UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
UNIVERSAL AMERICAN FINANCIAL CORP.
(Name of Issuer)
Common Stock (par value $.01 per share)
(Title of Class of Securities)
913377107
(CUSIP Number)
Capital Z Partners, Ltd.
54 Thompson Street
New York, NY 10012
Attention: Mr. David A. Spuria
Tel. No. (212) 965-0800
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
July 30, 1999
(Date of Event which Requires Filing of
this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this statement because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 (the "Exchange Act") or otherwise subject to the liabilities of that
section of the Exchange Act but shall be subject to all other provisions of the
Exchange Act (however, see the Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 91337107 Page 2 of 20 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Capital Z Financial Services Fund II, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00 - Contributions from Partners
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bermuda
7 SOLE VOTING POWER
NUMBER OF 25,571,713
SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
25,571,713
WITH
10 SHARED DISPOSITIVE POWER
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,571,713
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
59.4%
14 TYPE OF REPORTING PERSON
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 91337107 Page 3 of 20 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Capital Z Financial Services Private Fund II, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00 - Contributions from Partners
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bermuda
7 SOLE VOTING POWER
NUMBER OF 135,839
SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
135,839
WITH
10 SHARED DISPOSITIVE POWER
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
135,839
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.3%
14 TYPE OF REPORTING PERSON
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 91337107 Page 4 of 20 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Capital Z Management, LLC
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS
Not applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF 436,508
SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
436,508
WITH
10 SHARED DISPOSITIVE POWER
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
436,508
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.0%
14 TYPE OF REPORTING PERSON
OO
<PAGE>
SCHEDULE 13D
CUSIP No. 91337107 Page 5 of 20 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Capital Z Partners, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO - Contributions from Partners
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bermuda
7 SOLE VOTING POWER
NUMBER OF
SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
25,707,552
BY EACH REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH
10 SHARED DISPOSITIVE POWER
25,707,552
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,707,552
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
59.7%
14 TYPE OF REPORTING PERSON
PN
(1) Solely in its capacity as the general partner of Capital Z Financial
Services Fund II, L.P. and Capital Z Financial Services Private Fund II,
L.P.
<PAGE>
SCHEDULE 13D
CUSIP No. 91337107 Page 6 of 20 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Capital Z Partners, Ltd.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO - Contributions from Partners
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bermuda
7 SOLE VOTING POWER
NUMBER OF
SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
25,707,552
BY EACH REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH
10 SHARED DISPOSITIVE POWER
25,707,552
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
25,707,552
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
59.7%
14 TYPE OF REPORTING PERSON
CO
(1) Solely in its capacity as the general partner of Capital Z Partners, L.P.,
which is the general partner of Capital Z Financial Services Fund II, L.P.
and Capital Z Financial Services Private Fund II, L.P.
<PAGE>
SCHEDULE 13D
CUSIP No. 91337107 Page 7 of 20 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Steven M. Gluckstern
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS
Not Applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
7 SOLE VOTING POWER
NUMBER OF
SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
26,144,060
BY EACH REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH
10 SHARED DISPOSITIVE POWER
26,144,060
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
26,144,060
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
60.7%
14 TYPE OF REPORTING PERSON
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 91337107 Page 8 of 20 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Robert A. Spass
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [ ]
(B) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS
Not Applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
7 SOLE VOTING POWER
NUMBER OF
SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
26,144,060
BY EACH REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH
10 SHARED DISPOSITIVE POWER
26,144,060
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
26,144,060
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
60.7%
14 TYPE OF REPORTING PERSON
PN
<PAGE>
SCHEDULE 13D
CUSIP No. 91337107 Page 9 of 20 Pages
ITEM 1. SECURITY AND ISSUER
This Statement on Schedule 13D relates to shares of common
stock, par value $.01 per share (the "Common Stock"), of Universal American
Financial Corp., a New York corporation (the "Company"). The address of the
principal executive offices of the Company is Six International Drive, Suite
190, Rye Brook, NY 10573.
ITEM 2. IDENTITY AND BACKGROUND
(a) This Statement on Schedule 13D is being filed by Capital Z
Financial Services Fund II, L.P., a Bermuda limited partnership ("Cap Z Fund
II"), Capital Z Financial Services Private Fund II, L.P., a Bermuda limited
partnership ("Cap Z Private Fund II"), Capital Z Management, LLC, a Delaware
limited liability company ("Cap Z Management"), Capital Z Partners, L.P., a
Bermuda limited partnership ("Cap Z L.P."), Capital Z Partners, Ltd., a Bermuda
exempt company ("Cap Z Ltd."), Steven M. Gluckstern and Robert A. Spass
(collectively, the "Reporting Persons").
(b) - (c)
CAP Z FUND II
Cap Z Fund II is a Bermuda limited partnership formed to
invest in securities of insurance, financial services and healthcare service
companies and other related businesses. Cap Z Fund II invests in parallel with
Cap Z Private Fund II. The principal business address of Cap Z Fund, which also
serves as its principal office, is 54 Thompson Street, New York, NY 10012.
Pursuant to Instruction C to Schedule 13D of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), information with respect to Cap Z L.P.,
the sole general partner of Cap Z Fund II, is set forth below.
CAP Z PRIVATE FUND II
Cap Z Private Fund II is a Bermuda limited partnership formed
to invest in securities of insurance, financial services and healthcare service
companies and other related businesses. Cap Z Private Fund II invests in
parallel with Cap Z Fund II. The principal business address of Cap Z Private
Fund II, which also serves as its principal office, is 54 Thompson Street, New
York, NY 10012. Pursuant to Instruction C to Schedule 13D of the Exchange Act,
information with respect to Cap Z L.P., the sole general partner of Cap Z
Private Fund II, is set forth below.
CAP Z L.P.
Cap Z L.P. is a Bermuda limited partnership, the principal
business of which is serving as the sole general partner of Capital Z Fund II
and Cap Z Private Fund, II. The principal address of Cap Z L.P., which also
serves as its principal office, is 54 Thompson Street, New York, NY 10012.
Pursuant to Instruction C to Schedule 13D of the Exchange Act, information with
respect to Cap Z Ltd., the sole general partner of Cap Z L.P., is set forth
below.
CAP Z LTD.
Cap Z Ltd. is a Bermuda exempt company, the principal business
of which is serving as the sole general partner of Cap Z L.P. The principal
address of Cap Z Ltd., which also serves as its principal office, is 54 Thompson
Street, New York, New York 10012. Pursuant to Instruction C to Schedule 13D of
the Exchange Act, the name, residence or business address, and present principal
occupation or employment of each director and executive officer of Cap Z Ltd.
are as follows:
<PAGE>
SCHEDULE 13D
CUSIP No. 91337107 Page 10 of 20 Pages
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR
NAME BUSINESS ADDRESS EMPLOYMENT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Steven M. Gluckstern 54 Thompson Street Chairman of the Boards of Directors of
New York, NY 10012 Cap Z Management and Cap Z Ltd.
Robert A. Spass 54 Thompson Street Deputy Chairman of the Boards of
New York, NY 10012 Directors of Cap Z Management and
Cap Z Ltd.
Laurence W. Cheng 54 Thompson Street President and Director of
New York, NY 10012 Capital Z Management and Cap Z Ltd.
Bradley E. Cooper 54 Thompson Street Senior Vice President and Director of
New York, NY 10012 Capital Z Management and Cap Z Ltd.
Mark K. Gormley 54 Thompson Street Senior Vice President and Director of
New York, NY 10012 Cap Z Management and Cap Z Ltd.
Adam M. Mizel 54 Thompson Street Senior Vice President and Director of
New York, NY 10012 Cap Z Management and Cap Z Ltd.
Paul H. Warren 54 Thompson Street Senior Vice President and Director of
New York, NY 10012 Cap Z Management and Cap Z Ltd.
Roland V. Bernardon 54 Thompson Street Chief Financial Officer and Treasurer
New York, NY 10012 of Capital Z Management and Cap Z
Ltd.
Scott M. Delman 54 Thompson Street Senior Vice President and Director of
New York, NY 10012 Cap Z Management and Cap Z Ltd.
David A. Spuria 54 Thompson Street General Counsel and Assistant
New York, NY 10012 Secretary of Cap Z Ltd. and General
Counsel and Secretary of Cap Z
Management
</TABLE>
CAP Z MANAGEMENT
Cap Z Management is a Delaware limited liability company, the
principal business of which is performing investment management services for Cap
Z Fund II, Cap Z Private Fund and their portfolio companies. The principal
business address of Cap Z Management, which also serves as its principal office,
is 54 Thompson Street, New York, NY 10012. Pursuant to Instruction C to Schedule
13D of the Exchange Act, a list of the Managing Directors of Cap Z Management is
included in the table above.
STEVEN M. GLUCKSTERN
Steven M. Gluckstern is a significant shareholder and serves
on the Board of Directors of Cap Z Ltd. and on such Board's Investment
Committee. Mr. Gluckstern also serves on the Board of Directors of Cap Z
Management and on such Board's Investment Committee that oversees investments in
Cap Z Fund II and Cap Z Private Fund II. As a member of the Investment
Committees of each of Cap Z Ltd. and Cap Z Management, Mr. Gluckstern may be
deemed the indirect beneficial owner of 26,144,060 shares of Common Stock. Mr.
Gluckstern disclaims any beneficial ownership of such shares. The business
address of Mr. Gluckstern is 54 Thompson Street, New York, New York 10012.
<PAGE>
SCHEDULE 13D
CUSIP No. 91337107 Page 11 of 20 Pages
ROBERT A. SPASS
Robert A. Spass is a significant shareholder and serves on the
Board of Directors of Cap Z Ltd. and on such Board's Investment Committee. Mr.
Spass also serves on the Board of Directors of Cap Z Management and on such
Board's Investment Committee that oversees investments in Cap Z Fund II and Cap
Z Private Fund II. As a member of the Investment Committees of each of Cap Z
Ltd. and Cap Z Management, Mr. Spass may be deemed the indirect beneficial owner
of 26,144,060 shares of Common Stock. Mr. Spass disclaims any beneficial
ownership of such shares. The business address of Mr. Spass is 54 Thompson
Street, New York, New York 10012.
(d) None of the entities or persons identified in this Item 2
has, during the last five years, been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors).
(e) None of the entities or persons identified in this Item 2
has, during the last five years, been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgement, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
(f) All of the natural persons identified in this Item 2 are
citizens of the United States of America, except for Laurence W. Cheng who is a
citizen of Canada.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
As more fully described in Item 6 below, on July 30, 1999 (i)
Cap Z Fund II purchased an aggregate of 25,571,713 shares of Common Stock for an
aggregate purchase price of $80,550,896, (ii) Cap Z Private Fund II purchased an
aggregate of 135,839 shares of Common Stock for an aggregate purchase price of
$427,893 and (iii) Cap Z Management received 436,508 shares of Common Stock,
representing $1,375,000 of the $5,000,000 transaction fee owed by the Company to
Cap Z Management. Cap Z Fund II and Cap Z Private Fund II used contributions
from their respective partners to fund such purchases.
ITEM 4. PURPOSE OF TRANSACTION
The Reporting Persons consummated the transactions described
herein for investment purposes, and acquired a controlling interest in the
Company.
The Reporting Persons intend to review continuously their
position in the Company. Depending upon future evaluations of the business
prospects of the Company and upon other developments, including, but not limited
to, general economic and business conditions and stock market conditions, the
Reporting Persons may retain or from time to time dispose of all or a portion of
their holdings, subject to any applicable legal and contractual restrictions on
their ability to do so.
In addition, the matters set forth in Item 6 below are
incorporated in this Item 4 by reference as if fully set forth herein.
Except as set forth in this Item 4 (including the matters
described in Item 6 below which are incorporated in this Item 4 by reference),
the Reporting Persons have no present plans or proposals that relate to or that
would result in any of the actions specified in clauses (a) through (j) of Item
4 of Schedule 13D of the Exchange Act.
<PAGE>
SCHEDULE 13D
CUSIP No. 91337107 Page 12 of 20 Pages
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a)
CAP Z FUND II AND CAP Z PRIVATE FUND II
Cap Z Fund II is the beneficial owner of 25,571,713 shares of
Common Stock, which based on calculations made in accordance with Rule 13d-3(d)
of the Exchange Act and there being 43,064,556 shares of Common Stock
outstanding (as represented by the Company to the Reporting Persons), represents
approximately 59.4% of the outstanding shares of Common Stock.
Cap Z Private Fund II is the beneficial owner of 135,839
shares of Common Stock, which, based on calculations made in accordance with
Rule 13d-3(d) of the Exchange Act and there being 43,064,556 shares of Common
Stock outstanding (as represented by the Company to the Reporting Persons),
represents approximately 0.3% of the outstanding shares of Common Stock.
Because Cap Z Fund II and Cap Z Private Fund invest in
parallel, they may be deemed to be a group for purposes of Rule 13d-3. Each of
Cap Z Fund II and Cap Z Private Fund II disclaims the existence of such a group
and disclaims beneficial ownership of any shares of Common Stock owned by the
other.
CAP Z L.P.
In its capacity as the sole general partner of Capital Z Fund
II and Cap Z Private Fund II, Cap Z L.P. may, pursuant to Rule 13d-3 of the
Exchange Act, be deemed to be the beneficial owner of 25,707,552 shares of
Common Stock, which, based on calculations made in accordance with Rule 13d-3(d)
of the Exchange Act and there being 43,064,556 shares of Common Stock
outstanding (as represented by the Company to the Reporting Persons), represents
approximately 59.7% of the outstanding shares of Common Stock.
CAP Z LTD.
In its capacity as the sole general partner of Capital Z L.P.,
Cap Z Ltd. may, pursuant to Rule 13d-3 of the Exchange Act, be deemed to be the
beneficial owner of 25,707,552 shares of Common Stock, which, based on
calculations made in accordance with Rule 13d-3(d) of the Exchange Act and there
being 43,064,556 shares of Common Stock outstanding (as represented by the
Company to the Reporting Persons), represents approximately 59.7% of the
outstanding shares of Common Stock.
CAPITAL Z MANAGEMENT
Capital Z Management is the beneficial owner of 436,508 shares
of Common Stock, which, based on calculations made in accordance with Rule
13d-3(d) of the Exchange Act and there being 43,064,556 shares of Common Stock
outstanding (as represented by the Company to the Reporting Persons), represents
approximately 1.0% of the outstanding shares of Common Stock.
STEVEN M. GLUCKSTERN
Mr. Gluckstern, in his capacity as a member of the Investment
Committees of the Boards of Directors of Cap Z Ltd. and Cap Z Management, may,
pursuant to Rule 13d-3 of the Exchange Act, be deemed to be the beneficial owner
of 26,144,060 shares of Common Stock, which based on calculations made in
accordance with Rule 13d-3(d) of the Exchange Act and there being 43,064,556
shares of Common Stock outstanding (as represented by the Company to the
Reporting Persons), represent approximately 60.7% of the outstanding shares of
Common Stock. Mr. Gluckstern disclaims beneficial ownership of such shares.
<PAGE>
SCHEDULE 13D
CUSIP No. 91337107 Page 13 of 20 Pages
ROBERT A. SPASS
Mr. Spass, in his capacity as a member of the Investment
Committees of the Boards of Directors of Cap Z Ltd. and Cap Z Management, may,
pursuant to Rule 13d-3 of the Exchange Act, be deemed to be the beneficial owner
of 26,144,060 shares of Common Stock, which based on calculations made in
accordance with Rule 13d-3(d) of the Exchange Act and there being 43,064,556
shares of Common Stock outstanding (as represented by the Company to the
Reporting Persons), represent approximately 60.7% of the outstanding shares of
Common Stock. Mr. Spass disclaims beneficial ownership of such shares.
(b)
Cap Z Fund II
1. Sole power to vote or to direct
the vote 25,571,713
2. Shared power to vote or to direct
the vote --
3. Sole power to dispose or to direct
the disposition 25,571,713
4. Shared power to dispose of or to
direct the disposition --
Cap Z Private Fund II
1. Sole power to vote or to direct
the vote 135,839
2. Shared power to vote or to direct
the vote --
3. Sole power to dispose or to direct
the disposition 135,839
4. Shared power to dispose of or to
direct the disposition --
Cap Z L.P.
