Execution Copy
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into
as of May 20, 2008, by and among W.P. Stewart & Co., Ltd., a Bermuda exempted
company ("WPS"), and the Arrow Offshore, Ltd, a Cayman Islands exempted company
("Arrow Offshore"), Arrow Partners LP, a Delaware limited partnership ("Arrow
Partners"), and Arrow Masters LP, a Delaware limited partnership ("Arrow
Masters" and collectively with Arrow Offshore and Arrow Partners, "Investors").
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to them in the Investment Agreement (as defined in the recitals below).
WHEREAS, the Investors (individually, a "Shareholder" and
collectively, "Shareholders") have agreed to purchase common shares of WPS ("WPS
Shares") pursuant to that certain Investment Agreement (the "Investment
Agreement") dated as of May 20, 2008, by and among WPS and the Investors;
WHEREAS, the Primary WPS Shares (as defined herein) will be issued
to the Shareholders without registration under the Securities Act of 1933, as
amended (the "Securities Act"), and WPS and the Shareholders desire to provide
for compliance with the Securities Act and for the registration of the re-sale
by the holders of the Registrable Securities upon the terms and subject to
conditions set forth below; and
WHEREAS, the Investment Agreement provides for the execution and
delivery of this Agreement; and
WHEREAS, the Investors intend to purchase additional WPS Shares
through a tender offer, and the Investors desire to receive the right to
register any shares acquired through such tender offer.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
Section 1. Certain Definitions. As used in this Agreement, the
following terms shall have the following meanings:
"Business Day" means any day on which the commercial banks are open
for business in New York, New York.
"Commission" means the United States Securities and Exchange
Commission and any successor federal agency having similar powers.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing Registration Rights Agreement" means that certain
Shareholders Agreement, dated as of May, 1996 by and between WPS and the
investors listed therein, as amended by Amendment Number 1, dated December
29, 2000 to the 1996 Shareholders Agreement.
"Holder" means the Shareholders and any donee, partner, member or
Shareholder of any of them to whom Registrable Securities are transferred.
"Permitted Transferee" shall mean (i) a Holder, (ii) a person who is
the parent, sibling, or lineal descendant, by blood or legal adoption, of
a Holder and the estate of any such person, (iii) the spouse of a Holder,
(iv) the trustee or trustees of an inter vivos or testamentary trust
created by a Holder, alone or with others, for the primary benefit of a
person or persons described in clause (i), (ii), or (iii), or (v) any
person that directly or indirectly controls, is controlled by, or is under
common control with such person.
"Primary WPS Shares" means any and all newly issued WPS Shares
acquired by the Investors pursuant to the Investment Agreement.
The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing with the Commission a
registration statement in compliance with the Securities Act, and the
declaration or ordering by the Commission of the effectiveness of such
registration statement.
"Registrable Securities" means (i) any and all of the Primary WPS
Shares, (ii) any and all Tendered WPS Shares, and (iii) any other
securities issued or issuable with respect to any WPS Shares described in
clause (i) or (ii) above by way of a stock dividend or stock split or in
connection with a combination, exchange, reorganization, recapitalization
or reclassification of WPS's securities or pursuant to a merger,
consolidation or other similar business combination transaction involving
WPS.
"Registration Expenses" means all expenses incurred by WPS in
connection with the registration of the Registrable Securities, including,
without limitation, all registration and filing fees (including fees and
expenses associated with filings required to be made with the New York
Stock Exchange or such other exchange on which the WPS Shares may be
listed), printing expenses (including expenses of printing certificates
for the WPS Shares being registered in a form eligible for deposit with
the Depository Trust Company and of printing prospectuses), fees and
disbursements of counsel for WPS and fees and expenses of compliance with
state securities or "Blue Sky" laws, WPS's accountants' fees and expenses,
transfer taxes, fees of transfer agents and registrars, costs of
insurance, and reasonable fees and disbursements of one counsel to
represent the Holders (such fees not to exceed $10,000), but specifically
excluding any and all fees, commission, discounts or similar payments made
to any underwriters, brokers or dealers in connection with the selling of
any Registrable Securities.
