EXHIBIT 10.12
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 Capital Z Financial Services Fund II,
L.P., a Bermuda limited partnership and exempted partnership (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 Securities Purchase
Agreement, dated as of February 2, 1999 (the "Securities Purchase Agreement"),
by and among Xxxxxx X. Xxxxx (the "Seller") and the Investor, the Investor has
agreed to purchase from the Seller an aggregate of 1,750,000 shares of the
common stock, $0.01 par value ("Common Stock"), of the Company (the "Purchase").
B. The Purchase facilitates an acquisition by the Seller of Common Stock,
which acquisition is a prerequisite to the Company's acquisition of a financial
institution;
C. The execution of this Agreement by the Company is a prerequisite to
the Purchase.
D. 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.
"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 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.
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"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.
"Securities Purchase Agreement" shall have the meaning provided in
Recital A.
"Shares" shall mean the shares of Common Stock agreed to be sold on
the Closing Date to the Investor pursuant to the Securities Purchase Agreement.
"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 180
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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
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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
Holder; provided, however, that the number of Registrable Shares to be
included in such underwritten offering shall not be reduced unless and
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until all other securities shall have been excluded from the underwritten
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offering.
(c) Limit on Demand Registrations. The Company is obligated to effect
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only two (2) Demand Registrations pursuant to Section 2 for an aggregate of
up to 1,750,000 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 the
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preparation) of any registration statement required by Section 2 for a
period of up to: (i) forty-five (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.
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
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receiving such certificate, the 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
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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 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
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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 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
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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;
(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
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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;
(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
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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 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 roadshow 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
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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 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
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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 withheld unreasonably); 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 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
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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.
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
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(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 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
-----------------------------------------
the Investor, 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
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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 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 Xxxx-Xxxxx-Xxxxxx 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.
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.
UNITED PAYORS & UNITED PROVIDERS, INC.
/s/ Xxxxxx X. Xxxxxx
By: ____________________________________
Xxxxxx X. Xxxxxx
President and Chief Operating Officer
Address:
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telecopier: (000) 000-0000
CAPITAL Z FINANCIAL SERVICES FUND II, L.P.
/s/ Xxxx X. Xxxxxx
By: _________________________________
Address:
c/o Capital Z Partners, Ltd.
One Chase Xxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
Xxxxx Xxxxxx
Telecopier: (000) 000-0000
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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 Capital Z Financial Services Fund II, L.P., a
Bermuda exempt and limited partnership, 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 Agreement, with
respect to 7,518 of the Shares (as such term is defined in the Agreement).
CAPITAL Z FINANCIAL SERVICES
PRIVATE 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/ Xxxx X. Xxxxxx
----------------------------
Name: Xxxx X. Xxxxxx
Title: Senior Vice President
-18-
