EXHIBIT 10.8
REGISTRATION RIGHTS AGREEMENT
dated as of December 1, 1997
among
ESG RE LIMITED
and
The Other Parties Listed on the Signature Pages Hereto
TABLE OF CONTENTS
Page No.
1. Definitions............................................................. 1
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2. Shelf Registration...................................................... 3
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(a) Shelf Registration Statement..................................... 3
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(b) Provision by Holders of Certain Information in Connection with the
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Shelf Registration Statement..................................... 3
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(c) Notice and Postponement of Resales Under Shelf Re~istration Statement
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............................................................... 3
3. Registration Procedures................................................. 4
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4. Registration Expenses................................................... 9
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5. Indemnification......................................................... 10
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(a) Indemnification by the Company................................... 10
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(b) Indemnification bv the Holders................................... 11
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(c) Conduct of Indemnification Proceedings........................... 11
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(d) Contribution..................................................... 12
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6. Rule 144................................................................ 13
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7. Underwritten Re~istrations.............................................. 13
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8. Amendment of Subscription Agreement..................................... 13
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9. Miscellaneous........................................................... 13
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(a) Remedies...................................................... 13
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(b) No Inconsistent Agreements.................................... 13
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(c) Amendments and Waivers........................................ 14
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(d) Notices....................................................... 14
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(e) Owner of Registrable Securities............................... 14
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(f) Successors and Assigns........................................ 14
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(g) Counterparts.................................................. 15
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(h) Headings...................................................... 15
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(i) Governing Law................................................. 15
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(0) Severability.................................................. 15
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(k) Entire Agreement.............................................. 15
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(1) Attorneys' Fees............................................... 15
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i
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made and entered
into as of December 1, 1997, by and among ESG Re Limited, a company formed under
the laws of Bermuda (the "Company"), and the other parties signatory hereto
(each a "Holder" and, collectively, the "Holders").
RECITALS
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WHEREAS, the Holders have entered into, or are equity owners in entities
that have entered into the Subscription Agreements (the "Subscription
Agreements"), dated September 30, 1997, by and among the Company and the
Holders, pursuant to which the Company is issuing Common Shares, par value $1.00
per share (the "Common Shares") to the Holders, which Common Shares will not be
registered under the Securities Act of 1993, as amended; and
WHEREAS, in order to induce the Holders to enter into the Subscription
Agreement, the Company agreed to provide certain registration rights with
respect to the Common Shares, which registration rights the Company and the
Purchasers now wish to modify as set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
1. Definitions: For purposes of this Agreement, the following terms have
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the following meanings when used herein with initial capital letters:
"Advice" shall have the meaning set forth in Section 3 hereof.
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"Black-Out Period" shall have the meaning set forth in Section 2(c)
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hereof.
"Commission" shall mean the Securities and Exchange Commission.
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"Common Shares" shall mean the Common Shares, par value $1.00 per share, of
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the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
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"Holder" or "Holders" shall have the meaning set forth in the Preamble and
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their respective transferees in accordance with Section 8(f) hereof.
"Losses" shall have the meaning set forth in Section 5 hereof.
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"Prospectus" shall mean the prospectus included in the Shelf Registration
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Statement (including without limitation a prospectus that discloses information
previously omitted from a prospectus filed as part of the effective Shelf
Registration Statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Shelf Registration Statement and all other amendments
and supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
"Registrable Securities" shall mean each of the Shares, until, in the case
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of any such Share, (i) it is effectively registered under the Securities Act and
disposed of in accordance with the Shelf Registration Statement covering it,
(ii) it is saleable by the holder thereof pursuant to Rule 144(k), or (iii) it
is distributed to the public by the holder thereof pursuant to Rule 144.
"Registration Expenses" shall have the meaning set forth in Section 4
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hereof.
"Resale Notice" shall have the meaning set forth in Section 2(c) hereof.
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"Rule 144" shall mean Rule 144 promulgated by the Commission under the
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Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC.