"Tendered WPS Shares" means any and all WPS Shares acquired pursuant
to a tender offer commenced by the Investors on or before May 28, 2008.
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Section 2. Restrictions on Transfer.
(a) Restrictions. Each Holder agrees that such Holder will not sell,
assign, transfer or otherwise dispose of (each, a "Transfer") any of the Primary
WPS Shares (or any interest therein) except upon the terms and conditions
specified herein, and such Holder will cause any subsequent holder of such
Holder's Primary WPS Shares to agree to take and hold the Primary WPS Shares
subject to the terms and conditions of this Agreement if such Primary WPS Shares
are required to include a legend pursuant to Section 2(b) hereof.
(b) Legend. Each certificate representing Primary WPS Shares issued
to the Holders or to any subsequent holder of such shares shall include a legend
in substantially the following form; provided, however, that such legend shall
not be required if (i) a Transfer is being made in connection with a sale of
Primary WPS Shares registered under the Securities Act or in connection with a
sale in compliance with Rule 144 under the Securities Act (each, a "Public
Sale"), or (ii) the opinion of counsel referred to in Section 2(d) hereof is to
the further effect that neither such legend nor the restrictions on transfer in
this Section 2 are required in order to ensure compliance with the Securities
Act:
"The securities represented by this certificate have not
been registered under the Securities Act of 1933, as
amended, or securities laws of any state, and may not be
sold, transferred, assigned, pledged or hypothecated
unless and until, either (A) registered under such Act
and/or applicable state securities laws, or (B) WPS has
received an opinion of counsel or other evidence,
reasonably satisfactory to WPS and its counsel, that such
registration is not required."
(c) Notices of Transfer. Prior to any proposed Transfer of any
Primary WPS Shares other than pursuant to an offering registered under the
Securities Act, the Holder proposing to make such Transfer shall give written
notice to WPS of such Holder's intention to effect such Transfer, which notice
shall set forth the date of such proposed Transfer. Such Holder also shall
furnish to WPS (i) a written agreement by the proposed Transferee that it is
taking and holding the same subject to the terms and conditions specified in
this Agreement, except with respect to any Primary WPS Shares which are being
sold in a Public Sale and (ii) except with respect to any Primary WPS Shares
which have been registered under the Securities Act, a written opinion of such
Holder's counsel, in form reasonably satisfactory to WPS, to the effect that the
proposed Transfer may be effected without registration under the Securities Act.
(d) Termination of Restrictions. The legend set forth in this
Section 2 may be removed and any related restrictions shall terminate and cease
to be effective with respect to any of the Primary WPS Shares (i) upon the sale
of any such Primary WPS Shares, if the Primary WPS Shares in respect of which
such sale occurs have been registered under the Securities Act, (ii) upon
receipt by WPS of an opinion of counsel (which counsel is reasonably acceptable
to WPS), in form reasonably satisfactory to WPS, to the effect that compliance
with such restrictions is not necessary in order to comply with the Securities
Act with respect to the Transfer of such WPS Shares, or (iii) upon the
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expiration of the one-year period referred to in Rule 144(b)(1) under the
Securities Act (as such Rule may be amended from time to time), if, pursuant to
Rule 144(b)(1), such Holder was not an "affiliate" of WPS (as such term is
defined in Rule 144(a) under the Securities Act) at the time of the sale of the
WPS Shares and has not been an affiliate of WPS during the preceding ninety (90)
days.
Section 3. Registration under Securities Act; Indemnification.
