AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, dated as of May 14,
2003 (the "Agreement"), by and among NATIONAL FINANCIAL PARTNERS CORP. (formerly
known as National Financial Services Company, Inc.), a Delaware corporation
("NFP"), APOLLO INVESTMENT FUND IV, LP., a Delaware limited partnership
("Apollo"), and each of the stockholders of NFP set forth on the signature page
hereto (collectively, 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 (as defined
below) (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) after September 30,
2003, 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, NFP, Apollo and NFP's other existing stockholders have
entered into a stockholders agreement, dated as of October 27, 1998 (the
"Original Stockholders Agreement") pursuant to which the parties provided for
the sale, assignment, transfer, encumbrance or other disposition of the common
stock, par value $.01 per share (the "Common Stock") of NFP which the parties
hereto own or may hereafter acquire, and for certain rights (including, without
limitation, registration rights) and obligations in respect thereof;
WHEREAS, Section 4.7 of the Original Stockholders Agreement
permits amendment of the Original Stockholders Agreement by a written instrument
signed by NFP, by Apollo and by Stockholders holding a majority of the then
outstanding shares of Common Stock held by all Stockholders;
WHEREAS, in connection with a proposed underwritten public
offering of shares of Common Stock by NFP, NFP has proposed certain amendments
to the Original Stockholders Agreement that are intended to facilitate such
offering; and
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 Covenant to Vote
Each of the Stockholders who holds Common Stock entitled to vote
on stockholder matters shall appear in person or by proxy at any annual or
special meeting of stockholders for the purpose of obtaining a quorum and shall
vote the shares of Common Stock entitled to vote on stockholder matters owned by
such Stockholder, either in person or by proxy, at any annual or special meeting
of stockholders of NFP called for the purpose of voting on the election or
removal of directors, or shall act by consensual action of stockholders with
respect to the election or removal of directors, in favor of (i) the election of
the directors nominated by the Board of Directors of NFP and (ii) the removal of
directors proposed or supported by Apollo. In addition, each Stockholder who
holds Common Stock entitled to vote on stockholder matters shall appear in
person or by proxy at any annual or special meeting of stockholders for the
purpose of obtaining a quorum and shall vote the shares of Common Stock entitled
to vote on stockholder matters owned by such Stockholder, either in person or by
proxy, upon any matter submitted to a vote of the stockholders of NFP, or shall
act by consensual action of stockholders, in a manner so as to be consistent and
not in conflict with, and to implement and effect, the terms of this Agreement.
Section 1.2 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 Common Stock nor shall any
Stockholder enter into any stockholder agreements or arrangements of any kind
with any Person with respect to the Common Stock 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 Common Stock 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 Common Stock in any manner which is
inconsistent with the provisions of this Agreement.
ARTICLE II
RESTRICTIONS ON TRANSFERS OF STOCK
Section 2.1 General Prohibition on Transfers
(a) Prohibition on Transfers Generally. No Stockholder shall, at
any time, directly or indirectly, sell, assign, pledge or encumber or otherwise
transfer, other than to NFP or Persons controlled by, controlling or under
common control with ("Affiliates") 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
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collectively as "Transferees" and individually as a "Transferee") any shares of
Common Stock, unless such Transfer is made in accordance with Section 2.3, 2.4,
2.5, 2.6 or 2.8 or in accordance with Article III. No such Transfer, other than
pursuant to Section 2.3, 2.5 or 2.6, shall be permitted pursuant to this
Agreement prior to the consummation of an IPO. "IPO" shall mean an underwritten
public offering of shares of Common Stock pursuant to a registration statement
under the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "Securities Act"), with, together with all prior
public offerings of Common Stock, aggregate net proceeds to NFP and any selling
Stockholders of at least $50 million.
(b) Recordation. NFP shall not record upon its books, and shall
cause any transfer agent appointed by NFP not to permit, any Transfer of shares
of Common Stock 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 shares of Common
Stock by a Stockholder (other than pursuant to Article III) 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 forms 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.
