in the offering to which the losses, claims, damages or liabilities of the
indemnified parties relate, less, in any such case referred to in (x) and (y),
the amount of all indemnification and contribution payments made pursuant to
Sections 3.9(b) and (c) and this Section 3.9(e), as the case may be, in
connection with such offering.
(f) The indemnity agreements contained herein shall be in addition to any
other rights to indemnification or contribution which any indemnified party may
have pursuant to law or contract and shall remain operative and in full force
and effect regardless of any investigation made or omitted by or on behalf of
any indemnified party and shall survive the transfer of the Registrable
Securities by any such party.
Section 3.10 Transfer of Registration Rights
The registration rights of Stockholders under this Agreement may not be
transferred except (i) by law pursuant to a merger or consolidation of such
Stockholder and (ii) to any transferee of such Stockholder to which such
Stockholder has transferred Registrable Securities in accordance with Section
2.3 (other than pursuant to a transaction under Rule 144 of the Securities Act).
No transferee of any Registrable Securities shall have any rights under this
Article III unless such rights are transferred in accordance with this Section
3.10, such Registrable Securities are held subject to all of the terms of this
Agreement, and such transferee agrees in writing for the benefit of NFP and the
other parties hereto to be bound by and to perform all of the terms and
provisions of this Agreement applicable to the transferor; provided, however,
that, unless NFP otherwise consents, such transferor shall act as such
transferee's agent for all purposes (including notices and pro rata cutbacks)
under this Agreement whether or not such transferor continues to hold
Registrable Securities.
Section 3.11 Recapitalizations, Exchanges, etc., Affecting Registrable
Securities
The provisions of this Article shall, to the extent reasonably practicable,
apply, to the full extent set forth herein with respect to the Registrable
Securities, to any and all securities or capital stock (of NFP or any successor
to NFP and/or any other issuer thereof) which may be issued in respect of, in
exchange for, or in substitution of such Registrable Securities, by reason of,
and shall be appropriately adjusted to reflect, any stock dividend, stock split,
reverse stock split, combination, recapitalization, reclassification, merger,
consolidation or otherwise. In the event that, upon the occurrence of a
transaction contemplated by this Section 3.11, the Stockholders hold securities
of more than one entity, the registration rights contemplated hereby will apply
to each such entity independently of the others. The adjustments contemplated by
this paragraph shall be made cumulative with respect to all such transactions
contemplated by this Section 3.11 that occur from time to time. Any issuer of
any such securities other than NFP shall be required to assume in writing, to
the extent relevant, NFP's obligations with respect to the registration rights
granted hereunder or enter into a registration rights agreement substantially
similar to this Agreement and giving effect to the allocations and
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adjustments contemplated by this Section 3.11, in connection with any such
transaction pursuant to which the Stockholders shall receive securities of such
issuer, as contemplated by this Section 3.11.
ARTICLE I
MISCELLANEOUS
Section 4.1 Specific Performance
The parties hereto acknowledge that there would be no adequate remedy at
law if any party fails to perform any of its obligations hereunder, and
accordingly agree that each party, in addition to any other remedy to which it
may be entitled at law or in equity, shall be entitled to compel specific
performance of the obligations of any other party under this Agreement in
accordance with the terms and conditions of this Agreement. Any remedy under
this Section 4.1 is subject to certain equitable defenses and to the discretion
of the court before which any proceedings therefor may be brought.
Section 4.2 Notices
All notices, statements, instructions or other documents required to be
given hereunder shall be in writing and shall be given either personally or by
mailing the same in a sealed envelope, first class mail, postage prepaid and
either certified or registered, return receipt requested, or by telecopy,
addressed to NFP at its principal offices and to the other parties at their
addresses reflected on the signature pages hereto. Each party hereto, by written
notice given to the other parties hereto in accordance with this Section 4.2,
may change the address to which notices, statements, instructions or other
documents are to be sent to such party. All notices, statements, instructions
and other documents hereunder that are mailed or telecopied shall be deemed to
have been given on the date of mailing or, in the case of telecopying, upon
confirmation of receipt.