1. Sole power to vote or to direct
the vote --
2. Shared power to vote or to direct
the vote 25,707,552
3. Sole power to dispose or to direct
the disposition --
<PAGE>
SCHEDULE 13D
CUSIP No. 91337107 Page 14 of 20 Pages
4. Shared power to dispose of or to
direct the disposition 25,707,552
Cap Z Ltd.
1. Sole power to vote or to direct
the vote --
2. Shared power to vote or to direct
the vote 25,707,552
3. Sole power to dispose or to direct
the disposition --
4. Shared power to dispose of or to
direct the disposition 25,707,552
Cap Z Management
1. Sole power to vote or to direct
the vote 436,508
2. Shared power to vote or to direct
the vote --
3. Sole power to dispose or to direct
the disposition 436,508
4. Shared power to dispose of or to
direct the disposition --
Steven M. Gluckstern
1. Sole power to vote or to direct
the vote --
2. Shared power to vote or to direct
the vote 26,144,060
3. Sole power to dispose or to direct
the disposition --
4. Shared power to dispose of or to
direct the disposition 26,144,060
<PAGE>
SCHEDULE 13D
CUSIP No. 91337107 Page 15 of 20 Pages
Robert A. Spass
1. Sole power to vote or to direct
the vote --
2. Shared power to vote or to direct
the vote 26,144,060
3. Sole power to dispose or to direct
the disposition --
4. Shared power to dispose of or to
direct the disposition 26,144,060
(c) Except as set forth herein, to the knowledge of the
Reporting Persons with respect to the other persons named in response to
paragraph (a), none of the persons named in response to paragraph (a) has
effected any transactions in shares of Common Stock during the past 60 days.
(d) Each of the Reporting Persons affirms that no person other
than the Reporting Persons has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the shares of
Common Stock owned by the Reporting Person.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE ISSUER
The matters set forth in Item 2 are incorporated in this Item
6 by reference as if fully set forth herein.
Share Purchase Agreement
Pursuant to the Share Purchase Agreement, dated as of December
31, 1998, between the Company and Cap Z Fund II, as amended by the Amendment,
dated July 2, 1999 (the "Share Purchase Agreement"), the Company issued and sold
to Cap Z Fund II and Cap Z Private Fund II an aggregate of 25,707,552 shares of
Common Stock for an aggregate purchase price of $80,978,789 (the "Share Purchase
Price"). The foregoing description of the Share Purchase Agreement is not, and
does not purport to be, complete and is qualified in its entirety by reference
to the Share Purchase Agreement, which is being incorporated herein by reference
to the Company's Proxy Statement pursuant to Section 14(A) of the Exchange Act,
filed with the Commission on July 12, 1999.
Shareholder Agreement
In connection with the closing of the transactions
contemplated by the Share Purchase Agreement, Cap Z Fund II, the Company and
certain other shareholders of the Company (the "Shareholders") entered into a
Shareholders Agreement, dated as of July 30, 1999 (the "Shareholders
Agreement").
Pursuant to Section 3.1 of the Shareholders Agreement, Cap Z
Fund II has been granted a right of first offer in connection with certain
transfers of Common Stock by the Shareholders. Such right of first offer is
subject to a number of conditions and limitations.
<PAGE>
SCHEDULE 13D
CUSIP No. 91337107 Page 16 of 20 Pages
Pursuant to Section 3.2 of the Shareholders Agreement, Cap Z
Fund II has been granted "tag along" rights in connection with certain transfers
of Common Stock by a Shareholder. Such "tag along" rights are subject to a
number of conditions and limitations.
Pursuant to Section 6.3 of the Stockholders Agreement, Cap Z
Fund II is entitled to designate four individuals (the "Cap Z Directors") as
members of the Board of Directors of the Company. The Company and the
Shareholders have agreed to take all actions necessary to ensure that the
certificate of incorporation and bylaws of the Company do not, at any time,
conflict in any respect with the provisions of the Shareholders Agreement.
Furthermore, provided that Cap Z Fund II continues to hold at least 10% of the
outstanding Common Stock, each committee of the Board of Directors will include
as a member at least one Cap Z Director. If at any time Cap Z Fund II owns
beneficially less than 50% of the outstanding Common Stock, then Cap Z Fund II
will have the right to designate a number of directors equal to such proportion
of the total number of directors as corresponds to the proportion of the
outstanding Common Stock then owned by Cap Z Fund II and its permitted
transferees (the "Cap Z Entities"). If at any time the Cap Z Entities own
beneficially less than 10% of the outstanding Common Stock, Cap Z Fund II will
not be entitled to designate a Cap Z Director.
The foregoing description of the Shareholders Agreement is
not, and does not purport to be, complete and is qualified in its entirety by
reference to the Shareholders Agreement, a copy of which is attached hereto as
Exhibit 7.1.
Registration Rights Agreement
In connection with the closing of the transactions
contemplated by the Share Purchase Agreement, the Company, Cap Z Fund II and
certain other shareholders of the Company entered into the Registration Rights
Agreement, dated as of July 30, 1999 (the "Registration Rights Agreement").
Pursuant to the Registration Rights Agreement, the Company has agreed to effect
four "demand" registrations at the request of Cap Z Fund II for the shares of
Common Stock owned by Cap Z Fund II and its affiliates (as adjusted for all
stock splits and similar transactions). Cap Z Fund II and its affiliates also
have certain piggyback registration rights in connection with registrations by
the Company under the Securities Act, the expenses of which are paid by the
Company. The foregoing description of the Registration Rights Agreement is not,
and does not purport to be, complete and is qualified in its entirety by
reference to the Registration Rights Agreement, a copy of which is attached
hereto as Exhibit 7.2.
<PAGE>
SCHEDULE 13D
CUSIP No. 91337107 Page 17 of 20 Pages
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 7.1 Shareholders' Agreement, dated July 30, 1999, among the
Company, Cap Z Fund and the other parties thereto.
Exhibit 7.2 Registration Rights Agreement, dated July 30, 1999, among the
Company, Cap Z Fund II and the other parties thereto.
Exhibit 7.3 Joint Filing Agreement, dated August 10, 1999 among Cap Z Fund
II, Cap Z Private Fund II, Cap Z Management, Cap Z L.P.,
Cap Z Ltd., Steven M. Gluckstern and Robert A. Spass
Incorporated by Share Purchase Agreement, dated December 31, 1998,
reference to between the Company and Cap Z Fund II, as amended by the
the Company's Amendment, dated July 2, 1999.
Proxy
Statement
pursuant
to Section 14(A)
of the
Exchange Act,
filed with the
Commission on
July 12, 1999
<PAGE>
Page 18 of 20 Pages
Signature
After reasonable inquiry and to the best of the knowledge and
belief of the undersigned, the undersigned hereby certifies that the information
set forth in this statement is true, complete and correct.
Dated: August 10, 1999
CAPITAL Z FINANCIAL SERVICES
FUND II, L.P., a Bermuda limited partnership
By: Capital Z Partners, L.P., a Bermuda limited
partnership, its General Partner
By: Capital Z Partners, Ltd., a Bermuda exempt
company, its General Partner
By:/s/ Robert A. Spass
----------------------
Name: Robert A. Spass
Title: Deputy Chairman of the Board
CAPITAL Z FINANCIAL SERVICES
PRIVATE FUND II, L.P., a Bermuda limited partnership
By: Capital Z Partners, L.P., a Bermuda limited
partnership, its General Partner
By: Capital Z Partners, Ltd., a Bermuda exempt
company, its General Partner
By:/s/ Robert A. Spass
----------------------
Name: Robert A. Spass
Title: Deputy Chairman of the Board
CAPITAL Z MANAGEMENT, LLC, a Delaware limited
liability company
By:/s/ Robert A. Spass
----------------------
Name: Robert A. Spass
Title: Deputy Chairman of the Board
<PAGE>
Page 19 of 20 Pages
CAPITAL Z PARTNERS, L.P.,
a Bermuda limited partnership
By: Capital Z Partners, Ltd., a Bermuda exempt
company, its General Partner
By:/s/ Robert A. Spass
----------------------
Name: Robert A. Spass
Title: Deputy Chairman of the Board
CAPITAL Z PARTNERS, LTD.,
a Bermuda exempt company
By:/s/ Robert A. Spass
----------------------
Name: Robert A. Spass
Title: Deputy Chairman of the Board
/s/ Steven M. Gluckstern
------------------------
Steven M. Gluckstern
/s/ Robert A. Spass
-------------------
Robert A. Spass
<PAGE>
Page 20 of 20 Pages
EXHIBIT INDEX
Exhibit No. Description
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 7.1 Shareholders' Agreement, dated July 30, 1999, among the
Company, Cap Z Fund and the other parties thereto.
Exhibit 7.2 Registration Rights Agreement, dated July 30, 1999, among the
Company, Cap Z Fund II and the other parties thereto.
Exhibit 7.3 Joint Filing Agreement, dated August 10, 1999 among Cap Z Fund
II, Cap Z Private Fund II, Cap Z Management, Cap Z L.P.,
Cap Z Ltd., Steven M. Gluckstern and Robert A. Spass
Incorporated by Share Purchase Agreement, dated December 31, 1998,
reference to between the Company and Cap Z Fund II, as amended by the
the Company's Amendment, dated July 2, 1999.
Proxy
Statement
pursuant
to Section 14(A)
of the
Exchange Act,
filed with the
Commission on
July 12, 1999
Exhibit 7.1
------------------------------
SHAREHOLDERS' AGREEMENT
among
UNIVERSAL AMERICAN FINANCIAL CORP.
and
THE SHAREHOLDERS NAMED HEREIN
------------------------------
Dated as of July 30, 1999
------------------------------
<PAGE>
TABLE OF CONTENTS
1. Definitions..........................................................1
2. Restrictions on Transfer of Shares...................................6
2.1 Limitation on Transfer....................................6
2.2 Permitted Transferees.....................................6
2.3 Barasch Transfers; Donations to Charity...................7
3. Right of First Offer, Tag Along and Bring Along......................7
3.1 Proposed Voluntary Transfer...............................7
3.1.1 First Offer........................................7
3.1.2 Notice.............................................7
3.1.3 Option Period......................................8
3.2 Tag Along.................................................8
3.2.1 Right to Participate...............................8
3.2.2 Exercise of Options................................9
3.3 Bring Along...............................................9
3.4 Sale to the Purchasing Eligible Shareholders.............10
3.5 Sale to Third Party Buyer................................10
3.6 Involuntary Transfers....................................11
3.6.1 Rights of First Offer upon Involuntary Transfer...11
3.6.2 Fair Market Value.................................11
3.6.3 Closing...........................................11
3.6.4 General...........................................12
4. Pledges and Other Encumbrances......................................12
5. All Transfers in Compliance with Law and Subject to this Agreement;
Substitution of Transferee..........................................12
6. Governance..........................................................13
6.1 General..................................................13
6.2 Shareholders' Actions....................................13
6.3 Election of Directors....................................13
6.4 Removal and Replacement..................................14
6.5 Adjustment of Board Representation.......................14
6.6 Board Committees.........................................15
6.7 Supermajority Approvals..................................15
6.8 Transactions with Affiliates.............................16
6.9 Reimbursement of Director Expenses.......................16
6.10 Liability Insurance......................................16
6.11 Limitation on Merger.....................................16
i
<PAGE>
7. Stock Certificate Legend............................................17
8. Other Agreements....................................................17
8.1 Financial Statements and Other Information...............17
8.2 Books and Records........................................18
9. Confidentiality.....................................................18
10. Specific Performance................................................18
11. Miscellaneous.......................................................19
11.1 Notices..................................................19
11.2 Amendment and Waiver.....................................21
11.3 Headings; Agreements.....................................21
11.4 Publicity................................................21
11.5 Severability.............................................21
11.6 Entire Agreement.........................................22
11.7 Term of Agreement........................................22
11.8 Assignment...............................................22
11.9 Counterparts.............................................22
11.10 Governing Law............................................22
11.11 Third Party Beneficiaries................................22
Schedule 1 Ownership of Shares
Schedule 6.8 Affiliate Transactions
Exhibit A Certificate of Incorporation
Exhibit B By-laws
ii
<PAGE>
SHAREHOLDERS' AGREEMENT
SHAREHOLDERS' AGREEMENT, dated as of July 30, 1999, among
Universal American Financial Corp., a New York corporation (the "Company"),
Capital Z Financial Services Fund II, L.P., a Bermuda limited partnership
("Capital Z"), Richard A. Barasch ("Barasch"), UAFC, L.P., a Delaware limited
partnership ("UAFCLP"), AAM Capital Partners ("AAM"), L.P. and Chase Equity
Associates, L.P. ("Chase" and, together with AAM and UAFCLP, the "AAM
Investors"), and the persons identified as "UA Shareholders" on Schedule I
hereto (the "UA Shareholders").
WHEREAS, the holders of the shares of Series C Convertible
Preferred Stock, par value $1.00 per share, of the Company (the "Series C
Preferred"), including the AAM Investors, Barasch and UAFCLP, have converted
their shares of Series C Preferred into shares of common stock, par value $0.01
per share (the "Common Stock") of the Company, pursuant to the terms of the
Series C Preferred;
WHEREAS, the AAM Investors have converted their shares of
Series D-1 Convertible Preferred Stock, par value $1.00 per share (the "Series
D-1 Preferred"), of the Company and shares of Series D-2 Convertible Preferred
Stock, par value $1.00 per share (the "Series D-2 Preferred"), of the Company,
pursuant to the terms of the Series D-1 Preferred and the Series D-2 Preferred;
WHEREAS, as of the date hereof, each of Capital Z, Barasch,
the AAM Investors and the UA Shareholders own the shares of Common Stock set
forth beside its name on Schedule I hereto; and
WHEREAS, the parties hereto wish to restrict the transfer of
the Shares (as hereinafter defined) and to provide for certain other rights and
obligations, on the terms and subject to the conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
agreements set forth herein, the adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the meanings set forth below:
"AAM Director" has the meaning assigned to such term in
Section 6.3.
"Affiliate" means, as to any Person, any other Person directly
or indirectly controlling, controlled by or under direct or indirect common
control with such Person. For the purposes of this definition, "control," when
used with respect to
<PAGE>
2
any Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise. The terms "controlling" and "controlled"
have meanings correlative to the foregoing.
"Barasch Directors" has the meaning assigned to such term in
Section 6.3.
"Board of Directors" means the Board of Directors of the
Company.
"Bona Fide Offer" has the meaning assigned to such term in
Section 3.1.2.
"Bring Along Notice" has the meaning assigned to such term in
Section 3.3.
"Bring Along Shareholders" has the meaning assigned to such
term in Section 3.3.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in the City of New York are authorized or
required by law or executive order to close.
"Capital Z Directors" has the meaning assigned to such term in
Section 6.3.
"Charter Documents" means the Certificate of Incorporation, as
amended, and By-laws, as amended, of the Company as in effect on the date
hereof. Copies of the Certificate of Incorporation, as amended, and By-laws, as
amended, are attached hereto as Exhibits A and B, respectively.
"Closing Date" has the meaning assigned to such term in
Section 3.4.
"Closing Price" shall mean, with respect to each share of
Common Stock for any day, (a) the last reported sale price regular way or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices regular way, in either case as reported on the principal national
securities exchange on which such Common Stock is listed or admitted for trading
or (b) if such Common Stock is not listed or admitted for trading on any
national securities exchange, the last reported sale price or, in case no such
sale takes place on such day, the average of the highest reported bid and the
lowest reported asked quotation for such Common Stock, in either case as
reported on NASDAQ or a similar service if NASDAQ is no longer reporting such
information.
<PAGE>
3
"Commission" means the Securities and Exchange Commission or
any similar agency then having jurisdiction to enforce the Securities Act.
"Common Stock" has the meaning assigned to such term in the
first "whereas" clause.
"Condition of the Company" means the assets, business,
properties, operations or financial condition of the Company and its
subsidiaries, taken as a whole.
"Contractual Obligations" means, as to any Person, any
obligations under any agreement, undertaking, contract, indenture, mortgage,
deed of trust or other instrument to which such Person is a party or by which it
or any of its property is bound or under any security issued by such Person.
