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AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
among
SUPERIOR NATIONAL INSURANCE GROUP, INC.,
INSURANCE PARTNERS, L.P.,
INSURANCE PARTNERS OFFSHORE (BERMUDA), L.P., and
CAPITAL Z FINANCIAL SERVICES FUND II, L.P.,
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Dated: December 10, 1998
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TABLE OF CONTENTS
PAGE
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1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. General; Securities Subject to this Agreement . . . . . . . . . . . . 5
(a) Grant of Rights . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Registrable Securities . . . . . . . . . . . . . . . . . . . . . 5
(c) Holders of Registrable Securities . . . . . . . . . . . . . . . 6
3. Demand Registration . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) Request for Demand Registration . . . . . . . . . . . . . . . . 6
(b) Limitation on Demand Registrations . . . . . . . . . . . . . . . 7
(c) Effective Demand Registration . . . . . . . . . . . . . . . . . 7
(d) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(e) Underwriting Procedures . . . . . . . . . . . . . . . . . . . . 8
(f) Selection of Underwriters . . . . . . . . . . . . . . . . . . . 8
4. Incidental or "Piggy-Back" Registration . . . . . . . . . . . . . . . 8
(a) Request for Incidental Registration . . . . . . . . . . . . . . 8
(b) Reduction in Registrable Securities to be Registered . . . . . . 9
(c) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5. Holdback Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Restrictions on Public Sale by Designated Holders . . . . . . . 10
(b) Restrictions on Public Sale by the Company . . . . . . . . . . . 11
6. Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . 11
(a) Obligations of the Company . . . . . . . . . . . . . . . . . . . 11
(b) Seller Information . . . . . . . . . . . . . . . . . . . . . . . 13
(c) Preparation; Reasonable Investigation . . . . . . . . . . . . . 14
(d) Notice to Discontinue . . . . . . . . . . . . . . . . . . . . . 14
7. Indemnification; Contribution . . . . . . . . . . . . . . . . . . . . 14
(a) Indemnification by the Company . . . . . . . . . . . . . . . . . 14
(b) Indemnification by Designated Holders . . . . . . . . . . . . . 15
(c) Conduct of Indemnification Proceedings . . . . . . . . . . . . . 16
(d) Other Indemnification . . . . . . . . . . . . . . . . . . . . . 17
(e) Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(f) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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PAGE
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8. Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(a) Recapitalizations, Exchanges, etc. . . . . . . . . . . . . . . . 18
(b) No Inconsistent Agreements . . . . . . . . . . . . . . . . . . . 18
(c) Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(d) Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . 19
(e) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(f) Successors and Assigns; Third Party Beneficiaries . . . . . . . 21
(g) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(h) Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(i) GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . 21
(j) Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(k) Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 22
(l) Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 22
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AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, dated
December 10, 1998 (this "Agreement"), among Superior National Insurance
Group, Inc., a Delaware corporation (the "Company"), Insurance Partners,
L.P., a Delaware limited partnership ("IP"), Insurance Partners Offshore
(Bermuda), L.P., a Bermuda limited partnership ("IP Bermuda"), and Capital Z
Financial Services Fund II, L.P., a Bermuda limited partnership ("Cap Z Fund
II" and, together with IP and IP Bermuda, "Insurance Partners").
