EXHIBIT 4.1
CGA GROUP, LTD.
SHAREHOLDERS AGREEMENT
Dated as of June 12, 1997
TABLE OF CONTENTS
Page
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1. TRANSFERS........................................................... 2
(a) Separation of Investment Units and Resale of Securities ....... 2
(b) Right of First Offer .......................................... 4
(c) Drag Along Right .............................................. 6
(d) Tag Along Right ............................................... 7
(e) Preemption Right .............................................. 8
(f) Regulatory Transfer ........................................... 10
(g) Exception...................................................... 10
(h) Termination of Rights.......................................... 10
2. RESTRICTIONS ON STOCK OWNERSHIP..................................... 10
(a) Share Ownership Limitations ................................... 10
(b) Prompt Disposition of Shares................................... 11
(c) Manner of Disposition.......................................... 11
3. REGISTRATION RIGHTS................................................. 12
(a) Definitions.................................................... 12
(b) Demand Registration ........................................... 13
(c) Piggyback Registration......................................... 17
(d) Expenses of Registration....................................... 18
(e) Registration Procedures........................................ 19
(f) Indemnification ............................................... 23
(g) Information by the Holders..................................... 27
(h) Rule 144 Reporting............................................. 27
(i) "Market Stand-off" Agreement................................... 28
(j) Assignability.................................................. 29
(k) Termination.................................................... 29
4. INFORMATION AS TO COMPANY AND RELATED COVENANTS..................... 30
(a) Auditors....................................................... 30
(b) Financial Information.......................................... 30
(c) Business Report................................................ 30
(d) Inspection..................................................... 31
5. DEFINITIONS......................................................... 31
(a) Terms Defined.................................................. 31
6. MISCELLANEOUS....................................................... 33
(a) Legends........................................................ 33
(b) Waiver; Amendments ............................................ 33
(c) Amendment of Schedule I to this Agreement ..................... 34
(d) Recapitalization, Exchanges, Etc. ............................. 34
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(e) Specific Performance ..................................... 34
(f) Notices .................................................. 34
(g) Successors and Assigns.................................... 34
(h) Counterparts.............................................. 35
(i) Entire Agreement.......................................... 35
(j) Applicable Law ........................................... 35
(k) Section Headings.......................................... 35
(l) Holders of Warrant Shares................................. 35
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SHAREHOLDERS AGREEMENT
Shareholders Agreement, dated as of June 12, 1997 (this "Agreement") among
CGA Group, Ltd., a company with limited liability organized under the laws of
Bermuda (the "Company") and each of the persons whose names and addresses appear
on Schedule I hereto, as such Schedule I may be amended from time to time in
accordance with the terms hereof (the "Common Holders"). Each of the foregoing
defined terms shall include such persons' successors and assigns as permitted by
this Agreement. Certain capitalized terms used in this Agreement have the
meanings set forth in Section 5 of this Agreement.
RECITALS
WHEREAS, the Company has issued or has agreed to issue the following
classes of shares: (i) an aggregate of 2,600,000 shares of Series A Cumulative
Voting Preference Shares, par value $.01 per share, of the Company ("Series A
Preferred Stock"), (ii) 1,600,000 shares of Series B Cumulative Voting
Preference Shares, par value of $.01 per share, of the Company ("Series B
Preferred Stock"), and (iii) 9,100,000 shares of common stock, par value of $.01
per share, of the Company ("Common Stock") (the Series A Preferred Stock, the
Series B Preferred Stock, the Common Stock and any other shares of the Company
are referred to herein as "Company Stock");
WHEREAS, certain investors have (i) agreed, pursuant to the terms of the
Series A Preferred Stock Subscription Agreement, dated as of June 9, 1997 (the
"Series A Preferred Stock Subscription Agreement"), to purchase the Series A
Preferred Stock and (ii) pursuant to the terms of the Warrant Acquisition
Agreement, dated as of June 9, 1997 (the "Warrant Acquisition Agreement"),
acquired or agreed to purchase warrants ("Warrants") to purchase Common Stock
(or such shares of other stock into which such Common Stock may have been
converted prior to the exercise of the Warrant);
WHEREAS, certain initial Common Holders have agreed pursuant to the terms
of the Investment Units Subscription Agreement, dated as of June 4, 1997 (the
"Investment Units Subscription Agreement"), to purchase an aggregate of
1,600,000 investment units (the "Investment Units"), each such Investment Unit
consisting of (i) one share of Series B Preferred Stock, (ii) 4.8925 shares of
Common Stock, and (iii) upon the occurrence of certain events described in such
subscription agreement, one and one-half (1.5)
additional shares of Series B Preferred Stock (the "Commitment"); and
WHEREAS, the Sponsoring Investors (as defined in the Private Placement
Memorandum) have (i) agreed pursuant to the Founders' Subscription Agreement,
dated as of June 12, 1997 (the "Founders' Subscription Agreement"), to purchase
an aggregate of 1,272,043 shares of Common Stock and (ii) pursuant to the terms
of the Sponsoring Investors' and Founders' Stock Warrant Plan, dated as of June
17, 1997 (the "Sponsoring Investors' and Founders' Stock Warrant Plan") acquired
or agreed to purchase an aggregate of 847,729 Warrants ("Sponsoring Investors'
and Founders' Warrants");
WHEREAS, the management employees of the Company (as defined in the Private
Placement Memorandum) will receive the right to purchase, over the prescribed
vesting period, an aggregate of 1,494,771 warrants to purchase Common Stock (or
such shares of other stock into which such Common Stock may have been converted
prior to the exercise of the warrants) ("Employee Warrants") pursuant to the
terms of the Employee Stock Warrant Plan dated of June 17, 1997 (the "Employee
Stock Warrant Plan") (the Warrants, Sponsoring Investors' and Founders' Warrants
and Employee Warrants, collectively the "Warrant Shares");
WHEREAS, the Common Holders and the Company desire to enter into the
agreements contained herein with respect to certain matters relating to the
operations of the Company and the disposition of Company Stock.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto hereby agree as follows:
1. TRANSFERS
(a) Seperation of investment Units and Resale of Securities. (i) Prior to
the occurrence of a Separation Event (as defined below), no Common Holder may
transfer any Company Stock constituting a part of an Investment Unit other than
collectively as a unit with the other Common Stock, Series B Preferred Stock and
the Commitment constituting a part of such Investment Unit. Upon the occurrence
of a Separation Event, a Common Holder may transfer some or all of the Common
Stock, the Series B Preferred Stock and the Commitment constituting an
Investment Unit other than collectively as a unit, subject to applicable
restrictions on transfers of Company Stock or Units set forth in this Agreement,
the Investment Units Subscription Agreement and the bye-laws of the Company (the
"Company's Bye-Laws"). The non-collective transfers described in the immediately
preceding sentence are referred
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to herein as the "Separate Transfers". As used herein, the phrase "Separation
Event" means the earlier to occur of (x) a Trigger Event, provided that the
Company receives written notification from Duff & ▇▇▇▇▇▇ Credit Rating Company
("DCR") that neither such Trigger Event nor the Separate Transfers will cause
the claims paying ability rating of Commercial Guaranty Assurance, Ltd. to be
downgraded by DCR or (y) receipt by the Company of written notification from DCR
that the Separate Transfers will not cause DCR to downgrade CGA's claims paying
ability. Within 10 days prior to the occurrence of each Trigger Event, the
Company shall request in writing that DCR deliver the written notification
referred to in the proviso to clause (x) above. Upon the request of any
Investment Unit holder, the Company shall request in writing that DCR deliver
the written notification specified in clause (y) above. Notwithstanding the
foregoing, prior to a Separation Event, Commitments with an aggregate value
(which value shall be determined based on the product of (x) the maximum number
of shares of Series B Preferred Stock required to be purchased pursuant to such
Commitments and (y) $25) of up to $7.5 million may be transferred separately
from the Common Stock and Series B Preferred Stock constituting the Investment
Units held by a Common Holder without receipt from DCR of the notices provided
above; provided, further, that Olympus Growth Fund II, L.P. and Olympus
Executive Fund, L.P. shall have the first right, prior to any other Common
Holder, to so transfer all or any portion of the Commitments that it, or its
Affiliates, own; provided, further, that if Olympus Growth Fund II, L.P. and
Olympus Executive Fund, L.P. notifies the Company prior to the occurrence of a
Separation Event that it will not exercise such first right or that it will not
exercise such first right with respect to Commitments with an aggregate value of
$7.5 million, Commitments with an aggregate value equal to the difference
between $7.5 million and the aggregate value of the Commitments so transferred
by Olympus Growth Fund II, L.P. and Olympus Executive Fund, L.P. may be
transferred by such Common Holders as shall request such right on a pro rata
basis based on the amount of shares of Common Stock owned by each such
requesting Common Holder, as compared to the aggregate of all of the shares of
Common Stock owned by all of the requesting Common Holders, and as shall be
approved by the Board of the Company in its sole discretion.