Section 4.3 Successors and Assigns
This Agreement shall be binding upon and shall inure to the benefit of the
parties, and their respective successors and assigns. If any Stockholder or any
Affiliate thereof or any Transferee of any Stockholder shall acquire any shares
of Common Stock, in any manner, whether by operation of law or otherwise, such
shares shall be held subject to all of the terms of this Agreement and by taking
and holding such shares such Person shall be conclusively deemed to have agreed
to be bound by and to perform all of the terms and provisions of this Agreement.
Section 4.4 Recapitalizations and Exchanges Affecting Common Stock
Subject to Section 3.11, the provisions of this Agreement shall apply, to
the full extent set forth herein with respect to Common Stock, to any and all
shares of capital stock or equity securities of NFP or any successor or assign
of NFP (whether by merger, consolidation, sale of assets or otherwise) which may
be issued in respect of, in
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exchange for, or in substitution of, the Common Stock, or which may be issued by
reason of any stock dividend, stock split, reverse stock split, combination,
recapitalization, reclassification or otherwise. Subject to Section 3.11, upon
the occurrence of any of such events, numbers of shares and amounts hereunder
shall be appropriately adjusted.
Section 4.5 Governing Law
This Agreement shall be governed and construed and enforced in accordance
with the laws of the State of Delaware, without regard to the principles of
conflicts of law thereof.
Section 4.6 Descriptive Headings, Etc.
The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning of terms contained herein.
Unless the context of this Agreement otherwise requires, references to "hereof,"
"herein," "hereby," "hereunder" and similar terms shall refer to this entire
Agreement.
Section 4.7 Amendment; Waiver; Bylaws
This Agreement may not be amended or supplemented except by an instrument
in writing signed by NFP, by Apollo and by Stockholders holding a majority of
the then outstanding shares of Common Stock held by all Stockholders; provided
that any amendment, supplement or modification of this Agreement which adversely
affects the rights and obligations of any Stockholder (an "Affected Holder")
differently than those of any other Stockholder shall also require the approval
of such Affected Holder. The foregoing notwithstanding, NFP, without the consent
of any other party hereto, may amend the signature pages hereto, in order to add
any party that becomes a holder of Common Stock or securities convertible into
or exercisable for Common Stock.
Section 4.8 Severability
If any term or provision of this Agreement shall to any extent be invalid
or unenforceable, the remainder of this Agreement shall not be affected thereby,
and each term and provision of this Agreement shall be valid and enforceable to
the fullest extent permitted by law. Upon the determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
shall negotiate in good faith to modify this Agreement so as to effect their
original intent as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
Section 4.9 Further Assurances
The parties hereto shall from time to time execute and deliver all such
further documents and do all acts and things as the other party may reasonably
require to effectively carry out or better evidence or perfect the full intent
and meaning of this Agreement, including, without limitation, to the extent
necessary or appropriate, using all reasonable efforts to cause the amendment of
the Certificate of Incorporation or the
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ByLaws of NFP in order to provide for the enforcement of this Agreement in
accordance with its terms.
Section 4.10 Complete Agreement; Counterparts
This Agreement constitutes the entire agreement and supersedes all other
agreements and understandings, both written and oral, among the parties or any
of them, with respect to the subject matter hereof. This Agreement may be
executed by any one or more of the parties hereto in any number of counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument.
Section 4.11 Third Party Beneficiaries
Each lead managing underwriter of an offering of securities of NFP (whether
by NFP or any other person) shall be a third party beneficiary to the agreements
made hereunder by each Stockholder under Section 3.7 and shall have the right to
enforce such agreements directly to the extent any such underwriter deems such
enforcement necessary or advisable to protect its rights hereunder. Except as
expressly provided in the preceding sentence, the provisions of this Agreement
shall be only for the benefit of the parties to this Agreement, and no other
Person shall have any third party beneficiary or other right hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed on the date first written above.
NATIONAL FINANCIAL PARTNERS CORP.
By:_______________________________________
Name:
Title:
Address:
APOLLO INVESTMENT FUND IV, L.P.
By: Apollo Management, L.P.
By:_______________________________________
Name:
Title:
Address:
Attn:
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