REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is entered into as of
___________, 2007, by and among Western United Financial Corporation, a Delaware
corporation (the "Company"), and the undersigned Investors listed on the
signature page hereto (each, an "Investor" and collectively, the "Investors").
WHEREAS, as of the date hereof the Investors collectively hold
all of the issued and outstanding securities of the Company (the "Investor
Shares");
WHEREAS, the Company has issued or will issue pursuant to a
binding agreement with each of the Investors an aggregate of 62,500 units (the
"Private Units"), consisting of one share of Common Stock (the "Private Unit
Shares") and one warrant (the "Private Warrants") exercisable to purchase one
share of Common Stock (the "Private Warrant Shares");
WHEREAS, after the consummation of the Company's initial
public offering of securities, Western United Funding, LLC, a Delaware limited
liability company, will purchase warrants in the open market (the "Warrant
Support Warrants") and/or purchase shares of Common Stock directly from the
Company (together with the shares of Common Stock issuable upon exercise of the
Warrant Support Warrants, the "Warrant Support Shares") as specified pursuant to
Section 2 of that certain Subscription Agreement, dated as of October 26, 2006,
between Western United Funding, LLC and the Company; and
WHEREAS, the Investors and the Company desire to enter into
this Agreement to provide the Investors with certain rights relating to the
registration of (i) the Investor Shares, (ii) the Private Units, (iii) the
Private Unit Shares, (iv) the Private Warrants, (v) the Private Warrant Shares,
(vi) the Warrant Support Warrants and (vii) the Warrant Support Shares.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. DEFINITIONS. The following capitalized terms used herein
have the following meanings:
"AGREEMENT" means this Agreement, as amended, restated,
supplemented, or otherwise modified from time to time.
"BOARD" means the board of directors of the Company.
"BUSINESS COMBINATION" means the acquisition by the Company of
one or more banks, thrifts and their respective holding companies and other
financial services organizations through a merger, capital stock exchange, asset
acquisition, exchangeable share transaction, stock purchase or other similar
business combination having collectively a fair market value (as calculated in
accordance with the requirements set forth below) of at least 80% of the
Company's net assets at the time of the acquisition.
"COMMISSION" means the Securities and Exchange Commission, or
any other federal agency then administering the Securities Act or the Exchange
Act.
"COMMON STOCK" means the common stock, par value $0.01 per
share, of the Company.
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"COMPANY" is defined in the preamble to this Agreement.
"DEMAND REGISTRATION" is defined in Section 2.1.1.
"DEMANDING HOLDER" is defined in Section 2.1.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder,
all as the same shall be in effect at the time.
"FORM S-3" is defined in Section 2.3.
"INDEMNIFIED PARTY" is defined in Section 4.3.
"INDEMNIFYING PARTY" is defined in Section 4.3.
"INVESTOR" is defined in the preamble to this Agreement.
"INVESTOR INDEMNIFIED PARTY" is defined in Section 4.1.
"INVESTOR SHARES" is defined in the recitals to this
Agreement.
"MAXIMUM NUMBER OF SECURITIES" is defined in Section 2.1.4.
"NOTICES" is defined in Section 6.3.
"OPTION SECURITIES" is defined in Section 2.1.4.
"PERSON" means an individual, a partnership, a limited
liability company, a joint venture, a corporation, a trust, an unincorporated
organization, a government or any department or agency thereof or any entity
similar to any of the foregoing.
"PIGGY-BACK REGISTRATION" is defined in Section 2.2.1.
"PRIVATE UNITS" is defined in the recitals to this Agreement.
"PRIVATE UNIT SHARES" is defined in the recitals to this
Agreement.
"PRIVATE WARRANTS" is defined in the recitals to this
Agreement.
"PRIVATE WARRANT SHARES" is defined in the recitals to this
Agreement.
"PRO RATA" is defined in Section 2.1.4.
"REGISTER," "REGISTERED" and "REGISTRATION" mean a
registration effected by preparing and filing a registration statement or
similar document in compliance with the requirements of the Securities Act, and
such registration statement becoming effective.
"REGISTRABLE SECURITIES" mean the Investor Shares, Private
Units, Private Unit Shares, Private Warrants, Private Warrant Shares, Warrant
Support Warrants and Warrant Support Shares owned or held by the Investors.
Registrable Securities include any warrants, shares of capital stock or other
securities of the Company issued as a dividend or other distribution with
respect to or in exchange for or in replacement of Registrable Securities. As to
any particular Registrable Securities, such securities shall
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cease to be Registrable Securities when: (a) a Registration Statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been sold, transferred, disposed
of or exchanged in accordance with such Registration Statement; (b) such
securities shall have been otherwise transferred, new certificates for them not
bearing a legend restricting further transfer shall have been delivered by the
Company and subsequent public distribution of them shall not require
registration under the Securities Act; (c) such securities shall have ceased to
be outstanding; or (d) all such Registrable Securities held by the Investor may
be sold in a single transaction without registration in compliance with Rule
144(k).
