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EXECUTION VERSION
[Exhibit 10.1]
SHAREHOLDERS' AGREEMENT
DATED AS
OF
DECEMBER 12, 2005
AMONG
VALIDUS HOLDINGS, LTD.
AND
THE SHAREHOLDERS NAMED HEREIN
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TABLE OF CONTENTS
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ARTICLE I.
DEFINITIONS
SECTION 1.1
Definitions.................................................
1
ARTICLE II.
REGISTRATION RIGHTS
SECTION 2.1 Demand
Registration......................................... 6
SECTION 2.2 Piggyback
Registration...................................... 8
SECTION 2.3 Lock-Up
Agreements.......................................... 9
SECTION 2.4
Registration Procedures.....................................
9
SECTION 2.5
Indemnification by the Company..............................
13
SECTION 2.6
Indemnification by Participating Shareholders...............
14
SECTION 2.7 Conduct of
Indemnification Proceedings...................... 14
SECTION 2.8
Contribution................................................
15
SECTION 2.9
Participation in Public Offering............................
16
SECTION 2.10 Other
Indemnification....................................... 16
SECTION 2.11 Exchange Act Filings, Rule
144.............................. 16
SECTION 2.12 Termination of Registration
Rights.......................... 16
SECTION 2.13 Black-Out
Period............................................ 16
ARTICLE III.
CERTAIN COVENANTS AND AGREEMENTS
SECTION 3.1
Restrictions................................................
17
SECTION 3.1A Business
Activities......................................... 18
SECTION 3.2 Special
Actions............................................. 18
SECTION 3.3
Confidentiality.............................................
18
SECTION 3.4
Conflicting Agreements......................................
19
SECTION 3.5
Acknowledgment..............................................
19
SECTION 3.6
Competition; No Fiduciary Duties............................
19
SECTION 3.7
Accounting; Financial Statements and other Information......
20
SECTION 3.8
Insurance...................................................
20
SECTION 3.9 Certain
Tax Matters......................................... 20
SECTION 3.10 Ratification of
Board....................................... 21
SECTION 3.11 Listed
Transactions......................................... 21
ARTICLE IV.
MISCELLANEOUS
SECTION 4.1 Binding
Effect; Assignability; Benefit...................... 21
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SECTION 4.2
Notices.....................................................
21
SECTION 4.3 Waiver;
Amendment; Termination.............................. 22
SECTION 4.4 Governing
Law............................................... 22
SECTION 4.5
Jurisdiction................................................
22
SECTION 4.6 Waiver of
Jury Trial........................................ 23
SECTION 4.7 Specific
Enforcement........................................ 23
SECTION 4.8
Counterparts; Effectiveness.................................
23
SECTION 4.9 Entire
Agreement............................................ 23
SECTION 4.10
Captions....................................................
23
SECTION 4.11
Severability................................................
24
SECTION 4.12 Foreign
Registration........................................ 24
Exhibit A
Joinder Agreement...........................................
A-1
Exhibit B
Form of Investor Election...................................
B-1
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SHAREHOLDERS' AGREEMENT
This AGREEMENT dated as of December 12, 2005 is made among
VALIDUS
HOLDINGS, LTD., a company with limited liability organized under
the laws of
Bermuda (the "Company"), and the Persons listed on the signature
pages attached
hereto.
WITNESSETH:
WHEREAS, each of the Shareholders (as defined below) has subscribed
to
purchase Voting Common Stock or Non-Voting Common Stock (each, as
defined below)
(such shares of all Shareholders, together with any additional
shares of Common
Stock hereafter acquired by such Shareholders in any manner, and
any Warrants
(as defined below) held or hereafter acquired by such Shareholders,
being
referred to herein as the "Shares");
WHEREAS, the Company owns the entire outstanding capital stock
of
Validus Reinsurance, Ltd., a limited liability company organized
under the laws
of Bermuda (the "Operating Company");
WHEREAS, each of the Shareholders desires to promote the interests
of
the Company and the mutual interests of the Shareholders by
establishing herein
certain terms and conditions upon which the Shares will be held,
including
provisions relating to approval of various corporate actions;
WHEREAS, each of the Shareholders has agreed that each of the
Qualified Sponsors (as defined below) shall be entitled to certain
rights set
forth herein in recognition of their commitments to the Company,
which rights
are acknowledged by the Shareholders; and
WHEREAS, the execution of this Agreement is a condition precedent
to
the purchase and sale of the Shares as contemplated in the
Subscription
Agreements (as defined below).
NOW, THEREFORE, in consideration of the covenants and
agreements
contained herein, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1 Definitions.
(a) The following terms, as used herein, have the following
meanings:
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common
control with
such Person; provided that no securityholder of the Company shall
be deemed an
Affiliate of any other securityholder solely by reason of any
investment in the
Company. For the purpose of this definition, the term "Control"
(including, with
correlative meanings, the terms "Controlling", "Controlled By" and
"Under Common
Control With"), as used with respect to any Person, shall mean the
possession,
directly or indirectly, of the power to direct or cause the
direction of the
management and policies of such Person, whether through the
ownership of voting
securities, by contract or otherwise.
"Board" means the board of directors of the Company.
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"Business Day" means any day except a Saturday, Sunday or other day
on
which commercial banks in New York, New York or Bermuda are not
open for
business.
"Bye-laws" means the Bye-laws of the Company, as amended from time
to
time.
"Code" means the United States Internal Revenue Code of 1986,
as
amended, and any successor thereto and the rules and regulations
promulgated
thereunder from time to time.
"Common Stock" means, collectively, the Voting Common Stock and
the
Non-Voting Common Stock.
"Company Securities" means (i) the Common Stock, (ii)
securities
convertible into or exchangeable for Common Stock, and (iii)
options, warrants
(including the Warrants) or other rights to acquire Common
Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended,
of the United States of America and the rules and regulations
promulgated
thereunder.
"First Public Offering" means the first Public Offering after the
date
hereof.
"Founder" means, collectively, the group of funds affiliated
with
Aquiline Capital Partners LLC which are holders of Company
Securities.
"Fully-Diluted" means, with respect to Company Securities, all
outstanding shares and all shares issuable in respect of securities
convertible
into or exchangeable for such shares, all stock appreciation
rights, options,
warrants (including the Warrants) and other rights to purchase or
subscribe for
such Company Securities or securities convertible into or
exchangeable for such
Company Securities; provided that, if any of the foregoing stock
appreciation
rights, options, warrants or other rights to purchase or subscribe
for such
Company Securities are subject to vesting, the Company Securities
subject to
vesting shall be included in the definition of "Fully-Diluted" only
upon and to
the extent of such vesting.
"Group" means a group of related persons for purposes of Section
13(d)
of the Exchange Act.
"GSCP V" means, collectively, the group of funds administered by
the
Principal Investment Area of The Goldman Sachs Group, Inc. which
are holders of
Company Securities.
"Major Investor" means (a) each Qualified Sponsor, (b) each
Shareholder who acquired at least $100 million of Common Stock on
the date
hereof, and (c) each Shareholder who, or a group of Shareholders
acting together
who in the aggregate, beneficially owns more than ten percent (10%)
of the
Company Securities, on a Fully Diluted basis either (x) immediately
prior to the
commencement of the First Public Offering or (y) on the date it
purchased its
Common Stock pursuant to the offering described in the Offering
Memorandum. For
the purposes of this definition, "beneficial ownership" shall
include ownership
by one or more Affiliates of such Shareholder.
"Majority of the Qualified Sponsors" means a majority in number
(i.e.,
initially 3 out of 5) of the Qualified Sponsors.
"Memorandum" means the Amended and Restated Memorandum of
Association
of the Company, as amended from time to time.
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"Merrill" means, collectively, the group of funds/entities
affiliated
with Merrill Lynch, Pierce, Fenner & Smith Incorporated which
are holders of
Company Securities.
"NASD" means the United States National Association of
Securities
Dealers, Inc.
"New Mountain" means, collectively, the group of funds affiliated
with
New Mountain Capital, L.L.C. which are holders of Company
Securities.
"Non-Voting Common Stock" means the non-voting common shares,
par
value $0.10 per share, of the Company and any shares into which
such shares may
thereafter be converted or changed.
"Offering Memorandum" means the Confidential Memorandum dated
October
13, 2005, as supplemented on November 21, 2005 and December 5,
2005, and
includes all exhibits, annexes and appendices thereto and any
further amendments
thereof and modifications and supplements thereto as may be made
from time to
time on or prior to the date hereof and delivered to the
Shareholders.
"Participating Shareholders" means the Shareholders that
participate
in any registration of Registrable Securities pursuant to Section
2.1 or Section
2.2, including any Requesting Shareholder.
"Permitted Transferee" has the meaning set forth in the
Bye-laws.
"Person" means an individual, corporation, limited liability
company,
partnership, association, trust or other entity or organization,
including a
government or political subdivision or an agency or instrumentality
thereof.
"Plan Options" means options issued by the Company pursuant to
any
stock option or similar plan (and any shares of Common Stock
issuable upon
exercise thereof or thereunder) approved by the Board where the
primary purpose
of such issuance is not to raise additional equity capital for the
Company.
"Public Offering" means a public offering of Common Stock pursuant
to
an effective registration statement under the Securities Act, other
than
pursuant to a registration statement on Form F-4 or Form F-8 or any
similar or
successor form.
"Qualified Public Offering" means the first Public Offering in
which
gross proceeds of not less than $150.0 million (at a per share
price of not less
than $10 per share, as adjusted to give effect to stock splits,
recombinations
and other reclassifications) are raised for the Company and/or for
selling
shareholders after the date hereof.
"Qualified Sponsor" means each Sponsor, except that, with respect
to
each Sponsor individually, a Sponsor shall cease to be a Qualified
Sponsor from
and after the date on which such Sponsor ceases to "beneficially
own" (as such
term is defined in Rule 13d-3 of the Exchange Act), as a result of
a Transfer
(excluding Transfers in accordance with clause (i) of the
definition of
Permitted Transferee), at least 33-1/3% of the number of shares of
Common Stock
(after giving effect to stock splits, recombination and other
similar
reclassifications) such Sponsor purchased in the offering described
in the
Offering Memorandum.
"Registrable Securities" means, at any time, any Common Stock and
any
securities issued or issuable in respect of such Common Stock by
way of
conversion, exchange, stock dividend, split or combination,
recapitalization,
merger, consolidation, other reorganization or otherwise until (i)
a
registration statement covering such Common Stock has been declared
effective by
the SEC and such Common
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Stock has been disposed of pursuant to such effective registration
statement,
(ii) such Common Stock is sold under circumstances in which all of
the
applicable conditions of Rule 144 are met or such securities may be
sold
pursuant to Rule 144(k) (or any similar provisions then in force)
under the
Securities Act or (iii) such Common Stock is otherwise Transferred,
the Company
has delivered a new certificate or other evidence of ownership for
such Common
Stock not bearing the legend required pursuant to this Agreement
and such Common
Stock may be freely resold without subsequent registration under
the Securities
Act.
"Registration Expenses" means any and all expenses incident to
the
performance of or compliance with any registration or marketing of
securities,
including all (i) registration and filing fees, and all other fees
and expenses
payable in connection with the listing of securities on any
securities exchange
or automated interdealer quotation system, (ii) fees and expenses
of compliance
with any securities or "blue sky" laws (including reasonable fees
and
disbursements of counsel in connection with "blue sky"
qualifications of the
securities registered), (iii) expenses in connection with the
preparation,
printing, mailing and delivery of any registration statements,
prospectuses and
other documents in connection therewith and any amendments or
supplements
thereto, (iv) security engraving and printing expenses, (v)
internal expenses of
the Company (including, without limitation, all salaries and
expenses of its
officers and employees performing legal or accounting duties), (vi)
reasonable
fees and disbursements of counsel for the Company and customary
fees and
expenses for independent certified public accountants retained by
the Company
(including the expenses relating to any comfort letters or costs
associated with
the delivery by independent certified public accountants of any
comfort letters
requested pursuant to Section 2.4(h)), (vii) reasonable fees and
expenses of any
special experts retained by the Company in connection with such
registration,
(viii) reasonable fees and expenses of counsel for the
Shareholders
participating in the offering, (ix) fees and expenses in connection
with any
review by the NASD of the underwriting arrangements or other terms
of the
offering, and all fees and expenses of any "qualified independent
underwriter,"
including the fees and expenses of any counsel thereto, (x) fees
and
disbursements of underwriters customarily paid by issuers or
sellers of
securities, but excluding any underwriting fees, discounts and
commissions
attributable to the sale of Registrable Securities, (xi) costs of
printing and
producing any agreements among underwriters, underwriting
agreements, any "blue
sky" or legal investment memoranda and any selling agreements and
other
documents in connection with the offering, sale or delivery of the
Registrable
Securities, (xii) transfer agents' and registrars' fees and
expenses and the
fees and expenses of any other agent or trustee appointed in
connection with
such offering, (xiii) expenses relating to any analyst or investor
presentations
or any "road shows" undertaken in connection with the registration,
marketing or
selling of the Registrable Securities, (xiv) fees and expenses
payable in
connection with any ratings of the Registrable Securities,
including expenses
relating to any presentations to rating agencies and (xv) all
out-of-pocket
costs and expenses incurred by the Company or its appropriate
officers in
connection with their compliance with Section 2.4(m). Except as set
forth above,
Registration Expenses shall not include any out-of-pocket expenses
of the
Shareholders (or the agents who manage their accounts).
"Rule 144" means Rule 144 and Rule 144A (or any successor
provisions)
under the Securities Act.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended, of
the
United States of America and the rules and regulations promulgated
thereunder.
"Shareholder" means each Person (other than the Company) who shall
be
a party to this Agreement, whether in connection with the execution
and delivery
hereof as of the date hereof, pursuant
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to Section 4.1 or otherwise, so long as such Person shall
"beneficially own" (as
such term is defined in Rule 13d-3 of the Exchange Act) any Company
Securities.
"Sponsor" means, individually, Founder, GSCP V, New Mountain,
Vestar
and Merrill.
"Subscription Agreements" means, collectively, the subscription
agreements pursuant to which Shares of the Company were purchased
or otherwise
acquired and all substantially identical agreements dated as of
other dates.
"Subsidiary" means, with respect to any Person, any entity of
which
securities or other ownership interests having ordinary voting
power to elect a
majority of the board of directors or other persons performing
similar functions
are at the time directly or indirectly owned by such Person.
"Supermajority of the Qualified Sponsors" means not less than 80%
in
number (i.e., initially 4 out of 5) of the Qualified Sponsors.
"Transfer" means, with respect to any Company Securities, (i)
when
used as a verb, to sell, assign, dispose of, exchange or otherwise
transfer such
Company Securities or any participation or interest therein,
whether directly or
indirectly, or agree or commit to do any of the foregoing and (ii)
when used as
a noun, a direct or indirect sale, assignment, disposition,
exchange or other
transfer of such Company Securities or any participation or
interest therein or
any agreement or commitment to do any of the foregoing.
"U.S. GAAP" means United States generally accepted accounting
principles.
"Vestar" means, collectively, the group of funds affiliated
with
Vestar Capital Partners which are holders of Company
Securities.
"Voting Common Stock" means shares of voting common shares, par
value
$0.10 per share, of the Company and any shares into which such
shares may
thereafter be converted or changed.
"Warrants" mean any warrants to purchase Common Stock held by a
Shareholder.
(b) In addition, each of the following terms is defined in the
Section
set forth opposite such term:
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SECTION
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Black-Out Period
2.13
Company
Preamble
Confidential Information 3.3(b)
Damages
2.5
Demand Registration
2.1(a)
Indemnified Party
2.7
Indemnifying Party
2.7
Inspectors
2.4(g)
Maximum Offering Size 2.1(e)
Operating Company
Recitals
Partner Distribution
2.1(a)
Piggyback Registration 2.2(a)
Records
2.4(g)
Representatives
3.3(b)
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SECTION
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Requesting Shareholder 2.1(a)
Shares
Recitals
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ARTICLE II.
REGISTRATION RIGHTS
SECTION 2.1 Demand Registration.