WHEREAS, pursuant to the Amended and Restated Stock Purchase
Agreement, dated as of September 17, 1996, as amended and restated effective
as of February 17, 1997 (the "Stock Purchase Agreement"), by and among the
Company, IP, IP Bermuda and such other persons or entities that executed the
form of subscription agreement attached thereto as Exhibit A, pursuant to
which the Company agreed to, among other things, issue and sell to (a) IP,
and IP agreed to purchase from the Company, an aggregate of 1,369,856 shares
of Common Stock and (b) IP Bermuda, and IP Bermuda agreed to purchase from
the Company, an aggregate of 754,978 shares of Common Stock;
WHEREAS, pursuant to the Stock Purchase Agreement, dated as of
May 5, 1998 (the "New Stock Purchase Agreement"), by and among the Company,
IP, IP Bermuda and Capital Z Partners, Ltd., a Bermuda corporation ("Cap Z"),
pursuant to which the Company has agreed to, among other things, issue and
sell to (a) IP, and IP has agreed to purchase from the Company, up to an
aggregate of 3,737,504 shares of Common Stock; (b) IP Bermuda, and IP Bermuda
has agreed to purchase from the Company, up to an aggregate of 1,516,227
shares of Common Stock; and (c) Cap Z, and Cap Z has agreed to purchase from
the Company, up to an aggregate of 6,686,567 shares of Common Stock;
WHEREAS, pursuant to the certain letter, dated December 7,
1998, among Cap Z, Cap Z Fund II and the Company, Cap Z assigned all of its
rights and obligations under the Stock Purchase Agreement to Cap Z Fund II;
WHEREAS, in order to induce each of IP and IP Bermuda to
purchase shares of Common Stock pursuant to the Stock Purchase Agreement (in
the aggregate, the "Original Shares"), the Company granted certain
registration rights as set forth in the Registration Rights Agreement, dated
April 11, 1997 (the "Original Agreement"), among the Company, IP and IP
Bermuda; and
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WHEREAS, in order to induce each of IP, IP Bermuda and Cap Z
Fund II (as the assignee of Cap Z) to purchase shares of Common Stock
pursuant to the New Stock Purchase Agreement (in the aggregate, the "New
Shares" and, together with the Original Shares, the "Shares"), the Company
has agreed to grant registration rights with respect to the Registrable
Securities (as hereinafter defined) and to modify the Original Agreement, in
each case as set forth in this 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, and notwithstanding
anything to the contrary contained in the Original Agreement, the Original
Agreement is hereby amended and restated in its entirety as follows:
1. DEFINITIONS. As used in this Agreement the following
terms have the meanings indicated:
"AFFILIATE" shall mean any Person who is an "affiliate"
as defined in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act.
"APPROVED UNDERWRITER" has the meaning set forth in
Section 3(f).
"CAP Z" has the meaning assigned to such term in the
recitals to this Agreement.
"CAP Z FUND II" has the meaning assigned to such term in
the recitals to this Agreement.
"CENTRELINE" means CentreLine Reinsured Limited, a
Bermuda corporation.
"CENTRELINE WARRANT" means the Common Stock Purchase
Warrant, dated as of June 30, 1994, issued by the Company to CentreLine
pursuant to the Preferred Securities Purchase Agreement, dated as of June 30,
1994, by and between the Company, Superior National Capital Holding
Corporation, Superior National Capital, L.P. and Centre Reinsurance Services
(Bermuda) III Limited.
"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, par value $.01
per share, of the Company or any other equity securities of the Company into
which such securities are converted, reclassified, reconstituted or exchanged.
3
"COMPANY" has the meaning assigned to such term in the
recital 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 the Insurance Partners
Stockholders 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.
"IIA" means International Insurance Advisors, Inc., a
Delaware corporation.
"III" means International Insurance Investors, L.P., a
Bermuda limited partnership.
"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).
"INSURANCE PARTNERS" has the meaning assigned to such
term in the recitals to this Agreement.
"INSURANCE PARTNERS STOCKHOLDERS" means each of IP, IP
Bermuda, Cap Z Fund II, ZCI, any Affiliate thereof to whom or which
Registrable Securities are transferred.
"IP" has the meaning assigned to such term in the
recitals to this Agreement.
"IP BERMUDA" has the meaning assigned to such term in
the recitals to this Agreement.
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"NEW SHARES" has the meaning assigned to such term in
the recitals to this Agreement.
"NEW STOCK PURCHASE AGREEMENT" has the meaning assigned
to such term in the recitals to this Agreement.
"1992 COMMON STOCK PURCHASE WARRANTS" means each of the
Common Stock Purchase Warrants, dated as of March 31, 1992, issued by the
Company pursuant to the Note Purchase Agreement, dated as of March 31, 1992,
among the Company and the purchasers listed on Schedule I thereto.
"1998 COMMON STOCK PURCHASE WARRANTS" means each of the
Common Stock Purchase Warrants, dated as of December 10, 1998, issued by the
Company pursuant to the New Stock Purchase Agreement.
"ORIGINAL AGREEMENT" has the meaning assigned to such
term in the recitals to this Agreement.
"ORIGINAL SHARES" has the meaning assigned to such term
in the recitals to this Agreement.
"OTHER RIGHTHOLDERS" has the meaning set forth in
Section 3(a).
