EXHIBIT 10.1
SHAREHOLDERS' AGREEMENT
This SHAREHOLDERS' AGREEMENT (this "Agreement") is made as of
December 22, 1999, by and among Max Re Capital Ltd., a company organized under
the laws of Bermuda (the "Company"), Max Re Ltd., an insurance company organized
under the laws of Bermuda ("Max Re"), and each of the other signatories to this
Agreement. Each of the shareholders of the Company that is, or hereafter
becomes, bound by this Agreement and each of their respective successors or
assignees of their rights hereunder, are sometimes collectively referred to
herein as the "Shareholders" and each individually as a "Shareholder."
1. Certain Definitions.
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"Affiliate" of any Person means any other Person controlling,
controlled by or under common control with such particular Person. In the case
of a natural Person, his Affiliates include members of such Person's immediate
family, natural lineal descendants of such Person or a trust for the exclusive
benefit of such Person and his immediate family and natural lineal descendants.
For the purposes of Section 2(c) herein and with respect to Xxxxx Holdings, the
term Affiliate includes the members of Xxxxx Holdings, including upon the
withdrawal of any such member from Xxxxx Holdings, and with respect to Cap Z,
the term Affiliate includes its limited partners or any partners, principals, or
other professionals of Cap Z or its Affiliates.
"Bermuda Monetary Authority" means that quasi-governmental authority of
similar name in Bermuda and, where applicable, includes any Bermuda governmental
authority, department or agency that performs similar functions.
"Business Day" means a day on which banks are open for ordinary banking
business in both New York City and Hamilton, Bermuda.
"Cap Z" means Capital Z Investments, L.P., a limited partnership
organized under the laws of Bermuda.
"Commission" means the U.S. Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Common Shares" means the shares of the Company issued and outstanding
or to be issued as common shares, initially having a par value $1.00 per share,
and includes a fraction of a common share.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Founding Investors" means Xxxxx Holdings and Cap Z and any of their
respective transferees under Section 2(c) hereof.
"Management Warrants" means the warrants to purchase Common Shares
issued to Officers from time to time.
"Management Warrant Shares" means the Common Shares issued or issuable
pursuant to the exercise of the Management Warrants.
"Max Re Non-Voting Common Shares" means the shares of Max Re issued and
outstanding or to be issued as non-voting common shares, initially having a par
value $1.00 per share, and includes a fraction of a non-voting common share,
which shares may be exchanged for Common Shares on a one-to-one basis under
certain circumstances and subject to compliance with the Company's Bye-Laws and
the laws of Bermuda.
"Xxxxx Holdings" means Xxxxx Holdings, L.L.C., a limited liability
company organized under the laws of the State of Delaware.
"Officer" means an officer of the Company or Max Re from time to time
during the term of this Agreement.
"Person" means an individual, a partnership, a company, a corporation,
a limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or a governmental or
quasi-governmental entity or any department, agency or political subdivision
thereof.
"Qualified IPO" means the initial registered public offering of Common
Shares in the United States.
"Registrable Securities" means (i) the Common Shares held by each
Shareholder, (ii) the Management Warrant Shares, (iii) the Warrant Shares, (iv)
any Common Shares issued or issuable upon exchange of the Max Re Non-Voting
Common Shares and (v) any Common Shares issued, issuable, exchanged or
exchangeable in respect of the securities referred to in clauses (i), (ii),
(iii) and (iv) above upon any stock split, stock dividend, recapitalization or
similar event; provided, however, that Registrable Securities shall not include
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any securities referred to in clauses (i), (ii), (iii), (iv) or (v) above if (x)
the holder of such securities, with the exception of the Founding Investors and
Western General, may resell such Registrable Securities pursuant to Rule 144(k)
under the Securities Act, (y) the sale of such securities has been registered
pursuant to the Securities Act or (z) the Registrable Securities have been
transferred in a transaction in which registration rights are not transferred
pursuant to Section 2 hereof.
"Register," "registered" and "registration" refer to a registration
effected by preparing and filing a Registration Statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
Registration Statement.
"Registration Expenses" shall have the meaning set forth in Section 8
hereof.
"Securities Act" means the U.S. Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
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"Selling Expenses" means all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Shareholders and the costs of any accountants, counsel or other experts
retained by the Shareholders.
"Transfer" means to offer, sell, assign or otherwise transfer an
interest, in whole or in part, whether voluntarily or involuntarily or by
operation of law or at a judicial sale or otherwise; provided, however, that
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Transfer shall not include the bona fide pledge of Common Shares or Max Re
Non-Voting Common Shares in connection with a loan by a financial institution or
any transfer back to the pledgor by the pledgee of such Common Shares or Max Re
Non-Voting Common Shares following the termination of any such bona fide pledge.
"Warrants" means the warrants issued to the Founding Investors on the
date hereof or at any time hereafter.
"Warrant Shares" means the number of Common Shares into which the Max
Re Non-Voting Common Shares issued or issuable upon exercise of the Warrants may
be exchanged.
"Western General" means Western General Insurance Ltd., a Bermuda
insurance company, and any of its transferees under Section 2(c) hereof.
"Western General Warrants" means the warrants issued to Western General
for the purchase of Common Shares on the date hereof or at any time hereafter.
"$" means the legal tender of the United States of America.
2. Transfer Restrictions.
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(a) General Restrictions. A Shareholder shall not Transfer its
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Registrable Securities, Max Re Non-Voting Common Shares, Management Warrants,
Western General Warrants or Warrants except in compliance with the Securities
Act or an exemption therefrom and except in compliance with any required
approval of the Bermuda Monetary Authority and in accordance with the following
terms and conditions:
(i) At least 30 calendar days prior to making any Transfer of
Registrable Securities, Max Re Non-Voting Common Shares, Management Warrants,
Western General Warrants or Warrants such transferring Shareholder (the
"Transferring Shareholder") shall deliver a written notice (each such notice, an
"Offer Notice") to the Company and each Founding Investor. The Offer Notice
shall disclose in reasonable detail the proposed number of Registrable
Securities, Max Re Non-Voting Common Shares, Management Warrants, Western
General Warrants or Warrants to be transferred (the "Transfer Securities") and
the proposed terms and conditions of the Transfer (including the proposed price
at which the Transfer Securities are to be transferred); provided that the
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purchase price specified in any Offer Notice shall be payable in cash at the
closing of the transaction.