(a) If, at any time following the earlier of 180 days after the
effective date of the registration statement for the First Public
Offering and
the expiration of the period during which the managing underwriters
for the
First Public Offering shall prohibit the Company from effecting any
other public
sale or distribution of Company Securities, the Company shall
receive a request
from a Major Investor (the "Requesting Shareholder") that the
Company effect the
registration under the Securities Act of all or any portion of such
Requesting
Shareholder's Registrable Securities, and specifying the intended
method of
disposition thereof, then the Company shall promptly give notice of
such
requested registration (each, a "Demand Registration") at least 15
Business Days
prior to the effective date of the registration statement relating
to such
Demand Registration to the other Shareholders holding Registrable
Securities and
thereupon shall use its commercially reasonable efforts to effect,
as
expeditiously as possible, subject to Section 2.1(e), the
registration under the
Securities Act of:
(i) all Registrable Securities for which the Requesting
Shareholder
has
requested registration under this Section 2.1, and
(ii) all other Registrable Securities that any other Shareholder
has
requested the Company to register by written request received by
the
Company within ten (10) Business Days after such Shareholder
receives the
Company's notice of the Demand Registration, all to the extent
necessary to
permit the disposition (in accordance with the intended methods
thereof as
aforesaid) of the Registrable Securities so to be registered;
provided that, other than any Demand Registration to be effected
pursuant to a
Registration Statement on Form F-3 or S-3, as applicable (or any
successor
thereto), for which an unlimited number of Demand Registrations
shall be
permitted, and subject to Section 2.1(d), the Company shall not be
obligated to
effect more than (i) four (4) Demand Registrations in the
aggregate, in the case
of the Qualified Sponsors, and (ii) two (2) Demand Registrations in
the
aggregate, in the case of all other Major Investors; provided,
further, that the
Company shall not be obligated to effect a Demand Registration
unless the
aggregate proceeds expected to be received from the sale of the
Registrable
Securities requested to be included in such Demand Registration
equals or
exceeds $35,000,000. For the avoidance of doubt, a Participating
Shareholder
shall not be deemed to have made a Demand Registration request
solely as a
result of participating in a registration statement effected
pursuant to a
Demand Registration of another Requesting Shareholder.
Notwithstanding anything contained herein to the contrary, the
Company
shall, at the request of any Major Investor seeking to effect a
distribution to,
and resale by, the members or partners of such Major Investor (a
"Partner
Distribution"), file at such Major Shareholder's cost and expense
any prospectus
supplement or post-effective amendments and otherwise take any
action reasonably
necessary to include therein all disclosure and language reasonably
deemed
necessary or advisable by such Shareholder if such disclosure or
language was
not included in the initial registration statement, or revise such
disclosure or
language if reasonably deemed necessary or advisable by such Major
Investor, to
disclose
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the Partner Distribution; provided that the Company shall not be
required to
take such action more than once a year with respect to any
Shareholder.
In no event shall the Company be required to effect more than
one
Demand Registration hereunder within any six month period.
(b) Promptly after the expiration of the 10 Business Day period
referred to in Section 2.1(a)(ii), the Company will notify all
Participating
Shareholders of the identities of the other Participating
Shareholders and the
number of shares of Registrable Securities requested to be included
therein. At
any time prior to the effective date of the registration statement
relating to
such registration, the Requesting Shareholder may revoke such
request, without
liability to any of the other Participating Shareholders, by
providing a notice
to the Company revoking such request. Subject to Section 2.1(d), a
request, so
revoked, shall be considered to be a Demand Registration unless (i)
such
revocation arose out of the fault of the Company (in which case the
Company
shall be obligated to pay all Registration Expenses in connection
with such
revoked request), (ii) after the date of the Demand Registration
request, the
Company postponed effecting the registration pursuant to clause (f)
below and
the Requesting Shareholder thereafter revoked such request (in
which case the
Company shall be obligated to pay all Registration Expenses in
connection with
such revoked request), or (iii) the Requesting Shareholder
reimburses the
Company for all Registration Expenses of such revoked request. The
Company
agrees to use commercially reasonable efforts to notify the
Participating
Shareholders if the price for any Company Securities to be
registered for sale
for the account of the Company is expected to occur outside of any
expected
pricing range disclosed to the Participating Shareholders; provided
that the
Company shall not have any such obligation with respect to any
registration
involving the registration of Company Securities only for the
account of parties
other than the Company.
(c) The Company shall be liable for and pay all Registration
Expenses
in connection with any Demand Registration, regardless of whether
such
Registration is effected, except as set forth in Section
2.1(b)(iii).