"Securities Act" shall mean the Securities Act of 1933, as amended.
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"Shares" shall mean all Common Shares issued or to be issued to any Holder
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upon the exercise of the Warrants which were issued to the Holders pursuant to
the Subscription Agreement.
"Shelf Registration Statement" shall have the meaning set forth in Section
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2(a) hereof, and shall include the related Prospectus, all amendments and
supplements to such thereto (including post-effective amendments), all exhibits
and all material incorporated by reference or deemed to be incorporated by
reference therein.
"Special Counsel" shall have the meaning set forth in Section 4(b) hereof.
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"Subscription Agreement" shall have the meaning set forth in the recitals
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hereof.
"Underwritten registration or underwritten offering" shall mean a sale of
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securities of the Company to an underwriter for reoffering to the public
pursuant to
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the Shelf Registration Statement filed by the Company with the Commission under
the Securities Act.
2. Shelf Registration.
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(a) Shelf Registration Statement. The Company hereby agrees to: (i)
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cause to be filed a shelf registration statement pursuant to Rule 415 under the
Securities Act (the "Shelf Registration Statement"), which Shelf Registration
Statement shall provide for resales of all of the Registrable Securities held by
those Holders which shall have provided the information required pursuant to
Section 2(b) hereof; and (ii) cause such Shelf Registration Statement to be
declared effective by the Commission on or before one year after the closing
under the Subscription Agreements. The Company shall use its best efforts to
keep such Shelf Registration Statement continuously effective, supplemented and
amended until the earlier of (i) the date when all of the Registrable Securities
covered thereby are issued or resold or (ii) the date on which Holders may sell
Registrable Securities without registration under the Securities Act, pursuant
to Rule 144(k) thereunder or any similar rule that may be adopted by the
Commission.
(b) Provision by Holders of Certain Information in Connection with the
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Shelf Registration Statement. No Holder of Registrable Securities may include
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any of its Registrable Securities in any Shelf Registration Statement pursuant
to this Agreement unless and until such Holder furnishes to the Company in
writing, within 20 business days after receipt of a request therefor, such
information as the Company may reasonably request for use in connection with the
Shelf Registration Statement or Prospectus or preliminary Prospectus included
therein. Each Holder as to which the Shelf Registration Statement is being
effected agrees to furnish promptly to the Company all information required to
be disclosed in order to make the information previously furnished to the
Company by such Holder not materially misleading.
(c) Notice and Postponement of Resales Under Shelf Registration
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Statement. At any time when one or more Holders proposes to engage in a
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transaction or series of related transactions to effect the resale of
Registrable Securities pursuant to the Shelf Registration Statement, such Holder
or Holders shall provide written notice to the Company of such proposed sale
(the "Resale Notice"). With respect to each such transaction or series of
related transactions, the Resale Notice shall set forth (i) the name of each
Holder that proposes to offer Registrable Securities for resale, (ii) the number
of Registrable Securities each such Holder intends to offer, and (iii) the
manner in which each such Holder intends to offer the Registrable Securities for
resale. Within one (1) business day of the receipt of a Resale Notice, the
Company shall be entitled to require the Holders by written notice to postpone
any such offering of Registrable Securities (as contemplated by the applicable
Resale Notice) for a reasonable period of time not in excess of 30 calendar days
(a "Black-Out Period"), if the Company determines, in the good faith exercise of
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the business judgment of its Board of Directors, that such offering could
materially interfere with a bona fide financing, acquisition, corporate
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reorganization or any other corporate development involving the Company or would
require disclosure of information, the premature disclosure of which could
materially and adversely affect the Company. If the events or circumstances
permitting the Black-Out Period end prior to the expiration of such Black-Out
Period, the Company will promptly notify the Holders in writing that such events
or circumstances have ended; the Holders will thereafter be permitted to effect
the proposed resale of the Registrable Securities as contemplated by the Resale
Notice.