(ii) Prior to any Transfer, the Company together with the Founding
Investors and any Persons designated by a Founding Investor shall be entitled
(without obligation to exercise such entitlement) to purchase all, but not less
than all, of the Transfer Securities, at the price and on the terms specified in
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the Offer Notice by delivering written notice of such election (an "Election
Notice") to the Transferring Shareholder as soon as practicable but in no event
later than ten (10) Business Days after delivery of the Offer Notice. If the
Company, the Founding Investors or any Person designated by a Founding Investor
elect to purchase the Transfer Securities, the Transfer of any Transfer
Securities shall be consummated as soon as practicable after delivery of the
Election Notice, but in no event later than ten (10) Business Days after the
delivery of the Election Notice. If more than one of the Founding Investors or
their respective designees make a firm offer to purchase the Transfer
Securities, each such Founding Investor or their respective designees shall be
permitted to purchase the Founder's Pro Rata Share (as defined below) of the
Transfer Securities that the Company has indicated that it will not purchase.
Each Founding Investor's "Founder's Pro Rata Share" shall be based upon such
Founding Investor's proportionate beneficial ownership of Common Shares, on a
fully diluted and converted basis, in relation to the total number of Common
Shares, on a fully diluted and converted basis, beneficially owned by the
Founding Investors.
(iii) Unless all of the Transfer Securities proposed to be
transferred in the Offer Notice are to be acquired by the Company and/or the
Founding Investors, the Transferring Shareholder may, no later than 90 calendar
days after the expiration of the election period, Transfer such Transfer
Securities to one or more third parties at a price no less than the price per
share specified in the Offer Notice and on other terms no more materially
favorable to the transferees thereof than offered to the Company and the
Founding Investors in the Offer Notice. It shall be a condition precedent to the
consummation of any Transfer of Transfer Securities to a Person not a party to
this Agreement that such third party execute and be bound by the terms and
conditions of this Agreement. Any Transfer Securities not Transferred within
such 90-day period shall be re-offered (without obligation to purchase) to the
Company and the Founding Investors under this Section 2 prior to any subsequent
Transfer pursuant to the terms of this Section 2.
(b) Other Restrictions.
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(i) In connection with the Transfer of any Registrable
Securities, Max Re Non-Voting Common Shares, Management Warrants, Western
General Warrants or Warrants (other than a Transfer described in Section 2(c)
below), such Shareholder shall deliver written notice to the Company and, where
concerning any share or warrant of Max Re, to Max Re describing in reasonable
detail the Transfer or proposed Transfer, together with, at the Company's or Max
Re's request, an opinion of counsel which (to the Company's or Max Re's
reasonable satisfaction) is knowledgeable in securities law matters to the
effect that such Transfer of Registrable Securities, Max Re Non-Voting Common
Shares, Management Warrants, Western General Warrants or Warrants may be
effected without registration of such Registrable Securities, Max Re Non-Voting
Common Shares, Management Warrants or Warrants, Western General Warrants under
the Securities Act and a list of affiliates or related parties of the
transferee.
(ii) The Company or Max Re, as the case may be, shall deliver new
certificates for Registrable Securities, Max Re Non-Voting Common Shares,
Management Warrants, Western General Warrants or Warrants which do not bear the
Securities Act legend set forth in Section 2(d) hereof promptly upon their
Transfer if such Transfer is exempt from registration under the Securities Act
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pursuant to Rule 144 under such act and, if requested, the Company and Max Re
shall have received an opinion of counsel to that effect.
(iii) Any Transfer of Registrable Securities, Max Re Non-Voting
Common Shares, Management Warrants, Western General Warrants or Warrants that
violates the provisions of this Section 2 shall not be recorded by the Company
or Max Re, as the case may be, or any of their agents and shall be deemed void
ab initio.
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(c) Permitted Transfers. The restrictions set forth in this
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Section 2 shall not apply to any Transfer of Registrable Securities, Max Re
Non-Voting Common Shares, Management Warrants, Western General Warrants or
Warrants by a Shareholder to its Affiliates (a "Permitted Transferee");
provided, assuming compliance with any required approval of the Bermuda Monetary
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Authority, that the provisions of this Agreement shall continue to be applicable
to the Registrable Securities, Max Re Non-Voting Common Shares, Management
Warrants, Western General Warrants or Warrants after any Transfer above and the
transferees of such Registrable Securities, Max Re Non-Voting Common Shares,
Management Warrants, Western General Warrants or Warrants shall agree in writing
to be bound by the provisions of this Agreement and shall be deemed a
"Shareholder" for purposes of this Agreement; provided, further that if a
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Permitted Transferee ceases to be an Affiliate of the Transferring Shareholder,
the Registrable Securities, Max Re Non-Voting Common Shares, Management
Warrants, Western General Warrants or Warrants held by such Person shall be
deemed to have been Transferred and shall be subject to the provision of Section
2(a) upon discovery by the Company of such change in status. Upon the Transfer
of Registrable Securities, Max Re Non-Voting Common Shares, Management Warrants,
Western General Warrants or Warrants pursuant to this Section 2(c) each
transferee will deliver a written notice to the Company or, where concerning any
share or warrant of Max Re, Max Re, which notice will disclose in reasonable
detail the identity of such transferee.
(d) Legend. Certificates evidencing Registrable Securities, Max Re
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Non-Voting Common Shares, Management Warrants, Western General Warrants and
Warrants shall bear the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS
MADE IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE COMPANY AT ITS OPTION RECEIVES AN
OPINION OF COUNSEL TO THE HOLDER OF THESE SECURITIES
REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT
AND UNLESS, WHERE APPLICABLE, HAS RECEIVED THE PRIOR APPROVAL
OF THE BERMUDA MONETARY AUTHORITY.