(d) A Demand Registration shall not be deemed to have occurred:
(i) unless the registration statement relating thereto has
become
effective under the Securities Act and has remained effective for a
period
of
at least 180 days (or such shorter period in which all
Registrable
Securities of the Participating Shareholders included in such
registration
have
actually been sold thereunder); provided that such registration
statement shall not be considered a Demand Registration if, after
such
registration statement becomes effective, (i) such registration
statement
is
interfered with by any stop order, injunction or other order or
requirement of the SEC or other governmental agency or court and
(ii) less
than
75% of the Registrable Securities of the Requesting Shareholder
sought
to
be included in such registration statement have been sold
thereunder; or
(ii) if the Maximum Offering Size is reduced in accordance with
Section 2.1(e) such that less than 75% of the Registrable
Securities of the
Requesting Shareholder sought to be included in such registration
are
included.
(e) If a Demand Registration involves an underwritten Public
Offering
and the managing underwriter advises the Company and the Requesting
Shareholder
that, in its view, the number of shares of Registrable Securities
requested to
be included in such registration (including any securities that the
Company
proposes to be included that are not Registrable Securities)
exceeds the largest
number of shares that can be sold without having an adverse effect
on such
offering, including the price at which
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such shares can be sold (the "Maximum Offering Size"), the Company
shall include
in such registration, in the priority listed below, up to the
Maximum Offering
Size:
(i) first, all Registrable Securities requested to be registered
by
the
Participating Shareholders (allocated, if necessary for the
offering
not
to exceed the Maximum Offering Size, pro rata among such entities
on
the
basis of the relative number of Registrable Securities owned by
the
Participating Shareholders), provided that no Shareholder who is
an
employee of the Company or its subsidiaries shall be entitled to
sell
pursuant to this Section 2.1 any Common Stock received pursuant to
an
employment agreement or a long term incentive plan approved by the
Board
until 180 days following the First Public Offering, and
(ii) second, any securities proposed to be registered by the
Company
or
any securities proposed to be registered for the account of any
other
Persons (including the Company), with such priorities among them as
the
Company shall determine.
(f) Upon notice to the Requesting Shareholder, the Company may
postpone effecting a registration pursuant to this Section 2.1 on
one occasion
during any period of six consecutive months for a reasonable time
specified in
the notice but not exceeding 90 days (which period may not be
extended or
renewed), if (i) Merrill Lynch, Pierce, Fenner & Smith
Incorporated or another
investment banking firm of recognized national standing shall
advise the Company
and the Requesting Shareholder in writing that effecting the
registration would
materially and adversely affect an offering of securities of the
Company the
preparation of which had then been commenced or (ii) the Company is
in
possession of material non-public information the disclosure of
which during the
period specified in such notice the Company reasonably believes
would not be in
the best interests of the Company.
SECTION 2.2 Piggyback Registration.
(a) Except in connection with any Demand Registration pursuant
to
Section 2.1 hereof, if the Company proposes, at any time after the
First Public
Offering, to register any Common Stock under the Securities Act
(other than a
registration on Form F-8 or F-4, or S-8 or S-4, as applicable, or
any successor
forms, relating to Shares issuable upon exercise of employee stock
options or in
connection with any employee benefit or similar plan of the Company
or in
connection with a direct or indirect acquisition by the Company of
another
Person), whether or not for sale for its own account, the Company
shall each
such time give prompt notice at least 15 Business Days prior to the
effective
date of the registration statement relating to such registration to
each
Shareholder, which notice shall set forth such Shareholder's rights
under this
Section 2.2 and shall offer such Shareholder the opportunity to
include in such
registration statement the number of shares of Common Stock as each
such
Shareholder may request (a "Piggyback Registration"), subject to
the provisions
of Section 2.2(b) (it being understood that the rights of each
Shareholder set
forth in this Section 2.2 shall also be applicable to the First
Public Offering
if the shares of any Shareholder are included in the First Public
Offering).
Upon the request of any such Shareholder made within 10 Business
Days after the
receipt of notice from the Company (which request shall specify the
number of
shares of Common Stock intended to be registered by such
Shareholder), the
Company shall use all reasonable efforts to effect the registration
under the
Securities Act of all Common Stock that the Company has been so
requested to
register by all such Shareholders, to the extent requisite to
permit the
disposition of the shares of Common Stock so to be registered;
provided that (i)
if such registration involves an underwritten Public Offering, all
such
Shareholders requesting to be included in the Company's
registration must sell
their Common Stock to the underwriters selected as provided in
Section 2.4(f) on
the same terms and conditions as apply to the Company or the
Shareholder
requesting such registration, as applicable, and (ii) if, at any
time after
giving notice of its intention to register any Common Stock
pursuant to this
Section 2.2(a) and prior to the effective date of the registration
statement
filed
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<PAGE>
in connection with such registration, the Company shall determine
for any reason
not to register such Common Stock, the Company shall give notice to
all such
Shareholders and, thereupon, shall be relieved of its obligation to
register any
Common Stock in connection with such registration. The Company
shall notify the
Participating Shareholders if the price for Common Stock to be
registered for
sale for the account of the Company is expected by the Company to
occur outside
of any previously publicly announced range; provided that the
Company shall not
have any such obligation with respect to any registration involving
the
registration of Common Stock only for the account of parties other
than the
Company. No registration effected under this Section 2.2 shall
relieve the
Company of its obligations to effect a Demand Registration to the
extent
required by Section 2.1. The Company shall pay all Registration
Expenses in
connection with each Piggyback Registration. For the avoidance of
doubt,
participation in a Piggyback Registration shall not in and of
itself be deemed
to be an exercise of a Shareholder's Demand Registration
rights.
(b) In any Piggyback Registration (other than any Demand
Registration,
in which case the provisions with respect to priority of inclusion
in such
offering set forth in Section 2.1(e) shall apply), if the Company
determines, or
if Merrill Lynch, Pierce, Fenner & Smith Incorporated or
another investment
banking firm of recognized national standing shall advise the
Company, that the
number of shares of Common Stock that the Company and such
Shareholders intend
to include in such registration exceeds the Maximum Offering Size,
the Company
shall include in such registration, in the following priority, up
to the Maximum
Offering Size:
(i) first, so much of the Common Stock proposed to be registered
for
the
account of the Company as would not cause the offering to exceed
the
Maximum Offering Size,
(ii) second, all Common Stock requested to be included in such
registration by any Shareholders pursuant to this Section 2.2
(allocated,
if
necessary for the offering not to exceed the Maximum Offering Size,
pro
rata
among such Shareholders on the basis of the relative number of
shares
of
Common Stock owned by such Shareholders), provided that no
Shareholder
who
is an employee of the Company or its subsidiaries shall be entitled
to
sell
pursuant to this Section 2.2 any Common Stock received pursuant to
an
employment agreement or a long term incentive plan approved by the
Board
until 180 days following the First Public Offering, and
(iii) third, any securities proposed to be registered for the
account
of
any other Persons with such priorities among them as the Company
shall
determine.
SECTION 2.3 Lock-Up Agreements.
In connection with any Public Offering, neither the Company nor
any
Shareholder shall effect any public sale or distribution of any
Company
Securities or other security of the Company (except as part of such
Public
Offering) during the period beginning 14 days prior to the
effective date of the
applicable registration statement until the earlier of (i) such
time as the
Company and the lead managing underwriter shall agree and (ii) 180
days in the
case of the First Public Offering and 90 days in the case of any
subsequent
Public Offering.
SECTION 2.4 Registration Procedures.
Whenever Shareholders request that any Registrable Securities
be
registered pursuant to Sections 2.1 or 2.2, subject to the
provisions of such
Sections, the Company shall use all reasonable efforts to effect
the
registration and the sale of such Registrable Securities in
accordance with the
intended method of disposition thereof as quickly as practicable,
and, in
connection with any such request:
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<PAGE>
(a) The Company shall as expeditiously as possible prepare and
file
with
the SEC a registration statement on any form for which the
Company
then
qualifies or that counsel for the Company shall deem appropriate
and
which form shall be available for the sale of the Registrable
Securities to
be
registered thereunder in accordance with the intended method of
distribution thereof (including Partner Distributions) (and if at
such time
the
Company is a "well known seasoned issuer" (within the meaning of
the
Securities Act), the Company shall file an automatic shelf
registration
(unless one is already filed and effective) for Shareholders to use
for the
sale
of their Registrable Securities) and use all reasonable efforts
to
cause such filed registration statement to become and remain
effective for
a
period of not less than 180 days, or in the case of a shelf
registration
statement, two years (or such shorter period in which all of
the
Registrable Securities of the Participating Shareholders included
in such
registration statement shall have actually been sold
thereunder).
(b) Prior to filing a registration statement or prospectus or
any
amendment or supplement thereto, the Company shall, if requested,
furnish
to
each Participating Shareholder and each underwriter, if any, of
the
Registrable Securities covered by such registration statement