(a) (i) Request for Registration. If WPS shall receive from any of
the Holders at any time that is at least one (1) year after the Closing Date (as
that term is defined in the Investment Agreement) a written request that WPS
effect a registration with respect to a number of WPS Shares not less than (x)
25% of the total Registrable Securities (but subject to a minimum of two million
(2,000,000) WPS Shares) held by the Investors or (y) five million (5,000,000)
WPS Shares, WPS will:
(A) promptly give written notice of the proposed
registration to all other Holders; and
(B) as soon as reasonably practicable, but in any event
not more than thirty (30) days after the date of such written notice
(subject to the need to respond to the Commission's comments on the
registration statement), use its best commercially reasonable
efforts to effect such registration by filing a registration
statement with the Commission on Form F-1 or Form F-3 (the
"Registration Statement") (including, without limitation, filing
post-effective amendments, appropriate qualifications under
applicable blue sky or other state securities laws, and appropriate
compliance with the Securities Act) or other such available form as
would permit or facilitate the sale and distribution of all or such
portion of such Registrable Securities as are specified in such
request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request received
by WPS within ten (10) days after such written notice from WPS is
mailed or delivered; provided, however, that (i) only one (1) such
request may be made by Holders for registration on Form F-1, (ii)
only three (3) total requests may be made by the Holders for
registration on Form F-3, and (iii) the Investors may not make a
request for registration within six (6) months after the date of
effectiveness of a Registration Statement in response to a previous
request for registration.
(ii) Effectiveness. WPS shall use all commercially reasonable
efforts to cause the Registration Statement to be declared effective by
the Commission under the Securities Act as soon as practicable after
filing.
(iii) Effective Period. WPS agrees to use its best efforts to
keep all Registration Statements continuously effective for a period
commencing on the effective date thereof and terminating on the date on
which such Holders are able to sell their Registrable Securities under the
provisions of Rule 144 without restriction (other than the current public
information requirement set forth in Rule 144(c)(1)) (the "Effective
Period"); provided that, the Effective Period shall, in all events,
terminate at such time as all the Registrable Securities covered by the
Registration Statement have been sold.
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(iv) Black-out Period. Without limiting the provisions of
Section 3(a)(iii), each Holder of Registrable Securities agrees by
acquisition of such Registrable Securities, if so requested by WPS, not to
effect any sale of Registrable Securities pursuant to a Registration
Statement, and WPS may postpone the filing or the effectiveness of any
registration requested pursuant to this Section 3 for any period deemed
necessary (A) by WPS or any underwriter in connection with the offering of
WPS Shares by WPS for its own account, (B) by WPS in connection with any
proposal or plan by WPS to engage in any financing or acquisition or
disposition by WPS or any subsidiary thereof of the shares or
substantially all the assets of any other person (other than in the
ordinary course of business), any tender offer or any merger,
consolidation, corporate reorganization or restructuring or other similar
transaction (each, a "Business Combination"), in each case material to WPS
and its subsidiaries taken as a whole, or (C) by WPS if (i) an event other
than an event specified in paragraph (B) above occurs and is continuing as
a result of which the Registration Statement, the prospectus included in
the Registration Statement, any amendment or supplement thereto or any
document incorporated by reference therein would, in WPS's judgment,
contain an 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 and (ii) WPS determines in good faith that the
disclosure of such event at such time could be seriously detrimental to
WPS or its subsidiaries. Any period within the Effective Period during
which WPS fails to keep the Registration Statement effective and usable
for resales of Registrable Securities, requires pursuant to this Section
3(a)(iv) that the Holders not effect sales of Registrable Securities
pursuant to the Registration Statement or postpones the filing or the
effectiveness of any requested registration, is hereafter referred to as a
"Suspension Period." A Suspension Period shall commence on the date set
forth in a written notice by WPS (which WPS shall use good faith efforts
(consistent with legal and contractual obligations) to deliver to each
Holder not less than three (3) business days in advance of any proposed or
anticipated suspension date) addressed to the Holders that the
Registration Statement is no longer effective or that the prospectus
included in a Registration Statement is no longer usable for resales of
Registrable Securities or, in the case of a suspension pursuant to this
Section 3(a)(iv) the date specified in the notice delivered by WPS
pursuant to this Section 3(a)(iv), and shall end on the date when each
Holder of Registrable Securities covered by the Registration Statement
either receives the copies of a supplemented or amended prospectus or is
advised in writing by WPS that use of the prospectus or sales may be
resumed. Notwithstanding anything to the contrary herein: (1) any
Suspension Period commenced under clause (A) of this Section 3(a)(iv) with
respect to an underwritten offering of WPS's securities which the managing
underwriter thereof has determined is necessary shall not exceed 90 days,
and (2) all Suspension Periods commenced under clause (B) or clause (C) of
this Section 3(a)(iv) with respect to which WPS is the acquiring party of
the subject Business Combination shall not, in the aggregate, exceed 90
days in any 12-month period. Each Holder also agrees that at any time such
Holder is an employee or director of WPS, such Holder will be subject to
and comply with the policies of WPS regarding purchases and sales of WPS
Common Stock; to the extent applicable to such Holder. The Holders
acknowledge that such policy may be changed by WPS from time to time.