"REGISTRATION STATEMENT" means a registration statement filed
by the Company with the Commission in compliance with the Securities Act for a
public offering and sale of Common Stock or other securities of the Company
(other than a registration statement on Form S-4 or S-8 (or any successor or
substantially similar form), or in connection with (i) an employee stock option,
stock purchase or compensation plan or securities issued or issuable pursuant to
any such plan, (ii) a dividend reinvestment plan or (iii) an offering of debt
that is convertible into equity securities of the Company).
"RELEASE DATE" means (a) with respect to the Investor Shares,
the first anniversary of the consummation of a Business Combination, and (b)
with respect to all other Registrable Securities, the 90th day following the
consummation of a Business Combination.
"SANDLER ▇'▇▇▇▇▇" means Sandler ▇'▇▇▇▇▇ & Partners, L.P.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder, all as
the same shall be in effect at the time.
"UNDERWRITER" means a securities dealer who purchases any
Registrable Securities as principal in an underwritten offering and not as part
of such dealer's market-making activities.
"UNIT PURCHASE OPTION" is defined in Section 2.1.4.
2. REGISTRATION RIGHTS.
2.1 DEMAND REGISTRATION.
2.1.1 REQUEST FOR REGISTRATION. At any time commencing two
(2) months prior to the applicable Release Date, and from time to time
thereafter, the holders of a majority-in-interest of the Registrable Securities,
on an as-converted to Common Stock basis, held by the Investors or the permitted
transferees of the Investors may make a written demand for registration under
the Securities Act of all or part of their Registrable Securities (a "Demand
Registration"). Any demand for a Demand Registration shall specify the number of
shares of Registrable Securities proposed to be sold and the intended method(s)
of distribution thereof. The Company will notify all holders of Registrable
Securities of the demand, and each holder of Registrable Securities who wishes
to include all or a portion of such holder's Registrable Securities in the
Demand Registration (each such holder including shares of Registrable Securities
in such registration, a "Demanding Holder") shall so notify the Company in
writing within ten (10) days after the receipt by the holder of the notice from
the Company. Upon any such request, the Demanding Holders shall be entitled to
have their Registrable Securities included in the Demand Registration, subject
to Sections 2.1.3, 2.1.4, 3.4 and the provisos set forth in Section 3.1.1. The
Company shall not be obligated to effect more than an aggregate of two (2)
Demand Registrations under this Section 2.1.1 in respect of Registrable
Securities.
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2.1.2 EFFECTIVE REGISTRATION. A registration will not count
as a Demand Registration until the Registration Statement filed with the
Commission with respect to such Demand Registration has been declared effective
and the Company has complied with all of its material obligations under this
Agreement with respect thereto; provided, however, that if, after such
Registration Statement has been declared effective, the offering of Registrable
Securities pursuant to a Demand Registration is interfered with by any stop
order or injunction of the Commission or any other governmental agency or court,
the Registration Statement with respect to such Demand Registration will be
deemed not to have been declared effective unless and until such stop order or
injunction is removed, rescinded or otherwise terminated; provided, further,
that the Company shall not be obligated to file a second Registration Statement
until a Registration Statement that has been filed is counted as a Demand
Registration or is terminated.
2.1.3 UNDERWRITTEN OFFERING. If a majority-in-interest, on an
as-converted to Common Stock basis, of the Demanding Holders so elects and such
holders so advise the Company as part of their written demand for a Demand
Registration, the offering of such Registrable Securities pursuant to such
Demand Registration shall be in the form of an underwritten offering. In such
event, the right of any holder to include its Registrable Securities in such
registration 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 Demanding Holders proposing to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the Underwriter or Underwriters
selected for such underwriting by a majority-in-interest, on an as-converted to
Common Stock basis, of the Demanding Holders, which Underwriter or Underwriters
shall be reasonably acceptable to the Company.
2.1.4 REDUCTION OF OFFERING. If the managing Underwriter or
Underwriters for a Demand Registration that is to be an underwritten offering
advises the Company and the Demanding Holders in writing that the dollar amount
or amount of Registrable Securities which the Demanding Holders desire to sell,
taken together with all other shares of Common Stock or other securities which
the Company desires to sell and the shares of Common Stock or other securities,
if any, as to which registration has been requested pursuant to written
contractual piggy-back registration rights held by other stockholders of the
Company who desire to sell, exceeds the maximum dollar amount or maximum number
of securities that can be sold in such offering without adversely affecting the
proposed offering price, the timing, the distribution method, or the probability
of success of such offering (such maximum dollar amount or maximum number of
securities, as applicable, the "Maximum Number of Securities"), then the Company
shall include in such registration: (i) first, the Registrable Securities as to
which Demand Registration has been requested by the Demanding Holders (pro rata
in accordance with the number of shares that each such Person has requested be
included in such registration, regardless of the number of shares held by each
such Person (such proportion is referred to herein as "Pro Rata")) that can be
sold without exceeding the Maximum Number of Securities; (ii) second, to the
extent that the Maximum Number of Securities has not been reached under the
foregoing clause (i), the shares of Common Stock or other securities that the
Company desires to sell that can be sold without exceeding the Maximum Number of
Securities; (iii) third, to the extent that the Maximum Number of Securities has
not been reached under the foregoing clauses (i) and (ii), the shares of Common
Stock or other securities registrable pursuant to the terms of the Unit Purchase
Option issued to Sandler ▇'▇▇▇▇▇ or its designees in connection with the
Company's initial public offering (the "Unit Purchase Option" and such
registrable securities, the "Option Securities") as to which "piggy-back"
registration has been requested by the holders thereof, Pro Rata, that can be
sold without exceeding the Maximum Number of Securities; and (iv) fourth, to the
extent that the Maximum Number of Securities has not been reached under the
foregoing clauses (i), (ii), and (iii), the shares of Common Stock or other
securities for the account of other Persons that the Company is obligated to
register pursuant to written contractual arrangements with such Persons and that
can be sold without exceeding the Maximum Number of Securities.