"PERSON" means any individual, firm, corporation,
partnership, limited liability company, trust, incorporated or unincorporated
association, joint venture, joint stock company, limited liability 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 each of the following:
(a) any and all Shares owned by the Designated Holders and (b) any shares of
Common Stock issued or issuable to any of the Designated Holders (i) upon
conversion, exercise or exchange of the 1998 Common Stock Purchase Warrants
or (ii) with respect to the Shares 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 shares of Common Stock
issuable upon conversion, exercise or exchange thereof.
"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 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
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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 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 holders pursuant to Section 3(d), 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.
"SECURITIES ACT" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"SHARES" has the meaning assigned to such term in the
recitals to this Agreement.
"STOCK PURCHASE AGREEMENT" has the meaning assigned to
such term in the recitals to this Agreement.
"SUBSIDIARY" has the meaning set forth in Section 6(c).
"ZCI" means Zurich Centre Investments Ltd.
2. GENERAL; SECURITIES SUBJECT TO THIS AGREEMENT.
(a) GRANT OF RIGHTS. The Company hereby grants
registration rights to the Insurance Partners Stockholders upon the terms and
conditions set forth in this Agreement.
(b) REGISTRABLE SECURITIES. For the purposes of
this Agreement, Registrable Securities 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 proposed 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 pursuant to Rule 144 (or any successor provision
then in effect) under the Securities Act and the Designated Holder is not
then an Affiliate of the Company, or
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(iii) the Registrable Securities are proposed to be sold or distributed by a
Person not entitled to the registration rights granted by this Agreement.
(c) 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
whether or not such acquisition or conversion has actually been effected and
disregarding any legal restrictions upon the exercise of such rights. 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 upon conversion of another security
shall be deemed outstanding for the purposes of this Agreement.
3. DEMAND REGISTRATION.
(a) REQUEST FOR DEMAND REGISTRATION. At any time
any of the Insurance Partners Stockholders (the "Initiating Holders") shall
be entitled to request in writing that the Company use its best efforts to
effect the registration under the Securities Act, and under the securities or
"blue sky" laws of any jurisdiction designated by such Initiating Holders, of
all or part of such Initiating Holders' 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 Holders of a request
for a Demand Registration, give written notice of such Demand Registration to
(i) all of the Insurance Partners Stockholders (other than the Initiating
Holders), (ii) all holders of (x) the 1992 Common Stock Purchase Warrants,
(y) the CentreLine Warrant and (z) the 1998 Common Stock Purchase Warrants,
and (iii) in the event that any Insurance Partners Stockholder distributed
Registrable Securities to its partners or members, all such partners and
members (the Persons in clauses (i), (ii) and (iii) being referred to
collectively as the "Other Rightholders"), and thereupon will, as provided in
Section 6, use its best efforts to effect the registration under the
Securities Act of (i) the Registrable Securities which the Company has been
so requested by the Initiating Holders to register and (ii) all other shares
of Common Stock which the Company has been requested in writing to register
by such Insurance Partners Stockholders and Other Rightholders (which
requests shall specify the number of shares of Common Stock 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).
(b) LIMITATION ON DEMAND REGISTRATIONS.
Notwithstanding anything to the contrary set forth in Section 3(a), the
Company shall not be obligated to
7
file a Registration Statement with respect to a Demand Registration upon a
request by the Initiating Holders under Section 3(a) if (i) the Company has
any other Registration Statement on file but not yet declared effective, (ii)
the Company has filed any other Registration Statement that has an effective
date within a period of 180 days prior to the filing of the Registration
Statement with respect to the Demand Registration, or (iii) Registrable
Securities having an anticipated aggregate net offering price of less than
$7,500,000 are to be registered in such Demand Registration.
(c) 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 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
Initiating 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 Initiating Holders.