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(b) WPS Registration.
(i) If, at any time that is at least one (1) year after the
Closing Date (as that term is defined in the Investment Agreement) WPS
shall determine to register any of its securities either for its own
account or the account of a security holder or holders exercising their
respective demand registration rights, other than a registration on Form
F-4, Form F-7, Form F-8, Form S-8 or a registration on any registration
form that does not permit secondary sales, WPS will:
(A) promptly give to each Holder written notice thereof;
and
(B) use its best commercially reasonable efforts to
include in such registration (and any related qualification under
blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written
request or requests, made by any Holder within thirty (30) days
after the written notice from WPS described in clause (i) above is
given. Such written request may specify all or a part of a Holder's
Registrable Securities.
(ii) If the registration of which WPS gives notice is for a
registered public offering involving an underwriting, WPS shall so advise
the Holders as a part of the written notice given pursuant to Section
3(b)(i). In such event, the right of any Holder to registration pursuant
to this Section 3 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable
Securities in the underwriting to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with WPS and the other holders of securities of WPS with
registration rights to participate therein distributing their securities
through such underwriting) enter into an underwriting agreement in
customary form with the representative of the underwriter or underwriters
selected by WPS.
(iii) Notwithstanding any other provision of this Section 3,
if the representative of the underwriters reasonably advises WPS in
writing that marketing factors require a limitation on the number of
shares to be underwritten, WPS may limit, to the extent so reasonably
advised by the underwriters, the amount of securities to be included in
the registration by WPS's shareholders (including the Holders pro rata
among the requesting holders of Registrable Securities and the holders of
other WPS Shares who have and are exercising registration rights pursuant
to the Existing Registration Rights Agreement in conjunction with the
Investors' exercise of rights under this Section 3 based upon the
aggregate number of WPS Shares owned by such holders). WPS shall so advise
all holders of securities requesting registration, and the number of
shares of securities that are entitled to be included in the registration
and underwriting shall be allocated first to WPS for securities being sold
for its own account. If any person does not agree to the terms of any such
underwriting, he shall be excluded therefrom by written notice from WPS or
the underwriter. Any Registrable Securities or other securities excluded
or withdrawn from such underwriting shall be withdrawn from such
registration.
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(iv) If shares are so withdrawn from the registration or if
the number of shares of Registrable Securities to be included in such
registration was previously reduced as a result of marketing factors, WPS
shall then offer to all persons who have retained the right to include
securities in the registration the right to include additional securities
in the registration in an aggregate amount equal to the number of shares
so withdrawn, with such shares to be allocated pro-rata among the persons
requesting additional inclusion.