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2.1.5 WITHDRAWAL. If a majority-in-interest, on an
as-converted to Common Stock basis, of the Demanding Holders disapproves of the
terms of any underwriting or are not entitled to include all of their
Registrable Securities in any offering, such majority-in-interest of the
Demanding Holders may elect to withdraw from such offering by giving written
notice to the Company and the Underwriter or Underwriters of their request to
withdraw prior to the effectiveness of the Registration Statement filed with the
Commission with respect to such Demand Registration.
2.1.6 PERMITTED DELAYS. The Company shall be entitled to
postpone the filing of any Registration Statement under this Section 2.1, if (a)
at any time prior to the filing of such Registration Statement the Board
determines, in its good faith business judgment, that such registration and
offering would materially and adversely affect any financing, acquisition,
corporate reorganization, or other material transaction involving the Company,
and (b) the Company delivers to the Demanding Holders written notice thereof
within ten (10) business days of the date of receipt of such request for Demand
Registration; provided that all such periods of postponement may not exceed 45
days during any 365-day period.
2.2 PIGGY-BACK REGISTRATION.
2.2.1 PIGGY-BACK RIGHTS. If at any time after the applicable
Release Date, the Company proposes to file a Registration Statement under the
Securities Act with respect to an offering of equity securities, or securities
or other obligations exercisable or exchangeable for, or convertible into,
equity securities, by the Company for its own account and/or for stockholders of
the Company for their account, then the Company shall (x) give written notice of
such filing to the holders of Registrable Securities, which notice shall
describe the amount and type of securities to be included in such offering, the
intended method(s) of distribution, and the name of the proposed managing
Underwriter or Underwriters, if any, of the offering, and (y) offer to the
holders of Registrable Securities in such notice the opportunity to register the
sale of such number of shares of Registrable Securities as such holders may
request in writing within five (5) days following receipt of such notice (a
"Piggy-Back Registration"). The Company shall cause such Registrable Securities
to be included in such registration and shall use reasonable efforts to cause
the managing Underwriter or Underwriters of a proposed underwritten offering to
permit the Registrable Securities requested to be included in a Piggy-Back
Registration on the same terms and conditions as any similar securities of the
Company and to permit the sale or other disposition of such Registrable
Securities in accordance with the intended method(s) of distribution thereof.
All holders of Registrable Securities proposing to distribute their securities
through a Piggy-Back Registration that involves an Underwriter or Underwriters
shall enter into an underwriting agreement in customary form with the
Underwriter or Underwriters selected for such Piggy-Back Registration.
2.2.2 REDUCTION OF OFFERING. If the managing Underwriter or
Underwriters for a Piggy-Back Registration that is to be an underwritten
offering advises the Company and the holders of Registrable Securities in
writing that the dollar amount or number of shares of Common Stock or other
securities which the Company desires to sell, taken together with shares of
Common Stock or other securities, if any, as to which registration has been
demanded pursuant to written contractual arrangements with Persons other than
the holders of Registrable Securities hereunder, the Registrable Securities as
to which registration has been requested under this Section 2.2, and the shares
of Common Stock or other securities, if any, as to which registration has been
requested pursuant to the written contractual piggy-back registration rights of
other stockholders of the Company, exceeds the Maximum Number of Securities,
then the Company shall include in any such registration:
(a) If the registration is undertaken for the Company's
account: (i) first, the shares of Common Stock or other securities that the
Company desires to sell that can be sold
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without exceeding the Maximum Number of Securities; (ii) second, to the extent
that the Maximum Number of Securities has not been reached under the foregoing
clause (i), the shares of Common Stock or other securities, if any, comprised of
Registrable Securities and Option Securities, as to which registration has been
requested pursuant to the applicable written contractual piggy-back registration
rights of such security holders, Pro Rata, that can be sold without exceeding
the Maximum Number of Securities; and (iii) third, to the extent that the
Maximum Number of Securities has not been reached under the foregoing clauses
(i) and (ii), the shares of Common Stock or other securities for the account of
other Persons that the Company is obligated to register pursuant to written
contractual piggy-back registration rights with such Persons and that can be
sold without exceeding the Maximum Number of Securities;
(b) If the registration is a "demand" registration
undertaken at the demand of holders of Option Securities, (i) first, the shares
of Common Stock or other securities for the account of the demanding Persons,
Pro Rata, that can be sold without exceeding the Maximum Number of Securities;
(ii) second, to the extent that the Maximum Number of Securities has not been
reached under the foregoing clause (i), the shares of Common Stock or other
securities that the Company desires to sell that can be sold without exceeding
the Maximum Number of Securities; (iii) third, to the extent that the Maximum
Number of Securities has not been reached under the foregoing clauses (i) and
(ii), the shares of Registrable Securities, Pro Rata, as to which registration