(ii) No Common Holder shall transfer, prior to a Separation Event, any
Investment Units or Common Stock and, after a Separation Event, any Common Stock
held by such Common Holder, whether held separately or as part of one or more
Investment Units, other than, in each case, (x) in accordance with the Company's
Bye-Laws and the provisions of this Section 1 and Section 2 hereof and (y) in
accordance with Article VII of the Investment Unit Subscription
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Agreement, Article VII of the Founders' Subscription Agreement or Article IV of
the Warrant Acquisition Agreement as the case may be. Unless (x) a registration
statement is in effect with respect to the Common Stock to be transferred or (y)
the transfer is made pursuant to Rule 144 of the Securities Act, or (z) the
transfer is of Common Stock that has been transferred previously pursuant to (x)
or (y), no Common Holder shall transfer any Common Stock whether held separately
or as part of one or more Investment Units, unless the transferee of such shares
has agreed to be bound by the terms of this Agreement and has duly executed a
counterpart of this Agreement. Any transfer or purported transfer made in
violation of this Section 1 and Section 2 hereof shall be null and void and of
no effect and the Company shall cause any correction required to be made to the
register of the Members of the Company to be effected.
(b) Right of First Offer
(i) Subject to subsection (vii) below, any Common Holder desiring to
transfer, prior to any Separation Event, Investment Units or Common Stock,
whether held separately or as part of one or more Investment Units and after a
Separation Event any Common Stock (hereinafter for purposes of this Section
only, the "Securities"), held by such Common Holder (the "Seller") shall give
written notice (the "Sales Notice") to the other Common Holders that the Seller
desires to effect such a transfer (a "Sale") and setting forth the number of
Investment Units or shares of Common Stock proposed to be transferred by the
Seller.
(ii) The receipt of the Sales Notice by each other Common Holder party to
this Shareholders Agreement shall constitute an offer (the "Offer") by the
Seller to sell to such Common Holder or group of Common Holders for cash the
Securities subject to the Sale, subject to the Seller's approval of the terms
and conditions of the Bid (as defined below). Each Common Holder, or any group
of one or more Common Holders, receiving an Offer shall have a 15-day period
(the "Order Period") in which to give a written notice (a "Bid") to the Seller
prior to the expiration of such 15-day period, which written notice shall set
the price per Security that such Common Holder or group of Common Holders
proposes to pay (the "Proposed Sales Price") and such other terms and conditions
it or they propose with respect to the Sale; provided, however, a Bid must be
for all of the Securities the Seller proposes to transfer as stated in the Sales
Notice.
(iii) Upon the receipt of all Bids, if any, the Seller shall have the right
to solicit offers for the Securities subject to the Sale from any non-affiliated
third-party (a "Third-Party Offer") for a period of 90 days
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from the date the Order Period expires. To the extent the Seller receives a
Third-Party Offer and such Third-Party Offer contains a Proposed Sales Price in
excess of the highest Sales Price received by Seller pursuant to the Bids made
by the Common Holders or group of Common Holders, then Seller shall have the
right to sell the Securities to the Third-Party pursuant to its Offer. If no
Bids are delivered during the Order Period then the Seller shall be entitled to
accept, in its sole discretion, any Third-Party Offer it so chooses. If such
sale pursuant to a Third-Party Offer is not consummated within 120-days from
receipt of the Third-Party Offer, and no Bids of Common Holders are accepted by
the Seller within 10 days following the expiration of the 90-day period
described in the first sentence of this subparagraph (iii), then the provisions
of this Section 1(b) shall be reinstated as to any other transfers proposed to
be made by the Seller.
(iv) The Common Holders or group of Common Holders providing a Bid to the
Seller during the Order Period as to all of the Securities subject to the Sale,
and which Bid is accepted by the Seller, shall be required to purchase and pay
for all the Securities accepted pursuant to their Bid within a 30-day period
from the date on which the buying Common Holder (or group of Common Holders)
receives written notice of the Seller's acceptance of the Bid; provided that if
the purchase and sale of such Securities is subject to any prior regulatory
approval, the time period during which such purchase and sale may be consummated
shall be extended until the expiration of five Business Days after all such
approvals shall have been received.
(v) Subject to the transfer restrictions of Section 1(a)(ii), the Seller
may transfer Investment Units or shares in accordance with subsection (b)(iii)
for consideration other than cash to an unaffiliated third-party only if the
Seller has first obtained and delivered to each of the Common Holders an opinion
of an independent investment banking firm of national standing indicating that
the fair market value of the per share non-cash consideration that the Seller
proposes to accept as consideration for such Investment Units or shares,
together with any per share cash consideration, is at least equal to the highest
proposed Sale Price received by the Seller pursuant to Bids made by the Common
Holders or group of Common Holders.
(vi) Notwithstanding any provision of this Section 1(b), no action may be
taken by the Seller, the other Common Holders or the Company that would cause a
violation of the provisions of Section 2.
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(vii) The Company shall take all reasonable steps necessary to ensure
application is made for the appropriate permissions from the Bermuda authorities
in connection with any Transfer complying with this Agreement. The Company
hereby acknowledges that no prior approval of the Bermuda Monetary Authority is
necessary for any Transfer between Persons who are designated as non-residents
of Bermuda for the purposes of the Exchange Control Act, 1972.
(viii) The provisions of this Section 1(b) shall not apply to:
(A) a Transfer of shares of Common Stock to an Affiliate of the
Seller;
(B) a Transfer of shares of Common Stock to another Common Holder;
(C) a Transfer of Investment Units to a Common Holder holding
Investment Units;
(D) a Transfer by one or more Common Holders of a majority of all
shares of Common Stock (and, if prior to a Separation Event, Investment
Units) then outstanding to any Person or Persons;
(E) a Transfer required by the provisions of Section 1(c) or Section
2;
(F) a Transfer permitted by the provisions of Section 1(d);
(G) a Transfer pursuant to an effective registration statement with
respect to the Common Stock to be transferred;
(H) a Transfer on or after the fifth anniversary of the date of this
Agreement; or
(I) a Transfer made by ▇▇▇▇▇▇▇ ▇. Price to one or more employees
(listed on Schedule II hereto on the date hereof as such schedule may be
amended or supplemented from time to time) of the Company and its
affiliates no later than January 30, 1999.
(c) Drag Along Right
(i) If at any time and from time to time after the date of this Agreement
Common Holders holding a majority of all shares of Common Stock then issued and
outstanding (whether or not such shares are held separately or as part of
Investment Units, the "Transferring Investors") wish to Transfer in a bona fide
arm's length sale for cash
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consideration all of the Common Stock (and, if prior to a Separation Event, the
Investment Units) held by the Transferring Investors to any Person or Persons
who are not Affiliates of the Transferring Investors (for purposes of this
Section 1(c), the "Proposed Transferee"), the Transferring Investors shall have
the right (the "Drag-Along Right"), subject to applicable law and compliance
with Section 1(a) with respect to such Transfer, to require all (but not less
than all) other Common Holders to sell, pursuant to Section 1(c)(ii), to the
Proposed Transferee all (but not less than all) of the shares of Common Stock
(and, if prior to a Separation Event, the Investment Units) then owned by such
other Common Holders. Each Common Holder agrees to take all steps necessary to
enable such Common Holder to comply with the provisions of this Section 1(c).
(ii) To exercise a Drag-Along Right, the Transferring Investors shall give
each other Common Holder and the Company a written notice (for purposes of this
Section 1(c), a "Drag-Along Notice") containing (a) the aggregate number of
shares of Common Stock (and, if prior to a Separation Event, the Investment
Units) that the Proposed Transferee proposes to acquire from the Transferring
Investors and the other Common Holders, (b) the name and address of the Proposed
Transferee and (c) the proposed purchase price, terms of payment and other
material terms and conditions of the Proposed Transferee's offer. Each Common
Holder shall thereafter be obligated, subject to applicable law, to sell all
(but not less than all) of its shares of Common Stock (and, if prior to a
Separation Event, its Investment Units) as provided in such Drag-Along Notice,
provided that the sale to the Proposed Transferee is consummated within one
hundred and twenty (120) days of delivery of the Drag-Along Notice. If the sale
is not consummated within such 120-day period, then each Common Holder shall no
longer be obligated to sell such Common Holder's shares of Common Stock (or, if
prior to a Separation Event, Investment Units) pursuant to that specific
Drag-Along Right but shall remain subject to the provisions of this Section 1(c)
with respect to any subsequent Drag-Along Rights.
(d) Tag Along Right. If at any time or from time to time after the date of
this Agreement one or more Common Holders (whether or not such shares are held
separately or as part of Investment Units, the "Transferors") wish to Transfer,
in one transaction or a series of related transactions, a majority of the then
issued and outstanding Common Stock (whether or not such shares of Common Stock
are held separately or as part of Investment Units) to any Person or Persons who
are not Affiliates of the Transferors (other than pursuant to an effective
registration statement with respect to the shares of Common Stock to be
transferred
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or as a result of a pledge of shares as security for a bona fide loan), such
Transferors shall notify each other Common Holder holding Common Stock (and, if
prior to a Separation Event, Investment Units) (the "Other Holders") and the
Company, in writing, of such Transfer and its terms and conditions. Within 20
days of the date that such notice is deemed to have been given (as provided in
Section 6(f) herein) to such Other Holders, each of the Other Holders shall
notify the Transferors if it elects to participate in such Transfer. Each of the
Other Holders that so notifies the Transferors shall be obligated to sell, at
the same price and on the same terms as the Transferors, such number of shares
of Common Stock (or, if prior to a Separation Event, such number of shares of
Common Stock or Investment Units, as the case may be) equal to the number of
shares of Common Stock (or, if prior to a Separation Event, such number of
shares of Common Stock or Investment Units, as the case may be) the third party
actually proposes to purchase multiplied by a fraction, the numerator of which
shall be the number of shares of Common Stock (or, if prior to a Separation
Event, such number of shares of Common Stock or Investment Units, as the case
may be) owned by such Other Holder and the denominator of which shall be the
aggregate number of shares of Common Stock (or, if prior to a Separation Event,
such number of shares of Common Stock or Investment Units, as the case may be)
held by the Transferors and each Other Holder exercising its rights under this
Section 1(d).