"Current Market Price" shall mean, with respect to shares of
Common Stock on any date, the average of the daily Closing Prices per share of
Common Stock for the 10 consecutive trading days commencing 15 days before such
date.
"Eligible Shareholders" has the meaning assigned to such term
in Section 3.1.1.
"Excess Offered Securities" has the meaning assigned to such
term in Section 3.1.2.
"Family Members" has the meaning assigned to such term in
Section 2.2.
"First Offer" has the meaning assigned to such term in Section
3.1.1.
"First Offer Notice" has the meaning assigned to such term in
Section 3.1.2.
"GAAP" means generally accepted accounting principles in the
United States in effect from time to time.
"Governmental Authority" means the government of any nation,
state, city, locality or other political subdivision thereof, and an entity
exercising executive, legislative, judicial, regulatory or administrative
functions of any of the foregoing.
"Independent Director" has the meaning assigned to such term
in Section 6.3.
"Involuntary Transfer" means any involuntary transfer,
proceeding or action by or in which a Shareholder shall be deprived or divested
of any right, title or
<PAGE>
4
interest in or to any of the Shares, including, without limitation, any seizure
under levy of attachment or execution, any transfer in connection with
bankruptcy (whether pursuant to the filing of a voluntary or an involuntary
petition under the United States Bankruptcy Code of 1978, or any modifications
or revisions thereto) or other court proceeding to a debtor in possession,
trustee in bankruptcy or receiver or other officer or agency, any transfer to a
state or to a public officer or agency pursuant to any statute pertaining to
escheat or abandoned property, and any involuntary transfer pursuant to a final
decree of a court in a divorce action, but not including any transfer occurring
pursuant to a merger or consolidation of the Company or a transfer pursuant to
Section 3.3.
"Interested Director" has the meaning assigned to such term in
Section 6.8.
"Involuntary Transferee" has the meaning assigned to such term
in Section 3.6.1.
"Liens" has the meaning assigned to such term in Section 3.4.
"NASDAQ" means The Nasdaq Stock Market, Inc.
"NYBCL" means the Business Corporation Law of the State of New
York.
"Offered Shares" has the meaning assigned to such term in
Section 3.1.1.
"Option Period" has the meaning assigned to such term in
Section 3.1.3.
"Outstanding Common Stock" means all issued and outstanding
shares of Common Stock (including any capital stock into which the Common Stock
is reclassified or reconstituted) and all securities (including Contractual
Obligations) of the Company that are convertible into or exchangeable or
exercisable for shares of Common Stock (regardless of whether such securities
are at the time convertible, exchangeable or exercisable), assuming that such
securities have been converted, exchanged or exercised at the rate such
securities are (or would be, but for the lapse of time) so convertible,
exchangeable or exercisable.
"Participating Shareholders" has the meaning assigned to such
term in Section 3.2.1.
"Permitted Transferee" has the meaning assigned to such term
in Section 2.2.
<PAGE>
5
"Person" means any individual, corporation, limited liability
company, partnership, trust, incorporated or unincorporated association, joint
venture, joint stock company, Governmental Authority or other entity of any
kind, and shall include any successor (by merger or otherwise) of any such
entity.
"Pro Rata Amount" has the meaning assigned to such term in
Section 3.1.2.
"Registration Rights Agreement" means the Registration Rights
Agreement dated the date hereof, among the Company, Capital Z, Barasch, the Wand
Investors and the AAM Investors.
"Regulated Shareholder" means any Shareholder that is subject
to the provisions of Regulation Y of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Part 225 (or any successor to such Regulation).
"Regulatory Problem" means any set of facts or circumstances
wherein it has been asserted by any governmental regulatory agency (or a
Regulated Shareholder reasonably believes that there is a risk of such
assertion) that such Regulated Shareholder is not entitled to acquire, own, hold
or control, or exercise any significant right (including the right to vote) with
respect to any securities of the Company.
"Requirements of Law" means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule, regulation or determination
of an arbitrator or a court or other Governmental Authority, in each case (i)
applicable or binding upon such Person or any of its properties or to which such
Person or any of its properties is subject or (ii) pertaining to any or all of
the transactions contemplated herein.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Selling Shareholder" has the meaning assigned to such term in
Section 3.1.1.
"Shareholders" means, collectively or singularly, Capital Z,
Barasch, the Wand Investors, the AAM Investors and the UA Shareholders, and any
transferee who has agreed to be bound by the terms and conditions of this
Agreement in accordance
<PAGE>
6
with Section 5. For purposes of this Agreement, Shares owned by Barasch will be
deemed to include Shares owned of record by Barasch and his wife, Renee P.
Barasch, and Shares owned of record by the following trusts and other entities:
Richard A. Barasch C/F Benjamin P. Barasch UGMA NY
Richard A. Barasch C/F Emily P. Barasch UGMA NY
Tara Acquisition, LLC
Barasch Associates Limited Partnership (but only to the extent
such Shares are beneficially owned by Richard A. Barasch,
Renee P.
Barasch and NMRB Corp.)
"Shareholders' Meeting" has the meaning assigned to such term
in Section 6.1.
"Share Purchase Agreement" means the Share Purchase Agreement,
dated as of December 31, 1998 and amended on July 2, 1999, between the Company
and Capital Z.
"Shares" means, with respect to each Shareholder or all
Shareholders, all shares, whether now owned or hereafter acquired, of Common
Stock (including any capital stock into which the Common Stock is reclassified
or reconstituted) and all securities (including Contractual Obligations) of the
Company that are convertible into or exchangeable or exercisable for shares of
Common Stock (regardless of whether such securities are at the time convertible,
exchangeable or exercisable), in each case that are beneficially owned, directly
or indirectly, by such Shareholder or all Shareholders.
"Third Party Buyer" has the meaning assigned to such term in
Section 3.1.1.
"Third Party Sale" has the meaning assigned to such term in
Section 3.2.1.
"Transaction Agreements" means, collectively, this Agreement,
the Share Purchase Agreement and the Registration Rights Agreement.
"transfer" has the meaning assigned to such term in Section
2.1.
"Transferred Shares" has the meaning assigned to such term in
Section 3.6.1.
"Written Consent" has the meaning assigned to such term in
Section 6.1.
<PAGE>
7
2. Restrictions on Transfer of Shares.
2.1 Limitation on Transfer. During the term of this Agreement,
no Shareholder shall sell, give, assign, hypothecate, pledge, encumber, grant a
security interest in or otherwise dispose of (whether by operation of law or
otherwise) (each a "transfer") any Shares or any right, title or interest
therein or thereto, except for (i) transfers pursuant to a registered public
offering of Common Stock and (ii) transfers effected in accordance with the
other provisions of this Agreement. Any attempt to transfer any Shares or any
rights thereunder in violation of the preceding sentence shall be null and void
ab initio and the Company shall refuse to register any such transfer.
2.2 Permitted Transferees. (a) At any time, any Shareholder
may, without the consent of the other Shareholders but subject to Sections
2.2(b) and Article 5, transfer Shares (i) with respect to a Shareholder who is
an individual, to a member of such Shareholder's immediate family, which shall
include her or his parents, spouse or former spouse, siblings, children
(including sons-in-law, daughters- in-law and adopted children) or grandchildren
("Family Members"), or a trust, corporation or partnership, all of the
beneficial interests in which shall be held by such Shareholder or one or more
Family Members of such Shareholder; provided, however, that during the period
any such trust, corporation or partnership holds any right, title or interest in
any Shares, no Person other than such Shareholder or one or more Family Members
of such Shareholder may be or become beneficiaries, Shareholders or limited or
general partners thereof; (ii) with respect to a Shareholder that is not an
individual, to (A) any corporation, partnership or other entity which is an
Affiliate of such Shareholder or (B) any general or limited partners of such
Shareholder or Affiliate of such Shareholder (the Persons referred to in the
preceding clauses (i) and (ii) are herein each referred to as a "Permitted
Transferee").
(b) If any Shareholder desires to transfer all or any portion
of its, her or his Shares to a Permitted Transferee under this Section 2.2, such
Shareholder shall give notice to the Company (and the Company shall give notice
to the other Shareholders) of its, her or his intention to make such transfer
not less than 15 days prior to effecting such transfer, which notice shall state
the name and address of each Permitted Transferee to whom such transfer is
proposed and the number of Shares proposed to be transferred to such Permitted
Transferee.
2.3 Barasch Transfers; Donations to Charity. Notwithstanding
any provision of this Agreement to the contrary, from the date hereof through
the third anniversary of the date hereof, so long as Barasch is an employee of
the Company, neither Barasch nor any of his Permitted Transferees shall transfer
in any given year to any Person (other than Barasch or his Permitted
Transferees) more than 3.0% of the Shares owned by Barasch on the date hereof.
In addition, at any time after the date hereof, Barasch may transfer in any
given year up to 2.5% of the Shares owned by him on the date hereof to
charitable institutions.
<PAGE>
8
3. Right of First Offer, Tag Along and Bring Along.
3.1 Proposed Voluntary Transfer.
3.1.1 First Offer. If any Shareholder (a "Selling
Shareholder") desires to transfer all or any portion of its or his Shares (the
"Offered Shares") to any Person (other than a Permitted Transferee) (a "Third
Party Buyer," which term may include another Shareholder), such Selling
Shareholder shall first offer (the "First Offer") to sell the Offered Shares to
Barasch and Capital Z (the "Eligible Shareholders"); provided, however, that the
Selling Shareholder shall not be obligated to make such an offer (i) in
connection with the pledge or other encumbrance of Shares to a bank or other
financial institution pursuant to Article 4, or, in the case of Barasch, in
connection with a donation of Shares to a charitable institution pursuant to
Section 2.3, (ii) if the Selling Shareholder elects to deliver a Bring-Along
Notice (as defined below) pursuant to Section 3.3, or (iii) subject to Section
2.3, if the transfer of a Selling Shareholder of Offered Shares would involve
(A) the transfer of less than 1% of the Outstanding Common Stock or (B) when
aggregated with all transfers pursuant to this Section 3.1 by such Selling
Shareholder and its Permitted Transferees, the transfer of less than 2.5% of the
Outstanding Common Stock.
3.1.2 Notice. The Selling Shareholder shall send
written notice of the First Offer (the "First Offer Notice") to the Company and
the Eligible Shareholders, which First Offer Notice shall state that the Selling
Shareholder proposes to effect a transfer of its Shares, the number of Shares
proposed to be transferred, and the terms and conditions of the First Offer. If
the First Offer Notice is delivered by the Selling Shareholder in connection
with the receipt by the Selling Shareholder of a bona fide written offer to
purchase Shares from a Third Party Buyer (a "Bona Fide Offer"), the First Offer
Notice shall include a copy of such offer. Upon receipt of the First Offer
Notice, the Eligible Shareholders (including any Shareholder participating in a
Bona Fide Offer) shall be entitled to purchase all (but not less than all) of
the Offered Shares upon the terms and conditions set forth in the First Offer
Notice. Each Eligible Shareholder electing to purchase Offered Shares
(including, without limitation, Shares that the other Eligible Shareholders have
a right to purchase but do not purchase under this Section 3.1) shall be
entitled to purchase its Pro Rata Amount (as defined below) of the Offered
Shares. The "Pro Rata Amount" of any Eligible Shareholder electing to purchase
Offered Shares shall be the ratio of the total number of Shares that such
Eligible Shareholder then owns to the number of Shares that all Eligible
Shareholders that elect to purchase the Offered Shares then own (including such
Eligible Shareholder's Shares); provided, however, that if any Eligible
Shareholder does not fully subscribe for the number or amount of Offered Shares
it is entitled to purchase, then each other participating Eligible Shareholder
shall have the right to purchase that percentage of the Offered Shares not so
subscribed for (the "Excess Offered Securities"), determined by dividing (i) the
total number of Shares then owned by such fully participating Eligible
Shareholder by (ii) the total number of shares then owned by
<PAGE>
9
all fully participating Eligible Shareholders who elect to purchase the Excess
Offered Securities.
3.1.3 Option Period. The right of First Offer may
only be exercised by the Eligible Shareholders by delivery of written notice of
exercise to the Selling Shareholder (with a copy to the other Eligible
Shareholders) within 15 days after receipt of the First Offer Notice (the
"Option Period"). If any Eligible Shareholder shall fail to respond to the
Selling Shareholder within the Option Period, such failure shall be deemed to be
a waiver of its, her or his rights under Section 3.
3.2 Tag Along.
3.2.1 Right to Participate. If the sale or transfer
by a Selling Shareholder of Common Stock would, when aggregated with all prior
sales or transfers by such Selling Shareholder and its Permitted Transferees,
result in the sale of 25% or more of the Outstanding Common Stock, and the
Eligible Shareholders do not, during the Option Period, elect pursuant to
Section 3.1 to purchase all of the Offered Shares, then each Shareholder
(including any Shareholder that is the Selling Shareholder) shall have the
right, in connection with any transfer of the Offered Shares to a Third Party
Buyer within the time specified in Section 3.5 (the "Third Party Sale"), to sell
to such Third Party Buyer upon the terms set forth in the First Offer Notice
(including the amount of per Share consideration, subject to appropriate
adjustment in the case of warrants, options and other securities that are
convertible into or exchangeable or exercisable for shares of Common Stock that
have not yet been converted, exchanged or exercised), that number of Shares
equal to the product of (i) the Shares owned by such Shareholder multiplied by
(ii) a percentage calculated by dividing the aggregate number of Shares proposed
to be sold in the Third Party Sale by the total number of Shares owned by such
Shareholder and the other Shareholders (including the Shareholder that is a
Selling Shareholder) participating in the Third Party Sale (collectively, the
"Participating Shareholders"). If one or more Shareholders who have the right to
participate in the Third Party Sale elect not to include the number of Shares
which such Shareholders would be permitted to include in the Third Party Sale,
each Participating Shareholder may elect to sell in the Third Party Sale a
number of additional Shares owned by such Participating Shareholders equal to
such Participating Shareholder's pro rata portion of the number of such Shares
that are not included in the Third Party Sale, based on the relative number of
Shares then owned by each Participating Shareholder.
3.2.2 Exercise of Options. The option of an Eligible
Shareholder under Section 3.2.1 shall be exercisable by delivering written
notice of the exercise thereof, prior to the expiration of the tenth day after
the Option Period, to the Selling Shareholder with a copy to the Company and the
other Shareholders. Such notice shall state, as appropriate, (a) the number of
Shares held by such Shareholder, and (b) the number of Shares that such
Shareholder desires to sell pursuant to
<PAGE>
10
Section 3.2.1. The failure of a Shareholder to respond within ten (10) days
after the expiration of the Option Period to the Selling Shareholder shall be
deemed to be a waiver of its, her or his rights under Section 3.2.1.
3.3 Bring Along. If one or more Selling Shareholders that, in
the aggregate, own more than 51% of the Outstanding Common Stock (which Selling
Shareholders must include one or more Shareholders other than Capital Z and its
Permitted Transferees) receives a Bona Fide Offer from a Third Party Buyer to
purchase at least 50% of the Outstanding Common Stock, such Selling Shareholders
may send written notice (the "Bring Along Notice") to the other Shareholders
(the "Bring Along Shareholders") (with a copy to the Company) notifying them
that the other Shareholders will be required to transfer Shares in such sale or
other transaction. Upon delivery of the Bring Along Notice, each Bring Along
Shareholder shall be obligated to transfer in the transaction contemplated by
the Bring-Along Notice, the number of Shares determined in accordance with the
next sentence, on the same terms and conditions as the Selling Shareholders
(including the amount of per Share consideration, subject to appropriate
adjustment in the case of warrants, options and other securities that are
convertible into or exchangeable or exercisable for shares of Common Stock that
have not yet been converted, exchanged or exercised). Each Selling Shareholder
and Bring Along Shareholder shall sell in the transaction contemplated by the
Bring Along Notice that number of Shares equal to the product of (i) the number
of Shares to be sold to the Third Party Buyer multiplied by (ii) a percentage
calculated by dividing (x) the number of Shares owned by such Selling
Shareholder or Bring Along Shareholder, as the case may be, by (y) the total
number of Shares owned by all Selling Shareholders and Bring Along Shareholders.