has been requested pursuant to the terms hereof, that can be sold without
exceeding the Maximum Number of Securities; and (iv) fourth, to the extent that
the Maximum Number of Securities has not been reached under the foregoing
clauses (i), (ii) and (iii), the shares of Common Stock or other securities for
the account of other Persons that the Company is obligated to register pursuant
to written contractual arrangements with such Persons, that can be sold without
exceeding the Maximum Number of Securities; and
(c) If the registration is a "demand" registration
undertaken at the demand of Persons other than either the holders of Registrable
Securities or of Option Securities, (i) first, the shares of Common Stock or
other securities for the account of the demanding Persons that can be sold
without exceeding the Maximum Number of Securities; (ii) second, to the extent
that the Maximum Number of Securities has not been reached under the foregoing
clause (i), the shares of Common Stock or other securities that the Company
desires to sell that can be sold without exceeding the Maximum Number of
Securities; (iii) third, to the extent that the Maximum Number of Securities has
not been reached under the foregoing clauses (i) and (ii), collectively the
shares of Common Stock or other securities comprised of Registrable Securities
and Option Securities, Pro Rata, as to which registration has been requested
pursuant to the terms hereof and of the Unit Purchase Option, as applicable,
that can be sold without exceeding the Maximum Number of Securities; and (iv)
fourth, to the extent that the Maximum Number of Securities has not been reached
under the foregoing clauses (i), (ii) and (iii), the shares of Common Stock or
other securities for the account of other Persons that the Company is obligated
to register pursuant to written contractual arrangements with such Persons, that
can be sold without exceeding the Maximum Number of Securities.
2.2.3 WITHDRAWAL. Any holder of Registrable Securities may
elect to withdraw such holder's request for inclusion of Registrable Securities
in any Piggy-Back Registration by giving written notice to the Company of such
request to withdraw prior to the effectiveness of the Registration Statement.
The Company (whether on its own determination or as the result of a withdrawal
by Persons making a demand pursuant to written contractual obligations) may
withdraw (or postpone the filing of) a registration statement at any time prior
to the effectiveness of the Registration Statement. Notwithstanding any such
withdrawal, the Company shall pay all expenses incurred by the holders of
Registrable securities in connection with such Piggy-Back Registration as
provided in Section 3.3.
2.3 REGISTRATIONS ON FORM S-3. The holders of Registrable
Securities may at any time and from time to time, request in writing that the
Company register the resale of any or all of such
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Registrable Securities on Form S-3 or any similar short-form registration which
may be available at such time ("Form S-3"); provided, however, that the Company
shall not be obligated to effect such request through an underwritten offering.
Upon receipt of such written request, the Company will give written notice of
the proposed registration to all other holders of Registrable Securities, and,
as soon as practicable thereafter, effect the registration of all or such
portion of such holder's or holders' Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities or
other securities of the Company, if any, of any other holder or holders joining
in such request as are specified in a written request given within fifteen (15)
days after receipt of such written notice from the Company; provided, however,
that the Company shall not be obligated to effect any such registration pursuant
to this Section 2.3: (i) if Form S-3 is not available for such offering; or (ii)
if the holders of the Registrable Securities, together with the holders of any
other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any) at any
aggregate price to the public of less than $500,000. Registrations effected
pursuant to this Section 2.3 shall not be counted as Demand Registrations
effected pursuant to Section 2.1.
3. REGISTRATION PROCEDURES.
3.1 FILINGS; INFORMATION. Whenever the Company is required to
effect the registration of any Registrable Securities pursuant to Section 2, the
Company shall use its reasonable efforts to effect the registration and sale of
such Registrable Securities in accordance with the intended method(s) of
distribution thereof as expeditiously as reasonably practicable, and in
connection with any such request:
3.1.1 FILING REGISTRATION STATEMENT. The Company shall, as
expeditiously as reasonably possible and in any event within sixty (60) days
after receipt of a request for a Demand Registration pursuant to Section 2.1,
prepare and file with the Commission a Registration Statement on any form for
which the Company then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the sale of all Registrable
Securities to be registered thereunder in accordance with the intended method(s)
of distribution thereof, and shall use reasonable efforts to cause such
Registration Statement to become and remain effective for the period required by
Section 3.1.3; provided, however, that the Company shall have the right to defer
any Demand Registration for up to 45 days, if the Company shall furnish to the
holders a certificate signed by the Chief Executive Officer or Chief Financial
Officer of the Company stating that, in the good faith judgment of the Board, it
would be materially detrimental to the Company and its stockholders for such
Registration Statement to be effected at such time; provided further, however,
that the Company shall not have the right to exercise the right set forth in the
immediately preceding proviso more than once in any 365-day period in respect of
a Demand Registration hereunder.
3.1.2 COPIES. The Company shall upon request, prior to filing
a Registration Statement or prospectus in respect of Registrable Securities, or
any amendment or supplement thereto, furnish without charge to the holders of
Registrable Securities included in such registration, and such holders' legal
counsel, copies of such Registration Statement as proposed to be filed, each
amendment and supplement to such Registration Statement (in each case including
all exhibits thereto and documents incorporated by reference therein), the
prospectus included in such Registration Statement (including each preliminary
prospectus), and such other documents as the holders of Registrable Securities
included in such registration or legal counsel for any such holders may request
in order to facilitate the disposition of the Registrable Securities owned by
such holders.
3.1.3 AMENDMENTS AND SUPPLEMENTS. The Company shall prepare
and file with the Commission such amendments, including post-effective
amendments, and supplements to such
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Registration Statement and the prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective and in compliance with
the provisions of the Securities Act until all Registrable Securities and other
securities covered by such Registration Statement have been disposed of in
accordance with the intended method(s) of distribution set forth in such
Registration Statement (which period shall not exceed the sum of one hundred
eighty (180) days plus any period during which any such disposition is
interfered with by any stop order or injunction of the Commission or any
governmental agency or court).
3.1.4 NOTIFICATION. After the filing of a Registration
Statement, the Company shall promptly, and in no event more than two (2)
business days after such filing, notify the holders of Registrable Securities
included in such Registration Statement of such filing, and shall further notify
such holders within two (2) business days of the occurrence of any of the
following: (i) when such Registration Statement becomes effective; (ii) when any
post-effective amendment to such Registration Statement becomes effective; (iii)
the issuance or threatened issuance by the Commission of any stop order (and the
Company shall take all reasonable actions required to prevent the entry of such
stop order or to remove it if entered); and (iv) any request by the Commission
for any amendment or supplement to such Registration Statement or any prospectus
relating thereto or for additional information or of the occurrence of an event
requiring the preparation of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of the securities covered by
such Registration Statement, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
promptly make available to the holders of Registrable Securities included in
such Registration Statement any such supplement or amendment.
3.1.5 STATE SECURITIES LAWS COMPLIANCE. The Company shall use
its reasonable efforts to (i) register or qualify the Registrable Securities
covered by the Registration Statement under such securities or "blue sky" laws
of such jurisdictions in the United States as the holders of Registrable
Securities included in such Registration Statement (in light of their intended
plan of distribution) may request and (ii) take such action necessary to cause
such Registrable Securities covered by the Registration Statement to be
registered with or approved by such other governmental authorities as may be
necessary by virtue of the business and operations of the Company and do any and
all other acts and things that may be necessary or advisable to enable the
holders of Registrable Securities included in such Registration Statement to
consummate the disposition of such Registrable Securities in such jurisdictions;
provided, however, that the Company shall not be required to qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this paragraph or subject itself to taxation in any such
jurisdiction.
3.1.6 AGREEMENTS FOR DISPOSITION. The Company shall enter into
customary agreements (including, if applicable, an underwriting agreement in
customary form) and take such other actions as are reasonably required in order
to expedite or facilitate the disposition of such Registrable Securities. The
representations, warranties and covenants of the Company in any underwriting
agreement which are made to or for the benefit of any Underwriters, to the
extent applicable, shall also be made to and for the benefit of the holders of
Registrable Securities included in such registration statement. Such holders
shall agree to such representations, warranties, covenants and indemnification
and contribution obligations for selling stockholders as are customarily
contained in agreements of that type used by the Underwriters.
3.1.7 COOPERATION. The principal executive officer of the
Company, the principal financial officer of the Company, the principal
accounting officer of the Company and all other officers and members of the
management of the Company shall cooperate in any offering of Registrable
Securities hereunder, which cooperation shall include, without limitation, the
preparation of the Registration Statement with respect to such offering and all
other offering materials and related
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documents, and participation in meetings with Underwriters, attorneys,
accountants and potential investors.
3.1.8 RECORDS. The Company shall make available for inspection
by the holders of Registrable Securities included in a Registration Statement,
any Underwriter participating in any disposition pursuant to such Registration
Statement and any attorney, accountant or other professional retained by any
holder of Registrable Securities included in such Registration Statement or any
Underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, as shall be necessary to enable them to exercise
their due diligence responsibility, and cause the Company's officers, directors
and employees to supply all information requested by any of them in connection
with such Registration Statement.
3.1.9 OPINIONS AND COMFORT LETTERS. If a Registration
Statement in respect of Registrable Securities includes an underwritten public
offering, the Company shall furnish such documents and certificates as may be
reasonably requested by the participating holders and the managing underwriters,
including customary opinions of counsel and "cold comfort" letters as may be
reasonably required pursuant to the underwriting agreement relating thereto. In
the event no legal opinion is delivered to any Underwriter, the Company shall
furnish to each holder of Registrable Securities included in such Registration
Statement, at any time that such holder elects to use a prospectus, an letter of
counsel to the Company to the effect that the Registration Statement containing
such prospectus has been declared effective and that no stop order is in effect.
3.1.10 EARNINGS STATEMENT. The Company shall comply with all
applicable rules and regulations of the Commission and the Securities Act, and
make available to its stockholders, as soon as practicable, an earnings
statement covering a period of twelve (12) months, beginning within three (3)
months 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.