(d) EXPENSES. The Company will pay all Registration
Expenses in connection with (i) two Demand Registrations of which IP or IP
Bermuda were Initiating Holders and (ii) two Demand Registrations of which
Cap Z Fund II was an Initiating Holder, under this Section 3 that either
become effective under the Securities Act or are withdrawn prior to the
effective date thereof; PROVIDED HOWEVER, that any withdrawal prior to the
effective date of a Demand Registration as the result of the actions of any
Person or Persons other than the Initiating Holders, or based upon material
adverse information relating to the Company that is different from the
information known by or available (upon request from the Company or
otherwise) to the Initiating Holders at the time of their request for a
Demand Registration under this Section 3, shall not diminish the number of
registrations in connection with which the Company agrees to pay Registration
Expenses; and PROVIDED FURTHER, that if such withdrawal is the result of the
actions of the Initiating Holders, then such Initiating Holders may in their
sole and unlimited discretion elect to bear the Registration Expenses of such
Demand Registration, in which case such registration shall not be counted as
a Demand Registration pursuant to this Section 3. In the event that the
Initiating Holders elect to bear the Registration Expenses (and underwriting
discounts and commissions and transfer taxes, if any) in connection with any
Demand Registration requested under this Section 3, such Registration
Expenses shall be apportioned among the holders whose shares of Common Stock
are then being registered, on the basis of the respective amounts (by number
of shares) of Common Stock then being registered by them or on their behalf.
8
(e) UNDERWRITING PROCEDURES. If the Initiating
Holders so elect, 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(f). In connection with any Demand Registration under this
Section 3 involving an underwriting, none of the Registrable Securities held
by any of the Insurance Partners Stockholders (other than the Initiating
Holders) or shares of Common Stock held by any Other Rightholders making a
request for inclusion thereof pursuant to Section 3(a) shall be included in
such underwriting unless such Insurance Partners Stockholders or Other
Rightholders, as the case may be, accept the terms of the underwriting as
agreed upon by the Company, the Initiating Holders and the Approved
Underwriter, and then only in such quantity as will not, in the opinion of
the Approved Underwriter, jeopardize the success of such offering. If the
Approved Underwriter advises the Company in writing that in its opinion the
aggregate amount of Common Stock requested to be included in such offering is
sufficiently large to have a material adverse effect on the success of such
offering, then the Company shall include in such registration only the
aggregate amount of Common Stock that in the opinion of the Approved
Underwriter may be sold without any such material adverse effect and shall
reduce, as to the Initiating Holders, the Insurance Partners Stockholders
(other than the Initiating Holders) and the Other Rightholders as a group,
the amount of Common Stock to be included in such registration, pro rata
within such group based on the number of Registrable Securities and other
shares of Common Stock included in the request for registration pursuant to
Section 3(a).
(f) SELECTION OF UNDERWRITERS. If any Demand
Registration of Registrable Securities is in the form of an underwritten
offering, the Initiating Holders holding a majority of the Registrable
Securities held by all such Initiating Holders shall select and obtain an
investment banking firm of national reputation to act as the managing
underwriter of the offering (the "Approved Underwriter"); PROVIDED, HOWEVER,
that the Approved Underwriter shall, in any case, be acceptable to the
Company in its reasonable judgment.
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 any of its
shares of Common Stock for its own account under the Securities Act (other
than a registration of shares of Common Stock solely in connection with any
plan for the acquisition of shares of Common Stock by employees of the
Company or any dividend reinvestment plan, and other than a registration of
shares of Common Stock, the Registration Statement pertaining to which does
not permit secondary sales or include substantially the same information as
would be required to be included in a Registration Statement covering
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the sale of Registrable Securities), then it will at each such time give
written notice (given at least 30 days prior to the proposed filing date)
describing the proposed registration and distribution to each of the
Designated Holders of its intention to do so and, upon the written request of
each of the Designated Holders, made within 30 days after the receipt of any
such notice (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, as provided in Section 6, use its
best efforts to effect the registration under the Securities Act of all of
the Registrable Securities that the Company has been so requested to register
by the Designated 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 if, at any time after giving written notice of its
intention to register any of its shares of Common Stock 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 such shares of Common Stock, the Company may, at its election, give
written notice of such determination to each of the Designated Holders and,
thereupon, shall be relieved from its obligation to register any Registrable
Securities in connection with such Incidental Registration (but not from its
obligation to pay the Registration Expenses in connection therewith), without
prejudice, however, to the rights of any Insurance Partners Stockholder to
request that such registration be effected as a Demand Registration under
Section 3. 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 Designated Holder to participate in such
Incidental Registration shall be conditioned upon such Designated Holder's
participation in such underwriting or distribution.
(b) REDUCTION IN REGISTRABLE SECURITIES TO BE
REGISTERED. 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 representative of the underwriters
advises the Company in writing that the registration of all or part of the
shares of Common Stock to be underwritten in such Incidental Registration
would materially adversely effect such offering, then the Company shall so
advise the Designated Holders and any other holders of shares of Common Stock
requesting registration in such Incidental Registration, and the number of
shares of Common Stock that are entitled to be included in the Incidental
Registration shall be allocated (i) first, to the Company for shares of
Common Stock being sold for its own account, (ii) second, among the
Designated Holders and any other holders of shares of Common Stock entitled
to "incidental" registration rights and requesting inclusion of shares of
Common Stock in such Incidental Registration, pro rata on the basis of the
number of shares of Common Stock requested to be included in such Incidental
Registration, and (iii) third, any other shares of Common Stock requested to
be included in such Incidental Registration; PROVIDED, HOWEVER, that if any
Insurance Partners Stockholder or Other Rightholder does not request
inclusion of the
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maximum number of shares of Common Stock allocated to it pursuant to the
foregoing procedure, then the remaining portion of its allocation shall be
reallocated among those Insurance Partners Stockholders and Other
Rightholders whose allocations were not satisfied on the basis of the number
of shares of Common Stock requested to be included in such Incidental
Registration, and this procedure shall be repeated until all of the shares of
Common Stock that may be included in the registration on behalf of the
Insurance Partners Stockholders and the Other Rightholders have been so
allocated. The Company shall not limit the number of shares of Common Stock
to be included in an Incidental Registration pursuant to this Agreement in
order to include shares held by stockholders with no registration rights or
to include any shares of stock issued to employees, officers, directors or
consultants pursuant to any stock option plan, or in order to include in such
registration securities registered for the Company's own account.
If any shares of Common Stock are withdrawn from the Incidental
Registration or if the number of shares of Common Stock 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 Common Stock in the Incidental Registration the right to
include additional shares of Common Stock in the registration in an aggregate
amount equal to the number of shares of Common Stock so withdrawn, with such
shares of Common Stock 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 90 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 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) or the Company's
underwriters (in the event of an Incidental Registration pursuant to Section
4(a)), as the case may be.
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(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 thereto), 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) 180 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 4(c), nine months) after
such Registration Statement becomes effective;
(iii) as soon as reasonably possible, furnish to
each seller of Registrable Securities, prior to filing a Registration
Statement, such number of conformed copies of 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), in conformity with the
12
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 jurisdictions 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) 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 be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
then existing;
(vii) 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;
13
(viii) 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;
(ix) list all the Registrable Securities on
any securities exchange (or The Nasdaq Stock Market, Inc. or the
over-the-counter market) 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;
(x) 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.; and
(xi) furnish to each seller a signed
counterpart, addressed to the sellers, of (x) an opinion of counsel
representing the Company for purposes of such registration, dated the
effective date of such Registration Statement, 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 each case, covering substantially the same
matters with respect to such Registration Statement (and the prospectus
included therein) and, 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 underwriters in underwritten
public offerings of securities; PROVIDED, HOWEVER, that the Company
shall not be obligated to furnish such accountants' letter except in
connection with an underwritten offering.
(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
and financial advisors, the opportunity to participate in the
preparation of such Registration Statement, each prospectus included
therein or filed with the Commission,
14
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 (as hereinafter defined)) 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
holding less than 150,000 Registrable Securities other than the
Initiating Holders, as a group, requesting a Demand Registration
pursuant to Section 3(a). A "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.
(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)(vi), 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)(vi) 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)(vi) to and including the date
when the Designated Holder shall have received the copies of the
supplemented or amended prospectus contemplated by and meeting the
requirements of Section 6(a)(vi).
7. INDEMNIFICATION; CONTRIBUTION.
15
(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 indemnify and hold harmless, to
the fullest extent permitted by law, each of the Designated Holders and their
respective directors, officers, partners, members, 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 Designated Holder 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) 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 reliance upon and in conformity with
written information concerning such Designated Holder and furnished to the
Company through an instrument duly executed by such Designated Holder
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 Designated Holder.
(b) INDEMNIFICATION BY DESIGNATED HOLDERS. 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 Designated Holder
selling such Registrable Securities to indemnify and hold harmless the
Company, its directors, officers, legal counsel, accountants and financial
advisors and each other Person, if any, who controls (within the meaning of
the Securities Act and the Exchange Act) the Company or any such directors,
officers, legal counsel, accountants and financial advisors (each of the
16
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 Designated Holder
and furnished to the Company through an instrument duly executed by such
Designated Holder 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. 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 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
17
indemnified party. 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) OTHER INDEMNIFICATION. Indemnification 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 under any
federal or state law or regulation of governmental authority other than the
Securities Act.