(c) Registration Procedures. WPS shall:
(i) cause the Registration Statement and the related
prospectus and any amendment or supplement thereto, as of the effective
date of the Registration Statement, or such amendment or supplement, (A)
to comply in all material respects with the applicable requirements of the
Securities Act and the rules and regulations of the Commission promulgated
under the Securities Act and (B) not to contain any 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;
(ii) promptly prepare and file with the Commission such
amendments and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the 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
the earlier of (A) such time as all such Registrable Securities have been
disposed of in accordance with the intended methods of disposition by the
Holder or Holders thereof set forth in the Registration Statement (which
shall not include, without the consent of WPS (which may be granted or
withheld in WPS's sole discretion) an underwritten offering), or (B) the
date on which such Holders are able to sell their Registrable Securities
under the provisions of Rule 144 without restriction (other than the
current public information requirement set forth in Rule 144(c)(1));
(iii) furnish to the Investors such number of conformed copies
of such Registration Statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of
the prospectus included in the Registration Statement (including any
summary prospectus), in conformity with the requirements of the Securities
Act, and such documents, if any, as may be incorporated by reference in
the Registration Statement or prospectus, as each Holder may reasonably
request;
(iv) use its best efforts to register or qualify all
Registrable Securities and other securities covered by the Registration
Statement under such securities or Blue Sky laws of the states of the
United States as each Holder of such Registrable Securities shall
reasonably request, to keep such registration or qualification in effect
for so long as the Registration Statement remains in effect (subject to
the limitations in Section 3(a)), and do any and all other acts and things
which may be necessary or advisable to enable such Holder to consummate
the disposition in such jurisdictions of its Registrable Securities
covered by such Registration Statement, except that WPS shall not for any
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such purpose be required to register or qualify generally to do business
as a foreign corporation in any jurisdiction in which it is not and would
not, but for the requirements of this Section 3(c)(iv), be obligated to be
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) immediately notify the Holders at any time when a
prospectus or prospectus supplement 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
the 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 the statements therein not
misleading in the light of the circumstances then existing which untrue
statement or omission requires amendment of the Registration Statement or
supplementation of the prospectus, and promptly thereafter prepare and
furnish to each Holder 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; provided, however, that each Holder of Registrable Securities
registered pursuant to the Registration Statement agrees that such Holder
will not sell any Registrable Securities pursuant to the Registration
Statement during the time that WPS is preparing and filing with the
Commission a supplement to or an amendment of such prospectus or
registration statement;
(vi) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission; and
(vii) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by the Registration
Statement from and after a date not later than the effective date of the
Registration Statement.
Each Holder of Registrable Securities as to which any registration is being
effected shall furnish to WPS such information regarding such Holder and the
distribution of such Registrable Securities as WPS may from time to time
reasonably request and as shall be required by law or by the Commission in
connection therewith. In furtherance and not in limitation of the foregoing,
each Shareholder, at the Closing (and each transferee of each Shareholder and of
any subsequent Holder, at the time of such Transfer), shall provide WPS with
such Holder's mailing and personal delivery (if different) addresses, and shall
promptly notify WPS in writing with any changes thereto after the date hereof
and during the Effective Period.
(d) Indemnification.
(i) Indemnification by WPS. WPS shall indemnify and hold
harmless each Holder of Registrable Securities and its officers,
directors, employees and controlling persons whose securities are covered
by the Registration Statement from and against any demands, claims,
actions or causes of action, assessments, losses, damages, liabilities,
interest and penalties, costs and expenses (including, without limitation,
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reasonable legal fees and disbursements incurred in connection therewith
and in seeking indemnification therefor, and any amounts or expenses
required to be paid or incurred in connection with any action, suit,
proceeding, claim, appeal, demand, assessment or judgment) (individually,
a "Loss" and, collectively "Losses"), joint or several, to which such
Holder may become subject under the Securities Act or otherwise insofar as
such Losses (or related actions or proceedings) arise out of or are based
upon (A) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, final prospectus or summary
prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, or any document incorporated by
reference in the Registration Statement or (B) 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; provided,
however, that WPS shall not be liable in any such case to the extent that
any such Losses (or actions or proceedings in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement or
omission or alleged omission of a material fact made in the Registration
Statement, or any such final prospectus, summary prospectus, amendment or
supplement, as the case may be, in reliance upon and in conformity with
information furnished to WPS by such Holder specifically for use in the
preparation of such Registration Statement, or any such final prospectus,
summary prospectus, amendment or supplement, as the case may be.
(ii) Indemnification by the Holders. Each Holder of
Registrable Securities, severally and not jointly, shall indemnify and
hold harmless (in the same manner and to the same extent as set forth in
Section 3(d)(i) hereof) WPS, each director of WPS, each officer of WPS who
shall sign the Registration Statement and each other person, if any, who
controls WPS within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, with respect to any untrue statement or
alleged untrue statement in or omission or alleged omission from such
registration statement, final prospectus or summary prospectus included in
the Registration Statement, or any amendment or supplement to the
Registration Statement, as the case may be, of a material fact if such
statement or omission was made in reliance upon and in conformity with
information furnished to WPS by such Holder specifically for use in the
preparation of the Registration Statement, final prospectus, summary
prospectus, amendment or supplement, as the case may be.
(iii) Notice of Claims, etc. In the event that any of the
indemnified parties under Section 3(d)(i) or 3(d)(ii) (each, an
"Indemnified Party") is made a defendant in or party to any action or
proceeding, judicial or administrative, instituted by any third party for
the liability or the costs or expenses of which are Losses (any such third
party action or proceeding being referred to as a "Claim"), the
Indemnified Party shall give the party hereto obligated to indemnify such
Indemnified Party (the "Indemnifying Party") prompt notice thereof. The
failure to give such notice shall not affect any Indemnified Party's
ability to seek reimbursement unless such failure has materially and
adversely affected the Indemnifying Party's ability to defend successfully
a Claim. The Indemnifying Party shall be entitled to contest and defend
such Claim; provided, that the Indemnifying Party (i) has a reasonable
basis for concluding that such defense may be successful and (ii)
diligently contests and defends such Claim. Notice of the intention so to
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contest and defend shall be given by the Indemnifying Party to the
Indemnified Party within twenty (20) business days after the Indemnified
Party's notice of such Claim (but, in all events, at least five (5)
business days prior to the date that an answer to such Claim is due to be
filed). Such contest and defense shall be conducted by reputable attorneys
employed by the Indemnifying Party. The Indemnified Party shall be
entitled at any time, at its own cost and expense (which expense shall not
constitute a Loss unless (i) the Indemnified Party reasonably determines
that the Indemnifying Party is not adequately representing or, because of
a conflict of interest, may not adequately represent, any interests of the
Indemnified Parties, or (ii) the Indemnified Party has available to it
reasonable defenses which are different from or additional to those
available to the Indemnifying Party, and only to the extent that such
expenses are reasonable), to participate in such contest and defense and
to be represented by attorneys of its or their own choosing. If the
Indemnified Party elects to participate in such defense, the Indemnified
Party will cooperate with the Indemnifying Party in the conduct of such
defense. Neither the Indemnified Party nor the Indemnifying Party may
concede, settle or compromise any Claim without the consent of the other
party, which consents will not be unreasonably withheld. Notwithstanding
the foregoing, (i) if a Claim seeks the issuance of an injunction, the
specific performance of an obligation or similar remedy or (ii) if the
subject matter of a Claim relates to the ongoing business of the
Indemnified Party, which Claim, if decided against the Indemnified Party,
would materially adversely affect the ongoing business or reputation of
the Indemnified Party, then, in each such case, the Indemnified Party
alone shall be entitled to contest, defend and settle such Claim in the
first instance and, if the Indemnified Party does not contest, defend or
settle such Claim, the Indemnifying Party shall then have the right to
contest and defend (but not settle) such Claim. Subject to the foregoing
limitations, each Indemnifying Party shall reimburse each Indemnified
Party for all legal or other reasonable expenses incurred by such
Indemnified Party in connection with the investigation or defense of any
such action or claim as such expenses are incurred.
(iv) Other Indemnification. Indemnification similar to that
specified in Sections 3(d)(i) and 3(d)(ii) hereof (with appropriate
modifications) shall be given by WPS and each Holder of Registrable
Securities with respect to any required registration or other
qualification of such Registrable Securities under any federal or state
law or regulation of governmental authority other than the Securities Act.
(v) Contribution. If the indemnification provided for in this
Section 3(d) is unavailable or insufficient to hold harmless an
Indemnified Party in respect of any Losses, then each Indemnifying Party
shall, in lieu of indemnifying such Indemnified Party, contribute to the
amount paid or payable by such Indemnified Party as a result of such
Losses in such proportion as appropriate to reflect the relative fault of
WPS, on the one hand, and such Holder, on the other hand, and to the
parties' relative intent, knowledge, access to information and opportunity
to correct or mitigate the damage in respect of or prevent any untrue
statement or omission giving rise to such indemnification obligation. WPS
and the Holders agree that it would not be just and equitable if
contributions pursuant to this Section 3(d)(v) were determined by pro rata
allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which did not take account
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of the equitable considerations referred to above in this Section 3(d)(v).
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 is not guilty of such fraudulent misrepresentation.
(e) Registration Expenses. WPS shall bear all Registration Expenses.
Section 4. Termination. The rights and obligations under this
Agreement (other than under Sections 3(d) and 3(e) hereof) shall automatically
terminate upon the earlier to occur of (a) the sale of all Registrable
Securities by the Holders and (b) the end of the Effective Period.
Section 5. Amendments and Waivers. This Agreement may be amended or
modified and WPS may take any action herein prohibited, or omit to perform any
act herein required to be performed by it, only if WPS shall have obtained the
written consent to such amendment, modification, action or omission to act, of
the holder or holders (at such time) of 51% or more of the shares of Registrable
Securities (and, in the case of any amendment, modification, action or omission
to act which adversely affects any specific holder of Registrable Securities or
a specific group of holders of Registrable Securities, the written consent of
each such holder or holders of 51% or more of the Registrable Securities held by
such group). Each holder of any Registrable Securities at the time shall be
bound by any consent authorized by this Section 5, whether or not such
Registrable Securities shall have been marked to indicate such consent.
Section 6. Reports under Securities Exchange Act of 1934. With a
view to making available to the Holders the benefit of Rule 144 promulgated
under the Securities Act (or any successor rule or regulation thereunder that
may at any time permit a Holder to sell securities of WPS to the public without
registration), WPS agrees to:
(a) For a period commencing on the Closing Date and terminating one
year following the Closing Date, to maintain registration of its common stock
under Section 12 of the Exchange Act and to file all reports and other documents
required of WPS under the Securities Act and Exchange Act (other than Reports on
Form 6-K); and
(b) furnish to any Holder, so long as the Holder owns Registrable
Securities, promptly upon request:
(i) a written statement by WPS that it has complied with the
reporting requirements of Rule 144(c); and
(ii) such other information as may be reasonably requested, if
any, in availing any Holder of any successor rule or regulation under the
Securities Act to Rule 144 to permit the selling of any such securities
without registration.
Section 7. Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election, be treated as the holder of
such Registrable Securities for purposes of any request or other action by any
holder or holders of Registrable Securities pursuant to this Agreement or any
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determination of any number or percentage of shares of Registrable Securities
held by any holder or holders of Registrable Securities contemplated by this
Agreement. If the beneficial owner of any Registrable Securities so elects, WPS
may require assurances reasonably satisfactory to it of such owner's beneficial
ownership of such Registrable Securities.