3. Registration Procedures. In connection with the Company's
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registration obligations pursuant to Section 2 hereof, the Company will effect
such registration to permit the sale of such Registrable Securities in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto the Company will as expeditiously as possible, in each case, to
the extent applicable:
(a) Prepare and file with the Commission at least sixty (60) days
prior to [DECEMBER __, 1998], the Shelf Registration Statement on any
appropriate form under the Securities Act available for the sale of the
Registrable Securities by the Holders in accordance with the intended method or
methods of distribution thereof, and cause such Shelf Registration Statement to
become effective and remain effective as provided herein; provided, however,
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that before filing the Shelf Registration Statement or Prospectus or any
amendments or supplements thereto (including documents that would be
incorporated or deemed to be incorporated therein by reference) the Company will
furnish to the Holders whose Registrable Securities are covered by such Shelf
Registration Statement, the Special Counsel and the managing underwriters, if
any, copies of all such documents proposed to be filed, which documents will be
subject to review of such Holders, the Special Counsel and such underwriters,
and the Company will not file the Shelf Registration Statement or amendment
thereto or any Prospectus or any supplement thereto (including such documents
which, upon filing, would or would be incorporated or deemed to be incorporated
by reference therein) to which the Holders of a majority of the Registrable
Securities covered by the Shelf Registration Statement, the Special Counsel or
the managing underwriter, if any, shall reasonably object on a timely basis.
(b) Prepare and file with the Commission such amendments and post-
effective amendments to the Shelf Registration Statement as may be necessary to
keep such Shelf Registration Statement continuously effective for the applicable
period specified in Section 2(a); cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provision then in force) under the
Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the Shelf Registration
Statement during the applicable period in accordance with the intended methods
of disposition by the sellers
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thereof set forth in the Shelf Registration Statement as so amended or to such
Prospectus as so supplemented.
(c) Notify the selling Holders, the Special Counsel and the managing
underwriters, if any, promptly, and (if requested by any such person) confirm
such notice in writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the Shelf
Registration Statement or any post-effective amendment, when the same has become
effective, (ii) of any request by the Commission or any other federal or state
governmental authority for amendments or supplements to the Shelf Registration
Statement or related Prospectus or for additional information, (iii) of the
issuance by the Commission or any other federal or state governmental authority
of any stop order suspending the effectiveness of the Shelf Registration
Statement or the initiation of any proceedings for that purpose, (iv) if at any
time the representations and warranties of the Company contained in any
agreement contemplated by Section 3(m) hereof (including any underwriting
agreement) cease to be true and correct, (v) of the receipt by the Company of
any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose, (vi) of the occurrence of any event which makes any statement made in
the Shelf Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or which requires the making of any changes in the Shelf
Registration Statement, Prospectus or documents so that, in the case of the
Shelf Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and, in the case of
the Prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated or is necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and (vii) of the Company's reasonable determination that a
post-effective amendment to the Shelf Registration Statement would be
appropriate.
(d) Use every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Shelf Registration Statement, or the lifting
of any suspension of the qualification (or exemption from qualification) of any
of the Registrable Securities for sale in any jurisdiction, at the earliest
possible moment.
(e) If requested by the managing underwriters, if any, or the Holders
of a majority of the Registrable Securities being registered, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment such
information as the managing underwriters, if any, and such Holder agree should
be included therein as may be required by applicable law and (ii) make all
required filings of such Prospectus supplement or such post-effective amendment
as soon as practicable after the Company has received notification of the
matters to be incorporated in such
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Prospectus supplement or post-effective amendment; provided, however, that the
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Company will not be required to take any actions under this Section 3(e) that
are not, in the opinion of counsel for the Company, in compliance with
applicable law.
(f) Furnish to each selling Holder, the Special Counsel and each
managing underwriter, if any, without charge, at least one conformed copy of the
Shelf Registration Statement and any post-effective amendment thereto, including
financial statements (but excluding schedules, all documents incorporated or
deemed incorporated therein by reference and all exhibits, unless requested in
writing by such selling Holder, counsel or underwriter).