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IN ADDITION, THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN TRANSFER RESTRICTIONS IN THE COMPANY'S
BYE-LAWS AND PURSUANT TO A SHAREHOLDERS' AGREEMENT DATED AS OF
DECEMBER 22, 1999 AMONG THE COMPANY, MAX RE LTD. AND CERTAIN
OF THE COMPANY'S SHAREHOLDERS. A COPY OF SUCH BYE-LAWS AND
SHAREHOLDERS' AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY
THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
If any Registrable Securities, Max Re Non-Voting Common Shares, Management
Warrants, Western General Warrants or Warrants become eligible for sale pursuant
to Rule 144(k) under the Securities Act, the Company or Max Re, as the case may
be, shall, upon the request of a holder of such Registrable Securities, Max Re
Non-Voting Common Shares, Management Warrants, Western General Warrants or
Warrants and delivery of an opinion of counsel reasonably satisfactory to the
Company or Max Re, issue new certificates for such Registrable Securities, Max
Re Non-Voting Common Shares (if applicable), Management Warrants, Western
General Warrants or Warrants not bearing the Securities Act legend set forth
above.
3. Drag-Along Rights.
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(a) Right to Require Sale. Notwithstanding any other provision hereof,
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if one or more Shareholders (such Shareholders, together with their Affiliates,
the "Selling Shareholder(s)") proposes to enter into an agreement to sell or
otherwise dispose of for value Common Shares held by such Selling Shareholders
representing eighty percent (80%) of the issued and outstanding Common Shares to
a third person who is not an affiliate (any such party, a "Third Party") in a
bona fide transaction pursuant to which the Third Party will purchase all of the
Common Shares on a fully diluted and converted basis (any such transaction, a
"Drag-Along Sale"), then each other Shareholder (the "Drag-Along Shareholders")
hereby agrees to sell to such Third Party, upon the demand of such Selling
Shareholders, all of the Common Shares and securities exercisable, convertible
into or exchangeable for Common Shares held by such Drag-Along Shareholders on
the date of the Drag-Along Notice (as defined in Section 3(b) below) and on the
same terms and conditions as has agreed with such Third Party; provided,
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however, that in negotiating such Drag-Along Sale, the Selling Shareholders
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shall provide (i) that the only representations and warranties or covenants
which any Drag-Along Shareholder shall be required to make in connection with
the Drag-Along Sale are representations and warranties with respect to its own
ownership of the shares to be sold by it and its ability to convey title thereto
free and clear of liens, encumbrances or adverse claims, its due organization,
its due authorization, execution and delivery of the definitive purchase
agreement (if applicable), enforceability of such purchase agreement against it
and no conflict of it with such purchase agreement, (ii) that the liability of
any Drag-Along Shareholder with respect to any representations or warranties
made in connection with the Drag-Along Sale is the several liability of such
Drag-Along Sharholder (and not any other person) and that such liability is
limited to the amount of proceeds actually received by such Drag-Along
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Shareholder in the Drag-Along Sale, and (iii) no Drag-Along Shareholder shall be
required to provide any indemnification to anyone in connection with the
Drag-Along Sale (other than an indemnification for damages resulting from the
breach of any representations or warranties made by such Drag-Along
Shareholder); provided, however, that the foregoing shall not limit the
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obligations of such Drag-Along Shareholder, and such Drag-Along Shareholder
hereby expressly agrees to be bound by and be subject to, any escrow or other
holdback arrangement (on a pro rata basis based on the amount of shares sold by
such Drag-Along Shareholder in proportion to all shares of the Company sold in
such Drag-Along Sale) provided for in the agreement relating to the Drag-Along
Sale.
(b) Drag-Along Notice. Prior to making any Drag-Along Sale, if the
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Selling Shareholder(s) elects to exercise the rights afforded under this Section
3, the Selling Shareholder(s) shall provide the Drag-Along Shareholders with
written notice (the "Drag-Along Notice") not less than ten (10) days prior to
the proposed date of the Drag-Along Sale (the "Drag-Along Sale Date"). The
Drag-Along Notice shall set forth: (i) the name and address of the Third Party;
(ii) the proposed amount and form of consideration to be paid per share and the
terms and conditions of payment offered by the Third Party; (iii) the Drag-Along
Sale Date; and (iv) confirmation that the Third Party has agreed to purchase the
Drag-Along Shareholder's shares in accordance with the terms hereof.
(c) Delivery of Certificates. On the Drag-Along Sale Date, each
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Drag-Along Shareholder shall deliver all of the certificates for such Drag-Along
Shareholder's shares, duly endorsed for transfer with signatures guaranteed, to
such Third Party in the manner and at the address indicated in the Drag-Along
Notice against delivery of immediately available funds in the amount of the
purchase price for such shares.
(d) Costs and Fees. The Selling Shareholders shall bear all costs
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and fees incurred in connection with a Drag-Along Sale except each Shareholder
shall bear the costs and fees of its own independent advisors. The Company and
Max Re shall have no obligation to bear any costs and fees incurred in
connection with a Drag-Along Sale or otherwise under this Section 3.
4. Compliance with Bermuda Law.
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(a) The Company and Max Re shall have no obligation under the
provisions of Sections 5, 6, 7, 8, 9 and 10 hereof unless and until all
approvals required from the Bermuda Monetary Authority are received and the
requirements of any of the exclusions or exemptions applicable to the provisions
of Section 39 of the Bermuda Companies Xxx 0000, as amended, are able to be
satisfied and are satisfied so as to permit compliance with such Section 39. At
appropriate times each of the Company and Max Re shall use its commercially
reasonable efforts to obtain any such approvals. With respect to such Section
39, each Shareholder shall use its commercially reasonable efforts where formal
meetings or written resolutions of the shareholders or other action may be
appropriate to waive or approve the financial assistance as described in such
Section 39 and related provisions.
(b) The provisions of Section 5, 6, 7, 8, 9 and 10 shall be read
subject to the provisions of Section 4(a) hereinabove.
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5. Demand Registrations.
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(a) Requests for Registration.