Section 8. Notices. All notices, demands and other communications to
be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when personally
delivered, or one business day after being sent by a nationally recognized
overnight courier, or three days after being mailed by first class mail, return
receipt requested, or when receipt is acknowledged, if sent by facsimile,
telecopy or other electronic transmission device (provided a confirmation copy
is sent via a nationally recognized overnight courier). Notices, demands and
communications to WPS and the Holders will, unless another address is specified
in writing, be sent to the address indicated below:
if to Investors:
Arrow Capital Management, LLC
499 Park Avenue, 10th Floor
New York, NY 10022
Telephone No: (212) 243-7338
Fax No: (212) 243-2195
Attention: Quinn Martin, Jr.
with a copy to:
Post Heymann & Koffler LLP
Two Jericho Plaza, Wing A
Jericho, NY 11753
Telephone No: (516) 681-3636
Fax No: (516) 433-2777
Attention: David J. Heymann
if to WPS:
W.P. Stewart & Co., Ltd.
Trinity Hall
43 Cedar Avenue
Hamilton HM 12
Bermuda
Telephone No: (441) 295-8585
Fax No: (441) 296-6823
Attention: Seth Pearlstein
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with a copy to:
Dorsey & Whitney LLP
250 Park Avenue
New York, NY 10177-1500
Telephone No: (212) 415-9200
Fax No: (212) 953-7201
Attention: Barry Wade
If notice is given pursuant to this Section 8 of any assignment to a permitted
successor or assignee of a party hereto, the notice shall be given as set forth
above to such successor or the assignee of such party.
Section 9. Entire Agreement. This Agreement represents the entire
agreement and understanding between WPS and the other parties to this
Agreement in respect of the subject matter contained herein. There are no
restrictions, promises, warranties, or undertakings, other than those set forth
or referred to herein or in the Investment Agreement, with respect to the
registration rights granted by WPS with respect to the Registrable
Securities. This Agreement and the Investment Agreement supersede all prior
agreements and understandings between the parties with respect to the subject
matter of this Agreement.
Section 10. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of New York (other than its rules
of conflicts of laws to the extent the application of the laws of another
jurisdiction would be required thereby).
Section 11. Severability. If any provision of this Agreement or the
application thereof to any person or circumstances is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected impaired or invalidated thereby, so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination, the parties shall negotiate in
good faith in an effort to agree upon a suitable and equitable substitute
provision to affect the original intent of the parties.
Section 12. Assignment of Registration Rights. The rights to cause
WPS to register Registrable Securities pursuant to Section 3 may be assigned
by any Holder to a Permitted Transferee, and by such transferee to a subsequent
Permitted Transferee, but only if such rights are transferred no earlier than
one (1) year after the Closing Date and if such rights are transferred in
connection with the sale or other transfer of not less than an aggregate of five
million (5,000,000) Registrable Securities. Any transferee to whom rights under
this Agreement are transferred shall (i) as a condition to such transfer,
deliver to WPS a written instrument by which such transferee agrees to be
bound by the obligations imposed upon Holders under this Agreement to the same
extent as if such transferee were a Holder under this Agreement and (ii) be
deemed to be a Holder hereunder.
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Section 13. Miscellaneous. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
of this Agreement. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which, when taken
together, shall constitute one and the same instrument.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
Arrow Masters LP Arrow Partners LP
By: Arrow Advisors LLC By: Arrow Advisors LLC
General Partner General Partner
By: /s/ Alexandre von Furstenberg By: /s/ Alexandre von Furstenberg
----------------------------- -------------------------------
Alexandre von Furstenberg Alexandre von Furstenberg
Co-Managing Member Co-Managing Member
By: /s/ Mal Serure By: /s/ Mal Serure
----------------------------- -------------------------------
Mal Serure Mal Serure
Co-Managing Member Co-Managing Member
Arrow Offshore, Ltd. W.P. Stewart & Co., Ltd.
By: /s/ Mal Serure By: /s/ William P. Stewart
----------------------------- -------------------------------
Mal Serure William P. Stewart
Director Chief Executive Officer
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