Each such Shareholder shall (a) take all actions (including executing documents)
in connection with the consummation of the proposed transaction as may
reasonably be requested of it by the Selling Shareholders, and (b) appoint the
Selling Shareholders as its attorneys-in-fact to do the same on its behalf. If a
contract with respect to the transaction contemplated by the Bona Fide Offer has
not been entered into within 90 days of receipt of the Bring Along Notice, the
obligations of the Shareholders under this Section 3.3 shall terminate with
respect to the transaction specified in the Bring-Along Notice, and the Selling
Shareholders may not cause such Shareholders to sell pursuant to this Section
3.3 without again complying with all of the provisions of this Section 3.3.
Notwithstanding the foregoing, no Shareholder shall be required to transfer
Shares in a sale or other transaction contemplated in this Section 3.3 if the
price at which the Selling Shareholders propose to sell their Shares is below
the Fair Market Value (calculated in accordance with Section 3.6.2) of such
Shares; provided, that in no event shall the Selling Shareholders be obligated
to make the other Shareholders a First Offer.
3.4 Sale to the Purchasing Eligible Shareholders. The closing
of the purchase of Offered Shares subscribed to by the purchasing Eligible
Shareholders under Section 3.1 shall be held at the principal office of the
Company at 11:00 a.m., local
<PAGE>
11
time, on the 30th day following delivery of the First Offer Notice (the "Closing
Date") or at such other time and place as the parties to the transaction may
agree. Notwithstanding the foregoing, the Closing Date may be extended, at the
option of the Eligible Shareholders, for such reasonable period of time as shall
be necessary to obtain requisite governmental or regulatory approvals in respect
of such purchase and sale, including the expiration of any applicable waiting
period under the Hart-Scott- Rodino Antitrust Improvements Act, as amended, or
any other applicable governmental or regulatory provision limiting or regulating
investments in any equities; provided, however, such extension shall not exceed
30 days. At such closing, the Selling Shareholders shall deliver to the
purchasing Eligible Shareholders certificates representing the Offered Shares,
duly endorsed with a signature guarantee for transfer and accompanied by all
requisite transfer taxes, if any, and such Offered Shares shall be free and
clear of any liens, claims, options, charges, encumbrances or rights ("Liens")
(other than those arising hereunder), and the Selling Shareholders shall so
represent and warrant, and each shall further represent and warrant that it is
the bene ficial and record owner of such Offered Shares. Each purchasing
Eligible Shareholder shall, at the closing, deliver to the Selling Shareholders
payment in full in immediately available funds for the Offered Shares purchased
by it. At such closing, all of the parties to the transaction shall execute such
additional documents as are otherwise necessary or appropriate.
3.5 Sale to Third Party Buyer. Unless the Eligible
Shareholders elect to purchase all of the Offered Shares pursuant to Section
3.1, (i) each Selling Shareholder may sell its or his Offered Shares or (ii) if
Section 3.2 applies, all Participating Shareholders may sell such portions of
their Shares as can be sold under Section 3.2.1, in either case (i) or (ii), to
the Third Party Buyer upon the terms and conditions stated in the First Offer
Notice; provided, however, that such sale is bona fide and made prior to or
within 60 days after the proposed Closing Date. Notwithstanding the foregoing,
the Closing Date may be extended, at the option of the Selling Shareholder, for
such reasonable period of time as shall be necessary to obtain requisite
governmental or regulatory approvals in respect of such purchase and sale,
including the expiration of any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act, as amended, or any other
applicable governmental or regulatory provision limiting or regulating
investments in any equities; provided, however, such extension shall not exceed
60 days. If such sale is not consummated prior to or on the Closing Date
(extended as provided above, if applicable) for any reason, then the
restrictions provided for herein shall again become effective, and no transfer
of such Offered Shares may be made thereafter (other than to a Permitted
Transferee) by the Selling Shareholders without again offering the same to the
Eligible Shareholders in accordance with this Section 3.
<PAGE>
12
3.6 Involuntary Transfers.
3.6.1 Rights of First Offer upon Involuntary
Transfer. If an Involuntary Transfer of any Shares (the "Transferred Shares")
owned by any of the Shareholders shall occur, the Eligible Shareholders shall
have the same rights as specified in Section 3.1 with respect to such
Transferred Shares as if the Involuntary Transfer had been a proposed voluntary
transfer by a Selling Shareholder, except that (a) the Option Period shall be a
period of 15 days from the date of receipt by the Company and the Eligible
Shareholders of notice of the Involuntary Transfer, (b) the Closing Date shall
be 90 days after the expiration of the Option Period, (c) such rights shall be
exercised by notice to the transferee of such Transferred Shares (the
"Involuntary Transferee") rather than to the Shareholder who suffered or will
suffer the Involuntary Transfer and (d) the purchase price per Transferred Share
shall be agreed to between the Involuntary Transferee and the purchasing
Eligible Shareholders; provided, however, that if such parties fail to agree as
to such purchase price, the purchase price shall be the fair market value
thereof as determined in accordance with Section 3.6.2.
3.6.2 Fair Market Value. If the Common Stock is
listed or admitted for trading on any national securities exchange or quoted on
NASDAQ or a similar service, the fair market value of the Transferred Shares
shall be the Current Market Price. If the Common Stock is not listed or admitted
for trading on any national securities exchange or quoted on NASDAQ or a similar
service, the fair market value of the Transferred Shares shall be determined in
accordance with the remaining provisions of this Section 3.6.2 by a panel of
three independent appraisers, which shall be recognized investment banking firms
or recognized experts experienced in the valuation of corporations. Within 15
days after the notice to the Involuntary Transferee with respect to the exercise
of the right to purchase the Transferred Shares, the Involuntary Transferee and
the Board of Directors of the Company shall each designate one such appraiser
that is willing and able to conduct such determination. If either the
Involuntary Transferee or the Board of Directors fails to make such designation
within such period, the other party that has made the designation shall have the
right to make the designation on its behalf. The two appraisers designated
shall, within a period of 15 days after the designation of the second appraiser,
agree to designate a third appraiser. The three appraisers shall conduct their
determination as promptly as practicable, and the fair market value of the
Transferred Shares shall be the average of the determination of the two
appraisers that are closer to each other than to the determination of the third
appraiser, which third determination shall be discarded. Such determination
shall be final and binding on the Involuntary Transferee and the purchasing
Eligible Shareholders.
3.6.3 Closing. The closing of any purchase under this
Section 3.6 shall be held at the principal office of the Company at 11:00 a.m.,
local time, on the Closing Date or at such other time and place as the parties
to the
<PAGE>
13
transaction may agree. At such closing, the Involuntary Transferee shall deliver
to the purchasing Eligible Shareholders certificates, if applicable, or other
instruments or documents representing the Transferred Shares being purchased
under this Section 3.6, duly endorsed with a signature guarantee for transfer
and such Transferred Shares shall be free and clear of any Lien arising through
the action or inaction of the Involuntary Transferee. Each purchasing Eligible
Shareholder shall deliver to the Selling Shareholder at the closing payment in
full in immediately available funds for such Transferred Shares. At such
closing, all of the parties to the transaction shall execute such additional
documents as are otherwise necessary or appropriate.
3.6.4 General. In the event that the provisions of
this Section 3.6 shall be held to be unenforceable with respect to any
particular Involuntary Transfer, the Eligible Shareholders shall have the rights
specified in Section 3.1 with respect to any transfer by an Involuntary
Transferee subject to a Bona Fide Offer from a Third Party Buyer for such
Shares, and each Shareholder agrees that any Involuntary Transfer shall be
subject to such rights, in which case the Involuntary Transferee shall be deemed
to be the Selling Shareholder for purposes of Section 3.1 of this Agreement and
shall be bound by the provisions of Section 3.1 and the other provisions of this
Agreement, except that the requirement for the absence of Liens and giving of
representations shall be limited to those required by an Involuntary Transferee
under Section 3.6.3.
4. Pledges and Other Encumbrances. No Shareholder shall hypothecate,
pledge, grant a security interest in or otherwise encumber any of its Shares
unless (i) such Shareholder shall give notice to the Company and the other
Shareholders of its intention to encumber its Shares not less than 15 days prior
to effecting such transaction, which notice shall state the name and address of
the proposed pledgee or other beneficiary (which shall be a bank or other
financial institution acceptable to the Company) and the number of Shares
proposed to be encumbered; and (ii) the proposed pledgee or other beneficiary
shall execute an agreement acknowledging its familiarity with the terms of this
Agreement and agreeing to be bound by the terms hereof in the event of any sale,
by or following foreclosure or otherwise, of such Shares, or in the event of any
proposal or waiver that would permit the retention of such Shares in
satisfaction of the secured obligation, or in the event of any exercise of any
rights (including voting rights) of such Shares, by such pledgee or other
beneficiary.
5. All Transfers in Compliance with Law and Subject to this Agreement;
Substitution of Transferee. Notwithstanding any other provision of this
Agreement, no transfer may be made under Section 2.2, and no transfer of 5% or
more of the Outstanding Common Stock may be made pursuant to Section 3 to a
Third Party Buyer in a privately negotiated transaction, unless each transferee
of Shares has agreed in writing to be bound by the terms and conditions of this
Agreement to the same extent and in the same manner as the Shareholder
transferring such Shares. All transfers of Shares shall comply in all respects
with the applicable provisions of this Agreement and
<PAGE>
14
with applicable federal and state securities laws including, without limitation,
the Securities Act. Upon becoming a party to this Agreement, a transferee shall
enjoy the same rights and be subject to the same obligations as its predecessor
hereunder, except that the rights of such Shareholder under Section 6 are not
transferable except as specifically provided in Section 6.3.
6. Governance.
6.1 General. From and after the execution of this Agreement,
each Shareholder shall vote its Shares, at any regular or special meeting of
Shareholders of the Company (each a "Shareholders' Meeting"), or in any written
consent executed in lieu of such a meeting of Shareholders (a "Written
Consent"), and shall take all other actions necessary to give effect to the
agreements contained in this Agreement and to ensure that the Charter Documents
do not at any time hereafter conflict in any respect with the provisions of this
Agreement. In addition, each Shareholder shall vote its Shares at any
Shareholders' Meeting, or act by Written Consent with respect to such Shares,
upon any matter submitted for action by the Company's Shareholders, or with
respect to which such Shareholder may vote or act by Written Consent, in
conformity with the specific terms and provisions of this Agreement and the
Charter Documents.
6.2 Shareholders' Actions. In order to effectuate the
provisions of this Section 6, each Shareholder hereby agrees that, when any
action or vote is required to be taken by such Shareholder pursuant to this
Agreement, such Shareholder shall use its reasonable best efforts to call, or
cause the appropriate officers and directors of the Company to call, a
Shareholders' Meeting or to execute or cause to be executed a Written Consent
pursuant to Section 615 of the NYBCL to effectuate such Shareholder action.
Further, each Shareholder shall use its reasonable best efforts to cause the
Board of Directors to adopt, either at a meeting of the Board of Directors or by
unanimous written consent of the Board of Directors pursuant to Section 708 of
the NYBCL, all the resolutions necessary to effectuate the provisions of this
Agreement.
6.3 Election of Directors. Each Shareholder shall vote its
Shares at any Shareholders' Meeting, or act by Written Consent with respect to
such Shares, and take all other actions necessary to ensure that the number of
directors constituting the entire Board of Directors shall be 9, as provided for
below. Subject to Section 6.5, each Shareholder shall vote its Shares at any
Shareholders' Meeting called for the purpose of filling the positions on the
Board of Directors, or in any Written Consent executed for such purpose, in
favor of the election to the Board of Directors of the following individuals:
(a) four individuals, who shall be designated by
Capital Z (the "Capital Z Directors");
<PAGE>
15
(b) two individuals, who shall satisfy the criteria
for treatment as an "independent director" under the rules of any stock exchange
on which securities of the Company are listed (including NASDAQ), who shall be
designated by the Company (the "Independent Director");
(c) two individuals, who shall be designated by
Richard Barasch (the "Barasch Directors");
(d) one individual, who shall be designated jointly
by the AAM Investors (the "AAM Director").
On the date hereof, the Capital Z Directors shall be Robert Spass, Bradley
Cooper, Susan Fleming and one additional director to be designated by Capital Z,
the Independent Directors shall be Robert Wright and Pat McLaughlin, the Barasch
Directors shall be Richard Barasch and Judge Bertram Harnett and the AAM
Director shall be Richard Veed.
The rights of the Shareholders to designate directors pursuant to this Section
6.3 are not transferable except to Permitted Transferees; provided, however,
that Capital Z and its Permitted Transferees may assign the right to designate
one or more Capital Z Directors to any Third Party Buyer which acquires from
Capital Z or its Permitted Transferees in one or more privately negotiated
transactions Shares representing 10% or more of the Outstanding Common Stock.
6.4 Removal and Replacement. Any Shareholder that nominated a
director pursuant to Section 6.3 shall be entitled at any time and for any
reason (or for no reason), by notice to the other Shareholders and the Company,
to designate such director for removal. Upon delivery of any such notice, each
Shareholder shall, as soon as practicable thereafter and in any event prior to
the transaction of any other business by the Shareholders or the Board of
Directors, use its reasonable best efforts to cause the Board of Directors (or,
if a Shareholder vote is required pursuant to Section 706 of the NYBCL, vote its
Shares (including by Written Consent)), to remove such Director designated for
removal, and to elect a director or directors designated to fill the resulting
vacancy or vacancies, in the manner contemplated by Section 6.3. If, at any
time, a vacancy is created on the Board of Directors by reason of the death or
resignation of any Capital Z Director, the Independent Director, either Barasch
Director, the Wand Director or the AAM Director, each Shareholder shall use its
reasonable best efforts to cause the Board of Directors, as soon as practicable
thereafter and in any event prior to the transaction of business by the Board of
Directors in respect of any matter requiring supermajority or special approval
pursuant to Section 6.7 or 6.8, to vote to elect to the Board of Directors the
individual designated to fill such vacancy in the manner contemplated by Section
6.3.
<PAGE>
16
6.5 Adjustment of Board Representation. The composition of the
Board of Directors described in Section 6.3 shall be subject to adjustment as
follows:
(a) If Capital Z and its Permitted Transferees cease
to own 50% or more of the Outstanding Common Stock, then Capital Z and its
Permitted Transferees collectively will have the right to designate a number of
directors equal to such proportion of the total number of directors as
corresponds to the proportion of the Outstanding Common Stock then owned by
Capital Z and its Permitted Transferees, subject to clause (c) below.
(b) Barasch shall continue to have the right to
designate two directors for so long (but only for so long) as he continues to
serve as President and Chief Executive Officer of the Company.
(c) From and after the date that any Shareholder
(together with its Permitted Transferees) does not own 10% of the Outstanding
Common Stock, such Shareholder shall no longer be entitled to designate any
directors; provided, however, that (i) if Barasch no longer serves as President
and Chief Executive Officer of the Company, he shall nevertheless continue to be
entitled to designate one director for so long as he owns (together with his
Permitted Transferees) at least 75% of the Shares owned by him on the date
hereof and (ii) the AAM Investors (and their Permitted Transferees) shall
continue to have the right to designate one director for so long as the AAM
Investors and their Permitted Transferees continue to own at least 90% of the
Shares owned by them on the date hereof.
6.6 Board Committees. The Shareholders shall cause the Company
to maintain in the By-laws of the Company a provision requiring the Board of
Directors to have an audit committee and a compensation committee. If Capital Z
continues to hold at least 10% of the Outstanding Common Stock, Capital Z shall
be entitled to appoint a member of all board committees. Each Shareholder agrees
that it will not take, cause to be taken or approve any action (including, but
not limited to, any amendment of the Certificate of Incorporation, as amended,
of the Company) that would be inconsistent with the first sentence of this
Section 6.6.
6.7 Supermajority Approvals. The Shareholders agree that they
will not vote their Shares to approve any of the following actions if such
action has not been specifically approved or ratified at a meeting of the Board
of Directors by the affirmative vote of not less than 662/3% of the total number
of directors:
(a) entering into (A) any merger or consolidation in
which either the Company or a material Subsidiary is a constituent corporation
or its securities are being issued and the shareholders following such
transaction do not own, directly or indirectly, in the aggregate a majority of
the shares or equity securities of the surviving corporation of any such merger
or consolidation entitled to elect members of
<PAGE>
17
the Board of Directors, (B) the sale of all or substantially all of the
Company's assets or properties in a single transaction or in a series of related
transactions, or (C) the sale, lease, exchange or other disposition of any
shares of a material Subsidiary or all or substantially all assets of any
material Subsidiary;
(b) changing the authorized number of directors;
(c) amending or modifying the Charter Documents;
(d) electing or removing any of the President, Chief
Financial Officer or other executive officers, and amending or modifying of the
Employment Agreement, dated July 30, 1999, between the Company and Barasch;
(e) voluntarily dissolving or winding-up the Company
or any material Subsidiary or filing with respect to the Company or any material
Subsidiary a voluntary petition in bankruptcy or for reorganization or for the
adoption of any plan or arrangement with creditors or an admission seeking the
relief therein provided under any existing or future law of any jurisdiction
relating to bankruptcy, insolvency, reorganization or relief of debtors; and
(f) approving any dividend or other distribution in
respect of the Common Stock.
6.8 Transactions with Affiliates. Without the approval of a
majority of the Company's Board of Directors (excluding directors nominated by
an Interested Shareholder (as defined below)), the Company shall not, and shall
not permit any subsidiary to, (a) enter into (or call a default under, amend in
any material respect or grant any waiver with respect to any material matter
under) any transaction or agreement with any Shareholder or any Affiliate of
such Shareholder (the "Interested Shareholders") or (b) purchase any selling,
general, management or administrative services from a Shareholder or an
Affiliate of a Shareholder; provided, however, that nothing contained in this
Section 6.8 shall prohibit the Company from performing its obligations under any
existing agreements between the Company and any Interested Shareholder or any
Affiliate of an Interested Shareholder as in effect on the date hereof and
described on Schedule 6.8; and provided, further, that any such renewal,
extension, modification or amendment of any such existing agreements shall
require approval of the Board of Directors (excluding directors nominated by an
Interested Shareholder).
6.9 Reimbursement of Director Expenses. Each Director shall be
entitled to receive from the Company reimbursement for reasonable out-of-pocket
expenses (including travel related expenses), if any, incurred in connection
with the performance of his or her duties as a director. Nothing contained in
this Section 6.9
<PAGE>
18
shall preclude any member of the Board of Directors from serving the Company or
its subsidiaries in any other capacity and receiving proper compensation
therefor.
6.10 Liability Insurance. The Company shall, and each
Shareholder shall use reasonable efforts to cause the Board of Directors to
cause the Company to, maintain a directors' liability insurance policy that is
reasonably acceptable to a majority of the Directors.
6.11 Limitation on Merger. Each Shareholder agrees that for a
period of two years from the date of this Agreement, it will not vote its Shares
to approve a merger of the Company in which the shareholders of the Company are
to receive consideration in cash or other property instead of shares in the
surviving entity, unless such merger has been approved at a meeting of the Board
of Directors by the requisite majority, including the affirmative vote of the
Barasch Directors.
7. Stock Certificate Legend. A copy of this Agreement shall be filed
with the Secretary of the Company and kept with the records of the Company. Each
certificate representing Shares now held or hereafter acquired by any
Shareholder shall, for as long as this Agreement is effective, bear legends
substantially in the following forms:
THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR OTHER
DISPOSITION (EACH A "TRANSFER") AND VOTING OF ANY OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF THE
SHAREHOLDERS' AGREEMENT, DATED AS OF JULY 30, 1999, AMONG THE COMPANY
AND THE SHAREHOLDERS NAMED THEREIN, A COPY OF WHICH MAY BE INSPECTED AT
THE COMPANY'S PRINCIPAL OFFICE. THE COMPANY WILL NOT REGISTER THE
TRANSFER OF SUCH SECURITIES ON THE BOOKS OF THE COMPANY UNLESS AND
UNTIL THE TRANSFER HAS BEEN MADE IN COMPLIANCE WITH THE TERMS OF SUCH
SHAREHOLDERS' AGREEMENT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE. SUCH SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
<PAGE>
19
8. Other Agreements. The Company hereby covenants and agrees with each
Shareholder, as follows:
8.1 Financial Statements and Other Information. The
Company shall deliver to each Shareholder:
(a) promptly upon their becoming available, a copy of
(i) all regular or special reports, registration statements and amendments to
the foregoing which the Company files with the Commission or any securities
exchange, (ii) all reports, proxy statements, financial statements and other
information distributed by the Company to its stockholders, bondholders or the
financial community generally, and (iii) all accountants' management letters
pertaining to, all other reports submitted by accountants in connection with any
audit of, and all other material reports from outside accountants with respect
to, the Company or any of its subsidiaries; and
(b) such other financial, operating or other data or
other information of or relating to the Company or any of its Subsidiaries as
any Shareholder reasonably may request.
8.2 Books and Records. The Company shall, and shall cause its
subsidiaries to, keep proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Company and each of its subsidiaries in accordance with GAAP.
8.3 Regulatory Compliance Cooperation. If, at any time, a
Regulated Shareholder notifies the Company that it has or would have a
Regulatory Problem, the Company agrees to use its reasonable best efforts to
accommodate any reasonable request of such Regulated Shareholder which may
assist in eliminating such Regulatory Problem, including, but not limited to,
the authorization and issuance to such Regulated Shareholder of shares of a
class of non-voting stock.
9. Confidentiality. All the financial statements, reports or other
information provided to any Shareholder pursuant to Section 8.1 hereof shall be
deemed to be confidential information of the Company; provided, however, that
information shall be deemed not to be confidential information of the Company if
such information (i) is generally available to the public or becomes generally
available to the public other than as a result of a disclosure by the
Shareholder receiving such information or its officers, employees, agents or
counsel or (ii) was or becomes available to the Shareholder receiving such
information prior to its disclosure to such Shareholder pursuant to Section 8.1
hereof, provided that the Shareholder had no reasonable basis for concluding
that such information was made available in violation of a confidentiality
agreement with the Company. Each Shareholder agrees to use reasonable efforts to
prevent the disclosure of such confidential information to any other person
(excluding its officers, employees, agents or counsel who require access to
<PAGE>
20
such information), except (a) as may be necessary in connection with a request
by a Governmental Authority having or claiming jurisdiction over such
Shareholder, or (b) in connection with the enforcement of such Shareholder's
rights hereunder or under the Charter Documents or Transaction Agreements.
Without limiting the generality of the foregoing, the Company may require any
Shareholder receiving any confidential information of the Company to enter into
a separate confidentiality and non-disclosure agreement, in form and substance
reasonably satisfactory to the Company and such Shareholder.
10. Specific Performance. The parties hereto intend that each of them
have the right to seek damages or specific performance in the event that any
other party hereto fails to perform such other party's obligations hereunder.
Therefore, if any party shall institute any action or proceeding to enforce the
provisions hereof, any party against whom such action or proceeding is brought
hereby waives any claim or defense therein that the plaintiff party has an
adequate remedy at law.
11. Miscellaneous.
11.1 Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been given
or made if in writing and delivered personally, sent by commercial carrier or
registered or certified mail (postage prepaid, return receipt requested) or
transmitted by facsimile with automated receipt confirmation to the parties at
the following addresses and numbers:
If to the Company, to:
Universal American Financial Corp.
Six International Drive, Suite 190
Rye Brook, NY 10573-1068
Fax: (914) 934-9123
Attention: Richard A. Barasch
with copies to:
Harnett Lesnick & Ripps, P.A.
NationsBank Tower
150 E. Palmetto Park Road
Suite 500
Boca Raton, FL 33432-4832
Fax: (561) 368-4315
Attention: Judge Bertram Harnett
and
<PAGE>
21
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017-3954
Fax: (212) 455-2502
Attention: Gary I. Horowitz, Esq.
If to Capital Z, to:
Capital Z Partners, L.P.
One Chase Manhattan Plaza
44th Floor
New York, NY 10005
Fax: (212) 898-8720
Attention: Bradley E. Cooper
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Fax: (212) 757-3990
Attention: David K. Lakhdhir, Esq.
If to Barasch, to:
Universal American Financial Corp.
Six International Drive
Suite 190
Rye Brook, NY 10573-1068
Fax: (914) 934-9123
with a copy to:
Harnett Lesnick & Ripps, P.A.
NationsBank Tower
150 E. Palmetto Park Road
Suite 500
Boca Raton, FL 33432-4832
Fax: (561) 368-4315
Attention: Judge Bertram Harnett
<PAGE>
22
If to the AAM Investors, to:
AAM Capital Partners, L.P.
30 North LaSalle Street
35th Floor
Chicago, IL 60602
Fax: (312) 263-1196
Attention: Richard A. Veed
with a copy to:
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, IL 60661-3693
Fax: (312) 902-1061
Attention: Michael P. Goldman, Esq.
If to any other Shareholder, at the address that such
Shareholder shall have furnished to the Company in writing in the manner set
forth herein.
Any Shareholder may designate another notice address by giving
notice to the other parties in the manner provided above.
11.2 Amendment and Waiver.
(a) No failure or delay on the part of any party
hereto in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
parties hereto at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or
to any provision of this Agreement, any waiver of any provision of this
Agreement, and any consent to any departure by any party hereto from the terms
of any provision of this Agreement, shall be effective (i) only if it is made or
given in writing and signed by each Shareholder that is or would be adversely
affected by any such amendment, supplement, modification, waiver or consent and
(ii) only in the specific instance and for the specific purpose for which made
or given. Notwithstanding the foregoing, the observance of any terms of this
Agreement which benefit only the Eligible Shareholders may be waived by Eligible
Shareholders holding a majority of the Shares owned by all Eligible
Shareholders.
<PAGE>
23
11.3 Headings; Agreements. The headings contained in this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement. The term "Agreement" for purposes of representations and warranties
hereunder shall be deemed to include the Exhibits hereto to be executed and
delivered by parties relevant thereto.
11.4 Publicity. So long as this Agreement is in effect, except
as required by law, regulation or stock exchange requirements, the parties
hereto shall not, and shall cause their affiliates not to, issue or cause the
publication of any press release or other announcement with respect to the
contents of this Agreement or the other agreements contemplated hereby without
the consent of the other party, which consent shall not be unreasonably withheld
or delayed.
11.5 Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the
benefits of the remaining provisions hereof.
11.6 Entire Agreement. This Agreement (including all Exhibits
hereto) constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any of them. This
Agreement, together with the exhibits hereto, supersedes all prior agreements
and understandings on the subject matter hereof, including, without limitation,
the Shareholders Agreement, dated as of December 30, 1994, as amended, among the
Company and Wand/Universal Investments L.P., and the Shareholders Agreement,
dated April 25, 1997, as amended, among the Company, AAM Capital Partners, L.P.
and the other parties named therein, all of which are being terminated effective
as of the date of this Agreement. Notwithstanding anything to the contrary
stated herein, Section 5.a.ii of the 1998 Stock Purchase Agreement, dated
December 31, 1998, among the Company, UAFC, L.P., Chase Equity Associates, L.P.
and AAM Capital Partners, L.P. shall terminate effective as of the date of this
Agreement.
11.7 Term of Agreement. This Agreement shall become effective
upon the execution hereof and shall continue in effect until the termination of
this Agreement by written agreement of all Shareholders; provided, however, that
this Agreement shall cease to be effective in respect of any Shareholder which
ceases to own at least 1% of the Outstanding Common Stock.
11.8 Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns (including, in the case of any
party hereto that is an
<PAGE>
24
individual, the heirs, estate and personal representatives of such party). This
Agreement is not assignable except by operation of law or in compliance with
Section 2.2 and 5 and the last sentence of Section 6.3.
11.9 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and each of which shall be deemed an original.
11.10 Governing Law. The validity and interpretation of this
Agreement shall be governed by the laws of the State of New York, without
reference to the conflict of laws principles thereof which might indicate the
applicability of the laws of any other jurisdiction.
11.11 Third Party Beneficiaries. This Agreement is not
intended to confer upon any other person any rights or remedies hereunder.
<PAGE>
25
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first written above.
UNIVERSAL AMERICAN FINANCIAL CORP.
By: /s/ Richard A. Barasch
--------------------------
Richard A. Barasch
President and Chief Executive Officer
CAPITAL Z FINANCIAL SERVICES FUND II, L.P.
By: Capital Z Partners, L.P., general partner
By: Capital Z Partners Ltd., its general
partner
By: /s/ Bradley Cooper
----------------------
Bradley Cooper
Senior Vice President
/s/ Richard A. Barasch
----------------------
Richard A. Barasch
BARASCH TRUST f.b.o. HARNETT FAMILY
/s/ Richard A. Barasch
----------------------
Richard A. Barasch
Trustee
<PAGE>
26
UAFC, L.P.
By: VWA, L.L.C., general partner
By: Veed Corp., managing member
By: /s/ Richard A. Veed
-----------------------
Richard A. Veed
President
AAM CAPITAL PARTNERS, L.P.
By: AAM Partners, L.P., general partner
By: AAM Investment Banking Group, Ltd.,
general partner
By: /s/ Richard A. Veed
-----------------------
Richard A. Veed
Managing Partner
CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners, general partner
By: /s/ Michael Hannan
----------------------
Michael Hannan
General Partner
<PAGE>
SCHEDULE I
UA Shareholders
1. Barasch Trust f.b.o. Harnett Family
<PAGE>
SCHEDULE 6.8
Affiliate Transactions
1. Retainer Agreement with Harnett, Lesnick & Ripps, PA, of which
Bertram Harnett, a director, is an officer and shareholder.
2. Consulting arrangements with Barco Associates, Inc., a company
wholly owned by Marvin Barasch, and Robert Wright Associates Inc., a company
wholly-owned by Robert Wright, Messrs. Barasch and Wright being directors of the
Company, and Jeffrey Laikind, director of American Progressive.
3. Financial advisory contract with WAND Partners, Inc., an affiliate
of WAND/Universal Investments L.P.I. and WAND/Universal Investments L.P.II.
4. Investment advisory contract with Asset Allocation and Management
Company, LLC, AAM Convertibles, Inc. and AAM Advisors, Inc., all of which are
affiliates of AAM Capital Partners L.P. ("AAM").
5. Actuarial service agreements with Lewis and Ellis, which is an
affiliate of AAM.
6. As part of his compensation, Marvin Barasch receives 12 1/2% of the
net profits pre-tax income of Quincy Coverage Corp.
<PAGE>
EXHIBIT A
Certificate of Incorporation
See attached.
<PAGE>
EXHIBIT B
By-Laws
See attached.
REGISTRATION RIGHTS AGREEMENT
among
UNIVERSAL AMERICAN FINANCIAL CORP.,
CAPITAL Z FINANCIAL SERVICES FUND II, L.P.,
WAND/UNIVERSAL INVESTMENTS L.P. I,
WAND/UNIVERSAL INVESTMENTS L.P. II,
AAM CAPITAL PARTNERS, L.P.,
UAFC, L.P.,
CHASE EQUITY ASSOCIATES, L.P.,
and
RICHARD A. BARASCH
Dated: July 30, 1999
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions...........................................................2
2. General; Securities Subject to this Agreement.........................5
(a) Grant of Rights..............................................5
(b) No Other Rights..............................................6
(c) Agreement of the Wand Investors, the AAM Investors and
Barasch and the UA Shareholders..............................6
(d) Registrable Securities.......................................6
(e) Holders of Registrable Securities............................6
3. Demand Registration...................................................7
(a) Request for Demand Registration..............................7
(b) Registration of Other Securities.............................7
(c) Limitation on Demand Registrations...........................7
(d) Effective Demand Registration................................9
(e) Expenses.....................................................9
(f) Underwriting Procedures......................................9
(g) Selection of Underwriters....................................9
(h) Priority in Demand Registration.............................10
4. Incidental or "Piggy-Back" Registration..............................10
(a) Request for Incidental Registration.........................10
(b) Priority in Incidental Registration.........................11
(c) Expenses....................................................12
5. Holdback Agreements..................................................12
(a) Restrictions on Public Sale by Designated Holders...........12
(b) Restrictions on Public Sale by the Company..................13
6. Registration Procedures..............................................13
(a) Obligations of the Company..................................13
(b) Seller Information..........................................16
(c) Preparation; Reasonable Investigation.......................16
(d) Notice to Discontinue.......................................16
7. Indemnification; Contribution........................................17
(a) Indemnification by the Company..............................17
(b) Indemnification by Sellers..................................18
(c) Conduct of Indemnification Proceedings......................18
(d) Contribution................................................19
(e) Other Indemnification.......................................20
(f) Insurance...................................................20
i
<PAGE>
Page
8. Rule 144.............................................................20
9. Miscellaneous........................................................20
(a) Recapitalizations, Exchanges, etc...........................20
(b) No Inconsistent Agreements..................................21
(c) Remedies....................................................21
(d) Amendments and Waivers......................................21
(e) Notices.....................................................21
(f) Successors and Assigns; Third Party Beneficiaries...........23
(g) Counterparts................................................23
(h) Headings....................................................23
(i) GOVERNING LAW...............................................23
(j) Severability................................................23
(k) Entire Agreement............................................24
(l) Further Assurances..........................................24
ii
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated July 30, 1999 (this
"Agreement"), among Universal American Financial Corp., a New York corporation
(the "Company"), Capital Z Financial Services Fund II, L.P., a Bermuda limited
partnership ("Capital Z"), Wand/Universal Investments L.P. I, a Delaware limited
partnership ("Wand I"), Wand/Universal Investments L.P. II, a Delaware limited
partnership ("Wand II" and, together with Wand I, the "Wand Investors"), AAM
Capital Partners, L.P., a Delaware limited partnership ("AAM"), UAFC, L.P., a
Delaware limited partnership ("UAFCLP"), Chase Equity Associates, L.P. ("Chase"
and, together with UAFCLP and AAM, the "AAM Investors") and Richard A. Barasch
("Barasch").
WHEREAS, pursuant to the Share Purchase Agreement, dated as of
December 31, 1998 and amended on July 2, 1999 (the "Share Purchase Agreement"),
between the Company and Capital Z, the Company has agreed, among other things,
to issue and sell to Capital Z, and Capital Z has agreed to purchase from the
Company, an aggregate of 25,707,552 shares of common stock, par value $.01 per
share, of the Company ("Common Stock");
WHEREAS, the Wand Investors have converted their shares of
Series B Convertible Preferred Stock, par value $1.00 per share (the "Series B
Preferred"), of the Company into shares of Common Stock;
WHEREAS, the AAM Investors have converted their shares of
Series C-1 Convertible Preferred Stock, par value $1.00 per share (the "Series
C-1 Preferred"), of the Company and shares of Series C-2 Convertible Preferred
Stock, par value $1.00 per share (the "Series C-2 Preferred" and together with
the Series C-1 Preferred, the "Series C Preferred"), of the Company into shares
of Common Stock;
WHEREAS, the AAM Investors have converted their shares of
Series D-1 Convertible Preferred Stock, par value $1.00 per share (the "Series
D-1 Preferred"), of the Company and shares of Series D-2 Convertible Preferred
Stock, par value $1.00 per share (the "Series D-2 Preferred"), of the Company
into shares of Common Stock;
WHEREAS, Barasch has converted his shares of Series C-1
Preferred into shares of Common Stock;
WHEREAS, in order to induce (i) Capital Z to purchase the
shares of Common Stock, (ii) the Wand Investors to convert their shares of
Series B Preferred into shares of Common Stock, (iii) the AAM Investors to
convert their shares of Series C Preferred, Series D Preferred and Series E
Preferred into shares of Common Stock and (iv) Barasch to convert his shares of
Series C-1 Preferred into shares of
<PAGE>
2
Common Stock, the Company has agreed to grant registration rights with respect
to the Registrable Securities (as hereinafter defined) as set forth in this
Agreement; and
WHEREAS, the registration rights under this Agreement
constitute the only registration rights granted by the Company and replace and
supersede all existing registration rights granted by the Company to any
shareholder of the Company pursuant to those agreements listed on Schedule I
hereto (the "Existing Registration Rights Agreements"), all of which are being
terminated effective the date hereof either pursuant to Section 2(c) of this
Agreement or by separate agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereby agree
as follows:
1. Definitions. As used in this Agreement the following terms
have the meanings indicated:
"AAM" has the meaning set forth in the preamble to
this Agreement.
"AAM Investors" has the meaning set forth in the
preamble to this Agreement.
"Affiliate" means any Person who is an "affiliate" as
defined in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act (or any successor provision then in effect).
"Approved Underwriter" has the meaning set forth in
Section 3(g).
"Barasch" has the meaning set forth in the preamble
to this Agreement.
"Capital Z" has the meaning set forth in the preamble
to this Agreement.
"Capital Z Shareholders" means Capital Z and any
Permitted Transferee of Capital Z (as defined in the Shareholders' Agreement,
dated as of the date hereof, among the Company, Capital Z, the Wand Investors,
the AAM Investors, Barasch and the UA Shareholders) to whom or to which
Registrable Securities are transferred.
"Chase" has the meaning set forth in the preamble to
this Agreement.
<PAGE>
3
"Commission" means the Securities and Exchange
Commission or any similar agency then having jurisdiction to enforce the
Securities Act.
"Common Stock" means the Common Stock of the Company
or any other equity securities of the Company into which such securities are
converted, reclassified, reconstituted or exchanged.
"Company" has the meaning set forth in the preamble
to this Agreement.
"Company Indemnified Party" has the meaning set forth
in Section 7(b).
"Demand Registration" has the meaning set forth in
Section 3(a).
"Designated Holder" means each of Capital Z, the Wand
Investors, the AAM Investors and Barasch and any transferee thereof to whom
Registrable Securities have been transferred in accordance with Section 9(f).
"Designated Indemnified Party" has the meaning set
forth in Section 7(a).
"Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"Existing Registration Rights Agreements" has the
meaning set forth in the recitals to this Agreement.
"Incidental Registration" has the meaning set forth
in Section 4(a).
"Indemnified Party" has the meaning set forth in
Section 7(c).
"Initiating Holder" has the meaning set forth in
Section 3(a).
"Person" means any individual, firm, corporation,
partnership, limited partnership, limited liability company, trust, incorporated
or unincorporated association, joint venture, joint stock company, government
(or an agency or political subdivision thereof) or other entity of any kind, and
shall include any successor (by merger or otherwise) of such entity.
"Registrable Securities" means (subject to Section
2(d)) each of the following: (a) any and all Shares owned by the Designated
Holders, (b) any Shares issued or issuable to any of the Designated Holders with
respect to the Shares
<PAGE>
4
by way of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise and (c) any Shares issued to any of the Designated Holders upon
exercise of any options and warrants or upon the conversion of any convertible
security.
"Registration Expenses" means all expenses arising
from or incident to the Company's performance of, or compliance with, this
Agreement, including, without limitation, all registration, filing and listing
fees; all fees and expenses of complying with securities or "blue sky" laws
(including reasonable fees and disbursements of outside counsel in connection
with "blue sky" qualifications of Registrable Securities); all printing,
messenger and delivery expenses; the fees and disbursements of counsel for the
Company and its independent public accountants; the reasonable fees and
disbursements of one firm of counsel (other than in-house counsel) retained by
the holders of Registrable Securities being registered; the expenses of any
special audits required by or incident to such performance and compliance; and
any liability insurance or other premiums for insurance obtained in connection
with any registration pursuant to the terms of Section 7(f) of this Agreement;
provided, however, that Registration Expenses shall not include underwriting
discounts and commissions and transfer taxes, if any; and provided further, that
in any case where Registration Expenses are borne by the Capital Z Shareholders
pursuant to Section 3(e), Registration Expenses shall not include general
overhead expenses of the Company or other expenses for the preparation of
financial statements or other data normally prepared by the Company in the
ordinary course of its business.
"Registration Statement" means a registration
statement filed pursuant to the Securities Act.
"Requesting Holder" has the meaning set forth in
Section 4(a).
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Selling Holders" has the meaning set forth in
Section 3(a).
"Series B Preferred" has the meaning set forth in the
recitals to this Agreement.
"Series C-1 Preferred" has the meaning set forth in
the recitals to this Agreement.
"Series C-2 Preferred" has the meaning set forth in
the recitals to this Agreement.
<PAGE>
5
"Series D-1 Preferred" has the meaning set forth in
the recitals to this Agreement.
"Series D-2 Preferred" has the meaning set forth in
the recitals to this Agreement.
"Shares" means the shares of Common Stock held at any
time by the Designated Holders. For purposes of this Agreement, Shares owned by
Barasch will be deemed to include Shares owned of record by Barasch and his
wife, Renee P. Barasch, and Shares owned of record by the following trusts and
other entities:
Richard A. Barasch C/F Benjamin P. Barasch UGMA NY
Richard A. Barasch C/F Emily P. Barasch UGMA NY
Tara Acquisition, LLC
Barasch Associates Limited Partnership (but only to the extent
such Shares are beneficially owned by Richard A. Barasch,
Renee P. Barasch and NMRB Corp.)
"Share Purchase Agreement" has the meaning set forth
in the recitals to this Agreement.
"Subsidiary" means, with respect to the Company, a
corporation or other entity of which 50% or more of the voting power of the
outstanding voting securities or 50% or more of the outstanding equity interests
is held, directly or indirectly, by the Company.
"UAFCLP" has the meaning set forth in the preamble to
this Agreement.
"Wand I" has the meaning set forth in the preamble to
this Agreement.
"Wand II" has the meaning set forth in the preamble
to this Agreement
"Wand Investors" has the meaning set forth in the
preamble to this Agreement.
2. General; Securities Subject to this Agreement.
(a) Grant of Rights. The Company hereby grants
registration rights to Capital Z, the Wand Investors, the AAM Investors and
Barasch upon the terms and conditions set forth in this Agreement.
<PAGE>
6
(b) No Other Rights. The Company hereby represents
and warrants that, other than those rights granted pursuant to the Existing
Registration Rights Agreements, the Company has not granted or agreed to grant
any registration rights to any other Person, and there are no other existing
agreements, arrangements or understandings between the Company and any other
Person relating to registration rights.
(c) Agreement of the Wand Investors, the AAM
Investors and Barasch. Each of the Wand Investors, the AAM Investors and Barasch
hereby acknowledge and agree that, effective as of the date hereof, the Existing
Registration Rights Agreements with respect to each of them are terminated and
of no further force and effect, and that this Agreement replaces and supersedes
any and all agreements, arrangements and understandings (including the Existing
Registration Rights Agreements), whether written or oral, between the Company
and each of the Wand Investors, the AAM Investors and Barasch with respect to
registration rights.
(d) Registrable Securities. For the purposes of this
Agreement, any Registrable Securities held by a Designated Holder will cease to
be Registrable Securities when (i) a Registration Statement covering such
Registrable Securities has been declared effective under the Securities Act by
the Commission and such Registrable Securities have been disposed of pursuant to
such effective Registration Statement, (ii) the entire amount of Registrable
Securities to be sold in a single sale by a Designated Holder, in the opinion of
counsel satisfactory to the Company and the Designated Holder, each in their
reasonable judgment, may be distributed to the public without any limitation as
to volume and without registration pursuant to Rule 144 (or any successor rule)
under the Securities Act and the Designated Holder is not then an Affiliate of
the Company; provided that the Wand Investors shall not be subject to this
Section 2(d)(ii) until the number of Registrable Securities held by them
represent 1% or less of the outstanding shares of Common Stock of the Company,
(iii) the Registrable Securities are proposed to be sold or distributed by a
Person not entitled to the registration rights granted by this Agreement or (iv)
such Registrable Securities cease to be outstanding.
(e) Holders of Registrable Securities. A Person is
deemed to be a holder of Registrable Securities whenever such Person owns of
record Registrable Securities, or holds an option to purchase, or a security
convertible into or exercisable or exchangeable for, Registrable Securities
(once such acquisition or conversion has actually been effected). If the Company
receives conflicting instructions, notices or elections from two or more Persons
with respect to the same Registrable Securities, the Company may act upon the
basis of the instructions, notice or election received from the registered owner
of such Registrable Securities. Registrable Securities issuable upon exercise of
an option or warrant or upon conversion of another security shall be deemed
outstanding for the purposes of this Agreement.
<PAGE>
7
3. Demand Registration.
(a) Request for Demand Registration. Subject to the
limitations set forth in Section 3(c) below, at any time, any Capital Z
Shareholder, the Wand Investors (taken together) and the AAM Investors (taken
together) (each an "Initiating Holder") shall be entitled to request in writing
that the Company use its reasonable best efforts to effect the registration
under the Securities Act, and under the securities or "blue sky" laws of any
jurisdiction designated by any such Initiating Holder, of all or part of such
Initiating Holder's Registrable Securities in accordance with this Section 3 (a
"Demand Registration"). Any such request for a Demand Registration shall specify
the amount of Registrable Securities proposed to be sold and the intended method
of disposition thereof. Upon receiving a request for a Demand Registration, the
Company will promptly, but in no event more than 10 days after the receipt from
the Initiating Holder of a request for a Demand Registration, give written
notice of such Demand Registration to all other holders of Registrable
Securities, and thereupon will, as provided in Section 6, use its reasonable
best efforts to effect, at the earliest possible date, the registration under
the Securities Act of:
(i) the Registrable Securities which the
Company has been so requested by such Initiating Holder to register; and
(ii) all other Registrable Securities that
the Company has been requested in writing to register by the holders thereof
(such holders, together with the Initiating Holder, are hereinafter referred to
as the "Selling Holders") (which requests shall specify the number of
Registrable Securities proposed to be sold and the intended method of
disposition thereof and shall be given to the Company within 30 days after the
giving of such written notice of the Demand Registration by the Company).
In connection with the foregoing, only the Initiating Holder shall be deemed to
have requested the Demand Registration.
(b) Registration of Other Securities. Subject to
Section 3(h), whenever the Company effects a registration under Section 3(a), it
may elect to include unissued shares of Common Stock.
(c) Limitation on Demand Registrations.
Notwithstanding anything to the contrary set forth in Section 3(a), the Company
shall not be obligated to file a Registration Statement with respect to a Demand
Registration (i) upon a request by the Wand Investors (taken together), more
than twice or upon a request by the AAM Investors (taken together), more than
once, (ii) upon a request by an Initiating Holder that is a Capital Z
Shareholder, if Registrable Securities having an aggregate market value of less
than $15,000,000 owned by all Capital Z Shareholders participating in such
registration are proposed to be included in the Demand Registration, which net
market value will be the product of such number of
<PAGE>
8
Registrable Securities times the proposed per share offering price, minus any
underwriting commissions or discounts or transfer taxes (provided that the
limitation set forth in this clause (ii) shall not be in effect at any time a
Capital Z Shareholder's Registrable Securities are not able to be sold under
Rule 144 under the Securities Act (or any successor provision then in effect)
because of the Company's failure to comply with the information requirements
thereunder, unless at such time, the Company's outside counsel (which shall be
reasonably acceptable to the Initiating Holder) delivers a written opinion of
counsel to such Initiating Holder to the effect that such holders' Registrable
Securities may be publicly offered and sold without registration under the
Securities Act); (iii) if the Company has any other Registration Statement on
file which has not yet been declared effective or (iv) within a period of 180
days after the effective date of any registration statement of the Company.
In addition, if the Board of Directors of the Company, in its
good faith judgment, determines that any registration of Registrable Securities
should not be made or continued because it would materially interfere with any
material financing, acquisition, corporate reorganization or merger or other
transaction involving the Company or any of its Subsidiaries (a "Valid Business
Reason"), the Company may (x) postpone the filing of a registration statement
relating to a Demand Registration until such Valid Business Reason no longer
exists, but in no event for more than 90 days and (y) in the event that a
registration statement has been filed relating to a Demand Registration, if the
Valid Business Reason has not resulted from actions taken by the Company, the
Company, upon the approval of a majority of the Company's Board of Directors
(such majority to include at least one director nominated by Capital Z), may
cause such registration statement to be withdrawn and its effectiveness
terminated or may postpone amending or supplementing such registration
statement. The Company shall give written notice to the Selling Holders of its
determination to postpone or withdraw a registration statement and of the fact
that the Valid Business Reason for such postponement or withdrawal no longer
exists, in each case, promptly after the occurrence thereof. Notwithstanding
anything to the contrary contained herein, the Company may not postpone or
withdraw a filing pursuant to this paragraph more than once in any 12-month
period.
Each Selling Holder agrees that, upon receipt of any
notice from the Company that the Company has determined to withdraw any
registration statement pursuant to the immediately preceding paragraph, such
holder will discontinue its disposition of Registrable Securities pursuant to
such registration statement and, if so directed by the Company, will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, then in such holder's possession, of the prospectus covering such
Registrable Securities that was in effect at the time of receipt of such notice.
If the Company shall give any notice of postponement or withdrawal of a
registration statement, the Company shall, at such time as the Valid Business
Reason that caused such postponement or withdrawal no longer exists (but in no
event later than 90 days after the date of the postponement), use its reasonable
best efforts to promptly effect the registration under the Securities Act of the
Registrable
<PAGE>
9
Securities covered by the postponed or withdrawn registration statement in
accordance with this Section 3 (unless the Initiating Holder delivering the
Demand Registration request shall have withdrawn such request, in which case the
Company shall not be considered to have effected an effective registration for
the purposes of this Agreement and the Initiating Holders shall not be
considered to have exercised any of its rights under Section 3(a)).
(d) Effective Demand Registration. A registration
shall not constitute a Demand Registration until it has become effective and
remains continuously effective for the lesser of (i) the period during which all
Registrable Securities registered in the Demand Registration are sold or
otherwise disposed of in accordance with the intended methods of disposition set
forth in the registration statement and (ii) 180 days; provided, however, that a
registration shall not constitute a Demand Registration if (x) after such Demand
Registration has become effective, such registration or the related offer, sale
or distribution of Registrable Securities thereunder is interfered with by any
stop order, injunction or other order or requirement of the Commission or other
governmental agency or court for any reason not attributable to the Selling
Holders and such interference is not thereafter eliminated or (y) the conditions
to closing specified in the underwriting agreement, if any, entered into in
connection with such Demand Registration are not satisfied or waived, other than
by reason of a failure by the Selling Holders.
(e) Expenses.
(i) The Company will pay all Registration
Expenses in connection with the first four Demand Registrations by the Capital Z
Shareholders under this Section 3 that either become effective under the
Securities Act or are withdrawn prior to the effective date thereof. Thereafter,
the Capital Z Shareholders will pay all Registration Expenses in connection with
any Demand Registrations under this Section 3.
(ii) The Company will pay all Registration
Expenses in connection with a Demand Registration by each of the Wand Investors
(taken together) and the AAM Investors (taken together) under this Section 3
whether it becomes effective under the Securities Act or is withdrawn prior to
the effective date thereof.
(f) Underwriting Procedures. If the Initiating Holder
so elects, the offering of Registrable Securities pursuant to a Demand
Registration shall be in the form of a firm commitment underwritten offering and
the managing underwriter or underwriters selected for such offering shall be the
Approved Underwriter (as hereinafter defined) selected in accordance with
Section 3(g).
(g) Selection of Underwriters. The underwriter or
underwriters of each underwritten offering of the Registrable Securities to be
<PAGE>
10
registered under a Demand Registration shall be selected by the Selling Holders
of more than 50% of Registrable Securities to be included in such registration
(the "Approved Underwriter") and shall, in any case, require the approval of the
Company, which approval will not be unreasonably withheld.
(h) Priority in Demand Registration. If the Approved
Underwriter of any underwritten offering under a Demand Registration advises the
Company (and the Company shall so advise each Selling Holder of Registrable
Securities requesting registration of such advice) that, in its opinion, the
number of securities requested to be included in such registration is
sufficiently large to have a material adverse effect on the success of such
offering, then the Company will include in such registration, to the extent of
the number of Registrable Securities which the Company is so advised can be sold
in (or during the time of) such offering within a price range acceptable to the
Initiating Holder, first, Registrable Securities requested to be included in
such registration by all Selling Holders entitled to include Registrable
Securities pursuant to Section 3(a), pro rata among such Selling Holders on the
basis of the number of securities requested to be included in such Demand
Registration; provided, that, for purposes of this Section 3(h) only, Wand I and
Wand II will be treated as separate Selling Holders and Chase and UAFCLP will be
treated as separate Selling Holders such that each of Wand I, Wand II, Chase and
UAFCLP will have the right to include its pro rata portion of Registrable
Securities in such registration, second, all securities proposed by the Company
to be sold for its own account, and third, all other securities proposed to be
registered; provided, that if the number of Registrable Securities that the
Approved Underwriter advises can be sold in such offering is less than all the
Registrable Securities that the Initiating Holder had requested be included, the
Initiating Holder may withdraw its written request made pursuant to Section 3(a)
and such written request will not be considered a request for registration for
the purposes of this Section 3.
4. Incidental or "Piggy-Back" Registration.
(a) Request for Incidental Registration. If the
Company, at any time or from time to time, proposes to register the offering of
any of its shares of Common Stock for its own account under the Securities Act
(other than (i) a registration of shares of Common Stock solely in connection
with any plan for the acquisition of shares of Common Stock by employees or
agents of the Company or any dividend reinvestment plan or (ii) on Forms S-4 or
S-8 (or any successor forms thereto)), it will at each such time give written
notice (given at least seven days prior to the proposed filing date) of its
intention to do so and of such Holders' rights under this Section 4(a). Upon the
written request of any Designated Holder that owns Registrable Securities having
an aggregate market value (the "Minimum Aggregate Value") equal to at least $5
million (unless such Designated Holder is any Capital Z Shareholder, the Wand
Investors, the AAM Investors or Barasch, in which case such Minimum Aggregate
Value shall not be applicable) (a "Requesting Holder") made within 30 days after
the receipt of any such notice (or such lesser period, but in any
<PAGE>
11
event not less than 10 days, as may be available from the date of such notice to
the last date on which additional Registrable Securities may be included in such
offering), which request shall specify the amount of Registrable Securities
proposed to be sold by such Designated Holder and the intended method of
disposition thereof, the Company will, in accordance with Section 6, use its
reasonable best efforts to effect the registration under the Securities Act of
the offering of all of the Registrable Securities that the Company has been so
requested to register by the Requesting Holders, to the extent required to
permit the disposition (in accordance with the intended methods thereof as
aforesaid) of the Registrable Securities to be registered (each, an "Incidental
Registration"); provided, however, that prior to the effective date of the
registration statement filed in connection with such registration, immediately
upon notification to the Company from the managing underwriter of the price at
which such securities are to be sold, if such price is below the price that any
Requesting Holder shall have indicated to be acceptable to such Requesting
Holder, the Company shall so advise such Requesting Holder of such price, and
such Requesting Holder shall then have the right promptly to withdraw its
request to have its Registrable Securities included in such registration
statement; provided further, that if, at any time after giving written notice of
its intention to register any securities and prior to the effective date of the
registration statement filed in connection with such Incidental Registration,
the Company shall determine for any reason not to register or to delay
registration of such Registrable Securities, the Company may, at its election,
give written notice of such determination to each Requesting Holder and (i) in
the case of a determination not to register, shall be relieved of its obligation
to register any Registrable Securities in connection with such registration (but
not from any obligation of the Company to pay the Registration Expenses in
connection therewith), without prejudice, however, to the rights of any
Initiating Holder to cause such registration to be effected as a registration
under Section 3(a) and (ii) in the case of a determination to delay registering,
shall be permitted to delay registering any Registrable Securities, for the same
period as the delay in registering such other securities. In connection with any
Incidental Registration under this Section 4(a) involving an underwriter, or a
distribution with the assistance of a selling agent, the right of any Requesting
Holder to participate in such Incidental Registration shall be conditioned upon
such Requesting Holder's reasonable participation in such underwriting or
distribution.
(b) Priority in Incidental Registration.
Notwithstanding anything to the contrary set forth in Section 4(a), if a
proposed Incidental Registration is for a registered public offering involving
an underwriting and the managing underwriter advises the Company in writing that
the number or type of Registrable Securities requested to be included in such
Incidental Registration would materially adversely effect such offering, then
the Company shall so advise the Requesting Holders and include in such
Incidental Registration (i) first, all securities proposed to be sold by the
Company for its own account, (ii) second, Registrable Securities requested to be
included in such registration by the Requesting Holders pursuant to this
Agreement and by any other Persons entitled to "incidental" registration rights
<PAGE>
12
and requesting inclusion of securities in such Incidental Registration, pro rata
among such Requesting Holders and such other Persons on the basis of the number
of securities requested to be included in such Incidental Registration and
third, any other shares of Common Stock requested to be included in such
Incidental Registration; provided, however, that if any Capital Z Shareholder
does not request inclusion of the maximum number of Registrable Securities
allocated to it pursuant to the foregoing procedure, then the remaining portion
of its allocation shall be reallocated among those Capital Z Shareholders whose
allocations were not satisfied on the basis of the number of Registrable
Securities requested to be included in such Incidental Registration, and this
procedure shall be repeated until all of the Registrable Securities that may be
included in the registration on behalf of the Capital Z Shareholders have been
so allocated. The Company shall not limit the number of Registrable Securities
to be included in an Incidental Registration pursuant to this Agreement in order
to include shares held by shareholders with no registration rights or to include
any shares of stock issued to employees, officers, directors or consultants
pursuant to any stock option plan unless such employees, officers, directors or
consultants have registration rights. The priority of securities included in a
Demand Registration through incidental registration rights exercised in
connection therewith shall be governed by Section 3(h).
If any Registrable Securities are withdrawn from the
Incidental Registration or if the number of Registrable Securities to be
included in such Incidental Registration was previously reduced as a result of
marketing factors, then the Company shall then offer to all Persons who have
retained the right to include Registrable Securities in the Incidental
Registration the right to include additional Registrable Securities in the
registration in an aggregate amount equal to the number of Registrable
Securities so withdrawn, with such Registrable Securities to be allocated among
the Persons requesting additional inclusion pro rata in accordance with the
terms of this Section 4(b).
(c) Expenses. The Company shall pay all Registration
Expenses in connection with any Incidental Registration pursuant to this Section
4, whether or not such Incidental Registration becomes effective. No Incidental
Registration under this Section 4 shall relieve the Company of its obligations
to effect a Demand Registration upon request under Section 3(a).
5. Holdback Agreements.
(a) Restrictions on Public Sale by Designated
Holders. Each of the Designated Holders agrees not to effect any public sale or
distribution of any Registrable Securities being registered or of any securities
convertible into or exchangeable or exercisable for such Registrable Securities,
including a sale pursuant to Rule 144 under the Securities Act, during the 120
day period beginning on the effective date of such Registration Statement
(except as part of such registration), (i) in the case of a non-underwritten
public offering, if and to the extent requested by
<PAGE>
13
the Company or (ii) in the case of an underwritten public offering, if and to
the extent requested by the Approved Underwriter (in the event of a Demand
Registration pursuant to Section 3(a)) or the Company's underwriters (in the
event of an Incidental Registration pursuant to Section 4(a)), as the case may
be.
(b) Restrictions on Public Sale by the Company. The
Company agrees not to effect any public sale or distribution of any of its
securities, or any securities convertible into or exchangeable or exercisable
for such securities (except pursuant to registrations on Form S-4 or Form S-8 or
any successor forms thereto or registration of shares of Common Stock solely in
connection with any plan for the acquisition of shares of Common Stock by agents
of the Company), during the period beginning on the effective date of any
Registration Statement in which the Designated Holders of Registrable Securities
are participating and ending on the earlier of (i) the date on which all
Registrable Securities registered on such Registration Statement are sold and
(ii) 120 days after the effective date of such Registration Statement.
6. Registration Procedures.
(a) Obligations of the Company. If and whenever the
Company is requested to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 3 and 4, then the Company will
promptly use its best efforts to:
(i) prepare and (in any event within 90 days
after the end of the period within which requests for registration may be given
to the Company) file with the Commission a Registration Statement with respect
to such Registrable Securities and use its best efforts to cause such
Registration Statement to become effective;
(ii) prepare and file with the Commission
such amendments and supplements to such Registration Statement and the
prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
covered by such Registration Statement until such time as all of such securities
have been disposed of in accordance with the intended methods of disposition
thereof by the seller or sellers thereof set forth in such Registration
Statement, but in no event for a period of more than six months (or, with
respect to any Registration Statement covering Registrable Securities the
distribution of which has been deferred pursuant to Section 3 or 4(c), nine
months) after such Registration Statement becomes effective;
(iii) furnish to each seller of Registrable
Securities, prior to filing a Registration Statement, such number of conformed
copies of
<PAGE>
14
such Registration Statement and of each such amendment and supplement
thereto (in each case including all exhibits, except that the Company
shall not be obligated to furnish any seller of Registrable Securities
with more than two copies of such exhibits), such number of copies of
the prospectus contained in such Registration Statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity
with the requirements of the Securities Act, and such other documents,
as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;
(iv) register or qualify such Registrable
Securities covered by such Registration Statement under such other securities or
"blue sky" laws of such jurisdictions as each seller of Registrable Securities
shall request, and do any and all other acts and things which may be necessary
or advisable to enable such seller to consummate the disposition in such
jurisdic tions of the Registrable Securities owned by such seller, except that
the Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it is not so
qualified, or to subject itself to taxation in any such jurisdiction, or to
consent to general service of process in any such jurisdiction;
(v) cause the Registrable Securities covered
by such Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable the seller or sellers of
Registrable Securities to consummate the disposition of such Registrable
Securities;
(vi) cause representatives of the Company to
participate in any "road show" or "road shows" reasonably requested by any
underwriter of an underwritten offering of any Registrable Securities;
(vii) notify each seller of any Registrable
Securities covered by such Registration Statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, upon
discovery that, or upon the happening of any event as a result of which, the
prospectus included in such Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make statements therein not
misleading in the light of the circumstances then existing, and prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to
<PAGE>
15
be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;
(viii) advise each seller of Registrable
Securities as to the time when such Registration Statement becomes effective and
as to the threat of or the issuance by the Commission of any stop order
suspending the effectiveness of such Registration Statement or the institution
of any proceedings for that purpose, and use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible the removal
thereof, if issued;
(ix) comply with all applicable rules and
regulations of the Commission, and make available to each seller of Registrable
Securities, as soon as reasonably practicable, an earnings statement covering
the period of at least 12 months, but not more than 18 months, beginning with
the first month after the effective date of the Registration Statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder;
(x) list all the Registrable Securities on
The Nasdaq Stock Market, Inc. or the over-the-counter market or any securities
exchange on which similar securities are then listed, if such securities are not
already so listed and such listing is then permitted under the rules of such
exchange;
(xi) cooperate with each seller of
Registrable Securities and each underwriter participating in the disposition of
such Registrable Securities and their respective counsel in connection with any
filings required to be made with the National Association of Securities Dealers,
Inc.;
(xii) provide and cause to be maintained a
transfer agent and registrar for all Registrable Securities covered by such
registration statement from and after a date not later than the effective date
of such registration; and
(xiii) in the case of an underwritten
offering, furnish to each seller a signed counterpart, addressed to the
underwriters, of (x) an opinion of counsel representing the Company for purposes
of such registration, dated the effective date of such Registration Statement
and, if applicable, the date of the closing under the underwriting agreement,
and (y) a "comfort letter" signed by the independent public accountants of the
Company who have certified the Company's financial statements included in such
Registration Statement; in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' letters delivered to
the
<PAGE>
16
underwriters in underwritten public
offerings of securities and, in the case of the accountants' comfort letter,
such other financial matters and, in the case of the legal opinion, such other
legal matters, as the underwriters may reasonable request.
(b) Seller Information. The Company may require each
seller of Registrable Securities as to which any registration is being effected
to furnish to the Company such information regarding the distribution of such
securities as the Company may from time to time reasonably request in writing
and as shall be required by law in connection therewith.