(g) Deliver to each selling Holder, the Special Counsel and the
underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses relating to such Registrable Securities (including each preliminary
prospectus) and any amendment or supplement thereto as such persons may request;
and the Company hereby consents to the use of such Prospectus or each amendment
or supplement thereto by each of the selling Holders and the underwriters, if
any, in connection with the offering and sale of the Registrable Securities
covered by such Prospectus or any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities, to
register or qualify or cooperate with the selling Holders, the underwriters, if
any, and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions within the United States as any seller or underwriter
reasonably requests in writing; use all reasonable efforts to keep each such
registration or qualification (or exemption therefrom) effective during the
period the Shelf Registration Statement is required to be kept effective and do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdiction of the Registrable Securities covered by the
Shelf Registration Statement; provided, however, that the Company will not be
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required to (i) qualify generally to do business in any jurisdiction in which it
is not then so qualified or (ii) take any action that would subject it to
general service of process in any such jurisdiction in which it is not then so
subject.
(i) Cooperate with the selling Holders and the managing underwriters,
if any, to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and enable such Registrable
Securities to be in such denominations and registered in such names as the
managing underwriters, if any, shall request at least two business days prior to
any sale of Registrable Securities to the underwriters.
(j) Use all reasonable efforts to cause the Registrable Securities
covered by the Shelf Registration Statement to be registered with or approved by
such other governmental agencies or authorities within the United States
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except as may be required solely as a consequence of the nature of such selling
Holder's business, in which case the Company will cooperate in all reasonable
respects with the filing of the Shelf Registration Statement and the granting of
such approvals as may be necessary to enable the seller or sellers thereof or
the underwriters, if any, to consummate the disposition of such Registrable
Securities.
(k) Upon the occurrence of any event contemplated by Section 3(c)(vi)
or 3(c)(vii) hereof, prepare a supplement or post-effective amendment to the
Shelf Registration Statement or a supplement to the related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable Securities
being sold thereunder, such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(l) Use all reasonable efforts to cause all Registrable Securities
covered by the Shelf Registration Statement to be listed on each securities
exchange, if any, on which similar securities issued by the Company are then
listed.
(m) Enter into such agreements (including, in the event of an
underwritten offering, an underwriting agreement in form, scope and substance as
is customary in underwritten offerings) and take all such other actions in
connection therewith (including those requested by the selling Holders, in the
event of an underwritten offering, those requested by the managing underwriters)
in order to expedite or facilitate the disposition of such Registrable
Securities and in such connection, whether or not an underwriting agreement is
entered into and whether or not the registration is an underwritten
registration, (i) make such representations and warranties to the Holders and
the underwriters, if any, with respect to the business of the Company and its
subsidiaries, the Shelf Registration Statement, Prospectus and documents
incorporated by reference or deemed incorporated by reference, if any, in each
case, in form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings and confirm the same if and when
requested; (ii) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any, and the Holders of a majority
of the Registrable Securities being sold) addressed to such selling Holders and
each of the underwriters, if any, covering the matters customarily covered in
opinions requested in underwritten offerings and such other matters as may be
reasonably requested by such selling Holders and underwriters, including without
limitation the matters referred to in Section 3(m)(i) hereof; (iii) use its best
efforts to obtain "comfort" letters and updates thereof from the independent
certified public accountants of the Company (and, if necessary, any other
certified public accountants of any subsidiary of the Company or of any business
acquired by the Company for which financial statements and financial data is, or
is required to be, included in the Shelf Registration Statement), addressed
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to each selling Holder and each of the underwriters, if any, such letters to be
in customary form and covering matters of the type customarily covered in
"comfort" letters in connection with underwritten offerings; and (iv) deliver
such documents and certificates as may be requested by the Holders of a majority
of the Registrable Securities being sold, the Special Counsel and the managing
underwriters, if any, to evidence the continued validity of the representations
and warranties of the Company and its subsidiaries made pursuant to clause (i)
above and to evidence compliance with any customary conditions contained in the
underwriting agreement or similar agreement entered into by the Company. The
foregoing actions will be taken in connection with each closing under such
underwriting or similar agreement as and to the extent required thereunder.