(e) Preemption Right. If at any time after the date hereof, the Company
proposes to issue equity securities of any kind (the term "equity securities"
shall include for these purposes any warrants, options or other rights to
acquire equity securities or debt securities convertible into equity securities)
of the Company (except for issuances pursuant to the terms of the Stock Warrant
Plans and issuances in connection with (i) a Qualified Public Offering, (ii) a
conversion or exchange of any outstanding securities, (iii) a stock dividend,
(iv) the exercise of any right existing pursuant to any agreements in effect
immediately following the Closing to acquire equity securities of the Company,
including, without limitation, pursuant to the Warrants and the Commitments, or
(v) a merger, amalgamation, reclassification or other reorganization), then, as
to each Common Holder who holds Company Stock at such time, the Company shall:
(i) give written notice setting forth in reasonable detail (1) the
designation and all of the terms and provisions of the equity securities
proposed to be issued (the "Proposed Securities"), including, where applicable,
the voting powers, preferences and relative participating, optional or other
special rights, and the
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qualification, limitations or restrictions thereof and interest rate and
maturity; (2) the price and other terms of the proposed sale of such securities;
(3) the amount of such securities proposed to be issued; and (4) such other
information as may be reasonably required in order to evaluate the proposed
issuance; and
(ii) offer to issue to each such Common Holder a portion of the Proposed
Securities equal to a percentage determined by dividing (x) the number of shares
of Common Stock held by such Common Holder (whether held separately or as part
of one or more Investment Units) by (y) the total number of shares of Common
Stock including those part of any Investment Units then issued and outstanding.
Each such Common Holder that wishes to exercise its purchase rights
hereunder must deliver a written notice to that effect to the Company within
fifteen (15) days after the date the notice specified in Section 1(e)(i) was
deemed to have been given (as provided in Section 6(f) herein) by the Company.
If all of the Proposed Securities offered to such Common Holders are not fully
subscribed by such Common Holders, the remaining Proposed Securities will be
reoffered to the Common Holders purchasing their full allotment upon the terms
set forth in this Section 1(e), until all such Proposed Securities are fully
subscribed for or until all such Common Holders have subscribed for all such
Proposed Securities which they desire to purchase, except that such Common
Holders must exercise their purchase rights within five (5) days after the date
notice was deemed to have been given (as provided in Section 6(f) herein) of all
such reoffers. To the extent that the Company offers two or more securities in
units, Common Holders must purchase such units as a whole and will not be given
the opportunity to purchase only one of the securities making up such units.
Upon the expiration of the offering periods described above, the Company
will be free to sell such Proposed Securities that the Common Holders have not
elected to purchase during the ninety (90) days following such expiration on
terms and conditions no more favorable to the purchasers thereof than those
offered to such holders. Any Proposed Securities offered or sold by the Company
after such 90-day period must be reoffered to the Common Holders pursuant to
this Section 1(e). The election by a Common Holder not to exercise its purchase
rights under this Section 1(e) in any one instance shall not affect its right
(other than in respect of a reduction in its percentage holdings) as to any
subsequent proposed issuance. Any sale of such securities by the Company without
first giving the Common Holders the rights described in this Section 1(e) shall
be void and of no force and effect and the Company
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shall cause any correction required to be made to the Register of the Members of
the Company to be effected.
The Company hereby agrees that it shall cause each of its wholly-owned
subsidiaries to comply with the terms of this Section 1(e) with respect to the
issuance of any equity securities by such subsidiary (except for issuances of
stock dividends or in connection with a merger, amalgamation, reclassification
or other reorganization).
(f) Regulatory Transfer. If a Common Holder reasonably determines and
delivers written notice to the Company that its holding of shares of Company
Stock (x) has resulted in a violation of any law or governmental rule,
regulation, order or decree to which such Common Holder is subject, or (y) has
caused such Common Holder to become subject to and be required to comply with
any law, regulation, order or decree to which it was not theretofore subject,
the result of which violation or subjection and compliance, as the case may be,
would be materially adverse to such Common Holder, the Company shall use its
commercially reasonable efforts, after such Common Holder has complied with
Section 1(b), to locate on behalf of the Common Holder a purchaser for all or
part of the Company Stock held by such Common Holder.
(g) Exception. Notwithstanding anything to the contrary contained herein,
no provisions of this Section 1 shall apply to the Transfer of Common Stock from
CGA Funding, L.P., a Delaware limited partnership, solely to its partners (who
are partners as of the Closing Date) within 30 days of the date hereof, provided
that (i) each such partner agrees to be bound by the terms hereof as if it were
an original party hereto and (ii) such transfer is in compliance with all
applicable securities or other laws.
(h) Termination of Rights. The rights and obligations provided by Section 1
shall expire upon a Qualified Public Offering.
2. RESTRICTIONS ON STOCK OWNERSHIP.
(a) Share Ownership Limitations.
(i) Notwithstanding any other provision of this Agreement, no Common
Holder may transfer, purchase or acquire (except by operation of law) any
Company Stock, directly, indirectly or by attribution, or take any other action
if such transfer, purchase, acquisition or other action would cause any Person
to become a 10% Investor.
(ii) Without limiting Section 2(a)(i), if any Common Holder becomes a 10%
Investor, such Common Holder
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(the "Excess Investor") shall give notice to the Company within five (5) days
following the date of such Common Holder's becoming aware that it has become a
10% Investor. Such notice shall specify the identity of such record or
beneficial owner, and such Common Holder shall furnish to the Company such other
information as the Company shall reasonably request.
(iii) Any proposed Transfer in violation of this Section (2)(a) made
known to the Company shall not be registered in the Register of Members of the
Company. If the Company learns that a Common Holder is holding Company Stock in
violation of this Section 2(a) that is registered in the Register of Members,
the Company may deregister the transfer of the Common Stock held in violation of
this Section 2(a) and register such Company Stock in the name of the Member that
transferred such Company Stock or repurchase the Company Stock held in violation
of this Section 2(a) as determined by the Board in its absolute and unfettered
discretion, subject to the restrictions on repurchase set forth in Bye-law 52(4)
of the Company's Bye-laws.
(b) Prompt Disposition of Shares. If a Common Holder takes any action
resulting in a violation of the provisions of Section (2)(a) and the Company
determines, pursuant to a Super-Majority Board Action, that the disposition of
Company Stock by such Excess Investor is in the interest of the Company and its
members, (i) the Company shall require the Excess Investor to dispose of a
number of shares of Company Stock such that such Excess Investor or other
Person, as the case may be, no longer exceeds the limitations set forth in
Section (2)(a) and (ii) each Common Holder hereby agrees, if so required by the
Company, to sell such Company Stock as the Company may direct in accordance with
Section 2(c). Any disposition pursuant to this Section (2)(b) should occur no
later than the 28th calendar day after the date on which the Excess Investor
first violated, or caused another Person to violate, the share ownership
limitations set forth in Section (2)(a) and such Excess Investor shall make all
reasonable efforts to effect such disposition within such 28-day period. The
determination of whether an Excess Investor is in violation of the share
ownership limitations of Section (2)(a) and, if so, whether such disposition is
in the interests of the Company and its members may be made on behalf of the
Company by the Board, pursuant to a Super-Majority Board Action, in its judgment
and such determination shall be binding on the Common Holders.
(c) Manner of Disposition. Any Company Stock required to be disposed of
pursuant to Section (2)(b) shall (i) (x) if purchased by the Excess Investor or
a Related Person from another Common Holder or Common Holders, be resold to such
other Common Holder or Common Holders at the original
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purchase price and (y) each Common Holder agrees, if applicable, to purchase
such Company Stock back from the Excess Investor as contemplated by the
foregoing clause, or (ii) if otherwise acquired by the Excess Investor, be sold
to any Person subject to the restrictions of Section (2)(a) (including, but not
limited to, the Company if a sale to the Company would not cause any Person to
exceed the share ownership limitations of Section (2)(a)), but within the time
period set forth in Section (2)(b).
Notwithstanding the foregoing, a holder of Series A Preferred Stock shall
not be obligated to dispose of shares of such Stock, but it may be obligated in
accordance with the foregoing to dispose of other classes of stock of the
Company.
3. REGISTRATION RIGHTS.
The Common Holders shall have the right to have their Registrable
Securities registered under the Securities Act and applicable United States
state securities laws in accordance with the following provisions.
(a) Definitions. As used in this Section 3:
(i) "Commission" shall mean the Securities and Exchange Commission or any
other United States of America federal agency at the time administering the
Securities Act;
(ii) the term "Holder" shall mean any holder of Registrable Securities;
(iii) the term "Initiating Holder" shall mean, any Holder or Holders who
in the aggregate are Holders of more than 10% of the then issued and outstanding
Registrable Securities;
(iv) the terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act (and any post-effective amendments filed or
required to be filed) and the declaration or ordering of effectiveness of such
registration statement;
(v) the term "Registrable Securities" shall mean (A) Common Stock issued
to the Common Holders, (B) any additional Common Stock acquired by the Common
Holders, including any Common Stock acquired upon the exercise of options
granted under the Stock Warrant Plans, and (C) any Common Stock issued as a
dividend or other distribution with respect to, or in exchange for or in
replacement of, the Common Stock referred to in clauses (A) and (B) above;
12
(vi) "Registration Expenses" shall mean all expenses incident to the
Company's performance of or compliance with its obligations under Sections 3(b)
and 3(c) hereof, including without limitation, all Commission, National
Association of Securities Dealers ("NASD") and stock exchange or Nasdaq
registration and filing fees and expenses, fees and expenses of compliance with
applicable state securities or "blue sky" laws (including, without limitation,
reasonable fees and disbursements of counsel for the underwriters in connection
with "blue sky" qualifications of the Registrable Securities), printing
expenses, messenger and delivery expenses, the fees and expenses incurred in
connection with the listing of the securities to be registered in an initial
public offering on each securities exchange or national market system on which
such securities are to be so listed and, following such initial public offering,
the fees and expenses incurred in connection with the listing of such securities
to be registered on each securities exchange or national market system on which
such securities are listed, fees and disbursements of counsel for the Company
and all independent certified public accountants (including the expenses of any
annual audit and "cold comfort" letters required by or incident to such
performance and compliance), the fees and disbursements of underwriters
customarily paid by issuers or sellers of securities (including the fees and
expenses of any "qualified independent underwriter" required by the NASD), the
reasonable fees of one counsel retained in connection with each such
registration by the holders of a majority of the Registrable Securities being
registered, the reasonable fees and expenses of any special experts retained by
the Company in connection with such registration, and fees and expenses of other
Persons retained by the Company (but not including any underwriting discounts or
commission or transfer taxes, if any, attributable to the sale of Registrable
Securities by holders of such Registrable Securities other than the Company);
and
(vii) "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities.
(b) Demand Registration.
(i) Request for Registration. If the Company shall receive from an
Initiating Holder, at any time after 180 days after a Qualified Public Offering,
a written request that the Company effect any registration with respect to all
or a part of the Registrable Securities, the Company will:
13
(A) promptly give written notice of the proposed registration to
all other Holders of Registrable Securities; and
(B) as soon as practicable, use its best efforts to effect a
registration statement, in accordance with Section 3(e), as would
permit or facilitate the sale and distribution of all or such portion
of such Registrable Securities as are specified in such request in
accordance with such request, together with all or such portion of the
Registrable Securities of any Holder or Holders joining in such
request as are specified in a written request received by the Company
within 10 Business Days after written notice from the Company is
deemed given (as provided in Section 6(f) herein) under Section
3(b)(i)(A) above; provided that the Company shall not be obligated to
effect, or take any action to effect, any such registration pursuant
to this Section 3(b):
(v) within 180 days following the effective date of any
underwritten public offering of the Company's securities;
(w) for a period of 180 days following the date of the Board
resolution described in this clause (w), if the Company furnishes
to the Holders requesting the filing of a registration statement
pursuant to this Section 3(b) a certificate signed by the
President or Chief Executive Officer of the Company stating that
the Board has passed a resolution authorizing the Company to
register any of its equity securities for its own account and the
Company is in the process of effecting such registration (it
being understood that the limitation described in this clause (w)
shall not affect any Holder's rights with respect to a
registration effected pursuant to Section 3(c));
(x) in any particular jurisdiction in which the Company
would be required as a result of such registration to (1) qualify
generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this clause (x), (2)
subject itself to taxation or regulation of its insurance
business in any such jurisdiction other than Bermuda or (3)
consent to service
14
of process in effecting such registration, qualification or
compliance;
(y) if the Registrable Securities requested by all Holders
to be registered pursuant to such request do not (I) represent at
least 10% of the Registrable Securities or (II) have an
anticipated aggregate public offering price (before any
underwriting discounts and commissions) of at least $10,000,000.
The registration statement filed pursuant to the request of the Initiating
Holders may, subject to the provisions of Section 3(b)(ii) below, include other
securities of the Company which are held by Persons who, by virtue of agreements
with the Company, are entitled to include their securities in any such
registration, but the right of such Persons to include any of their securities
in any such registration shall be subject to the limitations set forth in
Section 3(b)(ii) below.
Holders holding a majority of the Registrable Securities requested to be
registered may, at any time prior to the effective date of the registration
statement relating to such registration, revoke such request, without liability
to any of the other Holders or the Other Shareholders (as defined below), by
providing a written notice to the Company revoking such request.
(ii) Underwriting. The Initiating Holders shall distribute the
Registrable Securities covered by their request by means of an underwriting
(which underwriter shall be selected by the Company and reasonably acceptable to
the Initiating Holders).
If holders of Common Stock other than Registrable Securities who are
entitled, by virtue of agreements with the Company, to have Common Stock
included in such a registration (the "Other Shareholders") request such
inclusion, the securities of such Other Shareholders shall be included in the
underwriting subject to the applicable provisions of this Section 3. The Holders
whose shares are to be included in such registration and the Company shall
(together with all Other Shareholders proposing to distribute their securities
through such underwriting) enter into an underwriting agreement in customary
form with the representative of the underwriter or underwriters selected for
such underwriting by the Company and reasonably acceptable to the Initiating
Holders. Notwithstanding any other provision of this Section 3(b), if the
representative advises the Holders or the Company in writing that (i) marketing
factors require a limitation on the number of
15
shares to be underwritten or (ii) the inclusion of shares held by officers and
directors of the Company in the offering could, in the representative's best
judgment, materially reduce the offering price per share, then, in the case of
the preceding clause (i), the Common Stock held by Other Shareholders shall be
excluded from such underwriting to the extent so required by such limitations
and, in the case of the preceding clause (ii), the Common Stock held by officers
and directors of the Company shall be excluded from such underwriting to the
extent advised by the representative. If, after the exclusion of such shares,
further reductions are required to meet the limitation on the number of shares
to be underwritten as advised by the representative, the number of shares that
may be included in the underwriting by each Holder requesting inclusion in the
registration shall be reduced on a pro rata basis (based on the number of shares
held at such time by the respective Holders requesting inclusion in such
registration) by such minimum number of shares as is necessary to comply with
such limitation. If any Other Shareholder who has requested inclusion in such
registration as provided above disapproves of the terms of the underwriting,
such person may elect to withdraw therefrom by written notice to the Company,
the underwriter and the Initiating Holders. If the underwriter has not limited
the number of Registrable Securities or other securities to be underwritten, the
Company may include its securities for its own account in such registration if
the representative so agrees and if the number of Registrable Securities and
other securities which would otherwise have been included in such registration
and underwriting will not thereby be limited. Any Registrable Securities or
other securities excluded or withdrawn from such underwriting shall not be
included in such registration.
(iii) Notwithstanding the foregoing, if the Company shall furnish to
Holders requesting the filing of a registration statement pursuant to this
Section 3(b) a certificate signed by the President or Chief Executive Officer of
the Company stating that, in the good faith judgment of the Board, it would be
materially detrimental to the Company and its members for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, then the Company shall have the right to defer such
filing for a period of not more than 90 days after receipt of the request of the
Initiating Holders; provided, however, that the Company may not utilize this
right more than once in any twelve (12) month period.
16
c) Piggyback Registration
(i) If the Company shall determine to register any of its Common Stock
either for its own account or for the account of a holder or holders of Common
Stock (other than a registration on Form S-8 (or similar or successor form)
relating solely to stock option, stock purchase or other employee benefit plans,
or a registration on Form S-4 (or similar or successor form) relating solely to
a transaction exempt under Rule 145 of the Securities Act, or a registration on
any registration form which does not permit secondary sales or does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of Registrable Securities), the Company
will:
(A) promptly give to each of the Holders a written notice thereof
(which shall include a list of the jurisdictions in which the Company
intends to attempt to qualify such securities under the applicable
blue sky or other state securities laws); and
(B) 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 the Holders within fifteen (15)
days after the date written notice described in clause (i)(A) above is
deemed given (as provided in Section 6(f) herein) by the Company
except as set forth in Section 3(c)(ii) below. Such written request
may specify all or a part of the Holders' Registrable Securities.
(ii) Underwriting. If the registration of which the Company gives notice is
for a registered public offering involving an underwriting (which underwriter
shall be selected by the Company, in its sole discretion), the Company shall so
advise each of the Holders as a part of the written notice given pursuant to
Section 3(c)(i)(A). In such event, the right of each of the Holders to
registration pursuant to this Section 3(c) shall be conditioned upon such
Holders' participation in such underwriting and the inclusion of such Holders'
Registrable Securities in the underwriting to the extent provided herein. The
Holders whose shares are to be included in such registration shall (together
with the Company and the Other Shareholders distributing their Common Stock
through such underwriting) enter into an underwriting agreement in customary
form with the representative of the underwriter or underwriters selected for
underwriting by the Company. Notwithstanding any other provision of this Section
3(c), if the representative advises the Holders or the Company in writing
17
that (i) marketing factors require a limitation on the number of shares to be
underwritten or (ii) the inclusion of shares held by the officers and directors
of the Company in the offering could, in the representative's best judgment,
materially reduce the offering price per share, then, in the case of the
preceding clause (i), the Common Stock held by Other Shareholders shall be
excluded from such underwriting to the extent so required by such limitations
and, in the case of the preceding clause (ii), the Common Stock held by officers
and directors of the Company shall be excluded from such underwriting to the
extent so advised by the representative. If, after exclusion of such shares,
further reductions are required to meet the limitation on the number of shares
to be underwritten as advised by the representative, the number of shares that
may be included in the underwriting by each Holder requesting inclusion in such
registration shall be reduced, on a pro rata basis (based on the number of
shares held at such time by the respective Holders requesting inclusion in such
registration), by such minimum number of shares as is necessary to comply with
such limitation (it is hereby understood that the foregoing shall not be a
limitation on the number of shares of Common Stock to be registered by the
Company). If any of the Holders or any officer, director or Other Shareholder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the underwriter. Any Registrable
Securities or other securities excluded or withdrawn from such underwriting
shall not be included in such registration.
(iii) Number. Each of the Holders shall be entitled to have its shares
included in an unlimited number of registrations pursuant to this Section 3(c).
(d) Expenses of Registration. Upon the exercise of registration rights set
forth in this Section 3, the Company shall pay all Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to this Section 3, provided that such expenses shall not include
Selling Expenses which shall be borne by the Holders of the securities so
registered pro rata on the basis of the number of their shares so registered;
provided, however, that the Company shall not otherwise be required to pay any
Registration Expenses if, as a result of the withdrawal of a request for
registration by any of the Holders, as applicable, including, without
limitation, as provided in the last paragraph of Section 3(b)(i), the
registration statement does not become effective, in which case each of the
Holders and Other Shareholders requesting registration and thereafter
withdrawing its request for registration shall bear such Registration Expenses
pro rata on the basis of the number of its shares so included in the
registration request (it is hereby understood that this proviso shall not
18
apply to a withdrawal of a registration being effected pursuant to Section 3(c))
provided further, however, that the Company shall not otherwise be required to
pay any Registration Expenses after the Company has effected four (4)
registrations pursuant to Section 3(b) requested by an Initiating Holder and
such registrations have been declared or ordered effective and the sales of such
Registrable Securities shall have closed.
(e) Registration Procedures. In the case of each registration effected by
the Company pursuant to Section 3, the Company will keep the Holders requesting
inclusion in such registration advised in writing as to the initiation of each
registration and as to the completion thereof. In connection with any offering
of Registrable Securities registered pursuant to clause (b) or (c) of this
Section 3, the Company shall use its best efforts to obtain all necessary
permissions from the Bermuda governmental authorities and, upon obtaining such
permission, at its expense, the Company shall:
(i) prepare and file with the Commission, as promptly as practical after
receipt of a request for registration pursuant to this Section 3, a registration
statement on any form for which the Company then qualifies, and which form shall
be available for the sale of the Registrable Securities in accordance with the
intended methods of distribution thereof, and use its best efforts to cause such
registration statement to become and remain effective as provided herein;
provided that before filing with the Commission a registration statement or
prospectus or any amendments or supplements thereto, the Company will (A)
furnish, to one counsel selected by the Holders of a majority of the Registrable
Securities requested to be registered, copies of all such documents proposed to
be filed for said counsel's review and comment and (B) notify each Holder of
Registrable Securities to be registered of any stop order issued or threatened
by the Commission and take all reasonable actions required to prevent the entry
of such stop order or to remove it if entered;
(ii) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration effective for a period of one
hundred and eighty (180) days or until the Holders have completed the
distribution described in the registration statement relating thereto, whichever
first occurs (but not before the time periods referred to in Section 4(3) of the
Securities Act and Rule 174 promulgated thereunder, or any successor provisions,
if applicable) and comply with the provisions of the Securities Act with respect
to the disposition of securities covered by such
19
registration statement during such period in accordance with the intended method
of disposition by sellers thereof set forth in such registration statement;
provided, however, that (A) such 180-day period shall be extended for a period
of time equal to the period, if any, during which the Holders refrain from
selling any securities included in such registration in accordance with
provisions of the last paragraph of this Section 3(e) and (B) in the case of any
registration of Registrable Securities on Form S-3 which are intended to be
offered on a continuous or delayed basis, such 180-day period shall be extended
until all such Registrable Securities are sold, provided that (x) Rule 415, or
any successor rule under the Securities Act, permits an offering on a continuous
or delayed basis and (y) the applicable rules under the Securities Act governing
the obligation to file a post-effective amendment permit, in lieu of filing a
post-effective amendment which (1) includes any prospectus required by Section
10(a)(3) of the Securities Act or (2) reflects facts or events representing a
material or fundamental change in the information set forth in the registration
statement, the incorporation in the registration statement by reference to
periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act of
the information specified in clauses (1) and (2) above;
(iii) furnish to each underwriter, if any, and each Holder of Registrable
Securities covered by such registration statement such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto), and the prospectus included in such
registration statement (including each preliminary prospectus) in conformity
with the requirements of the Securities Act, and such other documents incident
thereto as each of the Holders from time to time may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by such
Holder;
(iv) use its best efforts to register or qualify such Registrable
Securities under such other state securities or "blue sky" laws of such
jurisdictions as any Holder, and underwriter, if any, of Registrable Securities
covered by such registration statement reasonably requests and do any and all
other acts and things that may be reasonably necessary or advisable to enable
such Holder and each underwriter, if any, to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Holder; provided that
the Company will not be required as a result thereof to (A) qualify generally to
do business in any jurisdiction where it would not otherwise be required to
qualify but for this clause (iv), (B) subject itself to taxation or regulation
of its insurance business in any such
20
jurisdiction other than Bermuda or (C) consent to general service of process in
any such jurisdiction;
(v) use its best efforts to cause the Registrable Securities covered by
such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable the Holder or Holders thereof
to consummate the disposition of such Registrable Securities;
(vi) immediately notify each Holder of such Registrable Securities at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act of the happening of any event that comes to the Company's
attention if as a result of such event the prospectus included in such
registration statement contains 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; and the Company will promptly prepare and
furnish to such Holder a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading;
(vii) use its best efforts to cause all such Registrable Securities to be
listed on a national securities exchange in the United States or Nasdaq and on
each securities exchange on which similar securities issued by the Company may
then be listed, and enter into such customary agreements including a listing
application and indemnification agreement in customary form, and, subject to
Bermuda law, to provide a transfer agent and registrar for such Registrable
Securities covered by such registration statement no later than the effective
date of such registration statement;
(viii) enter into such customary agreements (including an underwriting
agreement or qualified independent underwriting agreement, in each case, in
customary form) and take all such other actions as the Holders of a majority of
the Registrable Securities being covered by such registration statement or the
underwriters retained by such Holders, if any, reasonably request in order to
expedite or facilitate the disposition of such Registrable Securities, including
customary representations, warranties, indemnities and agreements;
(ix) make available for inspection, during business hours of the Company,
by any Holder of Registrable
21
Securities covered by such registration statement, any underwriter participating
in any disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such Holder or underwriter
(collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries
(collectively, "Records"), if any, as shall be reasonably necessary to enable
them to exercise their due diligence responsibility, and cause the Company's
officers, directors and employees, and those of the Company's affiliates, if
any, to supply all information and respond to all inquiries reasonably requested
by any such Inspector in connection with such registration statement;
(x) use its best efforts to obtain a "cold comfort" letter from the
Company's appointed auditors in customary form and covering such matters of the
type customarily covered by "cold comfort" letters as the Holders of a majority
in interest of the Registrable Securities being sold reasonably request; and
(xi) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission and all conditions imposed by Bermuda
governmental authorities or under Bermuda law, including, without limitation,
under the Bermuda Companies Act, and make available to the Holders, as soon as
reasonably practicable, an earnings statement covering a period of at least
twelve months beginning after the effective date of the registration statement
(as the term "effective date" is defined in Rule 158(c) under the Securities
Act) which earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act and Rule 158 thereunder.
It shall be a condition precedent to the obligation of the Company to take
any action with respect to any Registrable Securities that the Holder thereof
shall furnish to the Company such information regarding the Registrable
Securities and any other Company Stock held by such Holder and the intended
method of disposition of the Registrable Securities held by such Holder as the
Company shall reasonably request and as shall be required in connection with the
action taken by the Company.
Each Holder of Registrable Securities agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 3(e)(vi) hereof, such Holder will forthwith discontinue disposition of
Registrable Securities until such Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(e)(vi) hereof, and,
if so directed by the Company (at the Company's expense), such Holder will
22
deliver to the Company all copies (including, without limitation, any and all
drafts), other than permanent file copies, then in such Holder's possession, of
the prospectus covering such Registrable Securities current at the time of
receipt of such notice.
(f) Indemnification
(i) In the event of any registration of any shares of Company Stock under
the Securities Act pursuant to this Agreement, the Company will indemnify and
hold harmless each of the Holders of any Registrable Securities covered by such
registration statement, their respective directors and officers, general
partners, limited partners and managing directors, each other Person who
participates as an underwriter in the offering or sale of such securities and
each other Person, if any, who controls, is controlled by or is under common
control with any such Holder or any such underwriter within the meaning of the
Securities Act (and directors, officers, controlling Persons, partners and
managing directors of any of the foregoing) against any and all losses, claims,
damages and liabilities (or actions in respect thereto), joint or several, and
expenses (including any amounts paid in any settlement effected with the
Company's consent, which consent will not be unreasonably withheld) to which
such Holder, any such director or officer or general or limited partner or
managing director or any such underwriter or controlling Person may become
subject under the Securities Act, United States state securities "blue sky"
laws, common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) or expenses arise out
of or are based upon (A) any untrue statement (or alleged untrue statement) of
any material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary, final or
summary prospectus contained therein, or any amendment or supplement thereto,
(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,
or (C) any violation (or alleged violation) by the Company of any United States
federal, state or common law rule or regulation applicable to the Company and
relating to action required of or inaction by the Company in connection with any
such registration, qualification or compliance. The Company will reimburse each
such Holder, director, officer, general partner, limited partner, managing
director or underwriter and controlling Person (and directors, officers,
controlling Persons, partners and managing directors of any of the foregoing)
for any legal and any other expenses reasonably incurred in connection with
investigating or defending such claim, loss, damage, liability or action;
provided, however, that the Company
23
shall not be liable in any such case to the extent that any such claim, loss,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based on any untrue statement (or alleged untrue statement) or
omission (or alleged omission) made in such registration statement or amendment
or supplement thereto or in any such preliminary, final or summary prospectus in
reliance upon and in conformity with written information furnished to the
Company by such Holder in its capacity as a Holder or any such director,
officer, general or limited partner, managing director, underwriter or
controlling Person specifically stating that it is for use therein; provided
further, however, that the Company shall not be liable to any Holder, any Person
who participates as an underwriter in the offering or sale of Registrable
Securities, if any, or any other Person, if any, who controls such underwriter
within the meaning of the Securities Act, pursuant to this Section 3(f) with
respect to any untrue statement or omission or alleged untrue statement or
omission made in any preliminary prospectus or the final prospectus or the final
prospectus as amended or supplemented, as the case may be, to the extent that
any such loss, claim, damage or liability of such Holder, underwriter or
controlling Person results from the fact that such Holder or underwriter sold
Registrable Securities to a Person to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the final prospectus
or of the final prospectus as then amended or supplemented, whichever is most
recent, if the Company has previously furnished copies thereof to such Holder or
underwriter and such final prospectus, as then amended or supplemented, had
corrected any such misstatement or omission.
The indemnity provided for herein shall remain in full force and effect
regardless of any investigation made by or on behalf of such Holder or any such
director, officer, general partner, limited partner, managing director,
underwriter or controlling Person and shall survive the transfer of such
securities by such Holder.
(ii) Each of the Holders will, if Registrable Securities held by it are
included in any registration statement filed in accordance with the provisions
hereof, (x) indemnify, on a several and not joint basis, the Company and its
directors, officers, controlling Persons and all other prospective sellers and
their respective directors, officers, general and limited partners, managing
directors, and their respective controlling Persons against all claims, losses,
damages and liabilities (or actions in respect thereof) and expenses to which
any such Person may become subject under the Securities Act, United States state
securities "blue sky" laws, common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions
24
or proceedings in respect thereof) or expenses arise out of or are based upon
(A) any untrue statement (or alleged untrue statement) of a material fact with
respect to such Holder contained in any such registration statement,
preliminary, final or summary prospectus contained therein, or any amendment or
supplement thereto, or (B) any omission (or alleged omission) to state therein a
material fact with respect to such Holder required to be stated therein or
necessary to make the statements made by such Holder therein not misleading and
(y) reimburse the Company and its directors, officers, controlling Persons and
all other prospective sellers and their respective directors, officers, general
and limited partners, managing directors, and their respective controlling
Persons for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, in the case of both clause (x) and clause (y), to the extent, and only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
preliminary, final or summary prospectus contained therein, or any amendment or
supplement thereto in reliance upon and in conformity with written information
furnished to the Company by such Holder with respect to such Holder and stated
to be specifically for use therein; provided, however, that the obligations of
each of the Holders hereunder shall be limited to an amount equal to the
proceeds to be received by such Holder from securities sold by such Holder
pursuant to such registration statement or prospectus.
The indemnity provided for herein shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or any of
the Holders of Registrable Securities, underwriters or any of their respective
directors, officers, general or limited partners, managing directors or
controlling Persons and shall survive the transfer of such securities by such
Holder.
(iii) Each party entitled to indemnification under this Section 3(f) (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom provided that counsel for the Indemnifying Party,
who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld) and the Indemnified Party may participate in such
defense at such party's expense (unless the Indemnified Party shall have
reasonably concluded that there may be a
25
conflict of interest between the Indemnifying Party and the Indemnified Party in
such action, in which case the fees and expenses of the Indemnified Party's
counsel shall be at the expense of the Indemnifying Party and shall be
reimbursed as they are incurred); and provided, further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 3 except to the extent
the Indemnifying Party is actually materially prejudiced thereby. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as a term thereof
the giving by the claimant or plaintiff to such Indemnified Party of an
unconditional release from all liability with respect to such claim or
litigation. Each Indemnified Party shall promptly furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and as shall be reasonably required in connection
with the defense of such claim and litigation resulting therefrom.
(iv) In order to provide for a just and equitable contribution in
circumstances in which the foregoing indemnity agreements provided for in this
Section 3(f) is for any reason held to be unenforceable although applicable in
accordance with its terms, the Company and the Holders shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement in such proportion as shall be
appropriate to reflect (A) the relative benefits received by the Company, on the
one hand, and the Holders of the Registrable Securities included in the offering
on the other hand, from the offering of the Registrable Securities and any other
securities included in such offering, and (B) the relative fault of the Company,
on the one hand, and the Holders of the Registrable Securities included in the
offering, on the other, with respect to the statements or omissions that
resulted in such loss, liability, claim, damage or expense, or action in respect
thereof, as well as any other relevant equitable considerations; provided,
however, that no Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to a
contribution from any Person who was not guilty of such fraudulent
misrepresentation. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or the Holders of the Registrable Securities, the intent
of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Holders of the
26
Registrable Securities agree that it would not be just and equitable if a
contribution pursuant to this Section 3(f) were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to herein. Notwithstanding anything to the
contrary contained herein, the Company and the Holders agree that any
contribution required to be made by a Holder pursuant to this Section 3(f) shall
not exceed the net proceeds from the offering of Registrable Securities (before
deducting expenses) received by such Holder with respect to such offering. For
purposes of this Section 3(f), each Person, if any, who controls a Holder within
the meaning of Section 15 of the Securities Act shall have the same rights to
contribution as such Holder, and each director of the Company, each officer of
the Company who signed the registration statement, and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act
shall have the same rights to contribution as the Company.
(v) The foregoing indemnity agreements of the Company and the Holders are
subject to the condition that, insofar as they relate to any loss, claim,
liability or damage made in a preliminary prospectus but eliminated or remedied
in the amended prospectus on file with the Commission at the time the
registration statement in question becomes effective or the amended prospectus
filed with the Commission pursuant to Commission Rule 424(b) (the "Final
Prospectus"), such indemnity agreements shall not inure to the benefit of any
underwriter if a copy of the Final Prospectus was furnished to the underwriter
and was not furnished to the Person asserting the loss, liability, claim or
damage at or prior to the time such action is required by the Securities Act.
(g) Information by the Holders. Each of the Holders and each Other
Shareholder holding Company Stock included in any registration shall furnish to
the Company such information regarding such Holder or Other Shareholder and the
distribution proposed by such Holder or Other Shareholder as the Company may
reasonably request in writing and as shall be reasonably required in connection
with any registration, qualification or compliance referred to in this Section
3.
(h) Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of the
restricted securities to the public without registration, the Company agrees to:
(A) make and keep public information available as those terms are
understood and defined in Rule 144
27
under the Securities Act, at all times from and after the effective date of
the first registration statement under the Securities Act filed by the
Company for an offering of its securities to the general public;
(B) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act at any time after it has become subject
to such reporting requirements; and
(C) so long as any Holder owns any Registrable Securities, furnish to
such Holder upon request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 under the Securities
Act (at any time from and after the effective date of the first
registration statement filed by the Company for an offering of its
securities to the general public), and of the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed as such Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing such Holder to sell any such securities without
registration.
(i) "Market Stand-off" Agreement. (i) If any registration of Common Stock
(or other securities) of the Company shall be in connection with an underwritten
public offering, each Holder of Registrable Securities agrees not to effect any
sale or distribution, including any private placement or any sale pursuant to
Rule 144A under the Securities Act (or any successor provision) or otherwise or
any sale pursuant to Rule 144 under the Securities Act (or any successor
provision), under the Securities Act of any Registrable Securities, other than
by pro-rata distribution to its shareholders, partners or other beneficial
holders, and not to effect any such sale or distribution of any other equity
security of the Company or of any security convertible into or exchangeable or
exercisable for any equity security of the Company (in each case, other than as
part of such underwritten public offering) during the ten calendar days prior
to, and during the 180 calendar day period (or such lesser period as may be
agreed upon between such Holders and the representative of the underwriters of
such offering) that begins on the effective date of such registration statement
(except as part of such registration), without the consent of the representative
of the underwriters of such offerings; provided, however, that written notice of
such registration has been deemed given (as provided in Section 6(f) herein) to
each Holder of
28
Registrable Securities at least two Business Days prior to the anticipated
beginning of the ten calendar day period referred to above.
(ii) If requested by the representative of the underwriters, the Holders
shall execute a separate agreement to the foregoing effect. The Company may
impose stop-transfer instructions with respect to the shares (or securities)
subject to the foregoing restriction until the end of said 180-day period. The
provisions of this Section 3(i) shall be binding upon any transferee who
acquires Registrable Securities, including, without limitation, any Holder's
shareholders, partners or other beneficial holders, whether or not such
transferee is entitled to the registration rights provided hereunder.
(iii) If any registration of Registrable Securities shall be in
connection with an underwritten public offering, the Company agrees (A) not to
effect any public sale or distribution of any of its equity securities or of any
security convertible into or exchangeable or exercisable for any equity security
of the Company (other than any such sale or distribution of such securities in
connection with any amalgamation, merger or consolidation by the Company or any
Affiliate of the Company or the acquisition by the Company or an Affiliate of
the Company of the shares of substantially all the assets of any other Person or
in connection with a stock option, stock purchase or other employee benefit
plan) during the ten days prior to, and during the 180-day period (or such
lesser period as may be agreed upon between the Company and the representative
of the underwriters of such offering) which begins on the effective date of such
registration statement (except as part of such registration) without the consent
of the representative of the underwriters of such offering and (B) that any
agreement entered into after the date hereof pursuant to which the Company
issues or agrees to issue any privately placed equity securities shall contain a
provision under which the holders of such securities agree not to effect any
sale or distribution of any such securities during the period and in the manner
referred to in the foregoing clause (A) of this Section 3(i)(iii).
(j) Assignability. The registration rights set forth in this Section 3
shall be assignable by any Holder, in whole or in part, to any transferee of
Registrable Securities provided such transferee agrees to be bound by all
provisions of this Agreement.
(k)) Termination. The registration rights set forth in this Section 3 shall
not be available to any Holder if, in the opinion of counsel to the Company, all
of the Registrable Securities then owned by such Holder could be
29
sold in any 90-day period pursuant to Rule 144 under the Securities Act (without
giving effect to the provisions of Rule 144(k)).
4. INFORMATION AS TO COMPANY AND RELATED COVENANTS
(a) Auditors. The Company shall maintain a system of accounting established
and administered in accordance with United States generally accepted accounting
principles ("U.S. GAAP") and shall set aside on its books all such proper
reserves as shall be required by U.S. GAAP. The Company shall retain a firm of
independent chartered accountants of recognized standing to audit and report on
the Company's annual consolidated balance sheets and statements of operations,
shareholders' equity and cash flows and to report to the Board. Subject to the
requirements of the Companies Act of 1981 of Bermuda and the regulations
promulgated thereunder, all major accounting policies and principles shall be
determined by the Board in accordance with U.S. GAAP.
(b) Financial Information. The Company shall prepare annual consolidated
balance sheets and statements of operations, shareholders' equity and cash flows
of the Company and its subsidiaries, which shall be prepared in accordance with
U.S. GAAP, and setting forth in each case in comparative form the figures for
the previous year, and audited by the auditors referred to in Section 4(a)
hereof. The Company shall also prepare quarterly unaudited, consolidated balance
sheets and statements of operations, shareholders' equity and cash flows of the
Company and its subsidiaries, certified by the Chief Financial Officer and the
Chief Executive Officer of the Company and prepared in accordance with U.S. GAAP
and setting forth in each case in comparative form the same figures for the
previous year and, in addition, year-to-date figures. The Company will furnish
to all Common Holders the following information within the time specified: (i)
as soon as practicable after the end of each fiscal quarter and, in any event
within 45 days thereafter, all of the quarterly financial information referred
to herein, and (ii) as soon as practicable after the end of each fiscal year,
and in any event within 110 days thereafter, all of the annual financial
information referred to herein.
(c) Business Report. The Company shall prepare and deliver to each Common
Holder within 45 days after the end of each calendar quarter a report as to the
implementation of the Company's business plan during such quarter, which report
shall be accompanied by a certificate signed by the Chief Executive Officer and
the Chief Financial Officer of the Company as to the Company's compliance with
its operating guidelines during such quarter.
30
(d) Inspection. From and after the date hereof, the Company will permit
each Common Holder, its nominee, assignee or its representative, to visit and
inspect any of the properties of the Company, to examine all its books of
account, records, reports and other papers not contractually required of the
Company to be kept confidential or secret, to make copies and extracts
therefrom, and to discuss its affairs, finances and accounts with its officers,
directors, key employees and independent public accountants or any of them (and
by this provision the Company authorizes said accountants to discuss with said
Common Holder, its nominee, assign and representatives the finances and affairs
of the Company and its Subsidiaries), all at such reasonable times and as often
as may be reasonably requested.
(e) The provisions of Section 4(a)-(d) shall expire upon the closing of the
Qualified Public Offering.
5. DEFINITIONS
(a) Terms Defined. As used in this Agreement, the following terms have the
respective meaning set forth below:
$: means United States dollars.
Affiliate: means (i) with respect to a Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person
and, in the case of an individual Common Holder, means members of his or her
immediate family or a trust for their benefit, (ii) a nominee(s) of a Person or
a principal of a nominee Person, (iii) a trustee of a trust, or (iv) such
Person's shareholders, partners, beneficiaries or members.
Board: means the board of directors of the Company.
Business Day: means any day except a Saturday, Sunday or other day on which
commercial banks in The City of New York or Bermuda are authorized by law or
executive order to close.
Commission: means the United States Securities and Exchange Commission.
Exchange Act: means the United States Securities Exchange Act of 1934, as
amended.
The terms "hold" and "holder": means, with reference to any Common Stock,
the Person whose name appears in the register of Members of the Company.
Person: means an individual, partnership, joint-stock company, corporation,
trust or unincorporated organization,
31
limited liability company, or a government or agency or political subdivision
thereof or any other entity.
Qualified Public Offering: means the completion of an underwritten public
offering of Common Stock pursuant to a registration statement under the
Securities Act resulting in net proceeds to the Company of at least $50,000,000.
Related Person: means any Person who bears a relationship to an Excess
Investor as described in Section 958 of the Code.
Securities Act: means the United States Securities Act of 1933, as amended.
Stock Warrant Plans: means (i) the Employee Stock Warrant Plan of the
Company dated June 17, 1997 and (ii) the Sponsoring Investors' and Founders'
Stock Warrant Plan of the Company dated June 17, 1997, each in the form attached
as Exhibit I hereto, except for such changes as are not material to the terms
and conditions thereof, and which have been duly adopted by the Board of
Directors and the Shareholders of the Company.
Super-Majority Board Action: means a vote of three-quarters (3/4) of the
directors serving on the Board at the time of such vote.
10% Investor: means a U.S. Person that (i) owns directly, indirectly or by
attribution (within the meaning of ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Internal
Revenue Code of 1986, as amended) 10% or more of the total combined voting power
of all classes of stock of the Company entitled to vote or (ii) by virtue of
such ownership is treated as owning indirectly or constructively 10% or more of
the total combined voting power of all classes of the stock entitled to vote of
Commercial Guaranty Assurance, Ltd., a Bermuda company with limited liability
(and its successors).
Transfer: means any sale, assignment, pledge, hypothecation, or other
disposition or encumbrance of any interest.
Trigger Event: means (a) the closing of a Qualified Public Offering, (b)
the consummation of an acquisition of a majority of the issued and outstanding
shares of Common Stock at the time of such acquisition by one or more purchasers
acting in concert in a single transaction or in a series of related transactions
(including, without limitation, acquisitions pursuant to an amalgamation,
exchange offer, business combination, consolidation, or corporate
reorganization) resulting in the ultimate beneficial ownership of such acquired
shares of Common Stock
32
being different than before such acquisition or (c) the sale of all or
substantially all of the assets of the Company unless the ultimate beneficial
owners of a majority of the ownership interests in the acquiror of such assets
were the ultimate beneficial owners of a majority of the issued and outstanding
shares of Common Stock at the time of or immediately before such sale.
U.S. Person: means an individual who is a citizen or resident of the United
States, a company, corporation or partnership created or organized under the
laws of the United States or any state thereof, an estate, the income of which,
from non-United States sources and not effectively connected with the conduct of
a trade or business in the United States, is includable in gross income for
United States federal income tax purposes, or a trust, if (i) a court within the
United States may exercise primary supervision of the trust, and (ii) one or
more United States fiduciaries have the authority to control all substantial
decisions of the trust.
6. MISCELLANEOUS
(a) Legends. In addition to any other legends required by applicable law,
the Company's Bye-laws or any other agreement restricting the Transfer of the
Company Stock or Investment Units, as the case may be, each certificate
evidencing the Common Stock or Investment Units, as the case may be, acquired by
the Common Holders will bear a legend reflecting the restrictions on the
transfer of such shares contained in this Agreement and in the Investment Units
Subscription Agreement, the Warrant Acquisition Agreement or the Founders'
Subscription Agreement, as the case may be.
(b) Waiver; Amendments. Except as expressly provided otherwise herein,
neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the Company and each of the Common Holders at the time who are party to this
Agreement; provided, however, that, any provision hereof, other than Section 4,
may be amended, which amendment shall be effective as to all Common Holders,
with the consent of the Company and the parties hereto that at the time just
prior to the amendment hold at least seventy-five percent (75%) of the Common
Stock; provided, further, however, that any amendment to Section 4 shall require
the consent of the Company and the parties hereto that at the time just prior to
the amendment hold at least ninety percent (90%) of the Common Stock.
(c) Amendment of Schedule I to this Agreement. The Secretary of the Company
shall, from time to time in the
33
ordinary course of business as reasonably necessary, amend Schedule I to this
Agreement to reflect accurately the addition or deletion of parties to this
Agreement by virtue of the succession, assignment, or other transfer of shares
of Company Stock in accordance with this Agreement, or exercise of Warrants
pursuant to the Warrant Acquisition Agreement or otherwise, and applicable law.
(d) Recapitalization, Exchange, Etc. The provisions of this Agreement shall
apply to the full extent set forth herein with respect to shares or other
securities of the Company that may be issued in respect of, in exchange for, or
in substitution of the Common Stock. The Company agrees not to enter into any
transaction with any Person pursuant to which shares or other securities of such
Person will be exchanged or substituted for the Common Stock unless it is a
condition to such transaction that such Person and the Common Holders execute an
agreement substantially in the form of this Agreement (or the surviving
provisions hereof).
(e) Specific Performance. Each of the parties hereto acknowledges and
agrees that, in the event of any breach of this Agreement, the non-breaching
parties would be irreparably harmed and could not be made whole by monetary
damages. Accordingly, each of the parties hereto agrees that the other parties,
in addition to any other remedy to which they may be entitled at law or in
equity, shall be entitled to compel specific performance of this Agreement.
(f) Notices. All notices, requests, demands and other communications
hereunder shall be in writing and, except to the extent otherwise provided in
this Agreement, shall be deemed to have been duly given if delivered by same day
or next day courier or mailed, registered mail, return receipt requested, or
transmitted by telegram, telex or facsimile (i) if to a Common Holder, at such
Common Holder's address appearing on applicable schedule attached hereto or at
any other address such Common Holder may have provided in writing to the Company
and (ii) if to the Company, at ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇ ▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇: Secretary, or such other address as the Company may have
furnished to the Common Holders in writing. A notice hereunder shall be deemed
to have been given on the day such notice is sent or transmitted; provided,
however, that if such notice is sent by next-day courier it shall be deemed to
have been given the day following sending and, if by registered mail, five days
following sending.
(g) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall inure to the benefit of, and be binding upon, the successors and
assigns of each of the parties; provided, however, that this Agreement may not
be assigned by any party hereto other than in compliance
34
with the terms hereof, including the restrictions on transfers of Company Stock
as set forth in Sections 1 and 2 hereof.
(h) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
(i) Entire Agreement. This Agreement and the Subscription Agreement
constitute the entire understanding of the parties hereto and supersede all
prior understandings among such parties.
(j) Applicable Law. The validity of this Agreement, its construction,
interpretation and enforcement, and the rights of the parties hereunder, shall
be determined under, governed by and construed in accordance with the laws of
New York without giving effect to the principles of conflicts of laws thereof.
Each party hereto agrees that any suit, action or other proceeding arising out
of this Agreement shall be brought and litigated in the courts of New York (or
if a suit, action or other proceeding arising out of this Agreement is unable to
be brought or is dismissed for jurisdictional reasons in the courts of New York,
then the suit, action or proceeding arising out of this Agreement shall be
brought in the courts of Bermuda) and each party hereto hereby irrevocably
consents to personal jurisdiction and venue in any such court and hereby waives
any claim it may have that such court is an inconvenient forum for the purposes
of any such suit, action or other proceeding.
(k) Section Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.
(l) Holders of Warrant Shares. Each of the parties hereto hereby consents
and agrees that any holder of the Warrant Shares not already a party hereto may
become a party to this Agreement upon exercise of the Warrant by executing a
counterpart signature page hereto and such holder shall then be reflected on
Schedule I hereto as a Common Holder. Each of the parties hereto hereby agrees
that each of the holders of the Warrants are third party beneficiaries of this
Section 6(l).
35
IN WITNESS WHEREOF, the parties hereto have executed this Shareholders
Agreement as of the date first above written.
COMPANY:
CGA GROUP, LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇. PRICE
------------------------
Name: ▇▇▇▇▇▇▇ ▇. Price
Title: President and Chief
Executive Officer
COMMON HOLDERS:
CAPITAL REINSURANCE COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: SVP, General Counsel
Secretary
ST. ▇▇▇▇▇▇ ▇▇▇▇▇▇:
THIRD AVENUE TRUST, ON BEHALF
OF THE THIRD AVENUE VALUE FUND
SERIES
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Executive Vice President
COMMON HOLDER:
OLYMPUS GROWTH FUND II, LP
By: OGP II, L.P., its general partner
By: Nibur, L.L.C., a general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Member
COMMON HOLDER:
OLYMPUS EXECUTIVE FUND, LP
By: OEF, L.P., its general partner
By: RSM, L.L.C., a general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
ST. ▇▇▇▇▇▇ ▇▇▇▇▇▇:
ACE LIMITED
By: /s/ ▇▇▇▇▇ ▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Executive Vice President and
General Counsel
COMMON HOLDER:
LENNAR CGA HOLDINGS, INC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
COMMON HOLDER:
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Investment Officer
COMMON HOLDER:
CGA FIREMARK VENTURE FUND I,
LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman and CEO
COMMON HOLDER:
PACIFIC MUTUAL LIFE INSURANCE
COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Asst. Vice President
COMMON HOLDER:
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
OF NEW YORK AS TRUSTEE OF THE
MULTI-MARKET SPECIAL
INVESTMENT TRUST FUND OF
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
COMMON HOLDER:
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
OF NEW YORK AS TRUSTEE OF THE
COMMINGLED PENSION TRUST FUND
(MULTI-MARKET SPECIAL
INVESTMENT FUND II) OF ▇▇▇▇▇▇
GUARANTY TRUST COMPAN OF NEW
YORK
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
COMMON HOLDER:
STARWOOD CGA, LLC
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
Title: Authorized Signatory
COMMON HOLDER:
MUTUAL DISCOVERY FUND
By: FRANKLIN MUTUAL ADVISORS, INC.
-----------------------------------
By: /s/ E.N. ▇▇▇▇▇▇▇▇▇
------------------------
Name: E.N. ▇▇▇▇▇▇▇▇▇
Title: V.P., Gen. Counsel
& Asst. Sec.
COMMON HOLDER:
PRUDENTIAL SECURITIES GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Treasurer
COMMON HOLDER:
MUTUAL QUALIFIED FUND
By: FRANKLIN MUTUAL ADVISORS, INC.
By: /s/ E.N. ▇▇▇▇▇▇▇▇▇
------------------------
Name: E.N. ▇▇▇▇▇▇▇▇▇
Title: V.P., Gen. Counsel
& Asst. Sec.
COMMON HOLDER:
CGA FUNDING, L.P.
By: ▇▇▇▇▇▇▇/CGA Corporation,
Its General Partner
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇,
Its President
COMMON HOLDER:
▇▇▇▇▇▇▇/CGA CORPORATION
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Its President
COMMON HOLDER:
▇▇▇▇▇▇▇ EQUITIES L.P.
By: ▇▇▇▇▇▇▇ Equities Corp.,
Its General Partner
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Its President
COMMON HOLDER:
▇▇▇▇▇▇▇ EQUITIES CORP.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Its President
COMMON HOLDER:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
COMMON HOLDER:
/s/ ▇▇▇▇▇▇▇ ▇. PRICE
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▇▇▇▇▇▇▇ ▇. Price
COMMON HOLDER:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
COMMON HOLDER:
▇▇▇▇▇▇▇▇ PARTNERS
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Its General Partner
COMMON HOLDER:
LBCW LIMITED PARTNERSHIP
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Its General Partner
COMMON HOLDER:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
COMMON HOLDER:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ REVOCABLE
TRUST UAD 2/5/90
By: /s/ ▇▇▇▇▇▇▇ ▇. TOMASZ
------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Trustee
COMMON HOLDER:
NAGLEBERG FAMILY
PARTNERSHIP, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its General Partner
COMMON HOLDER:
/s/ ▇▇▇▇▇▇ ▇▇▇▇
------------------------
▇▇▇▇▇▇ ▇▇▇▇
COMMON HOLDER:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
COMMON HOLDER:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
COMMON HOLDER:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
COMMON HOLDER:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
COMMON HOLDER:
▇▇▇▇▇▇▇▇ FAMILY TRUST
By:/s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Trustee
COMMON HOLDER:
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
COMMON HOLDER:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
REVOCABLE TRUST UAD 2/5/90
By:/s/ ▇▇▇▇▇▇▇▇ ▇. TOMASZ
-----------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Trustee
COMMON HOLDER:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
COMMON HOLDER:
RADNOR CAPITAL CORPORATION
PENSION TRUST
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
COMMON HOLDER:
/s/ JOHANNSON YAP
------------------------
Johannson Yap
COMMON HOLDER:
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
COMMON HOLDER:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
COMMON HOLDER:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
COMMON HOLDER:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
COMMON HOLDER:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
COMMON HOLDER:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
COMMON HOLDER:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
COMMON HOLDER:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
COMMON HOLDER:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
COMMON HOLDER:
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