3.1.11 LISTING. The Company shall use its reasonable efforts
to cause all Registrable Securities included in any registration to be listed on
such exchanges or otherwise designated for trading in the same manner as similar
securities issued by the Company are then listed or designated or, if no such
similar securities are then listed or designated, in a manner satisfactory to
the majority-in-interest, on an as-converted to Common Stock basis, of the
holders of Registrable Securities included in such registration.
3.2 OBLIGATION TO SUSPEND DISTRIBUTION. Upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
3.1.4(iv), or, in the case of a resale registration on Form S-3 pursuant to
Section 2.3 hereof, upon any suspension by the Company, pursuant to a written
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ compliance program adopted by the Board, of the ability of all
"insiders" covered by such program to transact in the Company's securities
because of the existence of material non-public information, each holder of
Registrable Securities included in any registration shall immediately
discontinue disposition of such Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities until such holder
receives the supplemented or amended prospectus contemplated by Section
3.1.4(iv) or the restriction on the ability of "insiders" to transact in the
Company's securities is removed, as applicable, and, if so directed by the
Company, each such holder will deliver to the Company all copies, other than
permanent file copies then in such holder's possession, of the most recent
prospectus covering such Registrable Securities at the time of receipt of such
notice.
3.3 REGISTRATION EXPENSES. The Company shall bear all costs and
expenses incurred in connection with any Demand Registration pursuant to Section
2.1, any Piggy-Back Registration pursuant to Section 2.2, and any registration
on Form S-3 effected pursuant to Section 2.3, and all
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expenses incurred in performing or complying with its other obligations under
this Agreement, whether or not the Registration Statement becomes effective,
including, without limitation: (i) all registration and filing fees; (ii) fees
and expenses of compliance with securities or "blue sky" laws (including fees
and disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities); (iii) printing expenses; (iv) the Company's internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees); (v) the fees and expenses incurred in connection with
the listing of the Registrable Securities as required by Section 3.1.11; (vi)
National Association of Securities Dealers, Inc. fees; (vii) fees and
disbursements of counsel for the Company and fees and expenses for independent
certified public accountants retained by the Company (including the expenses or
costs associated with the delivery of any opinions or comfort letters requested
pursuant to Section 3.1.9); (viii) the fees and expenses of any special experts
retained by the Company in connection with such registration and (ix) the fees
and expenses of one legal counsel selected by the holders of a
majority-in-interest, on an as-converted to Common Stock basis, of the
Registrable Securities included in such registration. The Company shall have no
obligation to pay any underwriting discounts or selling commissions attributable
to the Registrable Securities being sold by the holders thereof, which
underwriting discounts or selling commissions shall be borne by such holders.
Additionally, in an underwritten offering, all selling stockholders and the
Company shall bear the reimbursable expenses of the underwriter, if any, pro
rata in proportion to the respective amount of shares each is selling in such
offering.
3.4 INFORMATION. The holders of Registrable Securities shall
provide such information as may reasonably be requested by the Company, or the
managing Underwriter, if any, in connection with the preparation of any
Registration Statement, including amendments and supplements thereto, in order
to effect the registration of any Registrable Securities under the Securities
Act pursuant to Section 2 and in connection with the Company's obligation to
comply with federal and applicable state securities laws.
4. INDEMNIFICATION AND CONTRIBUTION.
4.1 INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless each Investor and each other holder of Registrable
Securities, and each of their respective officers, employees, affiliates,
directors, partners, members, attorneys and agents, and each Person, if any, who
controls (within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act) an Investor and each other holder of Registrable
Securities (each, an "Investor Indemnified Party"), from and against any
expenses, losses, judgments, claims, damages or liabilities, whether joint or
several, arising out of or based upon any untrue statement (or allegedly untrue
statement) of a material fact contained in any Registration Statement under
which the sale of such Registrable Securities was registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or arising out of or based upon any
omission (or alleged omission) to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Company of the Securities Act or any rule or regulation
promulgated thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration; and
the Company shall promptly reimburse the Investor Indemnified Party for any
legal and any other expenses reasonably incurred by such Investor Indemnified
Party in connection with investigating and defending any such expense, lose,
judgment, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such expense,
loss, claim, damage or liability arises out of or is based upon any untrue
statement or allegedly untrue statement or omission or alleged omission made in
such Registration Statement, preliminary prospectus, final prospectus, or
summary prospectus, or any such amendment or supplement, in reliance upon and in
conformity with information furnished to the Company, in writing, by such
selling holder expressly for use therein. The Company also shall indemnify any
Underwriter of the Registrable Securities, their
10
officers, affiliates, directors, partners, members and agents and each Person
who controls such Underwriter on substantially the same basis as that of the
indemnification provided above in this Section 4.1.
4.2 INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES. Each
selling holder of Registrable Securities will, in the event that any
registration is being effected under the Securities Act pursuant to this
Agreement of any Registrable Securities held by such selling holder, indemnify
and hold harmless the Company, each of its directors and officers and each
underwriter (if any), and each other selling holder and each other Person, if
any, who controls another selling holder or such underwriter within the meaning
of the Securities Act, against any losses, claims, judgments, damages or
liabilities, whether joint or several, insofar as such losses, claims,
judgments, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or allegedly untrue statement of a
material fact contained in any Registration Statement under which the sale of
such Registrable Securities was registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained in the
Registration Statement, or any amendment or supplement to the Registration
Statement, or arise out of or are based upon any omission or the alleged
omission to state a material fact required to be stated therein or necessary to
make the statement therein not misleading, if the statement or omission was made
in reliance upon and in conformity with information furnished in writing to the
Company by such selling holder expressly for use therein, and shall reimburse
the Company, its directors and officers, and each other selling holder or
controlling Person for any legal or other expenses reasonably incurred by any of
them in connection with investigation or defending any such loss, claim, damage,
liability or action. Each selling holder's indemnification obligations hereunder
shall be several and not joint and shall be limited to the amount of any net
proceeds actually received by such selling holder.
4.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after receipt
by any Person of any notice of any loss, claim, damage or liability or any
action in respect of which indemnity may be sought pursuant to Section 4.1 or
4.2, such Person (the "Indemnified Party") shall, if a claim in respect thereof
is to be made against any other Person for indemnification hereunder, notify
such other Person (the "Indemnifying Party") in writing of the loss, claim,
judgment, damage, liability or action; provided, however, that the failure by
the indemnified Party to notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability which the Indemnifying Party may have to
such Indemnified Party hereunder, except and solely to the extent the
Indemnifying Party is actually prejudiced by such failure. If the Indemnified
Party is seeking indemnification with respect to any claim or action brought
against the Indemnified Party, then the Indemnifying Party shall be entitled to
participate in such claim or action, and, to the extent that it wishes, jointly
with all other Indemnifying Parties, to assume control of the defense thereof
with counsel reasonably satisfactory to the Indemnified Party. After notice from
the Indemnifying Party to the Indemnified Party of its election to assume
control of the defense of such claim or action, the Indemnifying Party shall not
be liable to the Indemnified Party for any legal or other expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof other
than reasonable costs of investigation; provided, however, that in any action in
which both the Indemnified Party and the Indemnifying Party are named as
defendants, the Indemnified Party shall have the right to employ separate
counsel (but no more than one such separate counsel) to represent the
Indemnified Party and its controlling Persons who may be subject to liability
arising out of any claim in respect of which indemnity may be sought by the
indemnified Party against the Indemnifying Party, with the reasonable fees and
reasonable expenses of such counsel to be paid by such Indemnifying Party if,
based upon the written opinion of counsel of such Indemnified Party,
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, consent to
entry of judgment or effect any settlement of any claim or pending or threatened
proceeding in respect of which the Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such
11
Indemnified Party, unless such judgment or settlement includes an unconditional
release of such Indemnified Party from all liability arising out of such claim
or proceeding.
4.4 CONTRIBUTION.
4.4.1 If the indemnification provided for in the foregoing
Sections 4.1 and 4.2 is unavailable to any Indemnified Party in respect of any
loss, claim, damage, liability or action referred to herein, then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, claim, damage, liability or action in such proportion as is
appropriate to reflect the relative fault of the Indemnified Parties and the
Indemnifying Parties in connection with the actions or omissions which resulted
in such loss, claim, damage, liability or action, as well as any other relevant
equitable considerations. The relative fault of any Indemnified Party and any
Indemnifying Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such Indemnified Party or such Indemnifying Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
4.4.2 The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 4.4 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding Section
4.4.1.
4.4.3 The amount paid or payable by an Indemnified Party as a
result of any loss, claim, damage, liability or action referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
Indemnified Party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 4.4, no holder of
Registrable Securities shall be required to contribute any amount in excess of
the dollar amount of the net proceeds (after payment of any underwriting fees,
discounts, commissions or taxes) actually received by such holder from the sale
of Registrable Securities which gave rise to such contribution obligation. No
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
5. UNDERWRITING AND DISTRIBUTION.
5.1 RULE 144. The Company covenants that it shall file any reports
required to be filed by it under the Securities Act and the Exchange Act and
shall take such further action as the holders of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
holders to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144 under the
Securities Act, as such Rules may be amended from time to time, or any similar
Rule or regulation hereafter adopted by the Commission.
6. MISCELLANEOUS.
6.1 OTHER REGISTRATION RIGHTS. Except with respect to those
securities issued or issuable upon exercise of that certain Unit Purchase Option
to be issued to Sandler ▇'▇▇▇▇▇ or its designees in connection with the
Company's initial public offering on _________, 2007, the Company represents and
warrants that no Person, other than a holder of the Registrable Securities, has
any right to require the Company to register any shares of the Company's capital
stock for sale or to include shares of
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the Company's capital stock in any registration filed by the Company for the
sale of shares of capital stock for its own account or for the account of any
other Person.
6.2 ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. This Agreement and
the rights, duties and obligations of the Company hereunder may not be assigned
or delegated by the Company in whole or in part. This Agreement and the rights,
duties and obligations of the holders of Registrable Securities hereunder may be
freely assigned or delegated by such holder of Registrable Securities in
conjunction with and to the extent of any transfer of at least twenty (20%)
percent of the Registrable Securities held by any such holder. This Agreement
and the provisions hereof shall be binding upon and shall inure to the benefit
of (i) each of the parties hereto, (ii) Sandler ▇'▇▇▇▇▇ and its successors, and
(iii) the permitted assigns of the Investor or holder of Registrable Securities
or of any assignee of the Investor or holder of Registrable Securities. This
Agreement is not intended to confer any rights or benefits on any Persons that
are not party hereto other than as expressly set forth in Article 4 and this
Section 6.2.
6.3 NOTICES. All notices, demands, requests, consents, approvals
or other communications (collectively, "Notices") required or permitted to be
given hereunder or which are given with respect to this Agreement shall be in
writing and shall be personally served, delivered by reputable overnight courier
service with charges prepaid, or transmitted by hand delivery or facsimile,
addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice. Notice shall be deemed given on the
date of service or transmission if personally served or transmitted by
facsimile; provided, that if such service or transmission is not on a business
day or is after normal business hours, then such notice shall be deemed given on
the next business day. Notice otherwise sent as provided herein shall be deemed
given on the next business day following timely delivery of such notice to a
reputable overnight courier service with an order for next-day delivery.
To the Company:
Western United Financial Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: V. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇, Esq.
To an Investor, to the address for such Investor specified on the
signature pages hereto.
6.4 SEVERABILITY. This Agreement shall be deemed severable, and
the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision, the parties hereto intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible that is valid and enforceable.
6.5 COUNTERPARTS. This Agreement may be executed by facsimile and
in multiple counterparts, and all of which taken together shall constitute one
and the same instrument.
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6.6 ENTIRE AGREEMENT. This Agreement (including all agreements
entered into pursuant hereto and all certificates and instruments delivered
pursuant hereto and thereto) constitutes the entire agreement of the parties
with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements, representations, understandings, negotiations and
discussions between the parties, whether oral or written.
6.7 MODIFICATIONS AND AMENDMENTS. The Company may from time to
time supplement or amend this Agreement without the approval of any of the
Investors in order to cure any ambiguity, to correct or supplement any provision
contained herein that may be defective or inconsistent with any other provisions
herein, or to make any other provisions in regard to matters or questions
arising hereunder that the Company may deem necessary or desirable and that the
Company, in the exercise of reasonable judgment, determines that it shall not
materially adversely affect the interest of the Investors. All other
modifications or amendments shall require the written consent of the holders of
a majority-in-interest of the Registrable Securities.
6.8 TITLES AND HEADINGS. Titles and headings of sections of this
Agreement are for convenience only and shall not affect the construction of any
provision of this Agreement.
6.9 WAIVERS AND EXTENSIONS. Any party to this Agreement may waive
any right, breach or default which such party has the right to waive, provided
that such waiver will not be effective against the waiving party unless it is in
writing, is signed by such party, and specifically refers to this Agreement.
Waivers may be made in advance or after the right waived has arisen or the
breach or default waived has occurred. Any waiver may be conditional. No waiver
of any breach of any agreement or provision herein contained shall be deemed a
waiver of any preceding or succeeding breach thereof nor of any other agreement
or provision herein contained. No waiver or extension of time for performance of
any obligations or acts shall be deemed a waiver or extension of the time for
performance of any other obligations or acts.
6.10 REMEDIES CUMULATIVE. In the event that the Company fails to
observe or perform any covenant or agreement to be observed or performed under
this Agreement, the Investor or any other holder of Registrable Securities may
proceed to protect and enforce its rights by suit in equity or action at law,
whether for specific performance of any term contained in this Agreement or for
an injunction against the breach of any such term or in aid of the exercise of
any power granted in this Agreement or to enforce any other legal or equitable
right, or to take any one or more of such actions, without being required to
post a bond. None of the rights, powers or remedies conferred under this
Agreement shall be mutually exclusive, and each such right, power or remedy
shall be cumulative and in addition to any other right, power or remedy, whether
conferred by this Agreement or now or hereafter available at law, in equity, by
statute or otherwise.
6.11 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed in that State, including, without
limitation, Sections 5-1401 and 5-1402 of the New York General Obligations Law
and the New York Civil Practice Laws and Rules 327(b). The parties hereto agree
that any action, proceeding or claim against it arising out of or relating in
any way to this Agreement shall be brought and enforced in the courts of the
State of New York or the United States District Court for the Southern District
of New York, and irrevocably submit to such jurisdiction, which jurisdiction
shall be exclusive. The parties hereby waive any objection to such exclusive
jurisdiction and that such courts represent an inconvenient forum.
6.12 WAIVER OF TRIAL BY JURY. Each party hereby irrevocably and
unconditionally waives the right to a trial by jury in any action, suit,
counterclaim or other proceeding (whether based on
14
contract, tort or otherwise) arising out of, connected with or relating to this
Agreement, the transactions contemplated hereby, or the actions of the Investor
in the negotiation, administration, performance or enforcement hereof.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have caused this Registration
Rights Agreement to be executed and delivered by their duly authorized
representatives as of the date first written above.
WESTERN UNITED FINANCIAL CORPORATION
By:
---------------------------------
Name: V. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Executive Officer
INVESTORS:
WESTERN UNITED FUNDING, LLC
By:
---------------------------------
Name:
Title:
Address:
------------------------------------
Name: V. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Address:
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Address:
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address:
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address:
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address:
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Address:
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