Section 2.2 Compliance with Securities Laws
No Stockholder shall Transfer any shares of Common Stock, unless
(a) the Transfer is pursuant to an effective registration statement under 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 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) and 2.4 with respect to Transfers by Stockholders of shares of
Common Stock shall not apply to (A) any Transfer by a Stockholder who is an
individual (an "Individual Stockholder"): (i) to or among such Individual
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
Individual Stockholder, spouse or described
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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 Individual Stockholder in the
event of the death or Disability of such Individual Stockholder; and (iii)
pursuant to a qualified domestic relations order; or (B) any Transfer by any
Stockholder of such Stockholder's shares of Common Stock issued to such
Stockholder 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. Notwithstanding the foregoing, no Transfer may be effected
pursuant to this Section 2.3.1 unless NFP is satisfied, in its sole discretion,
that the proposed Transferee is an "Accredited Investor" (as defined in Rule 501
promulgated under the Securities Act). As used in this Agreement, "Disability"
means that the Individual 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 Transferees. Transferees to whom
Transfers are permitted pursuant to clauses (A) and (B) of Section 2.3.1 are
referred to herein as "Permitted Transferees." Any such permitted Transfer 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) and 2.4 of this Agreement with respect to Transfers
by Stockholders of shares of Common Stock 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 Right of First Refusal
Section 2.4.1 Seller's Notice. From and after the consummation of
an IPO, if any Stockholder proposes to Transfer any of the Common Stock held by
it in one transaction or a series of related transactions for consideration with
a value in excess of $250,000, other than to NFP or Affiliates of NFP, and other
than pursuant to Section 2.3, 2.5 or 2.6 of this Agreement or pursuant to the
Article III (for purposes of this Section 2.4 and any cross-references hereto,
such Stockholder, along with any Affiliates and Permitted Transferees thereof
that are Stockholders, the "Selling Stockholder"), the Selling Stockholder shall
first give written notice (the "Seller's Notice") to NFP, stating that the
Selling Stockholder desires to make such Transfer, referring to Section 2.4,
specifying the number of shares of Common Stock proposed to be Transferred (the
"First Refusal Shares"), and specifying the price, in cash (the "First Refusal
Price"), and the material terms pursuant to which such Transfer is proposed to
be made (together with the First Refusal Price, the "First Refusal Terms").
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Section 2.4.2 Exercise of Option.
(a) Option. Upon receipt of the Seller's Notice, NFP shall have
the exclusive option for five business days following receipt of the Seller's
Notice to give notice (the "Acceptance Notice") that it will purchase the First
Refusal Shares for Fair Market Value; provided, however, that the Selling
Stockholder shall not be required to sell any First Refusal Shares pursuant to
this option unless all the First Refusal Shares are to be purchased by NFP.
"Fair Market Value" shall mean, as of any applicable date, the mean between the
highest and lowest reported sales prices of the Common Stock on the New York
Stock Exchange or, if not listed on such exchange, on any other national
securities exchange on which the Common Stock is listed or, if not so listed, on
the Nasdaq National Market on the last preceding date on which there was a sale
of Common Stock on such exchange or Nasdaq National Market. If the Common Stock
is not then listed on any exchange or the Nasdaq National Market, the Fair
Market Value of the Common Stock shall be determined by the Board of Directors
of NFP in good faith.
(b) Failure to Exercise Option. If the Seller's Notice shall be
duly given and if NFP shall not exercise its option to purchase all of the First
Refusal Shares at Fair Market Value as provided in Section 2.4.2, then the
Selling Stockholder shall be free, for a period of 120 days from the 10/th/ day
following the receipt of the Seller's Notice, to Transfer the First Refusal
Shares to any Proposed Transferee (as defined below), as long as all of the
First Refusal Shares are Transferred for cash, payable upon Transfer, at a price
equal to or greater than 90% of the First Refusal Price and on all other
material terms not more favorable to the Proposed Transferee than the First
Refusal Terms.
(c) Closing Date. In the case of a purchase by NFP of any First
Refusal Shares pursuant to Section 2.4, the parties to such purchase shall
mutually determine a closing date (the "First Refusal Closing Date") which shall
not be (except as otherwise required by the terms of this Agreement) more than
30 days after the date of the Acceptance Notice, or if any such day is not a
business day, then the first business day thereafter, subject, in any case, to
extension until expiration or termination of any applicable regulatory waiting
periods (including, without limitation, if applicable, pursuant to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended) and
satisfaction of all other applicable regulatory conditions. The closing shall be
held at 10:00 a.m., local time, at the principal executive office of NFP, or at
such other time or place as the parties may agree.
(d) Deliveries at Closing; Method of Payment of Purchase Price.
On a First Refusal Closing Date, the Selling Stockholder shall deliver
certificates, free and clear of all liens and encumbrances, with appropriate
transfer tax stamps affixed and with stock powers endorsed in blank,
representing the shares of Common Stock to be purchased by NFP, which shall
deliver to such Selling Stockholder the purchase price in cash (or certified or
cashier's check). In addition, if the Person selling Common Stock is the
personal representative of a deceased Stockholder, the personal representative
shall also deliver to the purchaser or purchasers (i) copies of letters
testamentary or letters of administration evidencing his appointment and
qualification, (ii) a certificate issued by the Internal Revenue Service
pursuant to Section 6325 of Internal Revenue Code of 1986, as amended (the
"Code"), discharging the shares being sold from liens imposed by the Code (or,
if it is impossible to obtain such certificate by the First
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Refusal Closing Date, the sale of such Common Stock may be consummated and the
proceeds placed in escrow pending receipt thereof) and (iii) an estate tax
waiver issued by the state of the decedent's domicile.
Section 2.5 Tag-Along Rights
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
shares (the "Tag-Along Shares") of Common Stock 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 shares of
Common Stock 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 shares of
Common Stock 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
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for such Common Stock 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 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, but not solely by virtue of becoming a party to this Agreement), to
whom Common Stock is proposed to be Transferred pursuant to the terms of Section
2.4, 2.5 or 2.6 of this Agreement.
(e) No Liability. Notwithstanding any other provision contained
in Section 2.4 or 2.5, there shall be no liability on the part of NFP or Apollo
in the event that the sale pursuant to Section 2.4 or 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 Drag-Along Right
Section 2.6.1 Exercise. If Stockholders owning fifty-one percent
(51%) or more of the then outstanding shares of Common Stock propose to make a
bona fide sale of all of the shares of Common Stock held by such Stockholders to
a Proposed Transferee that is not an Affiliate of Apollo, pursuant to a stock
sale, merger, business combination, recapitalization, consolidation,
reorganization, restructuring or similar transaction with respect to which an
opinion of a third party investment bank has been obtained by NFP with respect
to the fairness, from a financial point of view, of the proposed transaction to
the stockholders of NFP (other than the proposing Stockholders), then such
Stockholders shall have the right (a "Drag-Along Right"), exercisable upon 30
days' prior written notice to the other Stockholders, to require the other
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Stockholders to sell all of their shares of Common Stock and, at the election of
such proposing Stockholders, options to purchase or any other award or right to
receive or acquire shares of Common Stock (whether vested or unvested) issued
pursuant to employment agreements, management agreements or stock incentive
plans or otherwise ("Options"), to the Proposed Transferee on the same terms and
conditions and at the same price (in the case of the Options, the purchase price
of each Option shall be equal to the purchase price attributable to the number
of shares of Common Stock issuable upon exercise of such Option less the
exercise price thereof) as the Stockholders exercising the Drag-Along Right.
Section 2.6.2 Sale Agreement. Each Stockholder selling shares of
Common Stock pursuant to a transaction contemplated by this Section 2.6 (a
"Drag-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 shares of Common Stock
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
foregoing notwithstanding, in connection with such sale, a Drag-Along Seller
shall not be required to make any representations and warranties with respect to
NFP or NFP's business or with respect to Apollo or any other seller. In
addition, each Drag-Along Seller shall be severally responsible for its
proportionate share of the expenses of sale incurred by the proposing
Stockholders 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 Drag-Along Seller, the amount of such obligations and
liabilities for which such Drag-Along Seller shall be responsible shall not
exceed the gross proceeds received by such Drag-Along Seller in such sale and
(2) a Drag-Along Seller shall not be responsible for the fraud of any other
seller or any indemnification obligations and liabilities for breaches of
representations and warranties made by any other seller with respect to 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.
Section 2.6.3 No Liability. Notwithstanding any other provision
contained in this Section 2.6, there shall be no liability on the part of NFP or
the proposing Stockholders in the event that the sale pursuant to this Section
2.6 is not consummated for any reason whatsoever. The decision whether to effect
a Transfer pursuant to this Section 2.6 shall be in the sole and absolute
discretion of the proposing Stockholders.
Section 2.7 Restrictions on Transfers of Stock
Section 2.7.1 Legends. Each of the Stockholders hereby agrees
that outstanding certificate representing shares of Common Stock, any
certificate representing shares of Common
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Stock acquired in accordance with the provisions of this Agreement and any
certificates representing shares of Common Stock issued upon exercise of the
Options or other Options to purchase shares of Common Stock, in any case,
subject to the provisions of this Agreement and issued prior to the date when
the applicable restrictions are terminated pursuant to Section 2.7.3, shall bear
endorsements reading substantially as follows:
(a) The securities represented by this certificate 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.
(b) The securities represented by this certificate are
subject to the terms and conditions set forth in an Amended and
Restated Stockholders Agreement, dated as of May 14, 2003, 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 shares of Common Stock (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 any 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 shares of Common Stock 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 shares of Common Stock, the Stockholder holding
such shares 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 Following an IPO.
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(a) Notwithstanding any other provision of this Agreement, each
Stockholder agrees that, 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, 2.5 and 2.6, from and
including the date of the consummation of an IPO, no Stockholder shall Transfer,
including in accordance with Rule 144 under the Securities Act, any shares of
Common Stock owned by such Stockholder, except that, at such stockholder's
election:
(i) each Stockholder may Transfer up to 20% of the Applicable Total
Shares of such Stockholder in the IPO, plus any shares the underwriters elect to
purchase as part of the over-allotment option granted to them by the
stockholders of NFP;
(ii) during the period commencing on the 180/th/ day after the
effective date of the registration statement relating to the IPO (the "Effective
Date") and ending 15 months after the Effective Date, in connection with an
underwritten offering of Common Stock by NFP, each Stockholder may Transfer the
aggregate of any Holdover Amount plus up to 20% of the Applicable Total Shares
of such Stockholder;
(iii) if, during the period described in clause (ii), NFP does not
consummate an underwritten public offering, during the period commencing 15
months after the Effective Date and ending 24 months after the Effective Date,
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
(iv) in each period after the Effective Date specified in the table
set forth below (each such period, together with the periods referred to in
clauses (ii) and (iii) 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, each 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.
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Transfer Period % of Applicable Total Shares
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24 months to 36 months 20%
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36 months to 60 months 20%
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After 60 months Any remaining shares
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(v) In any underwritten offering of Common Stock by NFP,
participation in any such offering by a Stockholder is subject to cutback in
accordance with Section 3.2.2 or Section 3.3.2, as applicable, 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:
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As of the date of the consummation of the IPO, "Applicable Total
Shares" means, the sum of (i) all shares of Common Stock owned of record by such
Stockholder as of the Cut-Off Date and (ii) all shares of Common Stock issuable
to such Stockholder upon the exercise of options held by such Stockholder that
are exercisable as of the Cut-Off Date.
As of any date after the consummation of the IPO, "Applicable Total
Shares" means:
(A) the amount calculated with respect to such Stockholder as of the
date of the consummation of the IPO;
(B) plus, the sum of (i) all shares of Common Stock 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 shares of Common Stock 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 shares of Common Stock 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;
(D) less, any shares of Common Stock purchased in the public market,
either in or after the IPO.
"Cut-Off Date" means a date determined by the Board of Directors, in
its sole discretion, that shall be not more than 180 days, and not less than 5
days, prior to the effective date of the registration statement relating to the
IPO.
"Holdover Amount" means, as of any date, the aggregate of any shares of
Common Stock that a Stockholder was permitted to Transfer in accordance with the
provisions of this Section in the IPO and in any completed Transfer Period that
were not so Transferred, including shares not so Transferred by reason of a
prior cutback in accordance with Section 3.2.2 or 3.3.2.
(c) The foregoing provisions do not apply to any shares of Common Stock
purchased by a Stockholder (i) from NFP in an underwritten public offering or
(ii) in the open market following the consummation of the IPO.
(d) Notwithstanding any other provisions of this Agreement, in the
event that an Individual Stockholder dies, upon a determination by the Board of
Directors that the provisions of this Article II 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 shares of Common Stock owned by such
Stockholder subject to such terms and conditions as are determined by the Board
of Directors.
(e) At any time after the 180/th/ day following the effective date of
the registration statement relating to the IPO, 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 Stockholders in any
transfer period or (ii) decrease the period of time that shares of Common Stock
will remain subject to the provisions of this Section.
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(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, following the
180/th/ day after the Effective Date, a 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.
(h) The provisions of this Section 2.8 shall no longer apply to any
Stockholder if the Common Stock is no longer listed on a national securities
exchange or quoted on Nasdaq (as defined below).
ARTICLE III
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 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 3.2 Demand Registration
Section 3.2.1 Demand Registration Rights. If NFP shall receive, at
any time, any, after October 27, 2003 and prior to the consummation of an IPO, a
written request by Stockholders owning a majority of the then outstanding shares
of Common Stock not owned by Apollo that NFP effect the registration under the
Securities Act of Registrable Securities then outstanding (which written request
shall specify the number of shares of Registrable Securities to
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be sold by the Initiating Stockholders (as defined below)), then NFP shall,
within 10 business days of the receipt thereof, give written notice of such
request (a "Demand Notice") to all Stockholders and shall, subject to the
limitations of this Section 3.2, use its reasonable efforts to effect such a
registration as soon as practicable and in any event to file with the SEC within
120 days of the receipt of such request a registration statement under the
Securities Act covering all the Registrable Securities which the Stockholders
shall request in writing to be included in such registration (which written
requests by the remaining Stockholders shall specify the number of shares of
Registrable Securities requested to be included and which written request shall
be given within 10 business days of receipt of the Demand Notice), and NFP shall
use its reasonable efforts to have such registration statement become effective.
Section 3.2.2 Underwritten Offering Provisions. Subject to Section
3.2.1, the Stockholders initiating the registration request hereunder (the
"Initiating Stockholders") and the other selling Stockholders responding to a
Demand Notice must distribute the Registrable Securities covered by their
request by means of an underwritten offering on a firm commitment basis. The
right of any Stockholder to include its Registrable Securities in such a
registration shall be conditioned upon such Stockholder's participation in such
underwriting and the inclusion of such Stockholder's Registrable Securities in
the underwriting. All Stockholders proposing to distribute their securities
through such underwriting shall enter into an agreement in customary form with
the underwriter or underwriters selected for such underwriting by NFP and
reasonably acceptable to Stockholders participating in such registration holding
a majority of the shares requested to be so registered. Notwithstanding any
other provision of this Section 3.2, if, 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 of Registrable
Securities which would otherwise be included in the registration statement
pursuant hereto, and the number of shares of Registrable Securities that may be
included in the registration statement shall be allocated pro rata among the
Stockholders participating in such registration based on the number of shares of
Registrable Securities requested to be included by such participating
Stockholders (a "Demand Cutback").
Section 3.2.3 Limitation on Number of Demands. NFP shall not be
required to effect, nor shall the Stockholders together be entitled to request,
more than one registration under this Section 3.2. A registration shall not be
deemed to have been effected, nor shall it be sufficient to eliminate the
registration available under this Section 3.2, unless such registration becomes
effective pursuant to the Securities Act; provided; that no registration shall
be deemed to have been effected, nor shall it eliminate the registration
available under this Section 3.2, if (i) such registration is interfered with by
any stop order, injunction or other order or requirement of the SEC or other
governmental authority, or the sale of Registrable Securities pursuant to such
registration is otherwise terminated or abandoned at the instance of NFP, in
either case, for any reason other than an act or omission of any Initiating
Stockholder; or (ii) the conditions to closing specified in the underwriting
agreement entered into in connection with such registration are not satisfied by
NFP other than by reason of an act or omission by any Initiating Stockholder:
Section 3.2.4 Delay of Registration. Notwithstanding the foregoing,
if NFP shall furnish to the Initiating Stockholders a certificate signed by an
officer of NFP stating that, in the reasonable good faith judgment of the Board
of Directors of NFP, it would not be in the best interests of NFP and its
stockholders for such registration to be effected (because NFP is
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engaging in or intends to engage in an acquisition, divestiture or other
material transaction or due to other extraordinary events relating to NFP, but,
in any case, not including for purposes of NFP avoiding its obligations
hereunder), then NFP shall have the right to defer such registration for a
period of not more than an additional 90 days after receipt of the request of
the Initiating Stockholders; provided, however, that (A) NFP shall not be
entitled to defer its obligation to effect a registration for an aggregate of
more than 180 days within any 365-day period and (B) NFP shall make and
communicate to the selling Stockholders its determinations under this paragraph
in respect of a registration under this Section 3.2 within 15 days of NFP's
receipt of the Demand Notice in respect of such registration or, to the extent
reasonably practicable, promptly after becoming aware of a transaction or event
referred to in this Section 3.2.4.
Section 3.3 NFP 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, in the
case of an IPO, 10 days or within, in the case of an offering following an IPO,
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 3.3.2 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 of Includable
Registrable Securities which would otherwise be included pursuant to this
Section 3.3, and the number of
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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 Sections
3.2 and 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 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;
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(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 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,
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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
twelve 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 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
17
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 Sections 3.2 and 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 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 or the Initiating Stockholders 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
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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
Each Stockholder agrees that upon prior notice by NFP to such
Stockholder and effective upon the reasonable request of the underwriters
managing a public offering for sale by NFP of its securities (or for sale by the
Stockholders pursuant to Section 3.2), 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 the sellers in the purchase,
underwriting or similar agreement entered into in connection with such
registration, as the managing underwriters shall agree as to Apollo, or as the
managing underwriters may otherwise permit) beginning on, the later of (i) the
effective date of such registration or (ii) the commencement of an underwritten
offering, offer, sell, contract to sell or otherwise dispose of any securities
of NFP (other than the exercise of any options or warrants or the conversion or
exchange of any convertible or exchangeable securities) that are substantially
similar to the Registrable Securities or that are convertible or exchangeable
into securities that are substantially similar to the Registrable Securities
(other than those included in the registration), without the prior written
consent of such underwriters.
Section 3.8 Underwriting Requirements
In connection with any offering involving any underwriting of
securities in an offering (a) described in Section 3.2, 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 the selling Stockholders holding a majority of the
Registrable Securities to be registered and the underwriters, which terms shall
be subject to the approval of NFP, which approval shall not be unreasonably
withheld, or (b) 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
Sections 3.2 and 3.3.
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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 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 3.2 or 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 3.2 or
3.3, any underwriter) shall, severally and not jointly, indemnify and hold
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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 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 3.2 or 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
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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 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
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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 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
23
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 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 IV
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,
24
sale of assets or otherwise) which may be issued in respect of, in 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 ByLaws of NFP in order to
provide for the enforcement of this Agreement in accordance with its terms.
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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 No Third Party Beneficiaries
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:
