EXHIBIT 10.13
REGISTRATION RIGHTS AGREEMENT
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THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and effective
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as of February 25, 1999, by and among ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "Investor") and
United Payors & United Providers, Inc., a Delaware corporation (the "Company").
RECITALS
A. Upon the terms and subject to the conditions of a Purchase Agreement,
dated as of February 2, 1999 (the "Purchase Agreement"), by and among the
Investor and the Independent Divestment Trust (the "Trust"), the Investor has
agreed to purchase from the Trust shares of the common stock, $0.01 par value
("Common Stock"), of the Company ("Purchase Agreement").
B. Such Purchase Agreement used by the Investor is a prerequisite to the
Company's acquisition of a financial institution;
C. The Company considers this Agreement to be in the best interests of
the Company and its stockholders.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements of the parties contained herein, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties agree as
follows:
1. Definitions. As used herein, the terms below shall have the following
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meanings. Any such term, unless the context otherwise requires, may be used in
the singular or plural, depending upon the reference.
"Affiliate" shall have the meaning provided in the Exchange Act.
"Agreement" shall mean this Registration Rights Agreement.
"Closing Date" shall have the meaning provided in the Securities
Purchase Agreement dated as of February 2, 1999 by and between Capital Z
Financial Services Fund II, L.P. and the Investor.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Common Stock" shall have the meaning provided in Recital A.
"Common Stock Equivalents" means, without duplication with any other
Common Stock or Common Stock Equivalents, any warrants, options, convertible
securities or indebtedness, exchangeable securities or indebtedness, or other
rights exercisable for or convertible or exchangeable into, directly or
indirectly, Common Stock, whether at the time of issuance or upon the passage of
time or the occurrence of some future event.
"Company" shall mean United Payors & United Providers, Inc., a
Delaware corporation, and any successor thereto.
"Demand Registration" shall mean a registration effected pursuant to
Section 2(a).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor law, and the rules and regulations issued pursuant to
that Act or any successor law.
"Holder" shall mean any holder of Shares listed on the signature pages
hereof and any direct or indirect transferee of any such holder that becomes a
party hereto by executing and delivering a Registration Rights Agreement Joinder
in the form attached hereto as Exhibit A.
"Initiating Holders" shall have the meaning provided in Section 2(b).
"Investor" shall have the meaning provided in the preamble of this
Agreement.
"Person" shall mean an individual, partnership, limited liability
company, joint venture, corporation, trust or unincorporated organization or any
other similar entity.
"Register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document by the
Commission.
"Registrable Shares" shall mean (a) the Shares beneficially owned by
any Holder and (b) any shares of Common Stock or other securities of the Company
issued or distributed to a Holder with respect to, in exchange for or in
replacement of, any of the Shares; provided, however, that such shares of Common
Stock and other securities shall be treated as Registrable Shares only if and so
long as (i) they have not been sold by the Investor pursuant to an effective
Registration Statement under the Securities Act, (ii) they have not been sold to
the public in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof or pursuant to
Rule 144 under the Securities Act or any similar provision), or (iii) they may
not immediately be resold by a Holder pursuant to Rule 144 (k) under the
Securities Act without any volume limitation.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor law, and the rules and regulations issued pursuant to that Act or
any successor law.
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"Purchase Agreement" shall have the meaning provided in Recital A.
"Shares" shall mean 2,250,000 outstanding shares of Common Stock.
"Violation" shall have the meaning provided in Section 7(a).
2. Demand Registration.
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(a) General. If the Company shall receive, at any time after 365
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days after the Closing Date (subject to Section 10 of this Agreement), a
written request from Holders that the Company file a registration statement
under the Securities Act covering the registration of at least 750,000
Registrable Shares (adjusted for all stock splits or similar transactions),
then the Company shall, within ten (10) days of the receipt thereof, give
written notice of such request to all Holders and shall, subject to the
limitations of this Section 2 file a registration statement with respect to
that number of Registrable Shares specified in such written request (and
such Registrable Shares as may be specified in the written notice of any
other Holder delivered to the Company within twenty (20) days after the
date on which the Company mailed notice of the initiating written request
to such other Holder) within 90 days of its receipt of such written request
(the "Required Filing Date") and use all commercially reasonable efforts to
cause such registration statement to be declared effective by the
Commission as promptly thereafter as is practicable.
(b) Underwriters Cut-back. If the Holders initiating the
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registration request under Section 2(a) (the "Initiating Holders") intend
to distribute the Registrable Shares covered by their request by means of
an underwritten offering, they shall so advise the Company as a part of
their request made pursuant to Section 2(a), and the Company shall include
in the applicable registration statement such information with respect
thereto as may be required or advisable. The selection of the managing
underwriter of any underwritten offering under this Section 2 shall be made
by a majority in interest of the Initiating Holders, with the consent of
the Company (such consent not to be unreasonably withheld) . In the case of
an underwritten offering, the right of any Holder to include Registrable
Shares in the related registration shall be conditioned upon the inclusion
of such Holder's Registrable Shares in the underwritten offering (unless
otherwise mutually agreed by a majority in interest of the Initiating
Holders and such Holder). All Holders proposing to distribute their
securities through such underwritten offering shall (together with the
Company as provided in Section 4(e)) enter into an underwriting agreement
with customary terms with the underwriter or underwriters selected for such
underwritten offering. Notwithstanding any other provision of this
Agreement, if the managing underwriter advises the Initiating Holders that
marketing factors require or make advisable a limitation of the number of
shares to be included in the underwritten offering, then the Initiating
Holders shall so advise all other participating Holders, and the number of
Registrable Shares that may be included in the underwritten offering shall
be allocated among all participating Holders, including the Initiating
Holders, in proportion (as nearly as practicable) to the amount of
Registrable Shares owned by each
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Holder; provided, however, that the number of Registrable Shares to be
included in such underwritten offering shall not be reduced unless and
until all other securities shall have been excluded from the underwritten
offering.
(c) Limit on Demand Registrations. The Company is obligated to
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effect only two (2) Demand Registrations pursuant to Section 2 for an
aggregate of up to 2,250,000 shares of Common Stock (as adjusted for all
stock splits or similar transactions). For purposes of this Section 2(c),
no such registration shall be deemed a Demand Registration unless and until
the registration statement filed pursuant thereto has been declared
effective by the Commission.
(d) Deferral of Filing. The Company may defer the filing (but not
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the preparation) of any registration statement required by Section 2 for a
period of up to: (i) 45 days in the event that the Company or any of its
Subsidiaries is engaged in confidential negotiations or other confidential
business activities, disclosure of which would be required in such
registration statement (but would not be required if such registration
statement were not filed), and the Board of Directors of the Company
determines in good faith that such disclosure would be materially
detrimental to the Company and its stockholders or would have a material
adverse effect on any such confidential negotiations or other confidential
business activities, or (ii) 120 days in the event that the Board of
Directors of the Company determined to effect a registered underwritten
public offering of the Company's securities for the Company's account and
the Company takes substantial steps (including, but not limited to,
selecting a managing underwriter for such offering) and proceeds with
reasonable diligence to effect such offering; provided that if such
determination is made by the Board of Directors after receipt of a Demand
Registration request, the Board prior to such request shall have commenced
negotiations with an underwriter with respect to such offering; and
provided further, however, that during any period of 360 consecutive days,
Holders shall not be subject to deferrals pursuant to the Company's
exercise of deferral rights for a period of at least 180 consecutive days
(which deferral period shall coincide with the deferral period permitted
under Section 2(d) of that certain Registration Rights Agreement, dated the
date hereof, between the Company and CapZ Fund). A deferral of the filing
of a registration statement pursuant to this Section 2(d) shall be lifted,
and the requested registration statement shall be filed forthwith, if, in
the case of a deferral pursuant to clause (i) of the preceding sentence,
the negotiations or other activities are terminated or the transaction
contemplated by such negotiations or other activities are consummated, or,
in the case of a deferral pursuant to clause (ii) of the preceding
sentence, the proposed registration for the Company's account is abandoned.
In order to defer the filing of a registration statement pursuant to this
Section 2(d), the Company shall promptly (but in any event within 10 days),
upon determining to seek such deferral, deliver to each Initiating Holder a
certificate signed by an executive officer of the Company stating that the
Company is deferring such filing pursuant to this Section 2(d) and a
general statement of the reason for such deferral and an approximation of
the anticipated delay. Within 20 days after receiving such certificate, the
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holders of a majority in interest of the Registrable Shares held by the
Requesting Holders and for which registration was previously requested may
withdraw their request by giving notice to the Company. If withdrawn, the
such request shall be deemed not to have been made for all purposes of this
Agreement.
(e) Expenses of Demand Registration. All expenses of Demand
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Registrations shall be paid by the selling Holders; provided, however, that
if any securities other than the Shares are included in a Demand
Registration, any person on whose behalf such securities have been included
shall pay that percentage of the total expenses which equals the percentage
of the total proceeds received by such person, and the selling Holders
shall have no responsibility for any such expenses.
3. Piggy-Back Registration.
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(a) General. If at any time after 180 days after the Closing Date,
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the Company proposes to register (including for this purpose a registration
effected by the Company pursuant to Section 2 of this Agreement) any shares
of its Common Stock under the Securities Act in connection with the public
offering of such securities (other than a registration on Form S-4 or Form
S-8 (or any successor forms)), the Company shall, at such time, promptly
give each Holder written notice of such registration. Upon the written
request of each Holder given within fifteen (15) days after mailing of such
notice by the Company in accordance with Section 18 hereof, the Company
shall cause to be registered under the Securities Act all of the
Registrable Shares that each such Holder has requested to be registered,
subject to the underwriter cutback and other provisions of Section 3(b)
hereof.
(b) Underwriting Requirements. In connection with any underwritten
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offering, the Company shall not be required under this Section 3 to include
any Holder's Registrable Shares in such underwritten offering unless such
Holder shall have agreed in writing to the terms of the underwriting as
agreed upon among the Company and the underwriters selected by the
Company or by selling stockholders, as the case may be, and then only in
such quantity as the underwriters determine in their sole discretion will
not materially and adversely affect the distribution of securities to be
covered by such registration statement such determination to be confirmed
in writing upon the request of any Holder. If the total amount of
Registrable Shares requested by Holders to be included in such offering
pursuant to Section 3(a) exceeds the amount of securities that the
underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in
the offering only that number of Registrable Shares and shares of Common
Stock offered by other selling shareholders which the underwriters
determine in their sole discretion will not have a material adverse effect
on the offering (the securities so included to be apportioned among all
selling Holders and other selling shareholders pro rata according to the
total amount of shares of Common Stock proposed to the be sold by each
selling holder.
(c) Expenses of Company Registration. The Company shall bear and pay
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all expenses incurred in connection with any registration, filing,
qualification or sale of
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Registrable Shares pursuant to this Section 3, including (without
limitation) all registration, filing, and qualification fees, and printers'
fees, accounting fees and the fees and disbursements of counsel for the
Company relating or apportionable thereto, but excluding underwriting
discounts and commissions, stock transfer taxes and the fees and expenses
of separate counsel, if any, retained by the selling Holders.
4. Obligations of the Company. Whenever required under this Agreement
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to effect the registration of any Registrable Shares, the Company shall, as
expeditiously as reasonably possible, use reasonable commercial efforts to
do the following:
(a) Commission Filing. Prepare and file with the Commission
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a registration statement with respect to such Registrable Shares and
to cause such registration statement to become effective, and, upon
the request of the Holders of a majority of the Registrable Shares
registered thereunder, keep such registration statement effective for
up to 180 days or until all of the Shares registered thereunder are
sold, whichever occurs sooner.
(b) Amendments. Prepare and file with the Commission such
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amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may
be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such
registration statement, and furnish such copies thereof to the Holders
and any underwriters as they may reasonably request.
(c) Prospectus. Furnish to the Holders and any underwriters
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such numbers of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act,
and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Shares owned by them, and
cause all related filings to be made with the Commission as required
by Rule 424 under the Securities Act.
(d) Blue Sky Qualification. Register and qualify the
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Registrable Shares covered by such registration statement under such
other securities or Blue Sky laws of such jurisdictions as shall be
reasonably requested by the Holders and any underwriters; provided,
however, that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
(e) Underwriting Agreement. In the event of any underwritten
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public offering, enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with the managing
underwriter of such offering, including, without limitation,
delivering opinions of counsel and "comfort letters" of accountants.
Each Holder participating in such underwriting shall also
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enter into and perform its obligations under such an agreement.
(f) Prospectus Delivery. Promptly notify each Holder of
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Registrable Shares covered by the registration statement at any time
when the Company becomes aware of the happening of any event as a
result of which the registration statement or the prospectus included
in such registration statement or any supplement to the prospectus (as
then in effect) contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements
therein (in the case of the prospectus, in light of the circumstances
under which they were made) not misleading or, if for any other reason
it shall be necessary during such time period to amend or supplement
the registration statement or the prospectus in order to comply with
the Securities Act, whereupon, in either case, each Holder shall
immediately cease to use such registration statement or prospectus for
any purpose and, as promptly as practicable thereafter, the Company
shall prepare and file with the Commission, and furnish without charge
to the appropriate Holders and managing underwriters, if any, a
supplement or amendment to such registration statement or prospectus
which will correct such statement or omission or effect such
compliance and provide such copies thereof as the Holders and any
underwriters may reasonably request.
(g) Make generally available to the Company's
securityholders an earnings statement satisfying the provisions of
Section 11(a) of the Securities Act no later than 30 days after the
end of the 12-month period beginning with the first day of the
Company's first fiscal quarter commencing after the effective date of
a registration statement, which earnings statement shall cover said
12-month period, and which requirement will be deemed to be satisfied
if the Company timely files complete and accurate information on Forms
10-Q, 10-K and 8-K under the Exchange Act and otherwise complies with
Rule 158 under the Securities Act;
(h) If requested by the managing underwriter or any seller,
promptly incorporate in a prospectus supplement or post-effective
amendment such information as the managing underwriter or any seller
reasonably requests to be included therein, including, without
limitation, with respect to the Registrable Shares being sold by such
seller, the purchase price being paid therefor by the underwriters
and with respect to any other terms of the underwritten offering of
the Registrable Shares to be sold in such offering, and promptly make
all required filings of such prospectus supplement or post-effective
amendment;
(i) As promptly as practicable after filing with the
Commission of any document which is incorporated by reference into a
registration statement, deliver a copy of each such document (in the
form in which it was incorporated) to each seller;
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(j) Cooperate with the sellers and the managing underwriter
to facilitate the timely preparation and delivery of certificates
(which shall not bear any restrictive legends unless required under
applicable law) representing securities sold under any registration
statement, to enable such securities to be in such denominations and
registered in such names as the managing underwriter or such sellers
may request and to make available to the Company's transfer agent
prior to the effectiveness of such registration statement a
satisfactory supply of such certificates;
(k) Promptly make available for inspection by any seller,
any underwriter participating in any disposition pursuant to any
registration statement, and any attorney, accountant or other agent or
representative retained by any such seller or underwriter
(collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably necessary to
enable them to fulfill their due diligence responsibilities, and cause
the Company's officers, directors and employees to supply all
information requested by any such Inspector in connection with such
registration statement; provided, however, that unless the disclosure
of such Records is necessary to avoid or correct a misstatement or
omission in the registration statement or the release of such Records
is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, the Company shall not be required to provide
any information under this subparagraph (x) if (A) the Company's Board
of Directors determines in good faith, after consultation with counsel
for the Company, that to do so would cause the Company to forfeit an
attorney-client privilege that was applicable to such information or
(B) if either (1) the Company has requested and been granted from the
SEC confidential treatment of such information contained in any filing
with the SEC or documents provided supplementally or otherwise or (2)
the Company reasonably determines in good faith that such Records are
confidential and so notifies the Inspectors in writing unless prior to
furnishing any such information with respect to (A) and (B) such
Holder of Registrable Shares requesting such information agrees to
enter into a confidentiality agreement in customary form and subject
to customary exceptions; and provided further, however, that each
Holder of Registrable Shares agrees that it will, upon learning that
disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company at its
expense, to undertake appropriate action to prevent disclosure of the
Records deemed confidential;
(l) Furnish to each seller and underwriter a signed
counterpart of (A) an opinion or opinions of counsel to the Company
and (B) a comfort letter or comfort letters from the Company's
independent public accountants, each in customary form and covering
such matters as are customarily covered by such opinions or comfort
letters, as the case may be, as the sellers or managing underwriter
reasonably requests;
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(m) Cause the Registrable Shares included in any
registration statement to be (A) listed on each securities exchange,
if any, on which similar securities issued by the Company are then
listed, or (B) authorized to be quoted and/or listed (to the extent
applicable) on the National Association of Securities Dealers, Inc.
Automated Quotation System or the National Market System of Nasdaq
Stock Market if the Registrable Shares so qualify;
(n) Provide a CUSIP number for the Registrable Shares
included in any registration statement not later than the effective
date of such registration statement;
(o) Cooperate with each seller and each underwriter
participating in the disposition of such Registrable Shares and their
respective counsel in connection with any filings required to be made
with the National Association of Securities Dealers, Inc.;
(p) During the period when a prospectus is required to be
delivered under the Securities Act, promptly file all documents
required to be filed with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act;
(q) Notify each seller of Registrable Shares promptly of any
request by the Commission for the amending or supplementing of such
registration statement or prospectus or for additional information;
(r) Prepare and file with the Commission promptly any
amendments or supplements to such registration statement or prospectus
which, in the opinion of counsel for the Company or the managing
underwriter, is required in connection with the distribution of the
Registrable Shares;
(s) Enter into such agreements (including underwriting
agreements in the managing underwriter's customary form) as are
customary in connection with an underwritten offering;
(t) Advise each seller of such Registrable Shares, promptly
after it shall receive notice or obtain knowledge thereof, of the
issuance of any stop order issued by the Commission suspending the
effectiveness of such registration statement or the initiation or
threatening of any proceeding for such purpose and promptly use its
best efforts to prevent the issuance of any stop order or to obtain
its withdrawal at the earliest possible moment if such stop order
should be issued;
(u) Cooperate in a reasonable manner, considering among
other
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things operating responsibilities to the Company, with each seller and
each underwriter participating in the disposition of Registrable
Shares in connection with their selling efforts, including, without
limitation, by making its officers and employees reasonably available
for road show or other presentations; and
(v) Subsequent to the date hereof, not grant rights to more
than four (4) Demand Registrations to any Person in connection with
any transaction or series of related transactions, or Piggy-Back
Registration rights having a priority over the Piggy-Back Registration
rights granted under this Agreement.
5. Furnish Information. It shall be a condition precedent to the
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obligations of the Company to take any action pursuant to this Agreement
with respect to the Registrable Shares of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Shares held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such
Holder's Registrable Shares.
6. Delay of Registration. No Holder shall have any right to obtain or
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seek an injunction restraining or otherwise delaying any registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Agreement.
7. Indemnification. In the event (i) any Registrable Shares are
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included in a registration statement under this Agreement or (ii) any other
shares of Common Stock held by the Investor are included in any
registration statement:
(a) Indemnification by the Company. To the fullest extent
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permitted by law, the Company will indemnify and hold harmless each
Holder, each of its directors, officers, partners, employees,
advisors, agents and representatives, and each person, if any, who
controls such Holder within the meaning of the Securities Act or the
Exchange Act and any agent or investment advisor thereof, against any
and all losses, claims, damages, expenses (including, without
limitation, attorneys' fees and disbursements) and liabilities (joint
or several) to which they may become subject, insofar as such losses,
claims, damages, expenses (including, without limitation, attorneys'
fees and disbursements) and liabilities (or actions in respect
thereof) arise out of, relate to, result from or are based upon any of
the following (each a "Violation"): (i) any untrue statement or
alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final
prospectus contained therein, or any amendments or supplements
thereto, (ii) the 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 (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, or
any state securities law or any rule or regulation promulgated under
the Securities Act, the Exchange Act, or any state securities law, and
the Company
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will pay to each such Holder or other person, as incurred, any legal
or other expenses reasonably incurred by one law firm retained by
them, plus appropriate local counsel in connection with investigating
or defending any such loss, claim, damage, expense, liability, or
action; provided, however, that the indemnity agreement contained in
this Section 7(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, expense, liability, or action if such
settlement is effected without the consent of the Company, nor shall
the Company be liable in any such case for any such loss, claim,
damage, expense, liability, or action to which any Holder or other
indemnifiable person may become subject to the extent that it arises
out of or is based upon a Violation which occurs in reliance upon and
in conformity with written information furnished expressly for use in
connection with such registration by such Holder or other
indemnifiable person. This right to indemnification shall remain in
full force and effect notwithstanding any investigation made by or on
behalf of such Holder or other indemnifiable person and shall survive
the transfer of such securities by such Holder.
(b) Indemnification by Selling Holder. To the fullest extent
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permitted by law, each selling Holder severally, but not jointly, will
indemnify and hold harmless the Company, each of its directors, each
of its officers, partners, employees, advisors, agents and
representatives, who has signed the registration statement, each
person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act, and any agent or investment
advisor thereof, any other Holder selling securities registered in
such registration statement and any controlling person of any such
underwriter or other Holder against any and all losses, claims,
damages, expenses (including, without limitation, attorney's fees and
disbursements) and liabilities (joint or several) to which any of the
foregoing persons may become subject, insofar as such losses, claims,
damages, expenses (including, without limitation, attorney's fees and
disbursements) and liabilities (or actions in respect thereto) arise
out of, relate to, result from or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation
occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such
registration; provided, however, that the indemnity agreement
contained in this Section 7(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if
such settlement is effected without the consent of the Holder (which
consent shall not be unreasonably withheld); provided, further, that
in no event shall any indemnity under this Section 7 (b) exceed the
net proceeds from the offering received by such Holder.
(c) Procedures. Promptly after receipt by an indemnified party
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under this Section 7 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party
under this Section 7, deliver to the indemnifying party a written
notice of the commencement thereof in accordance with Section 18
hereof
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and the indemnifying party shall have the right to participate in,
and, to the extent the indemnifying party so desires, jointly with any
other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party (together with all other
indemnified parties which may be represented without conflict by one
counsel) shall have the right to retain one separate counsel (plus
appropriate local counsel), with the reasonable fees and expenses to
be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential differing interests
between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to
the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial in any material respect to its ability
to defend such action, shall to the extent prejudicial relieve such
indemnifying party of any liability to the indemnified party under
this Section 7, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may
have to any indemnified party otherwise than under this Section 7.
(d) Contribution. If the indemnification provided for in this
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Section 7 from the indemnifying party is unavailable to an indemnified
party hereunder in respect of any losses, claims, damages, liabilities
or expenses referred to therein, then the indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on
the one hand and the indemnified parties on the other in connection
with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified parties shall 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 to state a material fact, has been made by, or related to
information supplied by, such indemnifying party or indemnified
parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action;
provided, however, that in no event shall the liability of any selling
Holder hereunder be greater in amount than the difference between the
dollar amount of the proceeds received by such Holder upon the sale of
the Registrable Shares giving rise to such contribution obligation and
all amounts previously contributed by such Holder with respect to such
losses, claims, damages, liabilities and expenses. The amount paid or
payable to a party as a result of the losses, claims damages,
liabilities and expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party
in connection with any investigation or proceeding.
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The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
(e) Survival. The obligations of the Company and Holders under
---------
this Section 7 shall survive the completion of any offering of
Registrable Shares in a registration statement under this Agreement,
and otherwise.
8. Reports Under Exchange Act. With a view to making available
---------------------------
to the Holders the benefits of Rule 144 promulgated under the Securities
Act and any other rule or regulation of the Commission that may at any time
permit a Holder to sell securities of the Company to the public without
registration, the Company agrees to use commercially reasonable efforts to:
(a) make and keep public information available, as those terms are
defined in Rule 144;
(b) file with the Commission in a timely manner all reports and
other documents required to be filed by the Company under the Securities
Act and the Exchange Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Shares, promptly upon request (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144,
the Securities Act and the Exchange Act, (ii) a copy of the most recent
annual and/or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may
be reasonably requested in availing any Holder of any rule or regulation of
the Commission which permits the selling of any Registrable Shares without
registration.
9. "Market Stand-Off" Agreement. Each Holder hereby agrees that
-----------------------------
for a period of 180 days, or such shorter period required by the
underwriters, following the effective date of any registration effected
pursuant to Section 2, or if Holders participate in the sale of securities
effected pursuant to Section 3 hereof, such Holder, if requested by the
managing underwriter, shall not, directly or indirectly sell, offer to
sell, contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise transfer or dispose of (other
than to donees and Affiliates who agree to be similarly bound) any
securities of the Company held by it at any time during such period, except
shares of Common Stock included in such registration. In addition, each
Holder agrees, if applicable, to acknowledge the undertaking provided for
in this Section 9 by entering into customary written "lock-up" agreements
with the managers of the relevant underwriting. The requirements of this
Section 9 shall not apply to any Holder that (together with its
Affiliates), at the time of receipt of the referenced notice from the
Company, (i) beneficially owns less than 5% of the outstanding shares of
Common Stock, (ii) is not an Affiliate or an employee of the Company and
(iii) waives any further benefits of this Agreement for it or any
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subsequent assignee or transferee of its Registrable Shares.
In order to enforce the foregoing covenant, the Company may
impose stop transfer instructions with respect to the Registrable Shares of
each Holder (and the shares or securities of every other person subject to
the foregoing restriction) until the end of such period.
10. "Lock-up" Agreements. Each Holder agrees to enter into a
---------------------
customary written "lock-up" agreement with respect to the Registrable
Shares with the managers of any underwritten public offering by the Company
of shares of its equity securities for cash, which offering is completed on
or before August 31, 1999; provided, however, that the aggregate of such
"lock-up" period together with any deferral period pursuant to Section 2(d)
shall not exceed the deferral period permitted under Section 2(d).
11. Right of First Offer.
---------------------
(a) Notice of Proposed Transaction; Election. In the event that
-----------------------------------------
any Holder or any holder of Common Stock Equivalents or shares of common
stock received upon exercise of such Common Stock Equivalents who is a
direct or indirect transferee of the Investor (the "Selling Holder")
desires to effect a sale, within the meaning of Section 2(3) of the
Securities Act of 1933, as amended, of any or all of its shares of Common
Stock or any Common Stock Equivalents (collectively, the "Subject Shares"),
the Selling Holder shall first give written notice (a "Right of First Offer
Notice") of such desire to the Company setting forth the terms and
conditions of sale and the price at which the Selling Holder desires to
sell. The Company shall thereupon, within twenty (20) business days
following its receipt of the Right of First Offer Notice (the "Right of
First Offer Election Period"), notify the Selling Holder in writing of the
number, if any, of Subject Shares that the Company or its designee, as the
case may be, desires to subscribe to purchase (the "Right of First Offer
Subscription"). Failure to respond to the Selling Holder with regard to
the Right of First Offer Notice prior to the expiration of the Right of
First Offer Election Period shall be deemed to be an election not to
subscribe for any of the Subject Shares. If the Selling Holder satisfies
all of the foregoing conditions and the Company and its designees, as the
case may be, do not collectively subscribe for all of the Subject Shares,
then the Selling Holder may, upon the expiration of the Right of First
Offer Election Period, sell the Subject Shares not subscribed for by the
Company or its designees, as the case may be, to any other person at a
purchase price equal to or higher than the price set forth in the Right of
First Offer Notice; provided, however, that the Selling Holder shall again
become subject to the above restrictions on transfer if a definitive
agreement for the proposed transfer is not entered into within ninety (90)
days after the expiration of Right of First Offer Election Period. This
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Section 11(a) shall not apply to any Transfer by any Holder to any
Affiliate of such Holder.
(b) Procedure for Sale. If all the Subject Shares are subscribed
-------------------
for by the Company or its designees, as the case may be, the closing of the
purchase of the Subject Shares shall take place at the principal offices of
the Company no later than thirty (30) days after the date of the expiration
of the Right of First Offer Election Period (subject to the last sentence
of this Section 11(b)). At the closing, the Company or its designees, as
the case may be, will pay the purchase price for the Subject Shares to be
purchased by it to the Selling Holder by wire transfer of immediately
available funds upon the Selling Holder's delivery of valid certificates
evidencing the Subject Shares. Such certificates will be duly endorsed
(with signatures guaranteed, if appropriate) for transfer to the Company or
its designees, as the case may be, and upon delivery of such certificates
to the Company or its designees, as the case may be, the Selling Holder
will be deemed to represent and warrant to the Company or its designees, as
the case may be, that the Subject Shares are owned by the Selling Holder
free and clear of all liens, adverse claims and other encumbrances (other
than as provided in this Registration Rights Agreement), and that the
Selling Holder has all requisite power and authority to sell the Subject
Shares. The parties shall take all such actions as may be necessary to
comply as promptly as practicable with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, in connection with the sale of the
Subject Shares.
12. Amendment. This Agreement may be amended and the
----------
observance of any provision of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the Company and Holders of
at least sixty-six percent (66%) of the Registrable Shares. Any amendment
or waiver effected in accordance with this Section 12 shall be binding upon
each Holder, each transferee thereof and the Company.
13. Termination. The rights provided in this Agreement shall
------------
terminate on the tenth anniversary of the effective date of this Agreement.
14. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED,
--------------
INTERPRETED AND THE RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS THEREOF).
15. Counterparts. This Agreement may be executed in two or more
-------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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16. Titles and Subtitles. The titles and subtitles used in this
---------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
17. Negotiation of Agreement. Each of the parties acknowledges
-------------------------
that it has been represented by independent counsel of its choice
throughout all negotiations that have preceded the execution of this
Agreement and that it has executed the same with consent and upon the
advice of said independent counsel. Each party and its counsel cooperated
in the drafting and preparation of this Agreement and the documents
referred to herein, and any and all drafts relating thereto shall be deemed
the work product of the parties and may not be construed against any party
by reason of its preparation. Accordingly, any rule of law or any legal
decision that would require interpretation of any ambiguities in this
Agreement against the party that drafted it is of no application and is
hereby expressly waived. The provisions of this Agreement shall be
interpreted in a reasonable manner to effect the intentions of the parties
and this Agreement.
18. Notices. Any notice, request, instruction or other document
--------
to be given hereunder by any party hereto to another party hereto shall be
in writing, shall be deemed to have been duly given or delivered when
delivered personally or telecopied (receipt confirmed, with a copy sent by
reputable overnight courier), or one business day after delivery to a
reputable overnight courier, postage prepaid, to the address of the party
set forth below such party's signature on this Agreement or to such address
as the party to whom notice is to be given may provide in a written notice
to each of the other parties to this Agreement, a copy of which written
notice shall be on file with the Secretary of the Company.
19. Severability. If one or more provisions of this Agreement
-------------
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable
in accordance with its terms to the fullest extent permitted by law.
20. Further Assurances. Each of the parties shall, without
-------------------
further consideration, execute and deliver such additional documents and
take such other action as the other parties, or any of them, may reasonably
request to carry out the intent of this Agreement and the transactions
contemplated hereby.
21. Successors and Assigns. This Agreement shall be binding
-----------------------
upon, and all rights hereto shall inure to the benefit of, the parties
hereto, and their respective successors and assigns that execute and
deliver a Registration Rights Agreement Joinder in the form attached hereto
as Exhibit A.
22. Entire Agreement. This Agreement embodies the entire
-----------------
agreement and understanding of the parties hereto in respect of the actions
and transactions contemplated by this Agreement. There are no restrictions
promises, inducements, representations, warranties, covenants or
undertakings with regard to the registration of the Shares pursuant to the
Securities Act, other than those expressly set forth or referred to in this
Agreement.
-16-
23. Recapitalization, etc. The provisions of this Agreement
----------------------
(including any calculation of share ownership) shall apply, to the full
extent set forth herein with respect to the Registrable Shares, to any and
all shares of capital stock of the Company or any capital stock,
partnership units or, any other security evidencing ownership interests in
any successor or assign of the Company (whether by merger, consolidation,
sale of assets or otherwise) that may be issued in respect of, in exchange
for, or in substitution of the Registrable Shares by reason of any stock
dividend, split, combination, recapitalization, liquidation,
reclassification, merger, consolidation or otherwise.
-17-
UNITED PAYORS & UNITED PROVIDERS, INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: ____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Operating Officer
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Address:
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EXHIBIT A
REGISTRATION RIGHTS AGREEMENT JOINDER
-------------------------------------
The undersigned, a Bermuda exempt and limited partnership, joins in the
execution of that certain Registration Rights Agreement ("Agreement"), dated
February 25, 1999, by and between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and United Payors & United
Providers, Inc., a Delaware corporation, for the purpose of accepting the
benefits conferred, and assuming the obligations and liabilities imposed, upon
Holders (as such term is defined in the Agreement) pursuant to the terms of the
Agreement, with respect to 2,240,334 of the Shares (as such term is defined in
the Agreement).
CAPITAL Z FINANCIAL SERVICES
FUND II, L.P.
February 25, 1999 By: Capital Z Partners, L.P.,
___________________ its General Partner
Date
By: Capital Z Partners, Ltd.,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Chairman of the Board
-19-