(n) Make available for inspection by a representative of the selling
Holders, any underwriter participating in any disposition of Registrable
Securities, and any attorney or accountant retained by such selling Holders or
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries, and cause the officers,
directors and employees of the Company and its subsidiaries to supply all
information reasonably requested by any such representative, underwriter,
attorney or accountant in connection with the Shelf Registration Statement;
provided, however, that any records, information or documents that are
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designated by the Company in writing as confidential at the time of delivery of
such records, information or documents will be kept confidential by such persons
unless (i) such records, information or documents are or come to be in the
public domain or otherwise publicly available, (ii) disclosure of such records,
information or documents is required by court or administrative order or is
necessary to respond to inquiries of regulatory authorities, or (iii) disclosure
of such records, information or documents, in the opinion of counsel to such
person, is otherwise required by law (including, without limitation, pursuant to
the requirements of the Securities Act).
(o) Comply with all applicable rules and regulations of the Commission
and make generally available to its security holders earning statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than 45 calendar days after the end of any 12-month period (or 90 calendar days
after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable Securities are
sold to underwriters in a firm commitment or best efforts underwritten offering,
and (ii) if not sold to underwriters in such an offering, commencing on the
first day of the first fiscal quarter of the Company, after the effective date
of the Shelf Registration Statement, which statements shall cover said 12-month
period.
(p) In connection with any underwritten offering, cause appropriate
members of its management to cooperate and participate on a reasonable basis in
the underwriters' "road show" conferences related to such offering.
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The Company may require each selling Holder as to which any registration is
being effected to furnish to the Company such information regarding the
distribution of such Registrable Securities as the Company may, from time to
time, reasonably request in writing and the Company may exclude from such
registration the Registrable Securities of any selling Holder who unreasonably
fails to furnish such information within a reasonable time after receiving such
request.
Each Holder will be deemed to have agreed by virtue of its acquisition of
such Registrable Securities that, upon receipt of any notice from the Company of
the occurrence of any event of the kind described in Section 3(c)(ii),
3(c)(iii), 3(c)(v), 3(c)(vi) or 3(c)(vii) hereof, such Holder will forthwith
discontinue disposition of such Registrable Securities covered by the Shelf
Registration Statement or Prospectus until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 3(k) hereof,
or until it is advised in writing (the "Advice") by the Company that the use of
the applicable Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus. The Company shall be obligated to
use its reasonable best efforts to allow use of the applicable Prospectus as
quickly as practicable. In the event the Company shall give any such notice,
the time period prescribed in Section 2(a) hereof will be extended by the number
of days during the time period from and including the date of the giving of such
notice to and including the date when each seller of Registrable Securities
covered by the Shelf Registration Statement shall have received (x) the copies
of the supplemented or amended Prospectus contemplated by Section 3(k) hereof or
(y) the Advice.