(i) Each of the Founding Investors and Western General may
request, at any time after the earlier to occur of (i) the second anniversary of
this Agreement or (ii) the date that is one hundred eighty (180) days after a
Qualified IPO, to have all or part of its Registrable Securities registered on
Form S-1, or any similar long-form registration statement ("Long-Form
Registration") or, if available, on Form S-2 or S-3, or any similar short-form
registration statement ("Short-Form Registration"). Each request for a Long-Form
Demand Registration (as defined below) shall have an aggregate offering price of
at least $50 million, inclusive of Registrable Securities included in such
Long-Form Demand Registration pursuant to Section 6 hereof, and shall specify
the approximate number of Registrable Securities requested to be registered, the
proposed manner of disposition and the proposed underwriter, if any. Within ten
(10) Business Days after receipt of any such request, the Company shall give
written notice of such requested registration to the other Shareholders and,
subject to Section 5(b) below, shall include in such registration all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within 15 calendar days after the receipt of the
Company's notice. All registrations requested pursuant to a Long-Form
Registration are referred to herein as "Long-Form Demand Registrations"; and all
other registrations requested pursuant to this paragraph 5(a) are referred to
herein as a "Short-Form Demand Registrations"; Long-Form Demand Registrations
and Short-Form Demand Registrations are sometimes collectively referred to as
"Demand Registrations." Each of the Founding Investors and Western General shall
each be entitled to request three (3) Long-Form Demand Registrations and an
unlimited number of Short-Form Demand Registrations for which the Company will
pay all Registration Expenses as set forth in Section 9 hereof; provided that
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the Company shall not be obligated to register more than two (2) Demand
Registrations in any 12-month period. A registration will not count as a Demand
Registration until it has been declared effective by the Commission.
(ii) Holders of at least 20% of the total Common Shares on a
fully diluted and converted basis shall, as a group, at any time and from time
to time after the earlier to occur of (i) the second anniversary of this
Agreement or (ii) the date that is one hundred eighty (180) days after a
Qualified IPO have the right to request a Demand Registration. The request for a
Demand Registration pursuant to this Section 5(a)(ii) shall have an aggregate
offering price of at least $50 million and shall specify the approximate number
of Registrable Securities requested to be registered, and the proposed
underwriter. Within ten (10) days after receipt of any such request, the Company
shall give written notice of such requested registration to all Shareholders
and, subject to Section 5(b) below, shall include in such registration all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within 15 days after the receipt of the Company
notice.
(iii) Upon receipt of a request for a Demand Registration (a
"Demand Request") pursuant to Sections 5(a)(i) or 5(a)(ii), the Company shall,
to the extent requested, cause to be filed, within the later of (x) 90 days (or
45 days with respect to any Short-Form Registration) of the date of delivery to
the Company of the Demand Request, or (y) 180 days after the effectiveness of
the most recently filed Registration Statement by the Company, a Registration
Statement covering such Registrable Securities which the Company has been so
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requested to register, providing for the registration under the Securities Act
of such Registrable Securities to the extent necessary to permit the disposition
of such Registrable Securities so to be registered in accordance with the
intended method of distribution specified in such Demand Request.
(b) Priority on Demand Registrations.
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The Company shall not include in any Demand Registration any securities
that are not Registrable Securities without the prior written consent of the
demanding Shareholders. If a Demand Registration is an underwritten offering and
the managing underwriters advise the Company in writing that in their opinion
the number of Registrable Securities and, if permitted hereunder, other
securities requested to be included in such offering exceeds the number of
Registrable Securities and other securities, if any, which can be sold therein
without adversely affecting the marketability of the offering (the "Offering
Quantity"), the Company shall include in such registration securities in the
following priority:
(i) first, before including any securities which are not Registrable
Securities, the Company shall include all of the Registrable Securities
requested to be included by the demanding Shareholders, each of the Founding
Investors (if other than a demanding Shareholder), Western General (if other
than a demanding Shareholder) and Officers, and if such number exceeds the
Offering Quantity, then the Company shall include only each of such demanding
Shareholder's, Founding Investor's (if other than a demanding Shareholder),
Western General's (if other than a demanding Shareholder) and Officer's pro rata
share of the Offering Quantity, based on the number of Registrable Securities
then beneficially owned on a fully converted basis by each of the demanding
Shareholders, Founding Investors, Western General and Officers, respectively;
(ii) second, to the extent (and only to the extent) that the Offering
Quantity exceeds the aggregate amount of Registrable Securities which are
requested to be included in such registration, the Company shall include in such
registration Registrable Securities requested to be included by the other
Shareholders, and if such number exceeds the Offering Quantity, the Company
shall include only such other Shareholders' pro rata share of the Offering
Quantity, based on the amount of Registrable Securities beneficially owned by
such other Shareholders; and
(iii) third, to the extent (and only to the extent) that the Offering
Quantity exceeds the aggregate amount of Registrable Securities which are
requested to be included in such registration, the Company shall include in such
registration any other securities requested to be included in the offering.
(c) Restrictions on Demand Registrations.
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The Company may postpone upon one (1) occasion during any
365-day period for up to 120 days the filing or the effectiveness of a
Registration Statement for a Demand Registration if the Company's board of
directors determines in its sole discretion that such Demand Registration would
reasonably be expected to have a material adverse effect on any proposal or plan
by the Company or any of its subsidiaries to engage in any acquisition of assets
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(other than in the ordinary course of business) or any merger, consolidation,
tender offer or similar transaction; provided, however, that in such event, the
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party requesting such Demand Registration shall be entitled to withdraw such
request at any time during the 90-day period and, if such request is withdrawn,
such Demand Registration shall not count as one of the permitted Demand
Registrations hereunder and the Company shall pay all Registration Expenses (as
set forth in Section 8) in connection with such registration.
(d) Selection of Underwriters.
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(i) The Founding Investors shall have the right to select
the investment banker(s) and managing underwriters for any Demand Registration
to administer an offering pursuant to Section 5(a)(i), subject to the Company's
approval, which approval shall not be unreasonably withheld or delayed.
(ii) The Shareholders initiating any Demand Registration
pursuant to Section 5(a)(ii) hereof that hold a majority of the Common Shares to
be so registered shall have the right to select the investment banker(s) and
managing underwriter(s) to administer the offering, subject to the Company's
approval, which approval shall not be unreasonably withheld or delayed.
(e) Other Registration Rights.
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Except as provided in this Agreement, the Company shall not
grant to any persons the right to request the Company to register any equity
securities of the Company, or any securities convertible or exchangeable into or
exercisable for such securities, without the prior written consent of both
Founding Investors.
6. Piggyback Registrations.
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(a) Right to Piggyback.
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After the consummation of a Qualified IPO, if the Company
proposes to register any of its equity securities under the Securities Act
(other than pursuant to a registration on Form S-4 or S-8 or any successor or
similar forms) and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), whether or
not for sale for its own account, the Company will give prompt written notice to
all the Shareholders of its intention to effect such a registration and shall,
subject to 6(b), include in such registration all Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within 30 days after the receipt of the Company's notice.
(b) Priority on Primary Registrations.
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If a Piggyback Registration is an underwritten primary
registration on behalf of the Company, and the managing underwriter advises the
Company in writing (with a copy to each party hereto requesting registration of
Registrable Securities) that in its opinion the number of securities requested
to be included in such registration exceeds the number which can be sold in such
offering without adversely affecting the marketability of such offering (the
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"Company Offering Quantity"), the Company will include in such registration
securities in the following priority:
(i) first, the securities the Company proposes to sell;
(ii) second, before including any securities which are not
Registrable Securities, the Company shall include (x) all of the Registrable
Securities requested to be included by the Founding Investors, Western General
and Officers and (y) to the extent that after the application of clause (x) the
number of Registrable Securities exceeds the Offering Quantity, the Company
shall include only such Founding Investor's, Western General's and each of the
Officer's pro rata share of the Offering Quantity, based on the number of
Registrable Securities then beneficially owned on a fully converted basis by
each of the Founding Investors, Western General and Officers, respectively;
(iii) third, to the extent (and only to the extent) that the
Offering Quantity exceeds the aggregate amount of Registrable Securities which
are requested to be included in such registration, the Company shall include in
such registration Registrable Securities requested to be included by the other
Shareholders, and if such number exceeds the Offering Quantity, the Company
shall include only such other Shareholders' pro rata share of the Offering
Quantity based on the amount of Registrable Securities beneficially owned on a
fully converted basis by such other Shareholders; and
(iv) fourth, to the extent (and only to the extent) that the
Company Offering Quantity exceeds the aggregate amount of Registrable Securities
which are requested to be included in such registration, the Company shall
include in such registration any other securities requested to be included in
the offering.
(c) Other Registrations.
-------------------
If the Company has previously filed a Registration Statement
with respect to Registrable Securities pursuant to Section 5 or pursuant to this
Section 6, and if such previous registration has not been withdrawn or
abandoned, the Company shall not file or cause to be effected any other
registration 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-4 or S-8 or any successor form), whether on its own behalf
or at the request of any Shareholder or Shareholders of such securities, until a
period of at least 90 days has elapsed from the effective date of such previous
registration.
7. Holdback Agreements.
-------------------
(a) To the extent not inconsistent with applicable law, each
Shareholder agrees not to effect any public sale or distribution (including
sales pursuant to Rule 144 under the Securities Act) of equity securities of the
Company, or any securities, options or rights convertible into or exchangeable
or exercisable for such securities, during the seven days prior to and the
180-day period beginning on the effective date of an initial public offering of
the Company's securities or the 90-day period beginning on the effective date of
a public offering of the Company's Common Shares effected pursuant to a Demand
Request, unless the underwriters managing the registered public offering
otherwise agree; provided that such restrictions shall not be more restrictive
--------
11
in duration or scope than restrictions imposed on (i) any Person which has been
granted registration rights by the Company, (ii) any officer or director of the
Company, or (iii) any 5% Shareholder of Common Shares; and provided, further,
--------
that nothing herein shall restrict, directly or indirectly,
(i) any bona fide pledge of Common Shares or the subsequent Transfer
upon default in connection with any such pledge,
(ii) subject to obtaining any required Bermuda Monetary Authority
approval, any charitable contribution; or
(iii) the disposition of freely tradable Common Shares that have been
acquired by the Shareholder in open market transactions.
(b) In addition, each Shareholder may Transfer Registrable Securities,
Max Re Non-Voting Common Shares, Management Warrants or Warrants to its
Affiliates so long as such Person agrees to be bound by the terms of this
Agreement and such is in compliance with any required Bermuda Monetary Authority
approval.
(c) The Company 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 days prior to and during the
180-day period beginning on 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-4 or S-8 or any
successor form), unless the underwriters managing the registered public offering
otherwise agree, and (ii) to cause each holder of its Common Shares, or any
securities convertible into or exchangeable or exercisable for Common Shares,
that were purchased from the Company at any time after the date of this
Agreement (other than in a registered public offering) to agree not to effect
any public sale or distribution (including sales pursuant to Rule 144) 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.
8. Registration Procedures.
-----------------------
In connection with any Registration Statement filed pursuant to Section
5(a) or Section 6(a) herein (a "Registrant Statement"), the following provisions
shall apply:
(a) The Company shall furnish to each selling Shareholder, prior to
the filing thereof with the Commission, a copy of the Registration Statement and
each amendment thereof and each supplement, if any, to the prospectus included
therein and shall use its reasonable best efforts to reflect in each such
document, when so filed with the Commission, such comments as the Shareholders
reasonably may propose.
(b) The Company shall prepare and within 90 days (or 45 days with
respect to any Short-Form Registration) after the end of the period within which
requests for registration may be given to the Company file with the Commission a
Registration Statement with respect to such Registrable Securities and
thereafter use its commercially reasonable efforts to cause such Registration
Statement to become effective.
12
(c) The Company shall prepare and file with the Commission such
amendments and supplements to such Registration Statement and the prospectus
used in connection therewith as may be necessary to keep such Registration
Statement effective for a period of either (i) not less than 180 days (subject
to extension pursuant to Section 8(p)) or, if such Registration Statement
relates to an underwritten offering, such longer period as in the opinion of
counsel for the underwriters a prospectus is required by law to be delivered in
connection with sales of Registrable Securities by an underwriter or dealer or
(ii) such shorter period as will terminate when all of the securities covered by
such Registration Statement have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set forth in
such Registration Statement (but in any event not before the expiration of any
longer period required under the Securities Act), and to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement until such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such Registration
Statement.
(d) The Company shall advise the selling Shareholders, and, if
requested by such Shareholders, confirm such advice in writing (which advice
pursuant to clauses (ii) - (v) hereof shall be accompanied by an instruction to
suspend the use of the prospectus until the requisite changes have been made):
(i) when the Registration Statement and any amendment
thereto has been filed with the Commission and when the Registration Statement
or any post effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the prospectus included therein or
for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Common Shares for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; and
(v) of the happening of any event that requires the making
of any changes in the Registration Statement or the prospectus or the filing of
any reports under the Exchange Act so that, as of such date, the statements
therein are not misleading and do not omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
(e) Upon the occurrence of any event contemplated by paragraphs (ii)
through (v) of Section 8(d) hereof during the period for which the Company is
required to maintain an effective Registration Statement, the Company shall (A)
use its commercially reasonable efforts to promptly obtain the withdrawal of any
stop order or order suspending the effectiveness of the Registration Statement
and (B) prepare a post-effective amendment to the Registration Statement or a
supplement to the related prospectus or file any other required document as soon
as possible so that, as thereafter delivered to purchasers of the Common Shares,
13
the prospectus will not include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and will
comply with the Securities Act and the rules promulgated thereunder.
(f) The Company will furnish to each Shareholder included within the
coverage of the Registration Statement, without charge, copies of the
Registration Statement and any amendment thereto, including financial statements
and schedules, and, if the Shareholder so requests in writing, all exhibits
(including those incorporated by reference) in such number as such Shareholder
may reasonably request from time to time.
(g) The Company will deliver to each Shareholder included within the
coverage of the Registration Statement, without charge, as many copies of the
prospectus (including each preliminary prospectus) included in the Registration
Statement and any amendment or supplement thereto as such Shareholder may
reasonably request; and the Company consents to the use of the prospectus or any
amendment or supplement thereto by each Shareholder in connection with the
offering and sale of the Common Shares covered by the prospectus or any
amendment or supplement thereto.
(h) Prior to any public offering of Common Shares pursuant to the
Registration Statement, the Company shall use its commercially reasonable
efforts to register or qualify or cooperate with each Shareholder selling Common
Shares pursuant to such Registration Statement and their respective counsel in
connection with the registration or qualification of such securities for offer
and sale under the securities laws of such jurisdictions as such counsel
reasonably requests in writing on behalf of such Shareholder and do any and all
other acts or things necessary or advisable to enable the offer and sale in such
jurisdictions of the Common Shares covered by the Registration Statement;
provided, however, that the Company will not be required to qualify generally to
-------- -------
do business in any jurisdiction where it is not then so qualified or to take any
action which would subject it to general service of process or to taxation in
any such jurisdiction where it is not then so subject.
(i) The Company shall cooperate with each Shareholder to facilitate
the timely preparation and delivery of certificates representing Common Shares
to be sold pursuant to such Registration Statement free of any restrictive
legends and registered in such names as such Shareholder may request in writing
prior to sales of Common Shares pursuant to the Registration Statement.
(j) The Company shall upon request, provide each Shareholder selling
Common Shares pursuant to such Registration Statement with printed certificates
for its Common Shares in a form acceptable to such Shareholder.
(k) The Company shall comply with all applicable rules and
regulations of the Commission and shall make generally available to its
Shareholders as soon as practicable but in any event not later than eighteen
(18) months after the effective date of the applicable Registration Statement an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act or Rule 158 promulgated thereunder.
14
(l) The Company shall be permitted to require each Shareholder
selling Common Shares pursuant to the Registration Statement to furnish to the
Company such information regarding the Shareholder, the Common Shares
beneficially owned by such Shareholder and the intended method of distribution
of such Common Shares as the Company may from time to time reasonably require
for inclusion in the Registration Statement, and the Company may exclude from
such registration the Common Shares of any Shareholder that fails to furnish
such information within a reasonable time after receiving such request.
(m) The Company shall enter into such customary agreements
(including, if requested, an underwriting agreement in customary form) and take
all such other action, if any, as Shareholders of a majority of Common Shares
being sold or the managing underwriters (if any) shall reasonably request in
order to facilitate the disposition of Common Shares pursuant to the
Registration Statement; provided, however, that the Company shall have no
-------- -------
obligation to pay any discounts or underwriting commissions.
(n) The Company, if requested by those Shareholders that together
hold a majority in interest of the Common Shares being sold, or the managing
underwriters (if any) in connection with the Registration Statement, shall use
its commercially reasonable efforts to cause (i) its counsel to deliver an
opinion relating to the Registration Statement and the Common Shares, in
customary form (and covering such matters of the type customarily covered by
legal opinions of such nature) addressed to such Shareholders and the managing
underwriters, if any, thereof and dated the effective date of such Registration
Statement; (ii) its officers to execute and deliver all customary documents and
certificates requested by Shareholders of a majority of the Common Shares being
sold or the managing underwriters (if any); and (iii) its independent public
accountants to provide a comfort letter in customary form (and covering such
matters of the type customarily covered by comfort letter).
(o) The Company shall use its reasonable best efforts to cause the
Common Shares covered by the Registration Statement to be listed on each
securities exchange, if any, or NASDAQ on which similar securities issued by the
Company are then listed, if so requested by Shareholders of a majority in
interest of Common Shares covered by the Registration Statement, or by the
managing underwriters, if any.
(p) The Company shall make available for inspection by any
Shareholder, any underwriter participating in any disposition pursuant to such
Registration Statement and any attorney, accountant or other agent retained by
any such Shareholder or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such Shareholder, underwriter, attorney,
accountant or agent in connection with such Registration Statement.
(q) No Shareholder may participate in any registration hereunder
which is underwritten unless such Shareholder (i) agrees to sell such
Shareholder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Shareholder entitled hereunder to approve such
arrangements (including, without limitation, pursuant to the terms of any
over-allotment or "green shoe" option requested by the managing underwriter(s);
provided that no Shareholder will be required to sell more than the number of
--------
15
Registrable Securities that such holder has requested the Company to include in
any registration) and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreement and other documents reasonably
required under the terms of such underwriting arrangements.
(r) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Sections 5 and 6 herein with respect to
the Registrable Securities of any Shareholder that such Shareholder shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Shareholder's
Registrable Securities.
(s) Each Shareholder agrees that upon receipt of any written notice
of the Company pursuant to paragraphs (ii) through (v) of Section 8(d) hereof,
such Shareholder shall discontinue offering such Common Shares pursuant to the
Registration Statement until such Shareholder's receipt of copies of the
supplemental or amended prospectus contemplated by Section 8(c) hereof, or until
advised in writing (the "Advice") by the Company that the use of the applicable
prospectus may be resumed. If the Company shall give any notice under Section
8(d)(ii) - (v) during the registration period, such registration period 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 seller of Common
Shares covered by the Registration Statement shall have received (x) the copies
of the supplemental or amended prospectus contemplated by Section 8(c) (if an
amended or supplemental prospectus is required) or (y) the Advice (if no amended
or supplemental prospectus is required).
9. Registration Expenses.
---------------------
The Company shall bear all expenses incurred in connection with the
performance of its obligations under this Agreement (except as otherwise
provided in the proviso to Section 8(m) hereof) and the Company shall reimburse
the Shareholders for the fees, disbursements and expenses of one counsel (and
one local counsel as reasonably required) chosen by the Shareholders of a
majority in interest of the Common Shares to be sold pursuant to a Registration
Statement acting for the Shareholders in connection therewith.
10. Indemnification.
---------------
(a) The Company shall indemnify and hold harmless, to the full
extent permitted by applicable law, each of the Shareholders to be named in any
Registration Statement filed pursuant to Sections 5(a) or 6(a) and the officers,
directors, members and control shareholders of such Shareholders against any
losses, claims, damages or liabilities, joint or several, to which such
Shareholder or such other Person may become subject under the Securities Act,
the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement under which such Registrable Securities were registered
under the Securities Act, or any preliminary, final or summary prospectus
contained therein or furnished by the Company to any such Shareholder, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
16
therein or necessary to make the statements therein not misleading, and the
Company shall reimburse such Shareholder for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that the
-------- -------
Company shall not be required to indemnify any such person pursuant to this
Section 10(a) to the extent that (i) any such loss, claim, damage or liability
(or actions in respect thereof) arises out of or is based upon fraud or
dishonesty or an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, or preliminary, final or
summary prospectus, or amendment or supplement thereto, in reliance upon and in
strict conformity with written information furnished to the Company by, or on
behalf of, such person expressly for use in connection therewith or (ii) the
Company subsequently corrects the untrue statement or alleged untrue statement
or omission or alleged omission made in the preliminary, final or summary
prospectus, or amendment or supplement thereto by delivering to such Shareholder
an amended prospectus or prospectus supplement that makes such correction and
the Shareholder fails timely to deliver such amended prospectus or prospectus
supplement to the party or parties making the claim.
(b) The Company shall require, as a condition to including any
Registrable Securities in any Registration Statement filed pursuant to this
Agreement and to entering into any underwriting agreement with respect thereto,
that the Company shall have received an undertaking reasonably satisfactory to
it from each Shareholder of Registrable Securities included in any Registration
Statement filed pursuant to this Agreement and from each underwriter named in
any such underwriting agreement, severally and not jointly, to (i) indemnify and
hold harmless the Company and all other Shareholders against any losses, claims,
damages or liabilities to which the Company or such other Shareholders may
become subject under the Securities Act, the Exchange Act, or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement, or any preliminary,
final or summary prospectus contained therein or furnished by the Company to any
such Shareholder, or any amendment or supplement thereto, or arise out of or are
based upon 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, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in strict conformity with written information furnished to
the Company by such Shareholder or underwriter expressly for use in connection
therewith and (ii) reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such action or claim as such expenses are incurred; provided, however, that
-------- -------
no such Shareholder shall be required to undertake liability to any Person under
this Section 10(b) for any amounts in excess of the dollar amount of the net
proceeds to be received by such Shareholder from the sale of such Shareholder's
Registrable Securities pursuant to such registration and such undertaking shall
be several, not joint and several, among such Shareholders; provided, further,
-------- -------
that no such Shareholder shall 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 Shareholder furnished in writing
to the Company information expressly for use in such Registration Statement or
prospectus or any amendment thereof or supplement thereto which corrected or
made not misleading information previously furnished to the Company.
(c) Promptly after receipt by an indemnified party under Section
10(a) or 10(b) hereof of written notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party pursuant to the indemnification provisions of or contemplated
by this Section 10, notify such indemnifying party in writing of the
commencement of such action; but the omission so to notify the indemnifying
party shall not relieve it from any liability which it may have to any
indemnified party other than under the indemnification provisions of or
contemplated by Section 10(a) or 10(b) hereof. In case any such action shall be
brought against any indemnified party and it shall notify an indemnifying party
of the commencement thereof, such indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and, after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, such indemnifying party shall not be liable to such
indemnified party for any legal expenses of other counsel or any other expenses,
in each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. Such
indemnifying party shall not enter into any settlement with a party without
obtaining an unconditional release of each indemnified party with respect to any
and all claims against each indemnified party. An indemnified party shall not
enter into any settlement without the consent of the indemnifying party, which
consent shall not be unreasonably withheld.
(d) Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 10(a) or 10(b) hereof are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities (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, claims,
damages or liabilities (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 statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
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 by such 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 contributions pursuant to this
Section 10(d) were determined by pro rata allocation (even if the Shareholders
or any agents or underwriters or all of them were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 10(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages, or
liabilities (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 defending any such action
or claim. Notwithstanding the provisions of this Section 10(d), no Shareholder
shall be required to contribute any amount in excess of the amount by which the
dollar amount of the proceeds received by such Shareholder from the sale of any
Registrable Securities (after deducting any fees, discounts and commissions
applicable thereto) exceeds the amount of any damages which such Shareholder has
otherwise been required to pay by reason of such untrue or alleged untrue
18
statement or omission or alleged omission, and no underwriter shall be required
to contribute any amount in excess of the amount by which the total price at
which the Registrable Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. 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 Shareholders' and any
underwriters' obligations in this Section 10(d) to contribute shall be several
in proportion to the principal amount of Common Shares registered or
underwritten, as the case may be, by them severally and not jointly.
(e) The obligations of the Company under this Section 10 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each officer, director and partner of
each Shareholder, agent and underwriter and each person, if any, who controls
any Shareholder, agent or underwriter within the meaning of the Securities Act;
and the obligations of the Shareholders and any underwriters contemplated by
this Section 10 shall be in addition to any liability which the respective
Shareholder or underwriter may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Securities
Act.
11. Periodic Information Reporting Requirements.
-------------------------------------------
(a) Quarterly Financial Statement.
-----------------------------
The Company shall prepare condensed, consolidated financial statements
for each of the first three fiscal quarters of each fiscal year in accordance
with United States generally accepted accounting principles ("U.S. GAAP")
consistently applied. The Company shall provide such quarterly financial
statements to each Shareholder not later than 45 days after the end of each
fiscal quarter.
(b) Annual Financial Statements.
---------------------------
The Company shall prepare consolidated financial statements for each
fiscal year in accordance with U.S. GAAP consistently applied and shall cause
such financial statements to be audited. The Company shall provide such audited
financial statements and the auditor's report thereon to the Shareholders not
later than 90 days after the end of each fiscal year.
(c) Additional Information.
----------------------
If a Shareholder requests in writing information about the Company or
its subsidiaries in addition to the financial statements made available pursuant
to Section 11(a) and 11(b) in order to, among other things, comply with
disclosure requirements under laws and regulations applicable to such
Shareholder or to meet the tax reporting requirements of such Shareholder, the
19
Company shall use its commercially reasonable efforts to provide such additional
information to such Shareholder as soon as practicable after such written
request has been received; provided, however, that the Company shall not be
-------- -------
required to provide any such additional information if the Company reasonably
believes that the disclosure of such information could have a materially adverse
impact on the financial condition, business or prospects of the Company on a
consolidated basis or is of a confidential nature.
(d) Confidentiality.
---------------
Except as authorized in writing by the Company, each of the
Shareholders shall not disclose any of the information provided to such
Shareholder pursuant to this Section 11 to any Person that is not a director,
officer, partner, employee, representative (including any accountant, attorney
or other professional) or Affiliate of such Shareholder or a party to this
Agreement, and each Shareholder shall use its commercially reasonable efforts to
cause its directors, officers, partners, employees, representatives and
Affiliates not to disclose such information to any Person that is not a party to
this Agreement; provided, however, that such Shareholder shall not be prohibited
-------- -------
from disclosing any such information if such information becomes publicly
available through no fault of the Shareholder or its directors, officers,
partners, employees, representatives or Affiliates or the information is
required to be furnished to a governmental agency in connection with any legal
or administrative proceeding or the information is requested by a prospective
transferee or purchaser of Common Shares so long as such third party enters into
a confidentiality agreement with the Company reasonably satisfactory to the
Company.
12. Miscellaneous.
-------------
(a) Amendments and Waivers.
----------------------
The provisions of this Agreement may not be amended, modified
or supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the Company has obtained the written consent of
the Founding Investors and Shareholders of a majority of the Common Shares
(other than the Founding Investors). Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of the Shareholders whose Common Shares are
being sold pursuant to the Registration Statement and that does not directly or
indirectly affect the rights of other Shareholders may be given by Shareholders
of a majority of the Common Shares being sold by such Shareholders pursuant to
the Registration Statement.
(b) Term and Termination.
--------------------
This Agreement may be terminated at any time by an instrument
in writing signed by all of the parties hereto. This Agreement shall terminate
automatically as to any Shareholder that Transfers all of its equity securities
of the Company and Max Re. The provisions of Section 2 to this Agreement, other
than Section 2(b)(i) and 2(b)(ii), and Section 3 to this Agreement shall
terminate automatically as to all parties hereto upon the consummation of a
Qualified IPO. Unless sooner terminated, this Agreement shall terminate ten (10)
20
years after the date of the Qualified IPO, unless, at any time within one (1)
year prior to such date, all of the parties extend its duration for as many
additional periods, each not to exceed ten (10) years, as they may desire.
(c) Notices.
-------
All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier, or air courier guaranteeing overnight delivery: (i) if to a
Shareholder then to the address set forth on the signature page or to such
address that such Shareholder may subsequently notify the Company in writing or
(ii) if to the Company or Max Re as set forth below:
Max Re Capital Ltd.
X.X. Xxx XX 0000
Xxxxxxxx, XX XX
Xxxxxxx
Xxxxxxxxx: Xxxxxx X. Xxxxxx
Facsimile Number: (000) 000-0000
with a copy to: Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Facsimile Number: (000) 000-0000
with a copy to: Xxxxxxx Xxxx & Xxxxxxx
Xxxxxxxxx Xxxxx
0 Xxxxxx Xxxxxx
P.O. Box HM666
Xxxxxxxx XX CX
Bermuda
Attention: Xxxx X. Xxxxxxxx
Facsimile Number: (000) 000-0000
All such notices and communications shall be deemed to have been duly given when
delivered by hand, if personally delivered; five (5) Business Days after being
deposited in the United States mails, if being mailed by first class mail, three
(3) Business Days after being delivered to a next-day air courier; and when
receipt is acknowledged by the recipient's telecopier machine, if telecopied.
(d) Successors and Assigns.
----------------------
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors and assigns.
21
(e) Counterparts.
------------
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(f) Governing Law.
-------------
This Agreement shall be governed by the laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
that would cause the application of the law of any jurisdiction other than the
State of New York.
(g) Headings.
--------
The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
(h) Severability.
------------
The remedies provided herein are cumulative and not exclusive of any
remedies provided by law. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
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