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EXHIBIT 4.1
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CERES GROUP, INC.
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
This Amended and Restated Registration Rights Agreement (this
"Agreement"), dated as of July 25, 2000, is between CERES GROUP, INC., a
Delaware corporation (the "Corporation"), and the persons and entities set forth
on Exhibit A hereto (the "Investors").
R E C I T A L S
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The Corporation and International Managed Care, LLC, International
Managed Care (Bermuda), L.P., Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxxxx, Mercantile
Bank of Northern Illinois, Trustee of the Conseco Stock Option Director Plan FBO
Xxxxxxx Xxxxxxxx #08590033, Mercantile Bank of Northern Illinois, Trustee of the
Conseco Stock Option Director Plan FBO Xxxxxxx Xxxxxxxx #08590034, Xxxxx Xxxx,
Xxx Xxxxx, Turkey Vulture Fund XIII, Ltd., Xxxx X. Xxxxxx, Xxxxxx Family Limited
Partnership, Medical Mutual of Ohio, Xxxxxx X. Xxxxxx, Xxxxxx Xxxxxxxx XXX, and
LEG Partners SBIC, L.P., Xxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxx, Xx., Xxxx-Ceres,
LLC, Xxxx Xxxxxxxx, Xxxxx Xxxxx, Xxxxxx X. Xxxxx, Xxxxx X. Xxxxx, Xxxxxxx X.
Xxxxxxxx XXX, Xxxxxxx X. Xxxxxxx XXX, Xxxxx Xxxxxxxxx, Xxxxxx X. Xxxxxxxx,
Xxxxxxx Xxxxxx, Xxxxxx X. Xxxxxxxxx, Xxxxxxx X. Xxxx, Xxxxx X. Xxxx, Xx. and
Xxxx Xxxxxx are parties to a Registration Rights Agreement, dated July 1, 1998,
as amended by Amendment No. 1 to Registration Rights Agreement, dated February
17, 1999 (the "Original Registration Rights Agreement"), pursuant to which the
Investors would have certain registration rights relating to shares of the
Corporation's common stock, par value $0.001 per share (the "Common Shares"),
owned by the Investors;
The Corporation has offered up to 3,333,334 Common Shares (the
"Pyramid Offering Shares") in a private placement offering;
The Corporation has offered Convertible Voting Preferred Stock, par
value $0.001 per share, which are convertible into ________ Common Shares (the
"United Offering Shares"), to United Insurance Company of America, an Illinois
insurance corporation ("United"), in a private placement offering;
The Corporation desires to enter into a separate registration rights
agreement with United as of the date hereof;
The Corporation desires to include the Pyramid Offering Shares in
the Original Registration Rights Agreement, as amended, and make the purchasers
of the Pyramid Offering Shares subject to and bound by the Original Registration
Rights Agreement;
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The purchasers of the Pyramid Offering Shares have agreed to be
subject to and bound by the Original Registration Rights Agreement; and
The Corporation and the Investors listed on the signature page
attached hereto representing a majority of the Registrable Shares in the
Original Registration Rights Agreement (together the "Parties") have agreed to
amend and restate the Original Registration Rights Agreement to include the
Pyramid Offering Shares and to make certain other modifications.
AGREEMENTS
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In consideration of the premises and the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS. As used in this Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Shares" means the Common Shares, $0.001 par value per share,
of the Corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Offering" means (1) the offering by the Corporation on February 17,
1999 of 2,000,000 Common Shares in a private placement offering in connection
with the acquisition of Continental General Corporation, a Nebraska corporation
(the "Continental Offering"), and (2) the offering by the Corporation on
________, 2000 of 3,333,334 Common Shares in a private placement offering in
connection with the acquisition of Pyramid Life Insurance Company, a Kansas
stock insurance company (the "Pyramid Offering").
"Offering Shares" means (1) the 2,000,000 Common Shares offered by
the Corporation in the Continental Offering, and (2) the 3,333,334 Common Shares
offered by the Corporation in the Pyramid Offering.
"Person" means a natural person, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or other entity, or a governmental
entity or any department, agency or political subdivision thereof.
"Public Offering" means any offering by the Corporation of its
equity securities to the public pursuant to an effective registration statement
under the Securities Act or any comparable statement under any comparable
federal statute then in effect.
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"Pyramid Registrable Shares" means at any time (i) any Common Shares
then outstanding which were issued pursuant to the Pyramid Offering; (ii) any
Common Shares then outstanding and held by any purchaser in the Pyramid
Offering; (iii) any Common Shares then outstanding which were issued as, or were
issued directly or indirectly upon the conversion or exercise of other
securities issued as, a dividend or other distribution with respect or in
replacement of any shares referred to in (i) or (ii); and (iv) any Common Shares
then issuable directly or indirectly upon the conversion or exercise of other
securities which were issued as a dividend or other distribution with respect to
or in replacement of any shares referred to in (i) or (ii); PROVIDED, HOWEVER,
that Pyramid Registrable Shares shall not include any shares which have been
registered pursuant to the Securities Act or which have been sold to the public
pursuant to Rule 144 of the Commission under the Securities Act. For purposes of
this Agreement, a Person will be deemed to be a holder of Pyramid Registrable
Shares whenever such Person has the then-existing right to acquire such Pyramid
Registrable Shares, whether or not such acquisition actually has been effected.
"Registrable Shares" means at any time (i) any Common Shares then
outstanding which were issued pursuant to the Stock Purchase Agreement; (ii) any
Common Shares then outstanding which were issued pursuant to the Offering,
except for purposes of Section 2.1 of this Agreement where the term "Registrable
Shares" does not include the Common Shares issued in the Pyramid Offering; (iii)
any Common Shares then outstanding and held by any Investor (including the
Common Shares issuable upon exercise of the Warrants (as defined in the Stock
Purchase Agreement)), except for the purposes of Section 2.1 of this Agreement
where the term "Registrable Shares" does not include the Common Shares issued in
the Pyramid Offering; (iv) any Common Shares then outstanding which were issued
as, or were issued directly or indirectly upon the conversion or exercise of
other securities issued as, a dividend or other distribution with respect or in
replacement of any shares referred to in (i), (ii) or (iii); and (v) any Common
Shares then issuable directly or indirectly upon the conversion or exercise of
other securities which were issued as a dividend or other distribution with
respect to or in replacement of any shares referred to in (i), (ii) or (iii);
PROVIDED, HOWEVER, that Registrable Shares shall not include any shares which
have been registered pursuant to the Securities Act or which have been sold to
the public pursuant to Rule 144 of the Commission under the Securities Act. For
purposes of this Agreement, a Person will be deemed to be a holder of
Registrable Securities whenever such Person has the then-existing right to
acquire such Registrable Shares, whether or not such acquisition actually has
been effected.
"Securities Act" means the Securities Act of 1933, as amended.
"Stock Purchase Agreement" means the Amended and Restated Stock
Purchase Agreement dated as of March 30, 1998, by and among the Corporation,
Strategic Acquisition Partners, L.L.C., Insurance Partners, L.P. and Insurance
Partners Offshore (Bermuda).
"United Registrable Shares" means the securities registrable under
the Registration Rights Agreement, dated as of __________, 2000, by and between
Ceres Group, Inc. and United Insurance Company of America (the "United
Registration Rights Agreement").
2. DEMAND REGISTRATION.
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2.1 REQUESTS FOR REGISTRATION. Subject to the terms of this
Agreement, (i) the holders of at least $5,000,000 of the then market value of
the outstanding Registrable Shares, at any time, may request registration under
the Securities Act of all or part of their Registrable Shares, and (ii)
beginning one year from the date of this Agreement, the holders of at least
$10,000,000 of the then market value of the outstanding Pyramid Registrable
Shares may request registration under the Securities Act of at least $5,000,000
of their Pyramid Registrable Shares, on Form S-1 or any similar long-form
registration ("Long Form Registrations") or, if available, then at the option of
the Corporation, on Form S-2 or S-3 or any similar short-form registration
("Short-Form Registrations"). Within ten (10) days after receipt of any request
pursuant to this Section 2.1, the Corporation will give written notice of such
request to all other holders of Registrable Shares, United Registrable Shares
and Pyramid Registrable Shares, subject to Section 2.4, and will include in such
registration all Registrable Shares, United Registrable Shares and Pyramid
Registrable Shares with respect to which the Corporation has received written
requests for inclusion within thirty (30) days after delivery of the
Corporation's notice. All registrations requested pursuant to this Section 2 are
referred to herein as "Demand Registrations."
2.2 PAYMENT OF EXPENSES FOR DEMAND REGISTRATIONS. The Corporation
will pay all Registration Expenses (as defined in Section 6 below) for (i) two
Demand Registrations initiated by International Managed Care, LLC, (ii) one
Demand Registration initiated by Turkey Vulture Fund XIII, Ltd., (iii) one
Demand Registration initiated by Strategic Acquisition Partners, LLC (or its
principals or affiliates), and (iv) one Demand Registration initiated by the
holders of at least $10,000,000 of the then market value of the outstanding
Pyramid Registrable Shares (including those under Section 2.3) (whether a
Long-Form Registration or a Short-Form Registration). A registration will not
count as one of the Corporation-paid Demand Registrations until it has become
effective and the holders of Registrable Shares are able to register and sell at
least 90% of the Registrable Shares requested to be included in such
registration (or in the case of a shelf registration, it remains effective for
not less than 180 days); PROVIDED, HOWEVER, that in any event the Corporation
will pay all Registration Expenses in connection with any registration initiated
as a Demand Registration even though such registration shall not count as a
Corporation-paid Demand Registration. In a Demand Registration other than the
five Demand Registrations referred to in the first sentence of this Section
(including those under Section 2.3), the Registration Expenses of such
registration shall be borne by the holders of Registrable Shares to be
registered thereunder PRO RATA based on the number of Registrable Shares, United
Registrable Shares and other securities requested or permitted to be included in
such registration pursuant to the terms of this Agreement.
2.3 SHORT-FORM REGISTRATIONS. Demand Registrations will be
Short-Form Registrations whenever the Corporation is permitted to use any
applicable short form. The Corporation will use its best efforts to make
Short-Form Registrations available for the sale of Registrable Shares and United
Registrable Shares. If a Short-Form Registration is to be an underwritten public
offering, and if the underwriters for marketing or other reasons request the
inclusion in the registration statement of information which is not required
under the Securities Act to be included in a registration statement on the
applicable form for the Short-Form Registration, the Corporation will provide
such information as may be reasonably requested for inclusion by the
underwriters in the Short-Form Registration.
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2.4 PRIORITY. If a Demand Registration is an underwritten public
offering and the managing underwriters advise the Corporation in writing that in
their opinion the inclusion of the number of Registrable Shares and United
Registrable Shares and other securities requested to be included (by the
Corporation or others) creates a substantial risk that the price per Common
Share will be reduced, the Corporation will include in such registration, prior
to the inclusion of any securities which are not Registrable Shares or United
Registrable Shares, the number of Registrable Shares and United Registrable
Shares requested to be included which in the opinion of such underwriters can be
sold without creating such a risk, PRO RATA among the respective holders of
Registrable Shares and United Registrable Shares on the basis of the number of
Registrable Shares and United Registrable Shares owned by such holders, with
further successive PRO RATA allocations among the holders of Registrable Shares
and United Registrable Shares if any such holder of Registrable Shares and
United Registrable Shares has requested the registration of less than all such
Registrable Shares and United Registrable Shares it is entitled to register.
2.5 RESTRICTIONS. The Corporation will not be obligated to effect
any Demand Registration within 180 days after the effective date of a previous
Demand Registration. The Corporation may postpone for up to ninety (90) days the
filing or the effectiveness (but not the preparation) of a registration
statement for a Demand Registration if the Board of Directors of the Corporation
reasonably and in good faith determines that such filing would require a
disclosure of a material fact that would have a material adverse effect on the
Corporation or any plan by the Corporation to engage in any acquisition of
assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer or other significant transaction. In order to
postpone the filing of a registration statement pursuant to this Section 2.5,
the Corporation shall promptly (but in any event within ten (10) days), upon
determining to seek such postponement, deliver to each holder who has requested
the registration of all or any part of its Registrable Shares and United
Registrable Shares, a certificate signed by an executive officer of the
Corporation stating that the Corporation is postponing such filing pursuant to
this Section 2.5 and a general statement of the reason for such postponement and
an approximation of the anticipated delay. Within twenty (20) days after
receiving such certificate, the holders of a majority of the Registrable Shares
and United Registrable Shares held who have requested the registration of all or
any part of their respective Registrable Shares and United Registrable Shares
and for which registration was previously requested may withdraw such demand
request by giving written notice to the Corporation; if withdrawn, the demand
request shall be deemed not to have been made for all purposes of this
Agreement. The Corporation may postpone the filing of a particular registration
statement pursuant to this Section 2.5 only once.
2.6 SELECTION OF UNDERWRITERS. The holders of at least a majority of
the Registrable Shares included in any Demand Registration pursuant to Section
2.1 of this Agreement shall have the right to select the investment banker(s)
and manager(s) to administer the offering, subject to the Corporation's approval
which will not be unreasonably withheld or delayed, and any existing contract
rights of Advest, Inc.
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3. PIGGYBACK REGISTRATION.
3.1 RIGHT TO PIGGYBACK. Whenever the Corporation proposes to
register any of its equity securities under the Securities Act (other than
pursuant to a Demand Registration hereunder or on Form S-8 or S-4 or any
successor form thereto) and the registration form to be used may be used for the
registration of any Registrable Shares and United Registrable Shares (a
"Piggyback Registration"), the Corporation will give prompt written notice
(which shall be given not less than thirty (30) days prior to the effective date
of the registration statement) to all holders of the Registrable Shares and
United Registrable Shares of its intention to effect such a registration and
will include in such registration all Registrable Shares and United Registrable
Shares (in accordance with the priorities set forth in Sections 3.2 and 3.3
below) with respect to which the Corporation has received written requests for
inclusion within fifteen (15) days after the delivery of the Corporation's
notice; PROVIDED, HOWEVER, that the holders of the Pyramid Registrable Shares
and the United Registrable Shares will only be permitted to include any of their
Pyramid Registrable Shares or United Registrable Shares, as the case may be, in
such registration beginning one year from the date of this Agreement.
3.2 PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration is an underwritten primary registration on behalf of the
Corporation and the managing underwriters advise the Corporation in writing that
in their opinion the number of securities requested to be included in the
registration creates a substantial risk that the price per Common Share will be
reduced, the Corporation will include in such registration FIRST, the securities
that the Corporation proposes to sell, SECOND, the Registrable Shares and United
Registrable Shares requested to be included in such registration, PRO RATA among
the holders of such Registrable Shares and United Registrable Shares on the
basis of the number of shares which are owned by such holders, and THIRD, other
securities requested to be included in such registration.
3.3 PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Corporation's securities and the managing underwriters advise the
Corporation in writing that in their opinion the number of securities requested
to be included in the registration creates a substantial risk that the price per
Common Share will be reduced, the Corporation will include in such registration
FIRST, the securities requested to be included therein by the holders requesting
such registration and the Registrable Shares and United Registrable Shares
requested to be included in such registration, PRO RATA among the holders of
such securities on the basis of the number of Common Shares or Registrable
Shares and United Registrable Shares which are owned by such holders, and
SECOND, other securities requested to be included in such registration.
3.4 OTHER REGISTRATIONS. If the Corporation has previously filed
a registration statement with respect to Registrable Shares or Pyramid
Registrable Shares pursuant to Section 2 or Registrable Shares pursuant to this
Section 3, and if such previous registration has not been withdrawn or
abandoned, the Corporation will not file or cause to be effected any other
registration
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of any of its equity securities or securities convertible or exchangeable into
or exercisable for its equity securities under the Securities Act (except on
Form S-8 or any successor form), whether on its own behalf or at the request of
any holder or holders of such securities, until a period of at least 180 days
has elapsed from the effective date of such previous registration.
3.5 SELECTION OF UNDERWRITERS. In connection with any Piggyback
Registration, the holders of at least a majority of the Registrable Shares and
United Registrable Shares requested to be registered shall have the right to
select the managing underwriters (subject to the approval of the Corporation
which shall not be unreasonably withheld or delayed) to administer any offering
of the Corporation's securities in which the Corporation does not participate,
and the Corporation will have such right in any offering in which it
participates.
4. HOLDBACK AGREEMENTS.
4.1 HOLDERS' AGREEMENTS. Each holder of Registrable Shares agrees
not to effect any public sale or distribution of equity securities of the
Corporation, or any securities convertible into or exchangeable or exercisable
for such securities or make any demand for registration under Sections 2 or 3
hereof, during the seven (7) days prior to, and during the ninety (90) days
following, the effective date of any underwritten Demand Registration or any
underwritten Piggyback Registration in which Registrable Shares are included
(except as part of such underwritten registration), unless the underwriters
managing the registered public offering otherwise agree. Nothing herein shall
prevent a holder of Registrable Shares that is a partnership from making a
distribution of Registrable Shares to its partners, a holder of Registrable
Shares that is a trust from making a distribution of Registrable Shares to its
beneficiaries or a holder of Registrable Shares that is a corporation from
making a distribution of Registrable Shares to its stockholders, provided that
the transferees of such Registrable Shares agree to be bound by the provisions
of this Agreement to the extent the transferor would be so bound.
4.2 CORPORATION'S AGREEMENTS. The Corporation agrees (i) not to
effect any public sale or distribution of its equity securities, or any
securities convertible into or exchangeable or exercisable for such securities,
during the seven (7) days prior to, and during the ninety (90) days following,
the effective date of any underwritten Demand Registration or any underwritten
Piggyback Registration (except as part of such underwritten registration or
pursuant to registrations on Form S-8 or any successor form), unless the
underwriters managing the registered public offering otherwise agree, (ii) to
use all reasonable efforts to cause each holder of at least five percent (5%)
(on a fully diluted basis) of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities to agree not
to effect any public sale or distribution of any such securities during such
period (except as part of such underwritten registration, if otherwise
permitted), unless the underwriters managing the registered public offering
otherwise agree, subject to the registration obligations of the Corporation
under the Common Share Purchase Warrants and (iii) if requested by the
underwriters managing the registered public offering, to use all reasonable
efforts to cause each other holder of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, purchased
from the Corporation at any time (other than in a registered public offering) to
agree not to effect any public sale or distribution of any such securities
during such period (except as part of such underwritten registration, if
otherwise
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permitted), unless the underwriters managing the registered public offering
otherwise agree, subject to the registration obligations of the Corporation
under the Common Share Purchase Warrants.
5. REGISTRATION PROCEDURES. Whenever the holders of Registrable
Shares have requested that any Registrable Shares be registered pursuant to this
Agreement, the Corporation will use its best efforts to effect the registration
and sale of such Registrable Shares in accordance with the intended method of
disposition thereof and, pursuant thereto, the Corporation will as expeditiously
as possible:
(a) prepare and file with the Commission a registration statement
with respect to such Registrable Shares and use its best efforts to cause such
registration statement to become effective (provided that before filing a
registration statement or prospectus, or any amendments or supplements thereto,
the Corporation will furnish copies of all such documents proposed to be filed
to the counsel or counsels for the sellers of the Registrable Shares covered by
such registration statement);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus(es) used in
connection therewith as may be necessary to keep such registration statement
effective for a period of not less than nine months and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;
(c) furnish to each seller of Registrable Shares and the
underwriters such number of copies of such registration statement, each
amendment and supplement thereto, the prospectus(es) included in such
registration statement (including each preliminary prospectus) and such other
documents as such seller or underwriter may reasonably request in order to
facilitate the disposition of the Registrable Shares;
(d) use its best efforts to register or qualify such Registrable
Shares under such other securities or blue sky laws of such jurisdictions as any
seller or underwriter reasonably requests and do any and all other acts and
things which may be reasonably necessary or advisable to enable such seller or
underwriter to consummate the disposition in such jurisdictions of the
Registrable Shares (provided that the Corporation will not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph or (ii) consent to
general service of process in any such jurisdiction);
(e) promptly notify each seller of such Registrable Shares, at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Corporation will
prepare a supplement or amendment to such prospectus or registration statement
so that, as thereafter delivered to the purchasers of such Registrable Shares,
such prospectus or registration statement will not
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contain any untrue statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading;
(f) cause all such Registrable Shares to be (i) listed on each
securities exchange on which similar securities issued by the Corporation are
then listed, (ii) authorized to be quoted and/or listed (to the extent
applicable) on the NASD Automated Quotation System or The Nasdaq National Market
if the Registrable Shares so qualify, or (iii) if no similar securities issued
by the Corporation are then listed on a securities exchange, a securities
exchange selected by the holders of at least a majority of the Registrable
Shares included in such registration;
(g) provide a transfer agent and registrar for all such
Registrable Shares not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
at least a majority of the Registrable Shares being sold or the underwriters, if
any, reasonably request in order to expedite or facilitate the disposition of
such Registrable Shares (including, but not limited to, effecting a stock split
or a combination of shares).
(i) make available for inspection by any seller of Registrable
Shares, any underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Corporation, and cause the
Corporation's officers, directors, employees and independent accountants to
supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration statement;
(j) advise each seller of such Registrable Shares, promptly after
it shall receive notice or obtain knowledge thereof, of the issuance of any stop
order by the Commission or any state securities or other regulatory authority
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for such purpose and promptly use all best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued;
(k) at least forty eight (48) hours prior to the filing of any
registration statement or prospectus, or any amendment or supplement to such
registration statement or prospectus, furnish a copy thereof to each seller of
such Registrable Shares and refrain from filing any such registration statement,
prospectus, amendment or supplement to which counsel selected by the holders of
at least a majority of the Registrable Shares being registered shall have
reasonably objected on the grounds that such document does not comply in all
material respects with the requirements of the Securities Act or the rules and
regulations thereunder, unless, in the case of an amendment or supplement, in
the opinion of counsel for the Corporation the filing of such amendment or
supplement is reasonably necessary to protect the Corporation from any
liabilities under any applicable federal or state law and such filing will not
violate applicable laws;
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(l) at the request of any seller of such Registrable Shares in
connection with an underwritten offering, furnish on the date or dates provided
for in the underwriting agreement: (i) an opinion of counsel, addressed to the
underwriters and the sellers of Registrable Shares, covering such matters as
such underwriters and sellers may reasonably request, including such matters as
are customarily furnished in connection with an underwritten offering and (ii) a
letter or letters from the independent certified public accountants of the
Corporation addressed to the underwriters and the sellers of Registrable Shares,
covering such matters as such underwriters and sellers may reasonably request,
in which letter(s) such accountants shall state, without limiting the generality
of the foregoing, that they are independent certified public accountants within
the meaning of the Securities Act and that in their opinion the financial
statements and other financial data of the Corporation included in the
registration statement, the prospectus(es), or any amendment or supplement
thereto, comply in all material respects with the applicable accounting
requirements of the Securities Act; (m) make generally available to the
Corporation's securityholders an earnings statement satisfying the provisions of
Section 11(a) of the Securities Act no later than thirty (30) days after the end
of the twelve (12) month period beginning with the first day of the
Corporation's first fiscal quarter commencing after the effective date of a
registration statement, which earnings statement shall cover such twelve (12)
month period, and which requirement will be deemed to be satisfied if the
Corporation timely files complete and accurate information on Forms 10-Q, 10-K,
and 8-K under the Exchange Act and otherwise complies with Rule 158 under the
Securities Act;
(n) if requested by the managing underwriter or any seller
promptly incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or any seller reasonably requests to be
included therein, including, without limitation, with respect to the Registrable
Shares being sold by such seller, the purchase price being paid therefor by the
underwriters and with respect to any other terms of the underwritten offering of
the Registrable Shares to be sold in such offering, and promptly make all
required filings of such prospectus supplement or post-effective amendment;
(o) cooperate with each seller and each underwriter participating
in the disposition of such Registrable Shares and their respective counsel in
connection with any filings required to be made with the NASD;
(p) during the period when the prospectus is required to be
delivered under the Securities Act, promptly file all documents required to be
filed with the Commission pursuant to Sections 13(a), 13(c), 14, or 15(d) of the
Exchange Act; and
(q) notify each seller of Registrable Shares promptly of any
request by the Commission for the amending or supplementing of such registration
statement or prospectus or for additional information.
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6. REGISTRATION EXPENSES.
6.1 CORPORATION'S EXPENSES. Except as provided in Section 2.2
hereof, all expenses incident to the Corporation's performance of or compliance
with this Agreement, including, but not limited to, all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, and fees and disbursements of counsel
for the Corporation and all independent certified public accountants,
underwriters (excluding discounts and commissions) and other Persons retained by
the Corporation (all such expenses being herein called "Registration Expenses"),
will be borne by the Corporation. In addition, the Corporation will pay its
internal expenses (including, but not limited to, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any annual audit or quarterly review, the expense of any liability insurance
obtained by the Corporation; the expenses and fees for listing the securities to
be registered on each securities exchange, expenses incurred in obtaining any
comfort letters, and all fees and expenses associated with filings required to
be made with the NASD.
6.2 HOLDER'S EXPENSES. Except as provided in Section 2.2 hereof,
in connection with any registration statement in which Registrable Shares are
included, the Corporation will reimburse the holders of Registrable Shares
covered by such registration for the reasonable cost and expenses incurred by
such holders in connection with such registration, including, but not limited
to, reasonable fees and disbursements of one counsel chosen by the holders of at
least a majority of such Registrable Shares.
7. INDEMNIFICATION.
7.1 BY THE CORPORATION. The Corporation agrees to indemnify and
reimburse, to the fullest extent permitted by law, each holder of Registrable
Shares, its officers and directors and each Person who controls such holder
(within the meaning of the Securities Act) against all losses, claims, damages,
liabilities and expenses (including, but not limited to, attorney's fees) caused
by any untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus, or any amendment
thereof or supplement thereto, or any omission or alleged omission of a material
fact, required to be stated therein or necessary to make the statements therein
not misleading, except insofar as the same are directly caused by statements or
omissions made in reliance on and in strict conformity with the information
furnished in writing to the Corporation by such holder regarding such holder
expressly for use therein or by such holder's failure to deliver a copy of the
prospectus or any amendments or supplements thereto after the Corporation has
furnished such holder with a sufficient number of copies of the same. In
connection with an underwritten offering, the Corporation will indemnify such
underwriters, their officers and directors and each Person who controls such
underwriters (within the meaning of the Securities Act) to the extent customary.
The payments required by this Section 7.1 will be made periodically during the
course of the investigation or defense, as and when bills are received or
expenses incurred, subject to an obligation of repayment in the event such
indemnity is determined not to be owed.
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7.2 BY EACH HOLDER. In connection with any registration statement
in which a holder of Registrable Shares is participating, each such holder will
furnish to the Corporation in writing such information regarding such holder as
the Corporation reasonably requests for use in connection with any such
registration statement, preliminary prospectus or prospectus, or any amendment
or supplement thereto and, to the extent permitted by law, will indemnify the
Corporation, its directors and officers and each Person who controls the
Corporation (within the meaning of the Securities Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact contained in the registration statement,
prospectus or preliminary prospectus, or any amendment thereof or supplement
thereto, or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only to the extent that such untrue statement or omission is contained in any
information so furnished in writing by such holder specifically for inclusion in
the registration statement or prospectus; provided, that the obligation to
indemnify will be several, and not joint and several, among such sellers of
Registrable Shares, and the liability of each such seller of Registrable Shares
will be limited to the net amount received by such seller from the sale of
Registrable Shares pursuant to such registration statement; further provided,
however, that such seller of Registrable Shares shall not be liable in any such
case to the extent that prior to the filing of any such registration statement
or prospectus or amendment thereof or supplement thereto, such seller has
furnished in writing to the Corporation information expressly for use in such
registration statement or prospectus or any amendment thereof or supplement
thereto that corrected or made not misleading information previously furnished
to the Corporation.
7.3 PROCEDURE. Any Person entitled to indemnification hereunder
will (i) give prompt written notice to the indemnifying Person of any claim with
respect to which it seeks indemnification (provided that the failure to give
such notice shall not limit the rights of such Person except to the extent such
failure to provide notice materially prejudices the indemnifying Person) and
(ii) unless in such indemnified Person's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying Person to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified Person;
provided, however, that any Person entitled to indemnification hereunder shall
have the right to employ separate counsel and to participate in the defense of
such claim, but the fees and expenses of such counsel shall be at the expense of
such Person unless (x) the indemnifying party has agreed to pay such fees or
expenses, or (y) the indemnifying party shall have failed to assume the defense
of such claim and employ counsel reasonably satisfactory to such Person. If such
defense is not assumed by the indemnifying party as permitted hereunder, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably delayed or withheld). If such defense is assumed by the
indemnifying party pursuant to the provisions hereof, such indemnifying party
shall not settle or otherwise compromise the applicable claim unless (i) such
settlement or compromise contains a full and unconditional release of the
indemnified party or (ii) the indemnified party otherwise consents in writing.
An indemnifying Person who is not entitled to, or elects not to, assume the
defense of a claim will not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such indemnifying Person with
respect to such claim, unless in the reasonable judgment of any indemnified
Person a conflict of interest may exist between such indemnified Person and any
other of such indemnified parties with respect to such claim in which event the
costs of such additional counsel shall be borne by the indemnifying Person.
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7.4 Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 7.1 or 7.2 are unavailable to
or insufficient to hold harmless an indemnified party in respect of any losses,
liabilities, claims, damages, or expenses (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
liabilities, claims, damages, or expenses (or actions in respect thereof) in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party in connection with the actions
which resulted in the losses, liabilities, claims, damages, or expenses as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission. The parties hereto agree that it
would not be just and equitable if contribution pursuant to this Section 7.4
were determined by pro rata allocation (even if the holders or any underwriters
or all of them were treated as one Person for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in this Section 7.4, The amount paid or payable by an indemnified
party as a result of the losses, liabilities, claims, damages, or expenses (or
actions in respect thereof referred to above) shall be deemed to include any
legal or other fees or expenses reasonably incurred by such indemnified party in
connection with investigating or, except as provided in Section 7.3, defending
any such action or claim. Notwithstanding the provisions of this Section 7.4, no
holder shall be required to contribute an amount greater than the dollar amount
by which the net proceeds received by such holder with respect to the sale of
any Registrable Shares exceeds the amount of damages which such holder has
otherwise been required to pay by reason of any and all untrue or alleged untrue
statements of material fact or omissions or alleged omissions of material fact
made in any registration statement, prospectus, or preliminary prospectus or any
amendment thereof or supplement thereto, related to such sale of Registrable
Shares. 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. The holders'
obligations in this Section 7.4 to contribute shall be several in proportion to
the amount of Registrable Shares registered by them and not joint. If
indemnification is available under this Section 7, the indemnifying parties
shall indemnify each indemnified party to the full extent provided in Sections
7.1 and 7.2 without regard to the relative fault of such indemnifying party or
indemnified party or any other equitable consideration provided for in this
Section 7.4 subject, in the case of the holders, to the limited dollar amounts
get forth in Section 7.2.
7.5 SURVIVAL. The indemnification provided for under this
Agreement will remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified Person or any officer, director or
controlling Person of such indemnified Person and will survive the transfer of
securities. The Corporation also agrees to make such provisions as are
reasonably requested by any indemnified Person for contribution to such Person
in the event the Corporation's indemnification is unavailable for any reason.
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8. COMPLIANCE WITH RULE 144 AND RULE 144A. At the request of any
holder of Registrable Shares who proposes to sell securities in compliance with
Rule 144 of the Commission, the Corporation will (i) forthwith furnish to such
holder a written statement of compliance with the filing requirements of the
Commission as set forth in Rule 144, as such rule may be amended from time to
time and (ii) make available to the public and such holders such information as
will enable the holders of Registrable Shares to make sales pursuant to Rule
144. Unless the Corporation is subject to Section 13 or 15(d) of the Exchange
Act, the Corporation will provide to the holder of Registrable Shares and to any
prospective purchaser of Registrable Shares under Rule 144A of the Commission,
the information described in Rule 144A(d)(4) of the Commission.
9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell its securities on the basis provided in any
underwriting arrangements approved by such Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, custody agreements, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements; provided, that no holder of Registrable Shares shall be required
to make any representations or warranties in connection with any registration
other than as to (i) such holder's ownership of his or its Registrable Shares to
be sold or transferred free and clear of all liens, claims, and encumbrances,
(ii) such holder's power and authority to effect such transfer, and (iii) such
matters pertaining to the compliance with securities laws as may be reasonably
requested; provided, further, that the obligation of such holder to indemnify
pursuant to any such underwriting arrangements shall be several, not joint and
several, among such holders selling Registrable Shares, and the liability of
each such holder will be in proportion to, and provided further that such
liability will be limited to, the net amount received by such holder from the
sale of his or its Registrable Shares pursuant to such registration.
10. MISCELLANEOUS.
10.1 NO INCONSISTENT AGREEMENTS. The Corporation will not
hereafter enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the holders of Registrable Shares in
this Agreement.
10.2 ADJUSTMENTS AFFECTING REGISTRABLE SHARES. The Corporation
will not take any action, or permit any change to occur, with respect to its
securities which would adversely affect the ability of the holders of
Registrable Shares to include such Registrable Shares in a registration
undertaken pursuant to this Agreement or which would adversely affect the
marketability of such Registrable Shares in any such registration, including,
but not limited to, effecting a stock split or combination of shares.
10.3 OTHER REGISTRATION RIGHTS. Except as provided in this
Agreement and in the United Registration Rights Agreement, the Corporation will
not hereafter grant to any Person or Persons the right to request the
Corporation to register any equity securities of the Corporation, or any
securities convertible or exchangeable into or exercisable for such securities,
without the prior written consent of the holders of at least a majority of the
Registrable Shares.
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10.4 REMEDIES. Any Person having rights under any provision of
this Agreement will be entitled to enforce such rights specifically, to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law, in equity, or otherwise.
10.5 AMENDMENTS AND WAIVERS. Except as otherwise expressly
provided herein, the provisions of this Agreement may be amended or waived at
any time only by the written agreement of the Corporation and the holders of at
least a majority of the Registrable Shares; PROVIDED, HOWEVER, that the
provisions of this Agreement may not be amended or waived without the consent of
the holders of all the Registrable Shares adversely affected by such amendment
or waiver if such amendment or waiver adversely affects a portion of the
Registrable Shares but does not so adversely affect all of the Registrable
Shares. Any waiver, permit, consent or approval of any kind or character on the
part of any such holders of any provision or condition of this Agreement must be
made in writing and shall be effective only to the extent specifically set forth
in writing. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of Registrable Securities and the Corporation.
10.6 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by or
on behalf of any of the parties hereto will bind and inure to the benefit of the
respective successors and assigns of the parties hereto, whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for the benefit of the Investors or
holders of Registrable Shares are also for the benefit of, and enforceable by,
any subsequent holders of such Registrable Shares.
10.7 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
10.8 DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience of reference only and do not constitute a
part of and shall not be utilized in interpreting this Agreement.
10.9 NOTICES. Any notices required or permitted to be sent
hereunder shall be delivered personally or mailed, certified mail, return
receipt requested, or delivered by overnight courier service to the following
addresses, or such other address as any Person designates by written notice to
the Corporation, and shall be deemed to have been given upon delivery, if
delivered personally, three days after mailing, if mailed, or one business day
after delivery to the courier, if delivered by overnight courier service:
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If to the Corporation, to:
Ceres Group, Inc.
00000 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxx 00000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
0000 X. Xxxxx Xxxxxx, 20th Floor
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxx X. Xxxxxx
If to the Investors, to the addresses set forth on Exhibit A hereto.
If to holders of the Registrable Shares other than the Investors, to
the addresses set forth on the stock record books of the Corporation.
10.10 GOVERNING LAW. All questions concerning the construction,
validity and interpretation of this Agreement, and the performance of the
obligations imposed by this Agreement, shall be governed by the laws of the
State of Ohio applicable to contracts made and wholly to be performed in that
state.
10.11 FINAL AGREEMENT. This Agreement, together with the Stock
Purchase Agreement and all other agreements entered into by the parties hereto
pursuant to the Stock Purchase Agreement, constitutes the complete and final
agreement of the parties concerning the matters referred to herein, and
supersedes all prior agreements and understandings.
10.12 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which when so executed and delivered
shall be deemed an original, and such counterparts together shall constitute one
instrument.
10.13 NO STRICT CONSTRUCTION. The language used in this
Agreement will be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction will be used
against any Person.
[Remainder of page intentionally left blank.
Signature pages follow.]
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The parties hereto have executed this Agreement on the date first
above written.
THE CORPORATION:
----------------
CERES GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
----------------------------
Name: Xxxxxxx X. Xxxxxx, Xx.
Title: CFO
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AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
CONSENT OF HOLDERS OF A MAJORITY OF REGISTRABLE SHARES
INTERNATIONAL MANAGED CARE, LLC
By: Insurance Partners, L.P.,
its managing member
By: Insurance GenPar, L.P.,
its General Partner
By: Insurance GenPar MGP, L.P.,
its General Partner
By: Insurance GenPar MGP, Inc.,
its General Partner
/s/ Xxxxxx X. Spass
--------------------------------
By: Xxxxxx X. Spass
Its: Managing Partner
INTERNATIONAL MANAGED CARE (BERMUDA), L.P.
By: Insurance Partners Offshore (Bermuda), L.P.,
its general partner
By: Insurance GenPar (Bermuda), L.P.,
its General Partner
By: Insurance GenPar (Bermuda) MGP, L.P.,
its General Partner
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By: Insurance GenPar (Bermuda) MGP, Ltd.,
its General Partner
/s/ Xxxxxx X. Spass
-----------------------------------
By: Xxxxxx X. Spass
Its: Managing Partner
/s/ Xxxxx X. Xxxxxx
------------------------------------------------
XXXXX X. XXXXXX
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EXHIBIT A
International Managed Care, LLC
International Managed Care (Bermuda), L.P.
Xxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxx
Mercantile Bank of Northern Illinois, Trustee of the Conseco Stock Option
Director Plan FBO
Xxxxxxx Xxxxxxxx #00000000
Mercantile Bank of Northern Illinois, Trustee of the Conseco Stock Option
Director Plan FBO
Xxxxxxx Xxxxxxxx #08590034
Xxxxx Xxxx
Xxx Xxxxx
Turkey Vulture Fund XIII, Ltd.
Xxxx X. Xxxxxx
Xxxxxx Family Limited Partnership
Medical Mutual of Ohio
Xxxxxx X. Xxxxxx
Xxxxxx Xxxxxxxx XXX,
LEG Partners SBIC, L.P.
Xxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxx, Xx.
Xxxx-Ceres, LLC
Xxxx Xxxxxxxx
Xxxxx Xxxxx
Xxxxxx X. Xxxxx
Xxxxx X. Xxxxx
Xxxxxxx X. Xxxxxxxx XXX
Xxxxxxx X. Xxxxxxx XXX
Xxxxx Xxxxxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxxx Xxxxxx,
Xxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxx
Xxxxx X. Xxxx, Xx.
Xxxx Xxxxxx
Castle Creek Capital Partners Fund IIa, LP
Castle Creek Capital Partners Fund IIb, XX
Xxxx-Ceres II, LLC