4. Registration Expenses.
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(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Company will be borne by the Company whether or not
the Shelf Registration Statement becomes effective. Such fees and expenses will
include, without limitation, (i) all registration and filing fees (including
without limitation fees and expenses (x) with respect to filings required to be
made with the National Association of Securities Dealers, Inc. and (y) of
compliance with securities or "blue sky" laws (including without limitation fees
and disbursements of counsel for the underwriters or Holders in connection with
"blue sky" qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of such
jurisdictions as the managing underwriters, if any, or Holders of a majority of
the Registrable Securities being sold may designate)), (ii) printing expenses
(including without limitation expenses of printing certificates for Registrable
Securities in a form eligible for deposit with [THE DEPOSITORY TRUST COMPANY]
and of printing prospectuses if the printing of prospectuses is requested by the
Holders of a majority of the Registrable Securities included in the Shelf
Registration Statement), (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Company and the Special Counsel for
the selling Holders, (v) fees and disbursements of all independent
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certified public accountants referred to in Section 5(m)(iii) hereof (including
the expenses of any special audit and "comfort" letters required by or incident
to such performance), (vi) any fees and expenses of any "qualified independent
underwriter" or other independent appraiser participating in an offering
pursuant to Section 3 of Schedule E to the By-laws of the National Association
of Securities Dealers, Inc., (vii) Securities Act liability insurance if the
Company so desires such insurance, and (viii) fees and expenses of all other
persons retained by the Company. In addition, the Company will pay its internal
expenses (including without limitation all salaries and expenses of its officers
and employees performing legal or accounting duties), the expense of any annual
audit, the fees and expenses incurred in connection with the listing of the
securities to be registered on any securities exchange on which similar
securities issued by the Company are then listed and the fees and expenses of
any person, including special experts, retained by the Company. In no event,
however, will the Company be responsible for any underwriting discount or
selling commission with respect to any sale of Registrable Securities pursuant
to this Agreement.
(b) In connection with any registration of Registrable Securities
hereunder, the Company will reimburse the Holders of the Registrable Securities
being registered in such registration for the reasonable fees and disbursements
of not more than one counsel (the "Special Counsel"), together with appropriate
local counsel, chosen by the Holders of a majority of the Registrable Securities
being registered.
5. Indemnification.
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(a) Indemnification by the Company. The Company will, without
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limitation as to time, indemnify and hold harmless, to the fullest extent
permitted by law, each Holder of Registrable Securities registered pursuant to
this Agreement, the officers, directors, partners, managers, agents and
employees of each of them, each person who controls such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, partners, managers, agents and employees of any
such controlling person, from and against all losses, claims, damages,
liabilities, costs (including without limitation the costs of investigation and
attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising out
of or based upon any untrue or alleged untrue statement of a material fact
contained in the Shelf Registration Statement, Prospectus or form of Prospectus
(including any document incorporated by reference into any such Shelf
Registration Statement, Prospectus or form of Prospectus) or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or based
upon 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,
except insofar as the same are based solely upon information furnished in
writing to the Company by such Holder expressly for use therein; provided,
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however, that the Company will not be liable to any Holder to the extent that
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any such Losses arise out of or are based upon an untrue statement or alleged
untrue statement or omission or alleged omission
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made in any preliminary prospectus if either (A) (i) such Holder failed to send
or deliver a copy of the Prospectus with or prior to the delivery of written
confirmation of the sale by such Holder to the person asserting the claim from
which such Losses arise and (ii) the Prospectus would have completely corrected
such untrue statement or alleged untrue statement or such omission or alleged
omission; or (B) such untrue statement or alleged untrue statement, omission or
alleged omission is completely corrected in an amendment or supplement to the
Prospectus previously furnished by or on behalf of the Company with copies of
the Prospectus as so amended or supplemented, and such Holder thereafter fails
to deliver such Prospectus as so amended or supplemented prior to or
concurrently with the sale of a Registrable Security to the person asserting the
claim from which such Losses arise.