(e) 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 of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person.
(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
18
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, and the holders of a
majority of the Registrable Securities to be registered reasonably agree.
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 successor 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 shall not
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. If at any
19
time after the date hereof, any Person other than an Other Rightholder shall
advise or give notice to the Company of such Person's exercise of
registration rights granted by the Company to such Person prior to the date
hereof, the Company shall use its best efforts to cause such Person to
acknowledge the registration rights granted pursuant to this Agreement and
agree that such Person's registration rights shall not be prior in right to
the rights granted in this Agreement.
(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 Insurance Partners Stockholders holding Registrable Securities
representing (after giving effect to any adjustments) at least 60% of the
aggregate number of Registrable Securities owned by all of the Insurance
Partners Stockholders. Any such written consent shall be binding upon the
Company, all of the Designated Holders and all other Persons party hereto.
(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:
(i) if to the Company:
Superior National Insurance Group, Inc.
26601 Agoura Road
Calabasas, California 91302
Telecopy: (818) 880-8615
Attention: Chief Financial Officer
20
with a copy to:
Riordan & McKinzie
5743 Corsa Avenue, Suite 116
Westlake Village, California 91362
Telecopy: (818) 706-2956
Attention: Dana M. Warren, Esq.
(ii) if to IP or IP Bermuda
c/o Insurance Partners Advisors, L.P.
One Chase Manhattan Plaza
44th Floor
New York, New York 10005
Telecopy: (212) 898-8720
Attention: Steven B. Gruber
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Telecopy: (212) 757-3990
Attention: Marilyn Sobel, Esq.
(iii) If to Cap Z Fund II:
c/o Capital Z Partners, Ltd.
One Chase Manhattan Plaza
44th Floor
New York, New York 10005
Fax: (212) 898-8720
Attention: Bradley E. Cooper
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Telecopy: (212) 757-3990
Attention: Marilyn Sobel, Esq.
(iv) if to any other Designated Holder or any
other Person party hereto, at its address
as it appears on the record books of the
Company.
21
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; five (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 Insurance Partners Stockholders contained in
Section 3 and the other rights of each of the Insurance Partners Stockholders
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 and, after such transfer, is the holder of not less
than 150,000 Registrable Securities. 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.
(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. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
(j) SEVERABILITY. If any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, 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
22
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 in respect of the subject
matter contained herein, other than those set forth or referred to herein, in
the Stock Purchase Agreement and in the New Stock Purchase Agreement. This
Agreement supersedes the Original Agreement and all other prior agreements
and understandings between the parties with respect to such subject matter.
(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.
23
IN WITNESS WHEREOF, the undersigned have executed, or have caused to
be executed, this Agreement on the date first written above.
SUPERIOR NATIONAL INSURANCE
GROUP, INC.
By: /s/ Robert E. Nagle
--------------------------
Name: Robert E. Nagle
Title: Secretary
24
INSURANCE PARTNERS, L.P.
By: Insurance GenPar, L.P., its General
Partner
By: Insurance GenPar MGP, L.P., its General
Partner
By: Insurance GenPar MGP, Inc., its General
Partner
By: /s/ Daniel L. Doctoroff
------------------------------
Name: Daniel L. Doctoroff
Title: Vice President
25
INSURANCE PARTNERS OFFSHORE (BERMUDA), L.P.
By: Insurance GenPar (Bermuda), L.P., its
General Partner
By: Insurance GenPar (Bermuda) MGP, L.P.,
its General Partner
By: Insurance GenPar (Bermuda) MGP, Ltd.,
its General Partner
By: /s/ Daniel L. Doctoroff
------------------------------
Name: Daniel L. Doctoroff
Title: Vice President
26
CAPITAL Z FINANCIAL SERVICES
FUND II, L.P., a Bermuda limited
partnership
By: Capital Z Partners, L.P., its
General Partner
By: Capital Z Partners, Ltd., its
General Partner
By: /s/ Bradley E. Cooper
------------------------------
Name: Bradley E. Cooper
Title: Senior Vice President