REGISTRATION RIGHTS AGREEMENT
among
UNIVERSAL AMERICAN FINANCIAL CORP.,
CAPITAL Z FINANCIAL SERVICES FUND II, L.P.,
WAND/UNIVERSAL INVESTMENTS L.P. I,
WAND/UNIVERSAL INVESTMENTS X.X. XX,
AAM CAPITAL PARTNERS, L.P.,
UAFC, L.P.,
CHASE EQUITY ASSOCIATES, L.P.,
and
XXXXXXX X. XXXXXXX
Dated: July 30, 1999
TABLE OF CONTENTS
Page
1. Definitions...........................................................2
2. General; Securities Subject to this Agreement.........................5
(a) Grant of Rights..............................................5
(b) No Other Rights..............................................6
(c) Agreement of the Wand Investors, the AAM Investors and
Xxxxxxx and the UA Shareholders..............................6
(d) Registrable Securities.......................................6
(e) Holders of Registrable Securities............................6
3. Demand Registration...................................................7
(a) Request for Demand Registration..............................7
(b) Registration of Other Securities.............................7
(c) Limitation on Demand Registrations...........................7
(d) Effective Demand Registration................................9
(e) Expenses.....................................................9
(f) Underwriting Procedures......................................9
(g) Selection of Underwriters....................................9
(h) Priority in Demand Registration.............................10
4. Incidental or "Piggy-Back" Registration..............................10
(a) Request for Incidental Registration.........................10
(b) Priority in Incidental Registration.........................11
(c) Expenses....................................................12
5. Holdback Agreements..................................................12
(a) Restrictions on Public Sale by Designated Holders...........12
(b) Restrictions on Public Sale by the Company..................13
6. Registration Procedures..............................................13
(a) Obligations of the Company..................................13
(b) Seller Information..........................................16
(c) Preparation; Reasonable Investigation.......................16
(d) Notice to Discontinue.......................................16
7. Indemnification; Contribution........................................17
(a) Indemnification by the Company..............................17
(b) Indemnification by Sellers..................................18
(c) Conduct of Indemnification Proceedings......................18
(d) Contribution................................................19
(e) Other Indemnification.......................................20
(f) Insurance...................................................20
i
Page
8. Rule 144.............................................................20
9. Miscellaneous........................................................20
(a) Recapitalizations, Exchanges, etc...........................20
(b) No Inconsistent Agreements..................................21
(c) Remedies....................................................21
(d) Amendments and Waivers......................................21
(e) Notices.....................................................21
(f) Successors and Assigns; Third Party Beneficiaries...........23
(g) Counterparts................................................23
(h) Headings....................................................23
(i) GOVERNING LAW...............................................23
(j) Severability................................................23
(k) Entire Agreement............................................24
(l) Further Assurances..........................................24
ii
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated July 30, 1999 (this
"Agreement"), among Universal American Financial Corp., a New York corporation
(the "Company"), Capital Z Financial Services Fund II, L.P., a Bermuda limited
partnership ("Capital Z"), Wand/Universal Investments L.P. I, a Delaware limited
partnership ("Wand I"), Wand/Universal Investments X.X. XX, a Delaware limited
partnership ("Wand II" and, together with Wand I, the "Wand Investors"), AAM
Capital Partners, L.P., a Delaware limited partnership ("AAM"), UAFC, L.P., a
Delaware limited partnership ("UAFCLP"), Chase Equity Associates, L.P. ("Chase"
and, together with UAFCLP and AAM, the "AAM Investors") and Xxxxxxx X. Xxxxxxx
("Xxxxxxx").
WHEREAS, pursuant to the Share Purchase Agreement, dated as of
December 31, 1998 and amended on July 2, 1999 (the "Share Purchase Agreement"),
between the Company and Capital Z, the Company has agreed, among other things,
to issue and sell to Capital Z, and Capital Z has agreed to purchase from the
Company, an aggregate of 25,707,552 shares of common stock, par value $.01 per
share, of the Company ("Common Stock");
WHEREAS, the Wand Investors have converted their shares of
Series B Convertible Preferred Stock, par value $1.00 per share (the "Series B
Preferred"), of the Company into shares of Common Stock;
WHEREAS, the AAM Investors have converted their shares of
Series C-1 Convertible Preferred Stock, par value $1.00 per share (the "Series
C-1 Preferred"), of the Company and shares of Series C-2 Convertible Preferred
Stock, par value $1.00 per share (the "Series C-2 Preferred" and together with
the Series C-1 Preferred, the "Series C Preferred"), of the Company into shares
of Common Stock;
WHEREAS, the AAM Investors have converted their shares of
Series D-1 Convertible Preferred Stock, par value $1.00 per share (the "Series
D-1 Preferred"), of the Company and shares of Series D-2 Convertible Preferred
Stock, par value $1.00 per share (the "Series D-2 Preferred"), of the Company
into shares of Common Stock;
WHEREAS, Xxxxxxx has converted his shares of Series C-1
Preferred into shares of Common Stock;
WHEREAS, in order to induce (i) Capital Z to purchase the
shares of Common Stock, (ii) the Wand Investors to convert their shares of
Series B Preferred into shares of Common Stock, (iii) the AAM Investors to
convert their shares of Series C Preferred, Series D Preferred and Series E
Preferred into shares of Common Stock and (iv) Xxxxxxx to convert his shares of
Series C-1 Preferred into shares of
2
Common Stock, the Company has agreed to grant registration rights with respect
to the Registrable Securities (as hereinafter defined) as set forth in this
Agreement; and
WHEREAS, the registration rights under this Agreement
constitute the only registration rights granted by the Company and replace and
supersede all existing registration rights granted by the Company to any
shareholder of the Company pursuant to those agreements listed on Schedule I
hereto (the "Existing Registration Rights Agreements"), all of which are being
terminated effective the date hereof either pursuant to Section 2(c) of this
Agreement or by separate agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereby agree
as follows:
1. Definitions. As used in this Agreement the following terms
have the meanings indicated:
"AAM" has the meaning set forth in the preamble to
this Agreement.
"AAM Investors" has the meaning set forth in the
preamble to this Agreement.
"Affiliate" means any Person who is an "affiliate" as
defined in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act (or any successor provision then in effect).
"Approved Underwriter" has the meaning set forth in
Section 3(g).
"Xxxxxxx" has the meaning set forth in the preamble
to this Agreement.
"Capital Z" has the meaning set forth in the preamble
to this Agreement.
"Capital Z Shareholders" means Capital Z and any
Permitted Transferee of Capital Z (as defined in the Shareholders' Agreement,
dated as of the date hereof, among the Company, Capital Z, the Wand Investors,
the AAM Investors, Xxxxxxx and the UA Shareholders) to whom or to which
Registrable Securities are transferred.
"Chase" has the meaning set forth in the preamble to
this Agreement.
3
"Commission" means the Securities and Exchange
Commission or any similar agency then having jurisdiction to enforce the
Securities Act.
"Common Stock" means the Common Stock of the Company
or any other equity securities of the Company into which such securities are
converted, reclassified, reconstituted or exchanged.
"Company" has the meaning set forth in the preamble
to this Agreement.
"Company Indemnified Party" has the meaning set forth
in Section 7(b).
"Demand Registration" has the meaning set forth in
Section 3(a).
"Designated Holder" means each of Capital Z, the Wand
Investors, the AAM Investors and Xxxxxxx and any transferee thereof to whom
Registrable Securities have been transferred in accordance with Section 9(f).
"Designated Indemnified Party" has the meaning set
forth in Section 7(a).
"Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"Existing Registration Rights Agreements" has the
meaning set forth in the recitals to this Agreement.
"Incidental Registration" has the meaning set forth
in Section 4(a).
"Indemnified Party" has the meaning set forth in
Section 7(c).
"Initiating Holder" has the meaning set forth in
Section 3(a).
"Person" means any individual, firm, corporation,
partnership, limited partnership, limited liability company, trust, incorporated
or unincorporated association, joint venture, joint stock company, government
(or an agency or political subdivision thereof) or other entity of any kind, and
shall include any successor (by merger or otherwise) of such entity.
"Registrable Securities" means (subject to Section
2(d)) each of the following: (a) any and all Shares owned by the Designated
Holders, (b) any Shares issued or issuable to any of the Designated Holders with
respect to the Shares
4
by way of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise and (c) any Shares issued to any of the Designated Holders upon
exercise of any options and warrants or upon the conversion of any convertible
security.
"Registration Expenses" means all expenses arising
from or incident to the Company's performance of, or compliance with, this
Agreement, including, without limitation, all registration, filing and listing
fees; all fees and expenses of complying with securities or "blue sky" laws
(including reasonable fees and disbursements of outside counsel in connection
with "blue sky" qualifications of Registrable Securities); all printing,
messenger and delivery expenses; the fees and disbursements of counsel for the
Company and its independent public accountants; the reasonable fees and
disbursements of one firm of counsel (other than in-house counsel) retained by
the holders of Registrable Securities being registered; the expenses of any
special audits required by or incident to such performance and compliance; and
any liability insurance or other premiums for insurance obtained in connection
with any registration pursuant to the terms of Section 7(f) of this Agreement;
provided, however, that Registration Expenses shall not include underwriting
discounts and commissions and transfer taxes, if any; and provided further, that
in any case where Registration Expenses are borne by the Capital Z Shareholders
pursuant to Section 3(e), Registration Expenses shall not include general
overhead expenses of the Company or other expenses for the preparation of
financial statements or other data normally prepared by the Company in the
ordinary course of its business.
"Registration Statement" means a registration
statement filed pursuant to the Securities Act.
"Requesting Holder" has the meaning set forth in
Section 4(a).
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Selling Holders" has the meaning set forth in
Section 3(a).
"Series B Preferred" has the meaning set forth in the
recitals to this Agreement.
"Series C-1 Preferred" has the meaning set forth in
the recitals to this Agreement.
"Series C-2 Preferred" has the meaning set forth in
the recitals to this Agreement.
5
"Series D-1 Preferred" has the meaning set forth in
the recitals to this Agreement.
"Series D-2 Preferred" has the meaning set forth in
the recitals to this Agreement.
"Shares" means the shares of Common Stock held at any
time by the Designated Holders. For purposes of this Agreement, Shares owned by
Xxxxxxx will be deemed to include Shares owned of record by Xxxxxxx and his
wife, Xxxxx X. Xxxxxxx, and Shares owned of record by the following trusts and
other entities:
Xxxxxxx X. Xxxxxxx C/F Xxxxxxxx X. Xxxxxxx UGMA NY
Xxxxxxx X. Xxxxxxx C/F Xxxxx X. Xxxxxxx UGMA NY
Xxxx Acquisition, LLC
Xxxxxxx Associates Limited Partnership (but only to the extent
such Shares are beneficially owned by Xxxxxxx X. Xxxxxxx,
Xxxxx X. Xxxxxxx and NMRB Corp.)
"Share Purchase Agreement" has the meaning set forth
in the recitals to this Agreement.
"Subsidiary" means, with respect to the Company, a
corporation or other entity of which 50% or more of the voting power of the
outstanding voting securities or 50% or more of the outstanding equity interests
is held, directly or indirectly, by the Company.
"UAFCLP" has the meaning set forth in the preamble to
this Agreement.
"Wand I" has the meaning set forth in the preamble to
this Agreement.
"Wand II" has the meaning set forth in the preamble
to this Agreement
"Wand Investors" has the meaning set forth in the
preamble to this Agreement.
2. General; Securities Subject to this Agreement.
(a) Grant of Rights. The Company hereby grants
registration rights to Capital Z, the Wand Investors, the AAM Investors and
Xxxxxxx upon the terms and conditions set forth in this Agreement.
6
(b) No Other Rights. The Company hereby represents
and warrants that, other than those rights granted pursuant to the Existing
Registration Rights Agreements, the Company has not granted or agreed to grant
any registration rights to any other Person, and there are no other existing
agreements, arrangements or understandings between the Company and any other
Person relating to registration rights.
(c) Agreement of the Wand Investors, the AAM
Investors and Xxxxxxx. Each of the Wand Investors, the AAM Investors and Xxxxxxx
hereby acknowledge and agree that, effective as of the date hereof, the Existing
Registration Rights Agreements with respect to each of them are terminated and
of no further force and effect, and that this Agreement replaces and supersedes
any and all agreements, arrangements and understandings (including the Existing
Registration Rights Agreements), whether written or oral, between the Company
and each of the Wand Investors, the AAM Investors and Xxxxxxx with respect to
registration rights.
(d) Registrable Securities. For the purposes of this
Agreement, any Registrable Securities held by a Designated Holder will cease to
be Registrable Securities when (i) a Registration Statement covering such
Registrable Securities has been declared effective under the Securities Act by
the Commission and such Registrable Securities have been disposed of pursuant to
such effective Registration Statement, (ii) the entire amount of Registrable
Securities to be sold in a single sale by a Designated Holder, in the opinion of
counsel satisfactory to the Company and the Designated Holder, each in their
reasonable judgment, may be distributed to the public without any limitation as
to volume and without registration pursuant to Rule 144 (or any successor rule)
under the Securities Act and the Designated Holder is not then an Affiliate of
the Company; provided that the Wand Investors shall not be subject to this
Section 2(d)(ii) until the number of Registrable Securities held by them
represent 1% or less of the outstanding shares of Common Stock of the Company,
(iii) the Registrable Securities are proposed to be sold or distributed by a
Person not entitled to the registration rights granted by this Agreement or (iv)
such Registrable Securities cease to be outstanding.
(e) Holders of Registrable Securities. A Person is
deemed to be a holder of Registrable Securities whenever such Person owns of
record Registrable Securities, or holds an option to purchase, or a security
convertible into or exercisable or exchangeable for, Registrable Securities
(once such acquisition or conversion has actually been effected). If the Company
receives conflicting instructions, notices or elections from two or more Persons
with respect to the same Registrable Securities, the Company may act upon the
basis of the instructions, notice or election received from the registered owner
of such Registrable Securities. Registrable Securities issuable upon exercise of
an option or warrant or upon conversion of another security shall be deemed
outstanding for the purposes of this Agreement.
7
3. Demand Registration.
(a) Request for Demand Registration. Subject to the
limitations set forth in Section 3(c) below, at any time, any Capital Z
Shareholder, the Wand Investors (taken together) and the AAM Investors (taken
together) (each an "Initiating Holder") shall be entitled to request in writing
that the Company use its reasonable best efforts to effect the registration
under the Securities Act, and under the securities or "blue sky" laws of any
jurisdiction designated by any such Initiating Holder, of all or part of such
Initiating Holder's Registrable Securities in accordance with this Section 3 (a
"Demand Registration"). Any such request for a Demand Registration shall specify
the amount of Registrable Securities proposed to be sold and the intended method
of disposition thereof. Upon receiving a request for a Demand Registration, the
Company will promptly, but in no event more than 10 days after the receipt from
the Initiating Holder of a request for a Demand Registration, give written
notice of such Demand Registration to all other holders of Registrable
Securities, and thereupon will, as provided in Section 6, use its reasonable
best efforts to effect, at the earliest possible date, the registration under
the Securities Act of:
(i) the Registrable Securities which the
Company has been so requested by such Initiating Holder to register; and
(ii) all other Registrable Securities that
the Company has been requested in writing to register by the holders thereof
(such holders, together with the Initiating Holder, are hereinafter referred to
as the "Selling Holders") (which requests shall specify the number of
Registrable Securities proposed to be sold and the intended method of
disposition thereof and shall be given to the Company within 30 days after the
giving of such written notice of the Demand Registration by the Company).
In connection with the foregoing, only the Initiating Holder shall be deemed to
have requested the Demand Registration.
(b) Registration of Other Securities. Subject to
Section 3(h), whenever the Company effects a registration under Section 3(a), it
may elect to include unissued shares of Common Stock.
(c) Limitation on Demand Registrations.
Notwithstanding anything to the contrary set forth in Section 3(a), the Company
shall not be obligated to file a Registration Statement with respect to a Demand
Registration (i) upon a request by the Wand Investors (taken together), more
than twice or upon a request by the AAM Investors (taken together), more than
once, (ii) upon a request by an Initiating Holder that is a Capital Z
Shareholder, if Registrable Securities having an aggregate market value of less
than $15,000,000 owned by all Capital Z Shareholders participating in such
registration are proposed to be included in the Demand Registration, which net
market value will be the product of such number of
8
Registrable Securities times the proposed per share offering price, minus any
underwriting commissions or discounts or transfer taxes (provided that the
limitation set forth in this clause (ii) shall not be in effect at any time a
Capital Z Shareholder's Registrable Securities are not able to be sold under
Rule 144 under the Securities Act (or any successor provision then in effect)
because of the Company's failure to comply with the information requirements
thereunder, unless at such time, the Company's outside counsel (which shall be
reasonably acceptable to the Initiating Holder) delivers a written opinion of
counsel to such Initiating Holder to the effect that such holders' Registrable
Securities may be publicly offered and sold without registration under the
Securities Act); (iii) if the Company has any other Registration Statement on
file which has not yet been declared effective or (iv) within a period of 180
days after the effective date of any registration statement of the Company.
In addition, if the Board of Directors of the Company, in its
good faith judgment, determines that any registration of Registrable Securities
should not be made or continued because it would materially interfere with any
material financing, acquisition, corporate reorganization or merger or other
transaction involving the Company or any of its Subsidiaries (a "Valid Business
Reason"), the Company may (x) postpone the filing of a registration statement
relating to a Demand Registration until such Valid Business Reason no longer
exists, but in no event for more than 90 days and (y) in the event that a
registration statement has been filed relating to a Demand Registration, if the
Valid Business Reason has not resulted from actions taken by the Company, the
Company, upon the approval of a majority of the Company's Board of Directors
(such majority to include at least one director nominated by Capital Z), may
cause such registration statement to be withdrawn and its effectiveness
terminated or may postpone amending or supplementing such registration
statement. The Company shall give written notice to the Selling Holders of its
determination to postpone or withdraw a registration statement and of the fact
that the Valid Business Reason for such postponement or withdrawal no longer
exists, in each case, promptly after the occurrence thereof. Notwithstanding
anything to the contrary contained herein, the Company may not postpone or
withdraw a filing pursuant to this paragraph more than once in any 12-month
period.
Each Selling Holder agrees that, upon receipt of any
notice from the Company that the Company has determined to withdraw any
registration statement pursuant to the immediately preceding paragraph, such
holder will discontinue its disposition of Registrable Securities pursuant to
such registration statement and, if so directed by the Company, will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, then in such holder's possession, of the prospectus covering such
Registrable Securities that was in effect at the time of receipt of such notice.
If the Company shall give any notice of postponement or withdrawal of a
registration statement, the Company shall, at such time as the Valid Business
Reason that caused such postponement or withdrawal no longer exists (but in no
event later than 90 days after the date of the postponement), use its reasonable
best efforts to promptly effect the registration under the Securities Act of the
Registrable
9
Securities covered by the postponed or withdrawn registration statement in
accordance with this Section 3 (unless the Initiating Holder delivering the
Demand Registration request shall have withdrawn such request, in which case the
Company shall not be considered to have effected an effective registration for
the purposes of this Agreement and the Initiating Holders shall not be
considered to have exercised any of its rights under Section 3(a)).
(d) Effective Demand Registration. A registration
shall not constitute a Demand Registration until it has become effective and
remains continuously effective for the lesser of (i) the period during which all
Registrable Securities registered in the Demand Registration are sold or
otherwise disposed of in accordance with the intended methods of disposition set
forth in the registration statement and (ii) 180 days; provided, however, that a
registration shall not constitute a Demand Registration if (x) after such Demand
Registration has become effective, such registration or the related offer, sale
or distribution of Registrable Securities thereunder is interfered with by any
stop order, injunction or other order or requirement of the Commission or other
governmental agency or court for any reason not attributable to the Selling
Holders and such interference is not thereafter eliminated or (y) the conditions
to closing specified in the underwriting agreement, if any, entered into in
connection with such Demand Registration are not satisfied or waived, other than
by reason of a failure by the Selling Holders.
(e) Expenses.
(i) The Company will pay all Registration
Expenses in connection with the first four Demand Registrations by the Capital Z
Shareholders under this Section 3 that either become effective under the
Securities Act or are withdrawn prior to the effective date thereof. Thereafter,
the Capital Z Shareholders will pay all Registration Expenses in connection with
any Demand Registrations under this Section 3.
(ii) The Company will pay all Registration
Expenses in connection with a Demand Registration by each of the Wand Investors
(taken together) and the AAM Investors (taken together) under this Section 3
whether it becomes effective under the Securities Act or is withdrawn prior to
the effective date thereof.
(f) Underwriting Procedures. If the Initiating Holder
so elects, the offering of Registrable Securities pursuant to a Demand
Registration shall be in the form of a firm commitment underwritten offering and
the managing underwriter or underwriters selected for such offering shall be the
Approved Underwriter (as hereinafter defined) selected in accordance with
Section 3(g).
(g) Selection of Underwriters. The underwriter or
underwriters of each underwritten offering of the Registrable Securities to be
10
registered under a Demand Registration shall be selected by the Selling Holders
of more than 50% of Registrable Securities to be included in such registration
(the "Approved Underwriter") and shall, in any case, require the approval of the
Company, which approval will not be unreasonably withheld.
(h) Priority in Demand Registration. If the Approved
Underwriter of any underwritten offering under a Demand Registration advises the
Company (and the Company shall so advise each Selling Holder of Registrable
Securities requesting registration of such advice) that, in its opinion, the
number of securities requested to be included in such registration is
sufficiently large to have a material adverse effect on the success of such
offering, then the Company will include in such registration, to the extent of
the number of Registrable Securities which the Company is so advised can be sold
in (or during the time of) such offering within a price range acceptable to the
Initiating Holder, first, Registrable Securities requested to be included in
such registration by all Selling Holders entitled to include Registrable
Securities pursuant to Section 3(a), pro rata among such Selling Holders on the
basis of the number of securities requested to be included in such Demand
Registration; provided, that, for purposes of this Section 3(h) only, Wand I and
Wand II will be treated as separate Selling Holders and Chase and UAFCLP will be
treated as separate Selling Holders such that each of Wand I, Wand II, Chase and
UAFCLP will have the right to include its pro rata portion of Registrable
Securities in such registration, second, all securities proposed by the Company
to be sold for its own account, and third, all other securities proposed to be
registered; provided, that if the number of Registrable Securities that the
Approved Underwriter advises can be sold in such offering is less than all the
Registrable Securities that the Initiating Holder had requested be included, the
Initiating Holder may withdraw its written request made pursuant to Section 3(a)
and such written request will not be considered a request for registration for
the purposes of this Section 3.
4. Incidental or "Piggy-Back" Registration.
(a) Request for Incidental Registration. If the
Company, at any time or from time to time, proposes to register the offering of
any of its shares of Common Stock for its own account under the Securities Act
(other than (i) a registration of shares of Common Stock solely in connection
with any plan for the acquisition of shares of Common Stock by employees or
agents of the Company or any dividend reinvestment plan or (ii) on Forms S-4 or
S-8 (or any successor forms thereto)), it will at each such time give written
notice (given at least seven days prior to the proposed filing date) of its
intention to do so and of such Holders' rights under this Section 4(a). Upon the
written request of any Designated Holder that owns Registrable Securities having
an aggregate market value (the "Minimum Aggregate Value") equal to at least $5
million (unless such Designated Holder is any Capital Z Shareholder, the Wand
Investors, the AAM Investors or Xxxxxxx, in which case such Minimum Aggregate
Value shall not be applicable) (a "Requesting Holder") made within 30 days after
the receipt of any such notice (or such lesser period, but in any
11
event not less than 10 days, as may be available from the date of such notice to
the last date on which additional Registrable Securities may be included in such
offering), which request shall specify the amount of Registrable Securities
proposed to be sold by such Designated Holder and the intended method of
disposition thereof, the Company will, in accordance with Section 6, use its
reasonable best efforts to effect the registration under the Securities Act of
the offering of all of the Registrable Securities that the Company has been so
requested to register by the Requesting Holders, to the extent required to
permit the disposition (in accordance with the intended methods thereof as
aforesaid) of the Registrable Securities to be registered (each, an "Incidental
Registration"); provided, however, that prior to the effective date of the
registration statement filed in connection with such registration, immediately
upon notification to the Company from the managing underwriter of the price at
which such securities are to be sold, if such price is below the price that any
Requesting Holder shall have indicated to be acceptable to such Requesting
Holder, the Company shall so advise such Requesting Holder of such price, and
such Requesting Holder shall then have the right promptly to withdraw its
request to have its Registrable Securities included in such registration
statement; provided further, that if, at any time after giving written notice of
its intention to register any securities and prior to the effective date of the
registration statement filed in connection with such Incidental Registration,
the Company shall determine for any reason not to register or to delay
registration of such Registrable Securities, the Company may, at its election,
give written notice of such determination to each Requesting Holder and (i) in
the case of a determination not to register, shall be relieved of its obligation
to register any Registrable Securities in connection with such registration (but
not from any obligation of the Company to pay the Registration Expenses in
connection therewith), without prejudice, however, to the rights of any
Initiating Holder to cause such registration to be effected as a registration
under Section 3(a) and (ii) in the case of a determination to delay registering,
shall be permitted to delay registering any Registrable Securities, for the same
period as the delay in registering such other securities. In connection with any
Incidental Registration under this Section 4(a) involving an underwriter, or a
distribution with the assistance of a selling agent, the right of any Requesting
Holder to participate in such Incidental Registration shall be conditioned upon
such Requesting Holder's reasonable participation in such underwriting or
distribution.
(b) Priority in Incidental Registration.
Notwithstanding anything to the contrary set forth in Section 4(a), if a
proposed Incidental Registration is for a registered public offering involving
an underwriting and the managing underwriter advises the Company in writing that
the number or type of Registrable Securities requested to be included in such
Incidental Registration would materially adversely effect such offering, then
the Company shall so advise the Requesting Holders and include in such
Incidental Registration (i) first, all securities proposed to be sold by the
Company for its own account, (ii) second, Registrable Securities requested to be
included in such registration by the Requesting Holders pursuant to this
Agreement and by any other Persons entitled to "incidental" registration rights
12
and requesting inclusion of securities in such Incidental Registration, pro rata
among such Requesting Holders and such other Persons on the basis of the number
of securities requested to be included in such Incidental Registration and
third, any other shares of Common Stock requested to be included in such
Incidental Registration; provided, however, that if any Capital Z Shareholder
does not request inclusion of the maximum number of Registrable Securities
allocated to it pursuant to the foregoing procedure, then the remaining portion
of its allocation shall be reallocated among those Capital Z Shareholders whose
allocations were not satisfied on the basis of the number of Registrable
Securities requested to be included in such Incidental Registration, and this
procedure shall be repeated until all of the Registrable Securities that may be
included in the registration on behalf of the Capital Z Shareholders have been
so allocated. The Company shall not limit the number of Registrable Securities
to be included in an Incidental Registration pursuant to this Agreement in order
to include shares held by shareholders with no registration rights or to include
any shares of stock issued to employees, officers, directors or consultants
pursuant to any stock option plan unless such employees, officers, directors or
consultants have registration rights. The priority of securities included in a
Demand Registration through incidental registration rights exercised in
connection therewith shall be governed by Section 3(h).
If any Registrable Securities are withdrawn from the
Incidental Registration or if the number of Registrable Securities to be
included in such Incidental Registration was previously reduced as a result of
marketing factors, then the Company shall then offer to all Persons who have
retained the right to include Registrable Securities in the Incidental
Registration the right to include additional Registrable Securities in the
registration in an aggregate amount equal to the number of Registrable
Securities so withdrawn, with such Registrable Securities to be allocated among
the Persons requesting additional inclusion pro rata in accordance with the
terms of this Section 4(b).
(c) Expenses. The Company shall pay all Registration
Expenses in connection with any Incidental Registration pursuant to this Section
4, whether or not such Incidental Registration becomes effective. No Incidental
Registration under this Section 4 shall relieve the Company of its obligations
to effect a Demand Registration upon request under Section 3(a).
5. Holdback Agreements.
(a) Restrictions on Public Sale by Designated
Holders. Each of the Designated Holders agrees not to effect any public sale or
distribution of any Registrable Securities being registered or of any securities
convertible into or exchangeable or exercisable for such Registrable Securities,
including a sale pursuant to Rule 144 under the Securities Act, during the 120
day period beginning on the effective date of such Registration Statement
(except as part of such registration), (i) in the case of a non-underwritten
public offering, if and to the extent requested by
13
the Company or (ii) in the case of an underwritten public offering, if and to
the extent requested by the Approved Underwriter (in the event of a Demand
Registration pursuant to Section 3(a)) or the Company's underwriters (in the
event of an Incidental Registration pursuant to Section 4(a)), as the case may
be.
(b) Restrictions on Public Sale by the Company. The
Company agrees not to effect any public sale or distribution of any of its
securities, or any securities convertible into or exchangeable or exercisable
for such securities (except pursuant to registrations on Form S-4 or Form S-8 or
any successor forms thereto or registration of shares of Common Stock solely in
connection with any plan for the acquisition of shares of Common Stock by agents
of the Company), during the period beginning on the effective date of any
Registration Statement in which the Designated Holders of Registrable Securities
are participating and ending on the earlier of (i) the date on which all
Registrable Securities registered on such Registration Statement are sold and
(ii) 120 days after the effective date of such Registration Statement.
6. Registration Procedures.
(a) Obligations of the Company. If and whenever the
Company is requested to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 3 and 4, then the Company will
promptly use its best efforts to:
(i) prepare and (in any event within 90 days
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 use its best efforts to cause such
Registration Statement to become effective;
(ii) 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 and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable 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
thereof by the seller or sellers thereof set forth in such Registration
Statement, but in no event for a period of more than six months (or, with
respect to any Registration Statement covering Registrable Securities the
distribution of which has been deferred pursuant to Section 3 or 4(c), nine
months) after such Registration Statement becomes effective;
(iii) furnish to each seller of Registrable
Securities, prior to filing a Registration Statement, such number of conformed
copies of
14
such Registration Statement and of each such amendment and supplement
thereto (in each case including all exhibits, except that the Company
shall not be obligated to furnish any seller of Registrable Securities
with more than two copies of such exhibits), such number of copies of
the prospectus contained in such Registration Statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity
with the requirements of the Securities Act, and such other documents,
as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;
(iv) register or qualify such Registrable
Securities covered by such Registration Statement under such other securities or
"blue sky" laws of such jurisdictions as each seller of Registrable Securities
shall request, and do any and all other acts and things which may be necessary
or advisable to enable such seller to consummate the disposition in such
jurisdic tions of the Registrable Securities owned by such seller, except that
the Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it is not so
qualified, or to subject itself to taxation in any such jurisdiction, or to
consent to general service of process in any such jurisdiction;
(v) cause the Registrable Securities covered
by such Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable the seller or sellers of
Registrable Securities to consummate the disposition of such Registrable
Securities;
(vi) cause representatives of the Company to
participate in any "road show" or "road shows" reasonably requested by any
underwriter of an underwritten offering of any Registrable Securities;
(vii) notify each seller of any Registrable
Securities covered by such Registration Statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, upon
discovery that, or upon the happening of any event as a result of which, the
prospectus included in such Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make statements therein not
misleading in the light of the circumstances then existing, and prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to
15
be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;
(viii) advise each seller of Registrable
Securities as to the time when such Registration Statement becomes effective and
as to the threat of or the issuance by the Commission of any stop order
suspending the effectiveness of such Registration Statement or the institution
of any proceedings for that purpose, and use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible the removal
thereof, if issued;
(ix) comply with all applicable rules and
regulations of the Commission, and make available to each seller of Registrable
Securities, as soon as reasonably practicable, an earnings statement covering
the period of at least 12 months, but not more than 18 months, beginning with
the first month after the effective date of the Registration Statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder;
(x) list all the Registrable Securities on
The Nasdaq Stock Market, Inc. or the over-the-counter market or any securities
exchange on which similar securities are then listed, if such securities are not
already so listed and such listing is then permitted under the rules of such
exchange;
(xi) cooperate with each seller of
Registrable Securities and each underwriter participating in the disposition of
such Registrable Securities and their respective counsel in connection with any
filings required to be made with the National Association of Securities Dealers,
Inc.;
(xii) provide and cause to be maintained a
transfer agent and registrar for all Registrable Securities covered by such
registration statement from and after a date not later than the effective date
of such registration; and
(xiii) in the case of an underwritten
offering, furnish to each seller a signed counterpart, addressed to the
underwriters, of (x) an opinion of counsel representing the Company for purposes
of such registration, dated the effective date of such Registration Statement
and, if applicable, the date of the closing under the underwriting agreement,
and (y) a "comfort letter" signed by the independent public accountants of the
Company who have certified the Company's financial statements included in such
Registration Statement; in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' letters delivered to
the
16
underwriters in underwritten public
offerings of securities and, in the case of the accountants' comfort letter,
such other financial matters and, in the case of the legal opinion, such other
legal matters, as the underwriters may reasonable request.
(b) Seller Information. The Company may require each
seller of Registrable Securities as to which any registration is being effected
to furnish to the Company such information regarding the distribution of such
securities as the Company may from time to time reasonably request in writing
and as shall be required by law in connection therewith.
(c) Preparation; Reasonable Investigation. In
connection with the preparation and filing of each Registration Statement
registering Registrable Securities under the Securities Act, the Company will
give the holders of such Registrable Securities so registered and their
underwriters, if any, and their respective counsel, the opportunity to
participate in the preparation of such Registration Statement (to the extent
customary for counsel to a selling shareholder), each prospectus included
therein or filed with the Commission, and each amendment thereof or supplement
thereto, and will give each of them such access to its books and records
(including the books and records of its subsidiaries) and such opportunities to
discuss the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of such holders' and such underwriters' respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act ;
provided, however, that the Company shall not be obligated to give such
opportunities and access to any holder of Registrable Securities including in
such Registration Statement Registrable Securities having an aggregate market
value less than $5 million.
(d) Notice to Discontinue. Each Designated Holder of
Registrable Securities agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 6(a)(vii), such
Designated Holder shall forthwith discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Designated Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 6(a)(vii) and, if so
directed by the Company, such Designated Holder shall deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in such
Designated Holder's possession, of the prospectus covering such Registrable
Securities that is current at the time of receipt of such notice. If the Company
shall give any such notice, the Company shall extend the period during which
such Registration Statement shall be maintained effective pursuant to this
Agreement (including, without limitation, the period referred to in Section
6(a)(ii)) by the number of days during the period from and including the date of
the giving of such notice pursuant to Section 6(a)(vii) to and including the
date when the Designated Holder shall have received the copies of the
supplemented or
17
amended prospectus contemplated by and meeting the requirements of Section
6(a)(vii).
7. Indemnification; Contribution.
(a) Indemnification by the Company. In the event of
any registration of any Registrable Securities pursuant to the terms of Section
3 or Section 4, (i) the Company will, and hereby does, indemnify and hold
harmless, to the fullest extent permitted by law, each seller of any Registrable
Securities covered by such registration statement and their respective
directors, officers, partners, trustees, employees, legal counsel, accountants,
financial advisors and agents, and each other Person, if any, who controls
(within the meaning of the Securities Act and the Exchange Act) such seller or
any such directors, officers, partners, trustees, employees, legal counsel,
accountants, financial advisors and agents (each of the foregoing, a "Designated
Indemnified Party") against any and all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation), joint or several, to
which such Designated Indemnified Party may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions or proceedings in respect thereof) arise out of or are
based upon (x) any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement under which such Registrable
Securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, any notification or
offering circular, or any amendment or supplement thereto or (y) any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; and (ii) the Company
will reimburse such Designated Indemnified Party for any legal or any other
expenses reasonably incurred by it in connection with investigating or defending
any such loss, claim, liability or action; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability (or actions or proceedings in respect thereof) or expense
arises out of or is based upon (x) any untrue statement or alleged untrue
statement of any material fact made in such Registration Statement, any such
preliminary prospectus, final prospectus, summary prospectus, notification or
offering circular, or any amendment or supplement thereto or (y) any omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case in
reliance upon and in conformity with written information concerning such seller
or in reliance upon and in conformity with written information concerning such
seller's underwriter and furnished to the Company through an instrument duly
executed by such seller or underwriter, as the case may be, specifically stating
that it is for use in the preparation thereof. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
such Designated Indemnified Party and shall survive the transfer of such
securities by any such seller.
18
(b) Indemnification by Sellers. The Company may
require, as a condition to including any Registrable Securities in any
Registration Statement filed pursuant to Section 3 or Section 4, that the
Company shall have received an undertaking from each prospective seller of such
Registrable Securities to indemnify and hold harmless the Company, any
underwriter retained by the Company and their respective directors, officers and
employees each other Person, if any, who controls (within the meaning of the
Securities Act and the Exchange Act) the Company or any such underwriter (each
of the foregoing, a "Company Indemnified Party") against any losses, claims,
damages, liabilities or expenses, joint or several, to which such Company
indemnified party may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions or
proceedings in respect thereof) arise out of or are based upon any statement of
a material fact or omission to state a material fact in such Registration
Statement, any preliminary prospectus or final prospectus contained therein, any
notification or offering circular, or any amendment or supplement thereto, if
such statement or omission was made in reliance upon and in conformity with
written information concerning such seller and furnished to the Company through
an instrument duly executed by such seller specifically stating that it is for
use in the preparation of such Registration Statement, preliminary prospectus,
final prospectus, summary prospectus, notification or offering circular, or
amendment or supplement thereto; provided, however, that the liability of any
seller under this Section 7(b) shall be limited to the amount of the net
proceeds received by such indemnifying party in the offering giving rise to such
liability. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Company indemnified party and
shall survive the transfer of such securities by any Designated Holder.
(c) Conduct of Indemnification Proceedings. Promptly
after receipt by any Designated Indemnified Party or Company Indemnified Party
(each, an "Indemnified Party") of notice of the commencement of any action,
suit, proceeding or investigation or threatened thereof in writing for which the
Indemnified Party intends to claim indemnification or contribution pursuant to
this Agreement, such Indemnified Party will give written notice thereof to the
indemnifying party; provided, however, that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under this Agreement, except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice. If notice of
commencement of any such action is brought against an Indemnified Party, the
indemnifying party may (and, upon request by the Indemnified Party, will), at
its expense, participate in and assume the defense thereof, with counsel
reasonably satisfactory to such Indemnified Party; provided, however, that in
the event of any failure by the indemnifying party diligently to assume and
conduct such defense, the indemnifying party will pay all costs and expenses
(including legal fees and expenses) incurred by such Indemnified Party in
connection with such claim or litigation. The Indemnified Party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be paid by the
Indemnified Party unless (i) the
19
indemnifying party agrees to pay the same, (ii) the indemnifying party fails to
assume the defense of such action with counsel satisfactory to the Indemnified
Party in its reasonable judgment or (iii) the named parties to any such action
(including any impleaded parties) have been advised by such counsel in writing
that either (x) representation of such Indemnified Party and the indemnifying
party by the same counsel would be inappropriate under applicable standards of
professional conduct or (y) there may be one or more legal defenses available to
the Indemnified Party which are different from or additional to those available
to the indemnifying party. In either of such cases, the indemnifying party shall
not have the right to assume the defense of such action on behalf of such
Indemnified Party; provided, that in no event shall the indemnifying party be
required to pay fees and expenses for more than one firm of attorneys in any
jurisdiction in any one legal action or group of related legal actions. No
indemnifying party shall be liable for any settlement of any action or
proceeding effected without its written consent, which consent shall not be
unreasonable withheld. No indemnifying party, in the defense of any such claim
or litigation, shall, except with the written consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation.
(d) Contribution. If the indemnification provided for
in this Section 7 from the indemnifying party is unavailable to an Indemnified
Party hereunder in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then the indemnifying party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and Indemnified Party in connection
with the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
faults of such indemnifying party and Indemnified Party shall be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or 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 action. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in Sections 7(a), 7(b)
and 7(c), any legal or other fees, charges or expenses reasonably incurred by
such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7(e) were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No person guilty
20
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person.
(e) Other Indemnification. Indemnification and
contribution similar to that specified in this Section 7 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any registration or other qualification of such
Registrable Securities (or the offering and/or sale thereof) under any federal
or state law or regulation of governmental authority other than the Securities
Act and pursuant to any underwriting or similar agreement, to the extent
requested by an underwriter.
(f) Insurance. In connection with any Demand
Registration or Incidental Registration, the Company will provide at its expense
a binder or binders of insurance in form satisfactory to the Designated Holders
participating in such registration, and, as soon as practicable thereafter, a
policy or policies of insurance, insuring each such Designated Holder, and each
Person, if any, who controls such Designated Holder within the meaning of the
Securities Act and the Exchange Act, for the aggregate amount of the public
offering price received for the Registrable Securities disposed of by such
Designated Holder (subject to such deductible as is customarily contained in
underwriting insurance policies at such time) against all losses, claims,
damages, liabilities and expenses which arise out of or are based upon any
untrue statement, alleged untrue statement, omission or alleged omission of the
character described in this Section 7 in connection with such registration and
disposition and which are customarily covered under underwriting insurance
policies; provided, however, that the Company shall not be obligated to provide
such insurance if it determines in good faith that such insurance is not
available on commercially reasonable terms at the time of such registration.
8. Rule 144. The Company covenants that it shall file (a) any
reports required to be filed by it under the Exchange Act and (b) take such
further action as each Designated Holder of Registrable Securities may
reasonably request (including providing any information necessary to comply with
Rule 144 under the Securities Act), all to the extent required from time to time
to enable such Designated Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such rule may be amended
from time to time, or (ii) any similar rules or regulations hereafter adopted by
the Commission. The Company shall, upon the request of any Designated Holder of
Registrable Securities, deliver to such Designated Holder a written statement as
to whether it has complied with such requirements.
9. Miscellaneous.
(a) Recapitalizations, Exchanges, etc. The provisions
of this Agreement shall apply, to the full extent set forth herein, with respect
to (i) the shares of Common Stock and (ii) any and all equity securities of the
Company or any suc cessor or assign of the Company (whether by merger,
consolidation, sale of assets or otherwise), which may be issued in respect of,
in conversion of, in exchange for or in substitution of, the shares of Common
Stock, and shall be appropriately adjusted for any stock dividends, splits,
reverse splits, combinations, recapitalizations and the like occurring after the
date hereof. The Company shall cause any successor or assign (whether by merger,
consolidation, sale of assets or otherwise) to enter into a new registration
rights agreement with the Designated Holders on terms substantially similar to
this Agreement as a condition of any such transaction.
(b) No Inconsistent Agreements. The Company is not
currently party to, and will not in the future, enter into any agreement with
respect to its securities that is inconsistent with the registration rights
granted in this Agreement or grant any additional registration rights to any
Person or with respect to any securities that are not Registrable Securities
that are prior in right to or inconsistent with the rights granted in this
Agreement. Without limiting the generality of the foregoing, the Company will
not hereafter enter into any agreement with respect to its securities that
grants, or modify any existing agreement with respect to its securities to
grant, to the holder of its securities in connection with an incidental
registration of such securities higher priority to the rights granted to the
Designated Holders under Section 4.
(c) Remedies. The Designated Holders, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, shall be entitled to specific performance of their rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive in any action for specific
performance the defense that a remedy at law would be adequate.
(d) Amendments and Waivers. Except as otherwise
provided herein, 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 consented to in writing by (i) the Company and
(ii) the holder or holders of the Registrable Securities adversely affected by
such amendment, modifications, supplements or departures. Any such written
consent shall be binding upon the Company and all of the Designated Holders
consenting to such action.
(e) Notices. All notices, demands and other
communications provided for or permitted hereunder shall be made in writing and
shall be made by registered or certified first-class mail, return receipt
requested, telecopier, courier service, overnight mail or personal delivery:
21
(i) if to the Company:
Universal American Financial Corp.
0 Xxxxxxxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
with copies to:
Harnett Xxxxxxx & Xxxxx P.A.
NationsBank Tower 000
Xxxx Xxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Judge Xxxxxxx Xxxxxxx
and
Xxxxxxx Xxxxxxx and Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx, Esq.
(ii) if to Capital Z:
Capital Z Partners, L.P.
One Chase Xxxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Spass
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx &
Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
(iii) if to any other Designated Holder or other
holder of Registrable Securities, at the address that such holder shall have
furnished to the Company in writing in the manner set forth herein, or, until
any such other holder so
22
furnishes to the Company an address, then to and at the address of the last
holder of such Registrable Securities who has furnished an address to the
Company.
Any party hereto may designate such other address for delivery
of notices by providing written notice to each other party to the Agreement of
the new address. All such notices and communications shall be deemed to have
been duly given when delivered by hand, if personally delivered; when delivered
by courier or overnight mail, if delivered by commercial courier service or
overnight mail; 5 Business Days after being deposited in the mail, postage
prepaid, if mailed; and when receipt is mechanically acknowledged, if
telecopied.
(f) Successors and Assigns; Third Party
Beneficiaries. This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties hereto. The Demand
Registration rights of the Designated Holders contained in Section 3 and the
other rights of each of the Designated Holders with respect thereto and the
incidental or "piggy-back" registration rights of the Designated Holders
contained in Section 4 and the other rights of each of the Designated Holders
with respect thereto shall be, with respect to any Registrable Security,
automatically transferred to any Person who is the transferee of such
Registrable Security; provided, that such transfer was made in compliance with
applicable securities laws and such transferee is made a party to this
Agreement. All of the obligations of the Company hereunder shall survive any
such transfer. Subject to Section 7, no Person other than the parties hereto and
their successors and permitted assigns is intended to be a beneficiary of any of
the rights granted hereunder. The provisions of this Section 9(f) are subject to
Section 2(d) of this Agreement.
(g) Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) GOVERNING LAW. THE VALIDITY AND INTERPRETATION OF
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO THE CONFLICT OF LAWS PRINCIPLES THEREOF WHICH MIGHT INDICATE THE
APPLICABILITY OF THE LAWS OF ANY OTHER JURISDICTION.
(j) Severability. If any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid,
23
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, it being intended
that all of the rights and privileges of the Designated Holders shall be
enforceable to the fullest extent permitted by law.
(k) Entire Agreement. This Agreement is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter,
including the Existing Registration Rights Agreements.
(l) Further Assurances. Each of the parties shall
execute such documents and perform such further acts as may be reasonably
required or desirable to carry out or to perform the provisions of this
Agreement.
24
IN WITNESS WHEREOF, the undersigned have executed, or have
caused to be executed, this Agreement on the date first written above.
UNIVERSAL AMERICAN FINANCIAL CORP.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
CAPITAL Z FINANCIAL SERVICES
FUND II, L.P.
By: Capital Z Partners, L.P., general partner
By: Capital Z Partners Ltd., its general
partner
By: /s/ Xxxxxxx Xxxxxx
----------------------
Xxxxxxx Xxxxxx
Senior Vice President
WAND/UNIVERSAL INVESTMENTS L.P. I
By: Wand (Universal), Inc., general partner
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Xxxxx X. Xxxxxxx
President
WAND/UNIVERSAL INVESTMENTS X.X. XX
By: Wand (Universal), Inc., general partner
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Xxxxx X. Xxxxxxx
President
25
AAM CAPITAL PARTNERS, L.P.
By: AAM Partners, L.P., general partner
By: AAM Investment Banking Group, Ltd.,
general partner
By: /s/ Xxxxxxx X. Xxxx
-----------------------
Xxxxxxx X. Xxxx
Managing Partner
UAFC, L.P.
By: VWA, L.L.C., general partner
By: Veed Corp., managing member
By: /s/ Xxxxxxx X. Xxxx
-----------------------
Xxxxxxx X. Xxxx
President
CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners, general partner
By: /s/ Xxxxxxx Xxxxxx
----------------------
Xxxxxxx Xxxxxx
General Partner
/s/ Xxxxxxx X. Xxxxxxx
----------------------
Xxxxxxx X. Xxxxxxx
26
Schedule I
Existing Registration Rights Agreements
1. Registration Rights Agreement, dated as of March 16, 1993, between the
Company and Xxxxx X. Xxxxxx Third Amended and Restated Revocable Trust,
dated March 20, 1987, as amended.
2. Shareholders' Agreement, dated as of April 25, 1997, between the
Company, AAM, Xxxxxxx Associates Limited Partnership ("BALP"), Xxxxxxx
and certain other parties thereto.
3. Shareholders' Agreement, dated as of December 30, 1994, among the
Company, Wand/Universal Investments L.P. [I], BALP and certain BALP
principals.
4. Stock Purchase Agreement, dated December 9, 1987, among Universal
Holding Corp., Xxxx Xxxxx Life Insurance Company of New York and BALP.