(b) Indemnification by the Holders. In connection with the Shelf
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Registration Statement in which a Holder is participating, such Holder will
furnish to the Company in writing such information as the Company reasonably
requests for use in connection with the Shelf Registration Statement or
Prospectus and will indemnify, to the fullest extent permitted by law, the
Company, its directors and officers, agents and employees, each person who
controls the Company (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling persons, from and against all Losses arising out
of or based upon any untrue statement of a material fact contained in the Shelf
Registration Statement, Prospectus or preliminary prospectus or arising out of
or based upon any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, to the extent, but only
to the extent, that such untrue statement or omission is contained in any
information so furnished in writing by such Holder to the Company expressly for
use in the Shelf Registration Statement or Prospectus and was relied upon by the
Company in the preparation of the Shelf Registration Statement, Prospectus or
preliminary prospectus. In no event will the liability of any selling Holder
hereunder be greater in amount than the dollar amount of the proceeds (net of
payment of all expenses) received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any person shall become
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entitled to indemnity hereunder (an "indemnified party"), such indemnified party
shall give prompt notice to the party from which such indemnity is sought (the
"indemnifying party") of any claim or of the commencement of any action or
proceeding with respect to which such indemnified party seeks indemnification or
contribution pursuant hereto; provided, however, that the failure to so notify
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the indemnifying party will not relieve the indemnifying party from any
obligation or liability except to the extent that the indemnifying party has
been prejudiced materially by such failure. All fees and expenses (including any
fees and expenses incurred in connection with investigating or preparing to
defend such action or proceeding) will be paid to the indemnified party, as
incurred, within five calendar days of written notice thereof to the
indemnifying party (regardless of whether it is
12
ultimately determined that an indemnified party is not entitled to
indemnification hereunder). The indemnifying party will not consent to entry of
any judgment or enter into any settlement or otherwise seek to terminate any
action or proceeding in which any indemnified party is or could be a party and
as to which indemnification or contribution could be sought by such indemnified
party under this Section 5, unless such judgment, settlement or other
termination includes as an unconditional term thereof the giving by the claimant
or plaintiff to such indemnified party of a release, in form and substance
satisfactory to the indemnified party, from all liability in respect of such
claim or litigation for which such indemnified party would be entitled to
indemnification hereunder.
(d) Contribution. If the indemnification provided for in this Section
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5 is unavailable to an indemnified party under Section 5(a) or 5(b) hereof in
respect of any Losses or is insufficient to hold such indemnified party
harmless, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, will, jointly and severally, contribute to the amount paid or
payable by such indemnified party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the indemnifying party or
indemnifying parties, on the one hand, and such indemnified party, on the other
hand, in connection with the actions, statement or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The relative
fault of such indemnifying party or indemnifying parties, on the one hand, and
such indemnified party, on the other hand, will be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or related to the information supplied
by, such indemnifying party or indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action, statement or omission. The amount paid or payable by a party as a
result of any Losses will be deemed to include any legal or other fees or
expenses incurred by such party in connection with any action or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
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allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provision of this Section 5(d), an indemnifying party that
is a selling Holder will not be required to contribute any amount in excess of
the amount by which the total price at which the Registrable Securities sold by
such indemnifying party and distributed to the public were offered to the public
exceed the amount of any damages which such indemnifying party has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
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The indemnity, contribution and expense reimbursement obligations of the
Company hereunder will be in addition to any liability the Company may otherwise
have hereunder or otherwise. The provisions of this Section 5 will survive so
long as Registrable Securities remain outstanding, notwithstanding any transfer
of the Registrable Securities by any Holder thereof or any termination of this
Agreement.
6. Rule 144. The Company will file the reports required to be filed by
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it under the Securities Act and the Exchange Act, and will cooperate with any
Holder (including without limitation by making such representations as any such
Holder may reasonably request), all to the extent required from time to time to
enable such Holder to sell Registrable Securities without registration under the
Securities Act within the limitations of the exemptions provided by Rule 144.
Upon the request of any Holder, the Company will deliver to such Holder a
written statement as to whether it has complied with such filing requirements.
Notwithstanding the foregoing, nothing in this Section 6 will be deemed to
require the Company to register any of its securities under any section of the
Exchange Act.
7. Underwritten Registrations. If any of the Registrable Securities
--------------------------
covered by the Shelf Registration Statement are to be sold in an underwritten
offering, the managing underwriter that will administer the offering will be
selected by the Holders of a majority of the Registrable Securities included in
such resale so long as such managing underwriter shall be reasonably
satisfactory to the Company; provided, however, that the Company shall have the
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right to select any co-managing underwriters so long as such co-managing
underwriters shall be reasonably satisfactory to the such Holders.
8. Amendment of Subscription Agreement. The Subscription Agreement shall
-----------------------------------
be amended by deleting section 6 thereof, pertaining to registration rights, in
its entirety.
9. Miscellaneous.
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(a) Remedies. In the event of a breach by the Company of its
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obligations under this Agreement, each Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of any of the provisions of this Agreement
and hereby further agrees that, in the event of any action for specified
performance in respect of such breach, it will waive the defense that a remedy
at law would be adequate.
(b) No Inconsistent Agreements. The Company has not, as of the date
--------------------------
hereof, and will not, on or after the date hereof, enter into any agreement
14
with respect to its securities which is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
(c) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Holders of 90% of the then-outstanding Registrable Securities. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of the Holders whose
securities are being sold pursuant to the Shelf Registration Statement and that
does not directly or indirectly affect the rights of other Holders may be given
by Holders of at least 75% of the Registrable Securities being sold by such
Holders; provided, however, that the provisions of this sentence may not be
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amended, modified, or supplemented except in accordance with the provisions of
the immediately preceding sentence.
(d) Notices. All notices and other communications provided for or
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permitted hereunder shall be made in writing and will be deemed given (i) when
made, if made by hand delivery, (ii) upon confirmation, if made by telecopier,
or (iii) one business day after being deposited with a reputable next-day
courier, to the parties as follows:
(x) if to the Company, initially at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, Telecopier (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to ▇▇▇▇ ▇▇▇▇▇, Rifkind, ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., and thereafter at such other address, notice of which
is given to the Holders in accordance with the provisions of this Section 9(d);
and
(y) if to any Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this Section 9(d).
(e) Owner of Registrable Securities. The Company will maintain, or
-------------------------------
will cause its registrar and transfer agent to maintain, a stock book with
respect to the Common Stock, in which all transfers of Registrable Securities of
which the Company has received notice will be recorded. The Company may deem and
treat the person in whose name Registrable Securities are registered in the
stock book of the Company as the owner thereof for all purposes, including
without limitation the giving of notices under this Agreement.
(f) Successors and Assigns. This Agreement will inure to the benefit of
----------------------
and be binding upon the successors and assigns of each of the parties and will
inure to the benefit of each Holder. Notwithstanding the foregoing, no
transferee will have any of the rights granted under this Agreement (i) until
such
15
transferee shall have acknowledged its rights and obligations hereunder by a
signed written statement of such transferee's acceptance of such rights and
obligations, (ii) if the transferor notifies the Company in writing on or prior
to such transfer that the transferee shall not have such rights, or (iii) with
respect to specific Registrable Securities, if such transferee was not a party
to this Agreement on the date hereof (or an affiliate of a party hereto) and
acquired such Registrable Securities in open-market purchases or pursuant to an
underwritten public offering.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed will be deemed to be an original and all of which taken
together will constitute one and the same instrument.
(h) Headings. The headings in this Agreement are for convenience of
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reference only and will not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
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ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS.
(j) Severability. If any term, provision, covenant or restriction of
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this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein will remain in full force and effect and will in
no way be affected, impaired or invalidated, and the parties hereto will use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
(k) Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the registration rights granted by the Company with respect to the
Registrable Securities. This Agreement supersedes all prior agreements and
understandings among the parties with respect to such registration rights.
(l) Attorneys' Fees. In any action or proceeding brought to enforce
---------------
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, as determined by the court, will be
entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
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(m) Termination. This Agreement shall terminate, and thereby become
-----------
null and void, on the tenth anniversary of the date hereof; provided, however,
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that the provisions of Section 5 and Sections 8(i) and (l) shall survive the
termination of this Agreement.
IN WITNESS HEREOF, the parties have executed a counterpart signature
page of this Agreement as of the date first above written.
ESG RE LIMITED
By:__________________________________________
Name:
Title:
[HOLDER]
By:__________________________________________
Name:
Title: