Exhibit 10.3
REGISTRATION RIGHTS AND COORDINATION
COMMITTEE AGREEMENT
AMONG
UICI
AND
THE STOCKHOLDERS NAMED HEREIN
DATED AS OF APRIL 5, 2006
TABLE OF CONTENTS
PAGE
ARTICLE I
Definitions
Section 1.1. Definitions.....................................................1
ARTICLE II
Coordination Committee
Section 2.1. Coordination Committee..........................................4
ARTICLE III
Registration Rights
Section 3.1. Demand Registrations............................................5
Section 3.2. Committee Demand Shelf Registration.............................8
Section 3.3. Underwritten Shelf Takedown.....................................9
Section 3.4. Piggyback Registration.........................................10
Section 3.5. Lock-Up Agreements.............................................12
Section 3.6. Registration Procedures........................................12
Section 3.7. Indemnification by the Company.................................18
Section 3.8. Indemnification by Participating Stockholders..................19
Section 3.9. Conduct of Indemnification Proceedings.........................20
Section 3.10. Contribution...................................................20
Section 3.11. Participation in Public Offering...............................21
Section 3.12. Other Indemnification..........................................22
Section 3.13. Cooperation by the Company.....................................22
Section 3.14. Release of Committee Members...................................22
Section 3.15. Waiver of Registration Rights in Connection with IPO
Bonus Plan.....................................................22
PAGE
ARTICLE IV
Miscellaneous
Section 4.1. Binding Effect; Assignability; Benefit.........................22
Section 4.2. Notices........................................................23
Section 4.3. Waiver; Amendment; Termination.................................25
Section 4.4. Governing Law..................................................25
Section 4.5. Jurisdiction...................................................25
Section 4.6. Waiver of Jury Trial...........................................25
Section 4.7. Specific Enforcement...........................................26
Section 4.8. Counterparts; Effectiveness....................................26
Section 4.9. Entire Agreement...............................................26
Section 4.10. Captions.......................................................26
Section 4.11. Severability...................................................26
Section 4.12. Termination....................................................26
-ii-
REGISTRATION RIGHTS AND COORDINATION
COMMITTEE AGREEMENT
This AGREEMENT dated as of April 5, 2006 is made among UICI, a
Delaware corporation (the "COMPANY"), each of the Sponsor Stockholders (as
defined in the Stockholders Agreement) and each of the Management Stockholders
(as defined in the Stockholders Agreement and, together with the Sponsor
Stockholders and such other Persons as may hereinafter become parties to or be
bound by this Agreement, the "STOCKHOLDERS").
W I T N E S S E T H:
WHEREAS, the Company and certain Affiliates of the Sponsor
Stockholders have entered into an Agreement and Plan of Merger, dated as of
September 15, 2005 (the "MERGER AGREEMENT"), whereby certain of such Affiliates
will merge with and into the Company (the "MERGER");
WHEREAS, the Company and the Stockholders have entered into a
Stockholders Agreement, dated as of the date hereof (the "STOCKHOLDERS
AGREEMENT"), setting forth certain rights, duties and obligations among them;
and
WHEREAS, under Section 2.07 of the Stockholders Agreement, the Company
and the Stockholders have agreed to execute this Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.1. DEFINITIONS.
(a) The following terms, as used herein, have the following meanings:
"ANNUAL THRESHOLD" means one percent (1%) of the then outstanding
shares of all classes of Common Stock (as defined in the Stockholders
Agreement).
"COMMITTEE PHASE" means the period beginning on the date the Committee
is established and ending on the fifth anniversary of the date of the IPO;
PROVIDED, HOWEVER, that the Committee may dissolve itself at any time upon the
unanimous vote of the Committee Members and, if such dissolution occurs earlier
than the fifth anniversary of the date of the IPO, the Committee Phase shall end
upon such dissolution.
"COMPANY SECURITIES" means any Shares or Share Equivalents.
"ELIGIBLE STOCKHOLDER" means (i) each Stockholder (other than a
Management Stockholder) that, alone or together with all other members of the
Investor Group to which it belongs, at the time of measurement owns more than
one percent (1%) of the then-outstanding shares of all classes of Common Stock
and (ii) any Management Stockholder.
"MAXIMUM OFFERING SIZE" means the largest number of Registrable
Securities to be included in any Public Offering without having an adverse
effect on such Public Offering, including the price at which such Registrable
Securities can be sold.
"NASD" means the United States National Association of Securities
Dealers, Inc.
"PARTICIPATING STOCKHOLDERS" means the Stockholders that participate
in any registration or sale of Registrable Securities pursuant to Section 3.1,
3.2, 3.3 or 3.4, including any Requesting Stockholder.
"REGISTRABLE SECURITIES" means (x) any Shares, (y) any Shares owned or
to be acquired upon conversion, exercise or exchange of Share Equivalents and
(z) any Shares owned or to be acquired in connection with a recapitalization,
merger, consolidation, exchange or other reorganization of the Company (or any
successor entity), in each case now or hereafter owned by the Stockholders. As
to any particular Registrable Securities, such securities shall cease to be
Registrable Securities when (i) a registration statement with respect to the
sale by the applicable Stockholder of such securities has become effective under
the Securities Act and such securities have been disposed of in accordance with
such registration statement, (ii) such securities are sold or distributed under
circumstances in which all of the applicable conditions of Rule 144 are met,
(iii) such securities have been otherwise Transferred, new certificates for such
securities not bearing a legend restricting further transfer have been delivered
by the Company and subsequent disposition of such securities does not require
registration or qualification of such securities under the Securities Act or any
state securities or blue sky law then in force, (iv) such securities are sold to
a Person in a transaction in which rights under provisions of this Agreement are
not assigned in accordance with this Agreement, or (v) such securities have
ceased to be outstanding.
"REGISTRATION EXPENSES" means any and all expenses incident to the
performance of or compliance with any registration or marketing of securities,
including all (i) registration and filing fees, and all other fees and expenses
payable in connection with the listing of securities on any securities exchange
or automated interdealer quotation system, (ii) fees and expenses of compliance
with any securities or "blue sky" laws (including reasonable fees and
disbursements of counsel in connection with "blue sky" qualifications of the
securities registered), (iii) expenses in connection with the preparation,
printing, mailing and delivery of any registration statements, prospectuses and
other documents in connection therewith and any amendments or supplements
thereto, (iv) security engraving and printing expenses, (v) internal expenses of
the Company (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), (vi) fees and
disbursements of counsel for the Company and fees and expenses for independent
certified public accountants retained by the Company (including the expenses
relating to any comfort letters or costs associated with the delivery by
independent certified public accountants of any comfort letters requested
pursuant to Section 3.6(j)), (vii) fees and expenses of any special experts
retained by the Company in connection with such registration, (viii) reasonable
fees and expenses of one counsel for all of the Stockholders participating in
the offering selected by the Stockholder holding the largest number of the
Registrable Securities to be sold for the account of any Stockholders in the
offering, (ix) fees and expenses in connection with any review by the NASD of
any underwriting arrangements or other terms of the offering, and all reasonable
fees and expenses of any "qualified independent underwriter," including the fees
and expenses of any counsel thereto, (x)
-2-
reasonable fees and disbursements of underwriters customarily paid by issuers or
sellers of securities, but excluding any underwriting fees, discounts and
commissions attributable to the sale of Registrable Securities, (xi) costs of
printing and producing any agreements among underwriters, underwriting
agreements, any "blue sky" or legal investment memoranda and any selling
agreements and other documents in connection with the offering, sale or delivery
of the Registrable Securities, (xii) transfer agents' and registrars' fees and
expenses and the fees and expenses of any other agent or trustee appointed in
connection with such offering, (xiii) reasonable expenses relating to any
analyst or investor presentations or any "road shows" undertaken in connection
with the registration, marketing or selling of the Registrable Securities, and
(xiv) fees and expenses payable in connection with any ratings of the
Registrable Securities, including expenses relating to any presentations to
rating agencies. Except as set forth in clause (viii) above, Registration
Expenses shall not include any out-of-pocket expenses of the Stockholders (or
the agents who manage their accounts).
"SEC" means the United States Securities and Exchange Commission.
"UNDERWRITTEN PUBLIC OFFERING" means an underwritten public offering
and sale of Common Stock of the Company to the public involving public marketing
efforts. For the avoidance of doubt, block sales to a single purchaser or small
group of purchasers shall not be deemed to be an Underwritten Public Offering,
even if such sale is in fact underwritten.
"WSKI" shall mean a well-known seasoned issuer as defined in Rule 405
promulgated under the Securities Act.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
TERM SECTION
AGREEMENT PREAMBLE
BLACKOUT PERIOD 3.1(F)
COMMITTEE 2.1(A)
COMMITTEE MEMBERS 2.1(A)
COMMITTEE MEMBER RELATED PERSONS 3.7(C)
COMMITTEE SHELF REGISTRATION REQUEST 3.2(A)
COMPANY PREAMBLE
DAMAGES 3.7(A)
DEMAND REGISTRATION 3.1(A)
INDEMNIFIED PARTY 3.9
INDEMNIFYING PARTY 3.9
INSPECTORS 3.6(I)
MERGER RECITALS
-3-
TERM SECTION
MERGER AGREEMENT RECITALS
PIGGYBACK REGISTRATION 3.4(A)
PRIMARY REGISTRATION 3.4(A)
RECORDS 3.6(I)
REQUESTING STOCKHOLDER 3.1(A)
SHELF REGISTRATION 3.2(A)
STOCKHOLDER EXECUTIVE 3.15
STOCKHOLDER RELATED PERSONS 3.7(A)
STOCKHOLDERS AGREEMENT RECITALS
UNDERWRITER RELATED PERSONS 3.7(B)
UNDERWRITTEN SHELF TAKEDOWN 3.3(A)
UNDERWRITTEN SHELF TAKEDOWN REQUEST 3.3(A)
(c) Capitalized terms not defined herein shall have the meanings set
forth in the Stockholders Agreement.
ARTICLE II
Coordination Committee
Section 2.1. COORDINATION COMMITTEE
(a) Concurrently with the completion of an IPO, there shall be
established a committee (the "COMMITTEE") consisting of representatives from
each of the Investor Groups (considered together with their respective
Affiliates) (the "COMMITTEE MEMBERS"). Each Investor Group shall be permitted to
designate one representative to participate on the Committee, and shall be
permitted to remove and replace such designee from time to time; PROVIDED that a
total of 100 votes shall be allocated among such designees PRO RATA in
accordance with each Investor Group's relative ownership of Sponsor Shares
(including for such purpose Share Equivalents) immediately following the IPO;
PROVIDED that such designees shall be automatically removed (and not replaced)
at such time as such Investor Group ceases to own any Company Securities or
otherwise becomes a Non-Qualifying Investor Group. The Committee shall not meet
unless (i) all of the Committee Members are present in person or by telephone or
(ii) Committee Members representing a majority of the votes of all Committee
Members are present in person or by telephone and each of the Committee Members
who is not so present has been given at least two Business Days' prior notice
that the Committee may meet without such Committee Member. The Committee shall
meet reasonably promptly upon receipt of any bona fide written request from a
Stockholder or Stockholders requesting Committee approval under Section 2.1(b)
to Transfer Shares and shall in any event respond to such written request with a
grant or denial of approval within three Business Days of receipt thereof;
PROVIDED that if the Committee does not so respond prior to the expiration of
such three Business Day period, it shall conclusively be
-4-
deemed to have consented to the requested Transfer. The Committee shall consider
in good faith any and all requests for its approval with a view toward
facilitating the ability of each Stockholder to dispose of its Shares in an
orderly manner that does not unduly disrupt the then prevailing market
conditions relating to the Shares and shall not unreasonably withhold or deny
its approval. Except as otherwise expressly provided in this Agreement, any
actions taken by the Committee must have received a majority of the votes of the
Committee Members present. No Committee Member shall be under any obligation to
discuss the contents of any meeting of the Committee with any other Stockholder.
No compensation of any kind will be payable to any Committee Member by the
Company in connection with its service on the Committee. The Committee will use
reasonable efforts to cooperate with the Company with respect to, and will keep
the Company well informed of, any actions taken by the Committee under Section 2
hereof.
(b) No Stockholder shall Transfer any Shares during the Committee
Phase other than Transfers:
(i) (x) to Permitted Transferees, (y) pursuant to such Stockholders'
Tag-Along Right or (z) in connection with the exercise of a Drag-Along
Right;
(ii) pursuant to a Demand Registration or a Piggyback Registration
(other than a Piggyback Registration in connection with a Shelf
Registration that is not an Underwritten Shelf Takedown);
(iii) at any time in which the Shelf Registration is in effect,
pursuant to an Underwritten Shelf Takedown (including participating therein
pursuant to Section 3.4);
(iv) pursuant to sales or distributions pursuant to Rule 144 so long
as the
aggregate number of Shares Transferred pursuant to this clause (iv) in any
12-month period by all members of the transferor's Investor Group (or by
the Stockholder, if not a member of an Investor Group) does not exceed the
Annual Threshold;
(v) pursuant to Fund Distributions so long as the aggregate number of
Shares Transferred pursuant to this clause (v) in any 12-month period by
all members of the transferor's Investor Group does not exceed the Annual
Threshold; or
(vi) approved by the Committee (by action of members representing a
majority of the votes of all Committee Members). For the avoidance of
doubt, during the Committee Phase all block sales must be approved by the
Committee, other than block sales by all Stockholders of a particular
Investor Group not exceeding in any 12-month period 0.5% of the outstanding
shares of Common Stock.
ARTICLE III
Registration Rights
Section 3.1. DEMAND REGISTRATIONS.
(a) If, at any time after an IPO, the Company shall receive a request
from a Sponsor Stockholder (the "REQUESTING STOCKHOLDER") that the Company
effect the registration under the Securities Act of all or any portion of such
Requesting Stockholder's Registrable
-5-
Securities, for the purpose of offering and selling such securities in an
Underwritten Public Offering (each such request, a "DEMAND REGISTRATION"), then
the Company shall use all reasonable efforts to effect, as expeditiously as
possible, the registration under the Securities Act of:
(i) all Registrable Securities for which the Requesting Stockholder
has requested registration under this Section, and
(ii) all other Registrable Securities of the same class or series that
any other Stockholder has requested the Company to register pursuant to
Article 3 hereof,
all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities to be so
registered.
Notwithstanding the foregoing, the Company (1) shall not be obligated
to effect more than one Demand Registration in any 180-day period without the
consent of a majority of the Board and (2) shall not be obligated to effect a
Demand Registration unless (A) the method of disposition shall be an
Underwritten Public Offering and (B) the aggregate proceeds expected to be
received from the sale of the Registrable Securities to be included in such
Demand Registration equals or exceeds US$25,000,000. Furthermore, the Company
shall not be obligated to effect more than (x) five Demand Registrations and/or
Underwritten Shelf Takedown Requests, in the aggregate, at the request of the
Sponsor Stockholders included in the Blackstone Investor Group, (y) two Demand
Registrations and/or Underwritten Shelf Takedown Requests, in the aggregate, at
the request of the Sponsor Stockholders included in the GS Investor Group and
(z) one Demand Registration and/or Underwritten Shelf Takedown Request, in the
aggregate, at the request of the Sponsor Stockholders included in the DLJ
Investor Group.
(b) At any time prior to the effective date of the registration
statement relating to a requested registration under this Section 3.1, the
Requesting Stockholder may revoke such request, without liability to the Company
or to any of the Participating Stockholders, by providing a notice to the
Company revoking such request. Notwithstanding anything in Section 3.1(d) to the
contrary (other than Section 3.1(d)(ii)), a request, so revoked, shall be
considered to be a Demand Registration and shall count against the Requesting
Stockholder's amount under Section 3.1(a) unless (i) such revocation arose out
of the fault of the Company (in which case the Company shall be obligated to pay
all Registration Expenses in connection with such revoked request), (ii) the
Requesting Stockholder reimburses the Company for all Registration Expenses of
such revoked request, (iii) there has been, since the date of the request, a
material deterioration in the assets, business, condition (financial or
otherwise) or prospects of the Company, or (iv) there has been, since the date
of the request, a significant disruption in the financial or capital markets.
(c) To the fullest extent permitted by applicable laws, the Company
shall be liable for and pay all Registration Expenses in connection with any
Demand Registration, regardless of whether such Demand Registration is effected,
except as set forth in Section 3.1(b)(ii).
-6-
(d) A Demand Registration shall not be deemed to have occurred (i)
except as provided in Section 3.1(b), unless the registration statement
relating thereto has become effective under the Securities Act or a
previously filed shelf registration statement has been designated for use
by the Requesting Stockholder and any Participating Stockholders for a
period of 90 days (or such shorter period in which all Registrable
Securities of the Requesting Stockholder and any Participating Stockholders
included in such registration have actually been sold thereunder), PROVIDED
that such registration statement shall not be considered a Demand
Registration if, after such registration statement becomes effective, such
registration statement is interfered with by any stop order, injunction or
other order or requirement of the SEC or other governmental agency or court
prior to the Requesting Stockholder's Registrable Securities being sold
thereunder or (ii) if the Maximum Offering Size is reduced in accordance
with Section 3.1(e) such that less than 66?% of the Registrable Securities
of the Requesting Stockholder and the other members of its Investor Group
sought to be included in such registration are so included.
(e) If a Demand Registration involves an Underwritten Public Offering
and the managing underwriter advises the Requesting Stockholder that, in
its view, the number of Registrable Securities requested to be included in
such registration (including any Registrable Securities that any
Participating Stockholder proposes to be included and any securities that
the Company proposes to be included) exceeds the Maximum Offering Size, the
Company shall include in such registration and/or such Underwritten Public
Offering, in the priority listed below, up to the Maximum Offering Size:
(i) first, all Registrable Securities requested to be registered by
the Participating Stockholders that have not specified a minimum price for
the sale of their Registrable Securities, that have specified a minimum
price that is less than or equal to the price determined by the Requesting
Stockholder for such sale or that have otherwise indicated their desire to
sell their Registrable Securities on a PRO RATA basis in proportion to the
number of Registrable Securities to be sold by the Requesting Stockholder
(allocated, if necessary for the offering not to exceed the Maximum
Offering Size, PRO RATA among such entities on the basis of the relative
number of Registrable Securities owned by such Participating Stockholders),
and
(ii) second, any securities proposed to be registered by the Company
or any securities proposed to be registered for the account of any other
Persons (including the Company), with such priorities among them as the
Company shall determine.
(f) With respect to any Demand Registration or Shelf Registration,
upon notice to the Requesting Stockholder and all Participating
Stockholders, if (i) a majority of the Board (after consultation with the
lead managing underwriter, if any, selected in accordance with this
Agreement) determines that effecting or continuing any such registration
would materially and adversely affect an offering of Company Securities the
preparation of which had then been commenced or (ii) a majority of the
Board determines that the Company is in possession of material non-public
information the disclosure of which during the period specified in such
notice the Company reasonably believes would not be in the best interests
of the Company, the Company may postpone effecting or suspend the
registration, or suspend the use of any registration statement or
prospectus already filed and/or effective, for a reasonable time specified
in the notice but not exceeding 60 days (a "BLACKOUT PERIOD") (which period
may not be extended
-7-
or renewed, PROVIDED that there shall not be more than two Blackout Periods in
any 365-day period). For the avoidance of doubt, there shall be no limits on the
number of days or frequency of Blackout Periods in any registration other than a
Demand Registration or Shelf Registration.
Section 3.2. COMMITTEE DEMAND SHELF REGISTRATION.
(a) If, at any time after an IPO and after the Company is eligible to
register Shares on Form S-3 (or any successor form), the Company shall receive a
request from the Committee that the Company effect a shelf registration under
the Securities Act of all or a portion of the Registrable Securities owned by
the Stockholders (such request, a "COMMITTEE SHELF REGISTRATION REQUEST", and
any registration effected pursuant to any such request, a "SHELF REGISTRATION"),
then the Company shall promptly file a registration statement relating to such
Registrable Securities on an appropriate shelf registration form (including any
amendments or prospectus supplements to add Registrable Securities that
Stockholders have requested, or may request, to be included in such shelf
registration from time to time pursuant to this Agreement) and give notice
concurrently with such filing or designation (or, in the case of an
automatically effective shelf registration statement, at least 10 Business Days
prior to such filing), which notice may be given by electronic mail, of the
filing or designation of such registration statement to Stockholders holding
Registrable Securities and shall use all reasonable efforts to effect, as
expeditiously as possible, the registration under the Securities Act of:
(i) all Registrable Securities for which the Committee has requested
(or may request from time to time while the Shelf Registration is in
effect) registration under this Section 3.2, and
(ii) all other Registrable Securities that any other Stockholder has
requested (or may request from time to time while the Shelf Registration is
in effect) the Company to register pursuant to Article 3 hereof,
all to the extent necessary to permit the disposition of the Registrable
Securities so to be registered. If the Company is eligible as a WKSI, the shelf
registration statement shall utilize the automatic shelf registration process
under Rule 415 and Rule 462 promulgated under the Securities Act. If the Company
is not eligible as a WKSI or is otherwise ineligible to utilize the automatic
shelf registration process, then the Company shall use all reasonable efforts to
have the shelf registration statement declared effective as expeditiously as
practicable. For the avoidance of doubt, notwithstanding the shelf registration
of Registrable Securities pursuant to a Shelf Registration, no sales of such
Registrable Securities shall be made during the Committee Phase, other than as
permitted by or in accordance with Section 2.1(b).
(b) To the fullest extent permitted by applicable laws, the Company
shall be liable for and pay all Registration Expenses in connection with any
Shelf Registration.
(c) The Company shall terminate a Shelf Registration upon request of
the Committee. The Committee may make an unlimited number of Committee Shelf
Registration Requests, PROVIDED that no such request shall be made less than 180
days following the termination of any prior Shelf Registration.
-8-
Section 3.3. UNDERWRITTEN SHELF TAKEDOWN.
(a) If, at any time during which a Shelf Registration is in effect (or
in connection with its initial effectiveness), the Company shall receive a
request from a Sponsor Stockholder (the "REQUESTING STOCKHOLDER") to facilitate
an Underwritten Public Offering and sale of all or a portion of the Registrable
Securities registered or registrable thereon (such request, an "UNDERWRITTEN
SHELF TAKEDOWN REQUEST", and any Underwritten Public Offering conducted pursuant
thereto, an "UNDERWRITTEN SHELF TAKEDOWN"), then the Company shall, subject to
the limitations on the number of Underwritten Shelf Takedown Requests contained
in Section 3.1(a), use all reasonable efforts to (1) file such amendments and
supplements or reports under the Exchange Act, if applicable, so as to include
in the Shelf Registration, and (2) facilitate, as expeditiously as possible, the
sale of:
(i) all Registrable Securities for which the Requesting Stockholder
has requested registration and sale under this Section 3.3,
(ii) all other Registrable Securities of the same class or series that
any other Stockholder has requested the Company to register and sell
pursuant to Article 3 hereof, and
(iii) any other securities proposed to be registered and sold by the
Company or any securities proposed to be registered and sold for the
account of any other Persons, with such priorities among the Company and
such other Persons as the Company shall determine,
all to the extent necessary to permit the disposition of the Registrable
Securities to be so registered.
(b) To the fullest extent permitted by applicable laws, the Company
shall be liable for, and pay all Registration Expenses in connection with, any
Underwritten Shelf Takedown. The Committee shall have the right, after
consultation with the Company, to select the underwriters, initial purchasers or
placement agents, if any, the price and other terms upon which and the process
by which any sale pursuant to an Underwritten Shelf Takedown is effected;
provided, however, that the Committee shall not select any underwriter, initial
purchaser or placement agent to which the Company shall reasonably object.
(c) If the managing underwriter advises the Requesting Stockholder
that, in its view, the number of Registrable Securities requested to be included
in an Underwritten Shelf Takedown (including any Registrable Securities that any
Participating Stockholder proposes to be included and any securities that the
Company proposes to be included that are not Registrable Securities) exceeds the
Maximum Offering Size, the Company shall include in such registration and/or
such Underwritten Public Offering, in the priority listed below, up to the
Maximum Offering Size:
(i) first, all Registrable Securities proposed to be sold by the
Participating Stockholders that have not specified a minimum price for the
sale of their Registrable Securities, that have specified a minimum price
that is less than or equal to the price determined by the Committee for
such sale or that have otherwise indicated their desire to
-9-
sell their Registrable Securities on a PRO RATA basis in proportion to the
number of Registrable Securities to be sold by the Committee Members
(allocated, if necessary for the offering not to exceed the Maximum
Offering Size, PRO RATA among them on the basis of the relative number of
Registrable Securities owned by such Participating Stockholders), and
(ii) second, any securities proposed to be sold by the Company or any
securities proposed to be sold for the account of any other Persons, with
such priorities among such other Persons as the Company shall determine.
Section 3.4. PIGGYBACK REGISTRATION.
(a) Except as provided in Section 3.4(b), if the Company proposes, at
any time after an IPO, to register any Company Securities under the Securities
Act (other than a registration on Form S-8 or Form S-4, or any successor forms,
relating to Company Securities issuable upon exercise of employee stock options
or in connection with any employee benefit or similar plan of the Company or in
connection with a direct or indirect business combination involving the Company
and another Person, but including any Shelf Registration), whether for sale
solely for its own account (a "PRIMARY REGISTRATION") or for the account of any
other Person (including a Requesting Stockholder), the Company shall each such
time give prompt notice to each Eligible Stockholder (i) in the case of a
registration of Company Securities for its own account or for the account of a
Person other than a Requesting Stockholder, at least 10 Business Days prior to
the effective date of the registration statement relating to such registration,
or, if earlier, promptly following the filing with the SEC of such related
registration statement, (ii) in the case of a registration at the request of a
Requesting Stockholder, promptly following receipt of the request for
registration from such Requesting Stockholder, and, in any event, at least five
Business Days prior to the effective date of the registration statement relating
to such registration and (iii) in the case of an Underwritten Shelf Takedown,
promptly following receipt of the request for such Underwritten Shelf Takedown
from such Requesting Stockholder, and, in any event, at least five Business Days
before the intended execution of an underwriting agreement with respect thereto.
Such notice shall set forth such Eligible Stockholder's rights under this
Section 3.4 and shall offer such Eligible Stockholder the opportunity to include
in such registration statement (and in such Underwritten Public Offering, in the
case of an Underwritten Shelf Takedown) the number of Registrable Securities of
the same class or series as those proposed to be registered (or sold, in the
case of an Underwritten Shelf Takedown) as each such Eligible Stockholder may
request (a "PIGGYBACK REGISTRATION"), subject to the provisions of Section
3.4(c). Upon the request of any such Eligible Stockholder made within nine
Business Days (or four Business Days in the case of a Piggyback Registration in
connection with a Demand Registration (or by the Business Day prior to the
effective date of the registration statement related to such Demand
Registration, if later) or Underwritten Shelf Takedown) after the receipt of
notice from the Company (which request shall specify the number of Registrable
Securities intended to be registered (or sold, in the case of an
-10-
Underwritten Shelf Takedown) by such Eligible Stockholder and the minimum price,
IF ANY, below which such Eligible Stockholder will not sell such Registrable
Securities (which minimum price, if any, may be subsequently waived or changed
in the discretion of such Eligible Stockholder)), the Company and the Requesting
Stockholder shall cause the underwriter to include all Registrable Securities
the Company has been so requested to include by all such Eligible Stockholders
(in the case of an Underwritten Shelf Takedown), and shall use all reasonable
efforts to effect the registration under the Securities Act of all Registrable
Securities that the Company has been so requested to register by all such
Eligible Stockholders, to the extent required to permit the disposition of the
Registrable Securities so to be registered; PROVIDED that (i) if such
registration involves an Underwritten Public Offering, all such Stockholders
requesting to be included in the Company's registration must sell their
Registrable Securities to be registered to the underwriters selected as provided
in Section 3.6(h) on the same terms and conditions as apply to the Company or
the Requesting Stockholder requesting such registration, as applicable, it being
understood that no Eligible Stockholder that has specified a minimum price shall
be obligated or (unless it has otherwise agreed with the Company) entitled to
sell its Registrable Securities at a price below the minimum price specified and
(ii) if, at any time after giving notice of its intention to register any
Company Securities in a Primary Registration pursuant to this Section 3.4(a) and
prior to the effective date of the registration statement filed in connection
with such registration, the Company shall determine for any reason not to
register such securities, the Company shall give notice to all such Eligible
Stockholders and, thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration. The Company agrees
to use all reasonable efforts to notify the Participating Stockholders if the
price for any Company Securities to be registered for sale for the account of
the Company in a Primary Registration is expected to occur outside of any
previously publicly announced range; PROVIDED that the Company shall not have
any such obligation with respect to any registration involving the registration
of Company Securities only for the account of parties other than the Company. No
registration effected under this Section 3.4 shall relieve the Company of its
obligations to effect a Demand Registration to the extent required by Section
3.1. The Company shall pay all Registration Expenses in connection with each
Piggyback Registration.
(b) Stockholders will not be entitled to a Piggyback Registration in
an IPO except, in the case of Eligible Stockholders, with the approval of a
majority of the Board (which may grant or withhold such approval in its
discretion but which shall grant such approval to all Eligible Stockholders who
so request on a PRO RATA basis if it grants approval to any).
(c) If a Piggyback Registration involves an Underwritten Public
Offering (other than a Piggyback Registration in connection with a Demand
Registration or Underwritten Shelf Takedown, in which case the provisions with
respect to priority of inclusion in such offering set forth in Sections 3.1 and
3.3, respectively, shall apply) and the managing underwriter advises the Company
that, in its view, the number of Registrable Securities that the Company and
such Eligible Stockholders intend to include in such registration exceeds the
Maximum Offering Size as determined by the Board (after consultation with the
underwriters for such offering), the Company shall include in such registration,
in the following priority, up to the Maximum Offering Size:
(i) first, that number of Company Securities proposed to be offered
for the account of the Company as would not cause the offering to exceed
the Maximum Offering Size,
(ii) second, all Registrable Securities requested to be included in
such offering by any Eligible Stockholders pursuant to this Section 3.4
that have not specified a minimum price for the sale of their Registrable
Securities or that have specified a
-11-
minimum price that is less than or equal to the price determined by the
Company for such sale (allocated, if necessary for the offering not to
exceed the Maximum Offering Size, PRO RATA among such Eligible Stockholders
on the basis of the relative number of Registrable Securities owned by such
Eligible Stockholders at the time of the notice of such Piggyback
Registration), and
(iii) third, any securities proposed to be offered for the account of
any other Persons with such priorities among them as the Company shall
determine.
Section 3.5. LOCK-UP AGREEMENTS.
(a) In connection with an IPO, neither the Company nor any Stockholder
shall effect any public sale or distribution of any Company Securities or other
security of the Company, including a sale or distribution pursuant to Rule 144
(except as part of such Public Offering if otherwise permitted), during the
period beginning 14 days prior to the effective date of the applicable
registration statement and ending upon the earlier of (i) such time as the
Company and the lead managing underwriter for the IPO shall agree and (ii) 180
days after the effective date of the applicable registration statement.
(b) Except with the prior approval of the Committee, in connection
with each Public Offering that occurs during the Committee Phase (other than the
IPO), neither the Company nor any Stockholder shall effect any public sale or
distribution of any Company Securities or other security of the Company,
including a sale or distribution pursuant to Rule 144 (except as part of such
Public Offering) and Fund Distributions, during the period beginning on the
later of (x) the date that the Company's notices to Eligible Stockholders are
delivered pursuant to Section 3.4 and (y) 10 Business Days prior to the
anticipated effective date of the registration statement (or, in the case of an
Underwritten Shelf Takedown, 10 Business Days prior to the intended execution of
an underwriting agreement with respect thereto) and ending on the earlier of (i)
such time as the Requesting Stockholder (in the case of a Demand Registration or
an Underwritten Shelf Takedown) shall agree with the lead managing underwriter
for the applicable Public Offering and (ii) 90 days after the effective date of
the applicable registration statement.
(c) Notwithstanding anything herein to the contrary, Goldman, Sachs &
Co., Goldman Sachs Execution & Clearing, L.P., Credit Suisse Securities (USA)
LLC and their respective Affiliates may engage in brokerage, investment
advisory, investment company, financial advisory, principal investing, anti-raid
advisory, merger advisory, financing, asset management, trading, market making,
arbitrage and other similar activities (including any hedging or other
transactions incidental thereto) conducted in the ordinary course of their
businesses, other than for or on behalf of any Stockholder hereunder.
Section 3.6. REGISTRATION PROCEDURES.
Whenever the Committee or Stockholders request that any Registrable
Securities be registered pursuant to Section 3.1, 3.2, 3.3 or 3.4, subject to
the provisions of such Sections and in particular without prejudice to Section
3.1(f), the Company shall use all reasonable efforts to effect the registration
and the sale of such Registrable Securities in accordance with the
-12-
intended method of disposition thereof as quickly as practicable, and, in
connection with any such request (in all cases, without prejudice to Section
3.1(f)):
(a) The Company shall as expeditiously as possible prepare and file
with the SEC a registration statement on any form for which the Company then
qualifies or that counsel for the Company shall deem appropriate, which shall
comply as to form with requirements of the applicable form and include all
financial statements required by the SEC to be filed therewith and all other
information reasonably requested by the lead managing underwriter or sole
underwriter, if applicable, to be included therein and which form shall be
available for the sale of the Registrable Securities to be registered thereunder
in accordance with the intended method of distribution thereof, and use all
reasonable efforts to cause such filed registration statement to become and
remain effective for a period of not less than 90 days (or such shorter period
in which all of the Registrable Securities of the Participating Stockholders
included in such registration statement shall have actually been sold
thereunder). The Company shall (i) use all reasonable efforts to not take any
action that would cause a registration statement to contain a material
misstatement or omission or to be not effective and usable for resale of
Registrable Securities during the period that such registration statement is
required to be effective and usable and (ii) cause each registration statement
and the related prospectus and any amendment or supplement thereto, as of the
effective date of such registration statement, amendment or supplement, (x) to
comply in all material respects with any requirements of the Securities Act and
the rules and regulations of the SEC and (y) not to contain any untrue statement
of material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading.
(b) Prior to filing a registration statement or prospectus or any
amendment or supplement thereto, the Company shall, if requested, furnish to
each Participating Stockholder and each underwriter, if any, of the Registrable
Securities covered by such registration statement copies of such registration
statement as proposed to be filed, and thereafter the Company shall furnish to
such Stockholder and underwriter, if any, without charge, as many copies of such
registration statement, each amendment and supplement thereto or the prospectus
included therein (in each case including all exhibits thereto and documents
incorporated by reference therein or otherwise deemed to be a part thereof), the
prospectus included in such registration statement (including each preliminary
prospectus, and any summary prospectus) and any other prospectus filed under
Rule 424, Rule 430A or Rule 430B under the Securities Act (including any "issuer
free writing prospectus" as such term is defined in Rule 433 of the Securities
Act regulations) and such other documents as such Stockholder or underwriter may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Stockholder. The Company hereby consents to the use of
the prospectus, including each preliminary prospectus, by each Participating
Stockholder and each underwriter, if any, in connection with the offering and
sale of the Registrable Securities covered by the prospectus or the preliminary
prospectus (such Stockholders hereby agreeing not to make a broad public
dissemination of a form of preliminary prospectus which is designed to be a
"quiet filing" without the Company's consent, such consent to not be withheld
unreasonably). The Company shall, upon request, furnish to the sole underwriter
or lead managing underwriter, if any, without charge, at least one signed copy
of each registration statement and any post-effective amendment thereto,
including financial statements and schedule, all documents incorporated therein
by reference and all exhibits; and furnish to each Participating Stockholder,
without charge, at least
-13-
one conformed copy of each registration statement and any post-effective
amendment thereto (without documents incorporated therein by reference or
exhibits thereto, unless requested). Each Participating Stockholder shall have
the right to request that the Company modify any information contained in such
registration statement, amendment and supplement thereto pertaining to such
Stockholder and the Company shall use all reasonable efforts to comply with such
request, PROVIDED, HOWEVER, that the Company shall not have any obligation to so
modify any information if the Company reasonably expects that so doing would
cause the prospectus to contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading.
(c) After the filing of the registration statement, the Company shall
(i) prepare and file with the SEC such amendments and post-effective amendments
to each such registration statement, as may be necessary to keep such
registration statement effective for the applicable period, (ii) cause the
related prospectus to be supplemented by any required prospectus supplement,
and, as so supplemented, to be filed pursuant to Rule 424 under the Securities
Act, (iii) comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such registration statement
during the applicable period in accordance with the intended methods of
disposition by the Participating Stockholders set forth in such registration
statement or supplement to such prospectus and (iv) promptly notify each
Participating Stockholder holding Registrable Securities covered by such
registration statement of any stop order issued or threatened by the SEC or any
state securities commission and use all reasonable efforts to prevent the entry
of such stop order or to remove it if entered.
(d) The Company shall use all reasonable efforts to (i) register or
qualify the Registrable Securities covered by such registration statement, no
later than the time the applicable registration statement is declared effective
by the SEC, under such other securities or "blue sky" laws of such jurisdictions
in the United States as any Participating Stockholder holding such Registrable
Securities reasonably (in light of such Stockholder's intended plan of
distribution) requests, (ii) use all reasonable efforts to keep each such
registration or qualification effective during the period such registration
statement is required to be kept effective, and (iii) cause such Registrable
Securities 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 and do any and all other acts and things that may be reasonably
necessary or advisable to enable such Stockholder to consummate the disposition
of the Registrable Securities owned by such Stockholder, PROVIDED that the
Company shall not be required to (1) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3.6(d), (2) subject itself to taxation in any such jurisdiction or (3)
consent to general service of process in any such jurisdiction.
(e) The Company shall immediately notify each Participating
Stockholder holding such Registrable Securities covered by such registration
statement, at any time when (1) a Blackout Period is imposed or (2) a prospectus
relating thereto is required to be delivered under the Securities Act, of the
occurrence of an event or the existence of any facts or circumstances requiring
the preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
-14-
were made, not misleading and promptly prepare and make available to each such
Stockholder and file with the SEC any such supplement or amendment.
(f) The Company shall notify each Participating Stockholder promptly,
and, if requested by such Stockholder, confirm such advice in writing, (i) when
a Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) if, between the
effective date of a registration statement and the closing of any sale of
securities covered thereby pursuant to any agreement to which the Company is a
party, the representations and warranties of the Company contained in such
agreement cease to be true and correct in all material respects or if the
Company receives any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation of any proceeding for such purpose and (iii) of the happening of any
event during the period a registration statement is effective as a result of
which such registration statement or the related prospectus contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
(g) The Company shall cooperate with the Participating Stockholders
and the sole underwriter or lead managing underwriter, if any, to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any restrictive legends; and enable such
Registrable Securities to be in such denominations (consistent with the
provisions of the governing documents thereof) and registered in such names as
the selling Participating Stockholders or the sole underwriter or lead managing
underwriter, if any, may reasonably request at least three Business Days prior
to any sale of Registrable Securities.
(h) Except as expressly provided elsewhere in this Agreement, the
Company shall have the right to select an underwriter or underwriters in
connection with any Underwritten Public Offering resulting from the exercise by
any Stockholder of a Demand Registration or in connection with any other
Underwritten Public Offering; PROVIDED that, in connection with any Demand
Registration where the Company will not be selling any Registrable Securities,
the Stockholder holding the largest number of the Registrable Securities to be
sold under such Demand Registration shall have the right to select the
underwriters. In connection with any Public Offering, the Company shall enter
into customary agreements (including an underwriting agreement in customary
form) and take all such other actions as are reasonably required in order to
expedite or facilitate the disposition of such Registrable Securities in any
such Public Offering, including the engagement of a "qualified independent
underwriter" in connection with the qualification of the underwriting
arrangements with the NASD.
(i) Upon execution of confidentiality agreements in form and substance
reasonably satisfactory to the Company by any Participating Stockholder and any
underwriter participating in any disposition pursuant to a registration
statement being filed by the Company pursuant to this Section 3.6, the Company
shall make available for inspection by such Participating Stockholder and any
such underwriter and any attorney, accountant or other professional retained by
any such Stockholder or underwriter (collectively, the "INSPECTORS"), all
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the "RECORDS") as shall be reasonably necessary or
desirable to enable them to exercise their due diligence responsibility, and
cause the Company's officers, directors and
-15-
employees to participate in discussions with, and supply all information
reasonably requested by, any Inspectors in connection with such registration
statement. Records that the Company determines, in good faith, to be
confidential and that it notifies the Inspectors are confidential shall not be
disclosed by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such registration
statement or (ii) the release of such Records is required pursuant to applicable
law or regulation or judicial process.
(j) The Company shall enter into customary agreements (including, in
the case of an underwritten offering, underwriting agreements in customary form,
and including provisions with respect to indemnification and contribution in
customary form and consistent with the provisions relating to indemnification
and contribution contained herein) and take all other customary and appropriate
actions in order to expedite or facilitate the disposition of such Registrable
Securities and in connection therewith:
(1) make such representations and warranties to the Participating
Stockholders and the underwriters, if any, in form, substance and scope as
are customarily made by issuers to underwriters in similar underwritten
offerings;
(2) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the lead managing underwriter, if any, and the
Participating Stockholder holding the largest number of Registrable
Securities being sold) addressed to each selling Participating Stockholder
and the underwriters, if any, covering the matters customarily covered in
opinions requested in sales of securities or underwritten offerings;
(3) obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants addressed to the
Participating Stockholders, if permissible, and the underwriters, if any,
which letters shall be customary in form and shall cover matters of the
type customarily covered in "cold comfort" letters to underwriters in
connection with primary underwritten offerings;
(4) to the extent requested and customary for the relevant
transaction, enter into a securities sales agreement with the Participating
Stockholders and such representative of the Participating Stockholder
holding the largest number of the Registrable Securities covered by any
Registration Statement relating to the Demand Registration and providing
for, among other things, the appointment of such representative as agent
for the Participating Stockholders for the purpose of soliciting purchases
of Registrable Securities, which agreement shall be customary in form,
substance and scope and shall contain customary representations, warranties
and covenants; and
(5) deliver such customary documents and certificates as may be
reasonably requested by the Participating Stockholders holding the largest
number of Registrable Securities being sold or by the managing
underwriters, if any.
-16-
The above shall be done (i) at the effectiveness of such registration statement
(and each post-effective amendment thereto) in connection with any registration
and (ii) at each closing under any underwriting or similar agreement as and to
the extent required thereunder.
(k) The Company shall otherwise use all reasonable efforts to comply
with all applicable rules and regulations of the SEC and make available to its
security holders, as soon as reasonably practicable, an earnings statement or
such other document that shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder.
(l) At all times while any Company Securities held by any Stockholder
are Registrable Securities, the Company shall file all reports required to be
filed by it under the Exchange Act and the rules and regulations adopted by the
SEC thereunder in a timely manner in accordance with the requirements of the
Exchange Act. All such reports shall comply in all material respects with the
applicable requirements of the Exchange Act when filed.
(m) The Company may require each such Participating Stockholder
promptly to furnish in writing to the Company such information regarding such
Participating Stockholders' distribution of the Registrable Securities as the
Company may from time to time reasonably request and such other information as
may be required in connection with such registration.
(n) Each such Participating Stockholder agrees that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in Section 3.6(e) or the imposition of any Blackout Period, such Stockholder
shall forthwith discontinue disposition of Registrable Securities pursuant to
the registration statement covering such Registrable Securities until such
Stockholder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3.6(e), and, if so directed by the Company, such
Stockholder shall deliver to the Company (at the expense of the Company) all
copies, other than any permanent file copies then in such Stockholder's
possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice. If the Company shall give such notice,
the Company shall extend the period during which such registration statement
shall be maintained effective (including the period referred to in Section
3.6(a)) by the number of days during the period from and including the date of
the giving of notice pursuant to Section 3.6(e) to the date when the Company
shall make available to such Stockholder a prospectus supplemented or amended to
conform with the requirements of Section 3.6(e).
(o) The Company shall use all reasonable efforts to list all
Registrable Securities covered by any registration statement filed pursuant to
this Article 3 on the principal securities exchange or quotation system on which
any of the Registrable Securities are then listed or traded.
(p) The Company shall cooperate and assist in any filings required to
be made with the NASD and in the performance of any due diligence investigation
by any underwriter in an underwritten offering.
(q) The Company shall have appropriate officers of the Company (i)
prepare and make presentations at any "road shows" and before analysts and
rating agencies, as the case
-17-
may be, (ii) take other actions to obtain ratings for any Registrable Securities
and (iii) otherwise use their reasonable efforts to cooperate as reasonably
requested by the underwriters in the offering, marketing or selling of the
Registrable Securities, including, without limitation, by executing customary
underwriting or placement agency agreements on behalf of the Company.
(r) For the avoidance of doubt, other than with respect to a Shelf
Registration pursuant to a Committee Shelf Registration Request, the Company
shall not be required to maintain a shelf registration statement under this
Agreement.
Section 3.7. INDEMNIFICATION BY THE COMPANY.
(a) The Company agrees to indemnify and hold harmless, to the full
extent permitted by law, each Participating Stockholder holding Registrable
Securities, each of their directors, officers, employees, shareholders, general
partners, limited partners, members, advisory directors, managing directors and
Affiliates (other than the Company and its Subsidiaries) (and directors,
officers, employees, shareholders, general partners, limited partners, members,
advisory directors, managing directors and controlling persons thereof)
(collectively, "STOCKHOLDER RELATED PERSONS") from and against any and all
losses, claims, damages or liabilities, joint or several, and expenses
(including without limitation reasonable attorneys' fees and any and all
reasonable expenses incurred investigating, preparing or defending against any
litigation, commenced or threatened, or any claim, and any and all amounts paid
in any settlement of any such claim or litigation) to which such Stockholder
Related Persons may become subject, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) (the "DAMAGES") or
expenses arise out of or are based upon, caused by or relating to (i) any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement, prospectus, offering circular, offering memorandum or
similar document relating to the Registrable Securities (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or (ii) 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 (in the case of a registration
statement) or not misleading in the light of the circumstances under which they
were made (in the case of a prospectus, preliminary prospectus, offering
circular, offering memorandum or similar document), except insofar as such
Damages are caused by or related to any such untrue statement or omission or
alleged untrue statement or omission so made based upon information furnished in
writing to the Company by such Stockholder or on such Stockholder's behalf
expressly for use therein. Such indemnification obligation shall be in addition
to any liability that the Company may otherwise have to any other such
Stockholder Related Persons.
(b) The Company also agrees to indemnify any underwriters of the
Registrable Securities, their directors, officers, employees, shareholders,
general partners, limited partners, members, advisory directors, managing
directors and Affiliates (and directors, officers, employees, shareholders,
general partners, limited partners, members, advisory directors, managing
directors and controlling persons thereof) (collectively, "UNDERWRITER RELATED
PERSONS") on substantially the same basis as that of the indemnification of the
Stockholders provided in this Section 3.7 or otherwise on commercially
reasonable terms negotiated on an arm's-length basis with such underwriters.
-18-
(c) The Company also agrees to indemnify and hold harmless each
Committee Member, each of their directors, officers, employees, shareholders,
general partners, limited partners, members, advisory directors, managing
directors and Affiliates (and directors, officers, employees, shareholders,
general partners, limited partners, members, advisory directors, managing
directors and controlling persons thereof) (collectively, "COMMITTEE MEMBER
RELATED PERSONS") from and against any Damages in connection with any decisions
made or any actions taken or not taken by the Committee under Articles 2 and 3
hereof other than any claim or liability arising from the intentional breach of
this Agreement by, or bad faith, willful misconduct or gross negligence of, such
Persons. This Section 3.7(c) shall terminate if, in connection with the IPO, the
lead managing underwriter advises each Committee Member and the Company in
writing that the continuation of the indemnification provided hereby would
materially and adversely affect the IPO.
(d) The provisions of this Section 3.7 are intended to be for the
benefit of, and shall be enforceable by, each Stockholder Related Person, each
Underwriter Related Person and each Committee Member Related Person, as
applicable, and its respective successors, heirs and representatives.
Section 3.8. INDEMNIFICATION BY PARTICIPATING STOCKHOLDERS.
Each Participating Stockholder holding Registrable Securities included
in a registration statement agrees, severally but not jointly, to indemnify and
hold harmless the Company, its officers, directors and agents and each Person,
if any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to such Stockholder, but only with respect
to information furnished in writing by such Stockholder or on such Stockholder's
behalf expressly for use in any registration statement or prospectus relating to
the Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus. Each such Stockholder also agrees to indemnify and hold
harmless underwriters of the Registrable Securities, their directors, officers,
employees, shareholders, general partners, limited partners, members, advisory
directors, managing directors and Affiliates (and directors, officers,
employees, shareholders, general partners, limited partners, members, advisory
directors, managing directors and controlling persons thereof) on substantially
the same basis as that of the indemnification of the Company provided in this
Section 3.8. As a condition to including Registrable Securities in any
registration statement filed in accordance with this Article 3, the Company may
require that it shall have received an undertaking reasonably satisfactory to it
from any underwriter to indemnify and hold it and each Participating Stockholder
harmless to the extent customarily provided by underwriters with respect to
similar securities. No Participating Stockholder shall be liable under this
Section 3.8 for any Damages in excess of the net proceeds realized by such
Stockholder in the sale of Registrable Securities of such Stockholder to which
such Damages relate.
Section 3.9. CONDUCT OF INDEMNIFICATION PROCEEDINGS.
If any proceeding (including any governmental investigation) shall be
instituted involving any Person in respect of which indemnity may be sought
pursuant to this Article 3, such Person (an "INDEMNIFIED PARTY") shall promptly
notify the Person against whom such
-19-
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Party, and shall assume the
payment of all fees and expenses; PROVIDED that the failure of any Indemnified
Party to so notify the Indemnifying Party shall not relieve the Indemnifying
Party of its obligations hereunder except to the extent and only to the extent
that the Indemnifying Party is materially prejudiced by such failure to notify.
In any such proceeding, any Indemnified Party shall have the right to retain its
own counsel separate from counsel selected by the Indemnifying Party, but the
fees and expenses of such counsel shall be at the expense of such Indemnified
Party unless (i) the Indemnifying Party and the Indemnified Party shall have
mutually agreed to the retention of such counsel or (ii) in the reasonable
judgment of such Indemnified Party representation of the Indemnified Party and
the Indemnifying Party by the same counsel would be inappropriate due to actual
or potential differing interests between them.
It is understood that, in connection with any proceeding or related
proceedings in the same jurisdiction, the Indemnifying Party shall not be liable
for the reasonable fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) at any time for all such Indemnified Parties,
and that all such fees and expenses shall be reimbursed as they are incurred. In
the case of any such separate firm for the Indemnified Parties, such firm shall
be designated in writing by the Indemnified Parties. The Indemnifying Party
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent, or if there be a final
judgment for the plaintiff, the Indemnifying Party shall indemnify and hold
harmless such Indemnified Parties from and against any loss or liability (to the
extent stated above) by reason of such settlement or judgment. Without the prior
written consent of the Indemnified Party, no Indemnifying Party shall effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such proceeding.
Section 3.10. CONTRIBUTION.
If the indemnification provided for in this Article 3 is unavailable
to or insufficient to hold harmless the Indemnified Parties in respect of any
Damages, then each such 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 Damages (i) as between the Company and the
Participating Stockholders holding Registrable Securities covered by a
registration statement on the one hand and the underwriters on the other, in
such proportion as is appropriate to reflect the relative benefits received by
the Company and such Stockholders on the one hand and the underwriters on the
other, from the offering of the Registrable Securities, or if such allocation is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits but also the relative fault of the Company and
such Stockholders on the one hand and of such underwriters on the other in
connection with the statements or omissions that resulted in such Damages, as
well as any other relevant equitable considerations and (ii) as between the
Company on the one hand and each such Stockholder on the other, in such
proportion as is appropriate to reflect the relative fault of the Company and of
each such Stockholder in connection with such statements or omissions, as well
as any other relevant
-20-
equitable considerations. The relative benefits received by the Company and such
Stockholders on the one hand and such underwriters on the other shall be deemed
to be in the same proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and such Stockholders bear to the total underwriting discounts
and commissions received by such underwriters, in each case as set forth in the
table on the cover page of the prospectus. The relative fault of the Company and
such Stockholders on the one hand and of such underwriters on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company and such
Stockholders or by such underwriters. The relative fault of the Company on the
one hand and of each such Stockholder on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Participating Stockholders agree that it would not
be just and equitable if contribution pursuant to this Section 3.10 were
determined by PRO RATA allocation (even if the underwriters were treated as one
entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
Damages referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 3.10, no Participating Stockholder shall be required to contribute any
amount for Damages in excess of the net proceeds realized by such Stockholder in
the sale of Registrable Securities of such Stockholder to which such Damages
relate. 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. Each
Participating Stockholder's obligation to contribute pursuant to this Section
3.10 is several in the proportion that the net proceeds of the offering received
by such Stockholder bears to the total net proceeds of the offering received by
all such Participating Stockholders and not joint.
Section 3.11. PARTICIPATION IN PUBLIC OFFERING.
No Person may participate in any Public Offering hereunder unless such
Person (i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and the provisions of
this Agreement in respect of registration rights.
Section 3.12. OTHER INDEMNIFICATION.
Indemnification similar to that specified herein (with appropriate
modifications) shall be given by the Company and each Participating Stockholder
with respect to any required
-21-
registration or other qualification of securities under any federal or state law
or regulation or governmental authority other than the Securities Act.
Section 3.13. COOPERATION BY THE COMPANY.
If any Stockholder shall Transfer or purport to Transfer any
Registrable Securities pursuant to Rule 144 in accordance with the terms of this
Agreement, the Company shall cooperate, to the extent commercially reasonable,
with such Stockholder and shall provide to such Stockholder such information as
such Stockholder shall reasonably request, including "current public
information" satisfying the requirements of paragraph (c) of Rule 144 and
information satisfying the requirements of paragraph (d)(4) of Rule 144A under
the Securities Act.
Section 3.14. RELEASE OF COMMITTEE MEMBERS.
Each Stockholder on behalf of itself and each of its direct and
indirect subsidiaries, if any, (i) agrees and acknowledges that neither the
Committee nor the individual Committee Members owe it any fiduciary duty in
connection with the matters entrusted to the Committee pursuant to this
Agreement and (ii) hereby agrees to release the Company, the Committee Members
and their respective officers, directors and agents and each Person, if any, who
controls such Committee Member within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from any and all manner of
action or actions, cause or causes of action, in law or in equity or otherwise,
liabilities, claims and damages it may have, now or hereafter, upon or by reason
of any matter, cause or thing concerning, arising out of, or in any way
connected to any decisions made or actions taken or not taken by the Committee
under Articles 2 and 3 hereof other than any claim or liability arising from the
intentional breach of this Agreement by, or bad faith, willful misconduct or
gross negligence of, such Persons.
Section 3.15. WAIVER OF REGISTRATION RIGHTS IN CONNECTION WITH IPO
BONUS PLAN.
In connection with an IPO, the Company will have the right to require
the Stockholders who are employees or officers of the Company or any of its
subsidiaries (the "STOCKHOLDER EXECUTIVES") to waive all of their rights under
this Agreement so long as the Company or a subsidiary implements an IPO-related
bonus plan in cash, stock or additional options to compensate such Stockholder
Executives for the reduced opportunities to obtain liquidity for their Shares.
ARTICLE IV
Miscellaneous
Section 4.1. BINDING EFFECT; ASSIGNABILITY; BENEFIT. (a) Neither the
Company nor any Stockholder shall assign all or any part of this Agreement
without the prior written consent of the other parties hereto; provided that in
connection with any Transfer of Shares by a Sponsor Stockholder or Permitted
Transferee of the Sponsor Stockholder that would result in the transferee
becoming an Eligible Stockholder, (1) the transferring Sponsor Stockholder may
assign to such transferee all, but not less than all, of such Sponsor
Stockholder's demand registration rights under Section 3.1, and (2) such
transferee
-22-
may, in the discretion of the transferring Sponsor Stockholder, thereafter be
treated as a Stockholder for purposes of this Agreement, provided, in each of
clauses (1) and (2), the transferee agrees to be bound by this Agreement
(including for purposes of Section 3.4) in all respects as a "Stockholder"
hereunder. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, successors, legal representatives and
permitted assigns; PROVIDED, HOWEVER, that this Agreement shall not inure to the
benefit of or be binding on, or be assignable or transferable by any Stockholder
to, any Person acquiring Company Securities in any Public Offering or pursuant
to Rule 144. Any Stockholder that ceases to own beneficially any Company
Securities shall cease to be bound by the terms hereof (other than (i) the
provisions of Sections 3.7, 3.8, 3.9, 3.10 and 3.12 applicable to such
Stockholder with respect to any offering of Registrable Securities completed
before the date such Stockholder ceased to own any Company Securities and (ii)
Sections 4.1, 4.2, 4.5, 4.6, 4.7 and 4.8).
(b) Except as expressly set forth in Sections 3.7, 3.8 and 3.9,
nothing in this Agreement, expressed or implied, is intended to confer on any
Person other than the parties hereto, and their respective heirs, successors,
legal representatives and permitted assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
Section 4.2. NOTICES.
All notices, requests and other communications to any party shall be
in writing and shall be delivered in person, mailed by certified or registered
mail, return receipt requested, or sent by facsimile transmission or electronic
mail:
TO THE COMPANY: UICI
9151 Grapevine Highway
North Richland Hills, TX 76180
Facsimile: (817) 255-5334
Attention: William J. Gedwed
Attention: General Counsel
TO ANY MEMBER OF THE Blackstone Management Partners IV L.L.C.
BLACKSTONE INVESTOR GROUP: 345 Park Avenue, 31st Floor
New York, NY 10154
Facsimile: (212) 583-5722
Attention: Chinh Chu
With a copy to: Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Facsimile: (212) 403-2000
Attention: Mark Gordon, Esq.
-23-
TO ANY MEMBER OF THE GS Capital Partners V Fund, L.P.
GS INVESTOR GROUP: 85 Broad Street, 31st Floor
New York, NY 10004
Facsimile: (212) 357-5505
Attention: John Bowman
With a copy to: Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
Facsimile: (212) 558-3588
Attention: Richard A. Pollack, Esq.
TO ANY MEMBER OF THE DLJ Merchant Banking Partners IV, L.P.
DLJ INVESTOR GROUP: Eleven Madison Avenue
New York, NY 10010
Facsimile: (212) 325-0256
Attention: Michael Isikow
With a copy to: Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Facsimile: (212) 450-3800
Attention: Nancy L. Sanborn, Esq.
and if to any other Stockholder, at such Stockholder's address as set forth in
the Register of Members maintained by the Company, with a copy to the Company,
at the address above, Attn: General Counsel. Any Person that becomes a
Stockholder shall promptly provide its address and fax number and email address
to the Company.
All notices, requests and other communications shall be deemed
received on the date of receipt by the recipient thereof if received prior to
5:00 p.m. in the place of receipt and such day is a Business Day in the place of
receipt. Otherwise, any such notice, request or communication shall be deemed
not to have been received until the next succeeding Business Day in the place of
receipt.
Any notice, request or other written communication sent by facsimile
transmission shall be confirmed by certified or registered mail, return receipt
requested, posted within one Business Day, or by personal delivery, whether
courier or otherwise, made within two Business Days after the date of such
facsimile transmissions.
Section 4.3. WAIVER; AMENDMENT; TERMINATION.
(a) Any party hereto may, on behalf of itself only, (i) extend the
time for the performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties of any other party contained herein or in any document delivered
pursuant hereto or (iii) waive compliance by any other party with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any
-24-
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party granting such waiver, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or future failure.
(b) No provision of this Agreement may be amended or otherwise
modified except by an instrument in writing by Sponsor Stockholders that own not
less than 70% of the Sponsor Shares.
(c) In addition, any amendment or modification of any provision of
this Agreement that would adversely affect a Stockholder in a manner different
from any other Stockholder may be effected only with the consent of such
Stockholder.
Section 4.4. GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY,
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES
WHICH WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
Section 4.5. JURISDICTION.
The parties hereby irrevocably and unconditionally consent and submit
to the exclusive jurisdiction of the federal courts of the Southern District of
New York and New York State courts sitting in New York City for any actions,
suits or proceedings arising out of or relating to this Agreement and the
transactions contemplated hereby (and agree not to commence any action, suit or
proceeding relating thereto except in such courts, and further agree that
service of any process, summons, notice or document by U.S. registered mail to
its address set forth above shall be effective service of process for any
action, suit or proceeding brought against such party in any such court). The
parties hereby irrevocably and unconditionally waive any objection to the laying
of venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in the federal courts of the Southern District
of New York and New York State courts sitting in New York City, and hereby
further irrevocably and unconditionally waive and agree not to plead or claim in
any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
Section 4.6. WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 4.7. SPECIFIC ENFORCEMENT.
Each party hereto acknowledges that the remedies at law of the other
parties for a breach or threatened breach of this Agreement would be inadequate
and, in recognition of this
-25-
fact, any party to this Agreement, without posting any bond, and in addition to
all other remedies that may be available, shall be entitled to obtain equitable
relief in the form of specific performance, a temporary restraining order, a
temporary or permanent injunction or any other equitable remedy that may then be
available.
Section 4.8. COUNTERPARTS; EFFECTIVENESS.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective as to the Sponsor Stockholders when it has been executed
by all of the Sponsor Stockholders and the Company, and shall become effective
as to each Management Stockholder when it has been executed by such Management
Stockholder.
Section 4.9. ENTIRE AGREEMENT.
This Agreement, the Stockholders Agreement and the Fee Agreement
constitute the entire agreement among the parties hereto and supersede all prior
and contemporaneous agreements and understandings, both oral and written, among
the parties hereto with respect to the subject matter hereof.
Section 4.10. CAPTIONS.
The captions herein are included for convenience of reference only and
shall be ignored in the construction or interpretation hereof.
Section 4.11. SEVERABILITY.
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. Upon such a determination, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner so that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.
Section 4.12. TERMINATION.
This Agreement shall terminate and, except as provided herein, be of
no further effect upon the termination of the Stockholders Agreement. No
termination under this Agreement shall relieve any Person of liability for
breach prior to termination. In the event that this Agreement is terminated,
each Stockholder shall retain the indemnification, contribution and
reimbursement rights provided for in this Agreement with respect to any matter
that occurred prior to such termination.
-26-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.
UICI
By: /s/ Glenn W. Reed
___________________________________
Name: Glenn W. Reed
Title: Executive Vice President and General
Counsel
[UICI SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
BLACKSTONE CAPITAL PARTNERS IV
L.P.
By: Blackstone Management Associates IV
L.L.C., its General Partner
By: /s/ Chinh Chu
______________________________
Name: Chinh Chu
Title: Member
BLACKSTONE CAPITAL PARTNERS
IV-A L.P.
By: Blackstone Management Associates IV
L.L.C., its General Partner
By: /s/ Chinh Chu
______________________________
Name: Chinh Chu
Title: Member
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP IV-A L.P.
By: Blackstone Management Associates IV
L.L.C., its General Partner
By: /s/ Chinh Chu
______________________________
Name: Chinh Chu
Title: Member
BLACKSTONE PARTICIPATION
PARTNERSHIP IV L.P.
By: Blackstone Management Associates IV
L.L.C., its General Partner
By: /s/ Chinh Chu
______________________________
Name: Chinh Chu
Title: Member
[BLACKSTONE SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
MULBERRY HOLDINGS I, LLC
By: GS Maverick Co., its Managing Member
By: /s/ Adrian M. Jones
______________________________
Name: Adrian M. Jones
Title: President
MULBERRY HOLDINGS II, LLC
By: GS Maverick Co., its Managing Member
By: /s/ Adrian M. Jones
______________________________
Name: Adrian M. Jones
Title: President
[GOLDMAN SACHS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
DLJ MERCHANT BANKING
PARTNERS IV, L.P
By: DLJ Merchant Banking, Inc., the
General Partner of DLJ Merchant
Banking IV, L.P., its General
Partner
DLJ OFFSHORE PARTNERS IV, L.P
By: DLJ Merchant Banking, Inc., the
General Partner of DLJ Merchant
Banking IV (Cayman), L.P., its
Overseas General Partner, and the
General Partner of DLJ Merchant
Banking IV, L.P., its Domestic
General Partner
Signed By or on Behalf of the Foregoing
Entities:
By: /s/ Kamil Salame
___________________________________
Name: Kamil Salame
Title: Authorized Representative
[DLJ SIGNATURE PAGE 1 TO REGISTRATION RIGHTS AGREEMENT]
MBP IV PLAN INVESTORS, L.P.
By: DLJ LBO Plans Management
Corporation, its General Partner
By: /s/ Kamil Salame
___________________________________
Name: Kamil Salame
Title: Authorized Representative
CSFB STRATEGIC PARTNERS
HOLDINGS III, L.P.
By: DLJ MB Advisors, Inc., its indirect
general partner
By: /s/ Peter Song
___________________________________
Name: Peter Song
Title: Vice President
[DLJ SIGNATURE PAGE 2 TO REGISTRATION RIGHTS AGREEMENT]
CSFB STRATEGIC PARTNERS
PARALLEL HOLDINGS III, L.P.
By: DLJ MB Advisors, Inc., its indirect
general partner
By: /s/ Peter Song
___________________________________
Name: Peter Song
Title: Vice President
[DLJ SIGNATURE PAGE 3 TO REGISTRATION RIGHTS AGREEMENT]