(c) Preparation; Reasonable Investigation. In
connection with the preparation and filing of each Registration Statement
registering Registrable Securities under the Securities Act, the Company will
give the holders of such Registrable Securities so registered and their
underwriters, if any, and their respective counsel, the opportunity to
participate in the preparation of such Registration Statement (to the extent
customary for counsel to a selling shareholder), each prospectus included
therein or filed with the Commission, and each amendment thereof or supplement
thereto, and will give each of them such access to its books and records
(including the books and records of its subsidiaries) and such opportunities to
discuss the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of such holders' and such underwriters' respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act ;
provided, however, that the Company shall not be obligated to give such
opportunities and access to any holder of Registrable Securities including in
such Registration Statement Registrable Securities having an aggregate market
value less than $5 million.
(d) Notice to Discontinue. Each Designated Holder of
Registrable Securities agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 6(a)(vii), such
Designated Holder shall forthwith discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Designated Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 6(a)(vii) and, if so
directed by the Company, such Designated Holder shall deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in such
Designated Holder's possession, of the prospectus covering such Registrable
Securities that is current at the time of receipt of such notice. If the Company
shall give any such notice, the Company shall extend the period during which
such Registration Statement shall be maintained effective pursuant to this
Agreement (including, without limitation, the period referred to in Section
6(a)(ii)) by the number of days during the period from and including the date of
the giving of such notice pursuant to Section 6(a)(vii) to and including the
date when the Designated Holder shall have received the copies of the
supplemented or
<PAGE>
17
amended prospectus contemplated by and meeting the requirements of Section
6(a)(vii).
7. Indemnification; Contribution.
(a) Indemnification by the Company. In the event of
any registration of any Registrable Securities pursuant to the terms of Section
3 or Section 4, (i) the Company will, and hereby does, indemnify and hold
harmless, to the fullest extent permitted by law, each seller of any Registrable
Securities covered by such registration statement and their respective
directors, officers, partners, trustees, employees, legal counsel, accountants,
financial advisors and agents, and each other Person, if any, who controls
(within the meaning of the Securities Act and the Exchange Act) such seller or
any such directors, officers, partners, trustees, employees, legal counsel,
accountants, financial advisors and agents (each of the foregoing, a "Designated
Indemnified Party") against any and all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation), joint or several, to
which such Designated Indemnified Party may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions or proceedings in respect thereof) arise out of or are
based upon (x) any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement under which such Registrable
Securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, any notification or
offering circular, or any amendment or supplement thereto or (y) any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; and (ii) the Company
will reimburse such Designated Indemnified Party for any legal or any other
expenses reasonably incurred by it in connection with investigating or defending
any such loss, claim, liability or action; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage or liability (or actions or proceedings in respect thereof) or expense
arises out of or is based upon (x) any untrue statement or alleged untrue
statement of any material fact made in such Registration Statement, any such
preliminary prospectus, final prospectus, summary prospectus, notification or
offering circular, or any amendment or supplement thereto or (y) any omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case in
reliance upon and in conformity with written information concerning such seller
or in reliance upon and in conformity with written information concerning such
seller's underwriter and furnished to the Company through an instrument duly
executed by such seller or underwriter, as the case may be, specifically stating
that it is for use in the preparation thereof. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
such Designated Indemnified Party and shall survive the transfer of such
securities by any such seller.
<PAGE>
18
(b) Indemnification by Sellers. The Company may
require, as a condition to including any Registrable Securities in any
Registration Statement filed pursuant to Section 3 or Section 4, that the
Company shall have received an undertaking from each prospective seller of such
Registrable Securities to indemnify and hold harmless the Company, any
underwriter retained by the Company and their respective directors, officers and
employees each other Person, if any, who controls (within the meaning of the
Securities Act and the Exchange Act) the Company or any such underwriter (each
of the foregoing, a "Company Indemnified Party") against any losses, claims,
damages, liabilities or expenses, joint or several, to which such Company
indemnified party may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions or
proceedings in respect thereof) arise out of or are based upon any statement of
a material fact or omission to state a material fact in such Registration
Statement, any preliminary prospectus or final prospectus contained therein, any
notification or offering circular, or any amendment or supplement thereto, if
such statement or omission was made in reliance upon and in conformity with
written information concerning such seller and furnished to the Company through
an instrument duly executed by such seller specifically stating that it is for
use in the preparation of such Registration Statement, preliminary prospectus,
final prospectus, summary prospectus, notification or offering circular, or
amendment or supplement thereto; provided, however, that the liability of any
seller under this Section 7(b) shall be limited to the amount of the net
proceeds received by such indemnifying party in the offering giving rise to such
liability. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Company indemnified party and
shall survive the transfer of such securities by any Designated Holder.
(c) Conduct of Indemnification Proceedings. Promptly
after receipt by any Designated Indemnified Party or Company Indemnified Party
(each, an "Indemnified Party") of notice of the commencement of any action,
suit, proceeding or investigation or threatened thereof in writing for which the
Indemnified Party intends to claim indemnification or contribution pursuant to
this Agreement, such Indemnified Party will give written notice thereof to the
indemnifying party; provided, however, that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under this Agreement, except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice. If notice of
commencement of any such action is brought against an Indemnified Party, the
indemnifying party may (and, upon request by the Indemnified Party, will), at
its expense, participate in and assume the defense thereof, with counsel
reasonably satisfactory to such Indemnified Party; provided, however, that in
the event of any failure by the indemnifying party diligently to assume and
conduct such defense, the indemnifying party will pay all costs and expenses
(including legal fees and expenses) incurred by such Indemnified Party in
connection with such claim or litigation. The Indemnified Party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be paid by the
Indemnified Party unless (i) the
<PAGE>
19
indemnifying party agrees to pay the same, (ii) the indemnifying party fails to
assume the defense of such action with counsel satisfactory to the Indemnified
Party in its reasonable judgment or (iii) the named parties to any such action
(including any impleaded parties) have been advised by such counsel in writing
that either (x) representation of such Indemnified Party and the indemnifying
party by the same counsel would be inappropriate under applicable standards of
professional conduct or (y) there may be one or more legal defenses available to
the Indemnified Party which are different from or additional to those available
to the indemnifying party. In either of such cases, the indemnifying party shall
not have the right to assume the defense of such action on behalf of such
Indemnified Party; provided, that in no event shall the indemnifying party be
required to pay fees and expenses for more than one firm of attorneys in any
jurisdiction in any one legal action or group of related legal actions. No
indemnifying party shall be liable for any settlement of any action or
proceeding effected without its written consent, which consent shall not be
unreasonable withheld. No indemnifying party, in the defense of any such claim
or litigation, shall, except with the written consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation.
(d) Contribution. If the indemnification provided for
in this 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 and Indemnified Party 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
faults of such indemnifying party and Indemnified Party 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 relates to information
supplied by, such indemnifying party or Indemnified Party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in Sections 7(a), 7(b)
and 7(c), any legal or other fees, charges 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(e) were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No person guilty
<PAGE>
20
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person.
(e) Other Indemnification. Indemnification and
contribution similar to that specified in this Section 7 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any registration or other qualification of such
Registrable Securities (or the offering and/or sale thereof) under any federal
or state law or regulation of governmental authority other than the Securities
Act and pursuant to any underwriting or similar agreement, to the extent
requested by an underwriter.
(f) Insurance. In connection with any Demand
Registration or Incidental Registration, the Company will provide at its expense
a binder or binders of insurance in form satisfactory to the Designated Holders
participating in such registration, and, as soon as practicable thereafter, a
policy or policies of insurance, insuring each such Designated Holder, and each
Person, if any, who controls such Designated Holder within the meaning of the
Securities Act and the Exchange Act, for the aggregate amount of the public
offering price received for the Registrable Securities disposed of by such
Designated Holder (subject to such deductible as is customarily contained in
underwriting insurance policies at such time) against all losses, claims,
damages, liabilities and expenses which arise out of or are based upon any
untrue statement, alleged untrue statement, omission or alleged omission of the
character described in this Section 7 in connection with such registration and
disposition and which are customarily covered under underwriting insurance
policies; provided, however, that the Company shall not be obligated to provide
such insurance if it determines in good faith that such insurance is not
available on commercially reasonable terms at the time of such registration.
8. Rule 144. The Company covenants that it shall file (a) any
reports required to be filed by it under the Exchange Act and (b) take such
further action as each Designated Holder of Registrable Securities may
reasonably request (including providing any information necessary to comply with
Rule 144 under the Securities Act), all to the extent required from time to time
to enable such Designated Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such rule may be amended
from time to time, or (ii) any similar rules or regulations hereafter adopted by
the Commission. The Company shall, upon the request of any Designated Holder of
Registrable Securities, deliver to such Designated Holder a written statement as
to whether it has complied with such requirements.
9. Miscellaneous.
(a) Recapitalizations, Exchanges, etc. The provisions
of this Agreement shall apply, to the full extent set forth herein, with respect
to (i) the shares of Common Stock and (ii) any and all equity securities of the
Company or any suc cessor or assign of the Company (whether by merger,
consolidation, sale of assets or otherwise), which may be issued in respect of,
in conversion of, in exchange for or in substitution of, the shares of Common
Stock, and shall be appropriately adjusted for any stock dividends, splits,
reverse splits, combinations, recapitalizations and the like occurring after the
date hereof. The Company shall cause any successor or assign (whether by merger,
consolidation, sale of assets or otherwise) to enter into a new registration
rights agreement with the Designated Holders on terms substantially similar to
this Agreement as a condition of any such transaction.
(b) No Inconsistent Agreements. The Company is not
currently party to, and will not in the future, enter into any agreement with
respect to its securities that is inconsistent with the registration rights
granted in this Agreement or grant any additional registration rights to any
Person or with respect to any securities that are not Registrable Securities
that are prior in right to or inconsistent with the rights granted in this
Agreement. Without limiting the generality of the foregoing, the Company will
not hereafter enter into any agreement with respect to its securities that
grants, or modify any existing agreement with respect to its securities to
grant, to the holder of its securities in connection with an incidental
registration of such securities higher priority to the rights granted to the
Designated Holders under Section 4.
(c) Remedies. The Designated Holders, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, shall be entitled to specific performance of their rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive in any action for specific
performance the defense that a remedy at law would be adequate.
(d) Amendments and Waivers. Except as otherwise
provided herein, the provisions of this Agreement may not be amended, modified
or supplemented, and waivers or consents to departures from the provisions
hereof may not be given unless consented to in writing by (i) the Company and
(ii) the holder or holders of the Registrable Securities adversely affected by
such amendment, modifications, supplements or departures. Any such written
consent shall be binding upon the Company and all of the Designated Holders
consenting to such action.
(e) Notices. All notices, demands and other
communications provided for or permitted hereunder shall be made in writing and
shall be made by registered or certified first-class mail, return receipt
requested, telecopier, courier service, overnight mail or personal delivery:
<PAGE>
21
(i) if to the Company:
Universal American Financial Corp.
6 International Drive, Suite 190
Rye Brook, NY 10573
Facsimile: (914) 934-0700
Attention: Richard A. Barasch
with copies to:
Harnett Lesnick & Ripps P.A.
NationsBank Tower 150
East Palmetto Park Road, Suite 500
Boca Raton, FL 33432
Facsimile: (501) 368-4315
Attention: Judge Bertram Harnett
and
Simpson Thacher and Bartlett
425 Lexington Avenue
New York, NY 10017-3954
Facsimile: (212) 455-2502
Attention: Gary I. Horowitz, Esq.
(ii) if to Capital Z:
Capital Z Partners, L.P.
One Chase Manhattan Plaza
44th Floor
New York, New York 10005
Facsimile: (212) 898-8720
Attention: Robert A. Spass
with a copy to:
Paul, Weiss, Rifkind, Wharton &
Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Facsimile: (212) 757-3990
Attention: David K. Lakhdhir, Esq.
(iii) if to any other Designated Holder or other
holder of Registrable Securities, at the address that such holder shall have
furnished to the Company in writing in the manner set forth herein, or, until
any such other holder so
<PAGE>
22
furnishes to the Company an address, then to and at the address of the last
holder of such Registrable Securities who has furnished an address to the
Company.
Any party hereto may designate such other address for delivery
of notices by providing written notice to each other party to the Agreement of
the new address. All such notices and communications shall be deemed to have
been duly given when delivered by hand, if personally delivered; when delivered
by courier or overnight mail, if delivered by commercial courier service or
overnight mail; 5 Business Days after being deposited in the mail, postage
prepaid, if mailed; and when receipt is mechanically acknowledged, if
telecopied.
(f) Successors and Assigns; Third Party
Beneficiaries. This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties hereto. The Demand
Registration rights of the Designated Holders contained in Section 3 and the
other rights of each of the Designated Holders with respect thereto and the
incidental or "piggy-back" registration rights of the Designated Holders
contained in Section 4 and the other rights of each of the Designated Holders
with respect thereto shall be, with respect to any Registrable Security,
automatically transferred to any Person who is the transferee of such
Registrable Security; provided, that such transfer was made in compliance with
applicable securities laws and such transferee is made a party to this
Agreement. All of the obligations of the Company hereunder shall survive any
such transfer. Subject to Section 7, no Person other than the parties hereto and
their successors and permitted assigns is intended to be a beneficiary of any of
the rights granted hereunder. The provisions of this Section 9(f) are subject to
Section 2(d) of this Agreement.
(g) Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) GOVERNING LAW. THE VALIDITY AND INTERPRETATION OF
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO THE CONFLICT OF LAWS PRINCIPLES THEREOF WHICH MIGHT INDICATE THE
APPLICABILITY OF THE LAWS OF ANY OTHER JURISDICTION.
(j) Severability. If any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid,
<PAGE>
23
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, it being intended
that all of the rights and privileges of the Designated Holders shall be
enforceable to the fullest extent permitted by law.
(k) Entire Agreement. This Agreement is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter,
including the Existing Registration Rights Agreements.
(l) Further Assurances. Each of the parties shall
execute such documents and perform such further acts as may be reasonably
required or desirable to carry out or to perform the provisions of this
Agreement.
<PAGE>
24
IN WITNESS WHEREOF, the undersigned have executed, or have
caused to be executed, this Agreement on the date first written above.
UNIVERSAL AMERICAN FINANCIAL CORP.
By: /s/ Richard A. Barasch
--------------------------
Richard A. Barasch
President and Chief Executive Officer
CAPITAL Z FINANCIAL SERVICES
FUND II, L.P.
By: Capital Z Partners, L.P., general partner
By: Capital Z Partners Ltd., its general
partner
By: /s/ Bradley Cooper
----------------------
Bradley Cooper
Senior Vice President
WAND/UNIVERSAL INVESTMENTS L.P. I
By: Wand (Universal), Inc., general partner
By: /s/ David J. Callard
------------------------
David J. Callard
President
WAND/UNIVERSAL INVESTMENTS L.P. II
By: Wand (Universal), Inc., general partner
By: /s/ David J. Callard
------------------------
David J. Callard
President
<PAGE>
25
AAM CAPITAL PARTNERS, L.P.
By: AAM Partners, L.P., general partner
By: AAM Investment Banking Group, Ltd.,
general partner
By: /s/ Richard A. Veed
-----------------------
Richard A. Veed
Managing Partner
UAFC, L.P.
By: VWA, L.L.C., general partner
By: Veed Corp., managing member
By: /s/ Richard A. Veed
-----------------------
Richard A. Veed
President
CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners, general partner
By: /s/ Michael Hannan
----------------------
Michael Hannan
General Partner
/s/ Richard A. Barasch
----------------------
Richard A. Barasch
<PAGE>
26
Schedule I
Existing Registration Rights Agreements
1. Registration Rights Agreement, dated as of March 16, 1993, between the
Company and David F. Bolger Third Amended and Restated Revocable Trust,
dated March 20, 1987, as amended.
2. Shareholders' Agreement, dated as of April 25, 1997, between the
Company, AAM, Barasch Associates Limited Partnership ("BALP"), Barasch
and certain other parties thereto.
3. Shareholders' Agreement, dated as of December 30, 1994, among the
Company, Wand/Universal Investments L.P. [I], BALP and certain BALP
principals.
4. Stock Purchase Agreement, dated December 9, 1987, among Universal
Holding Corp., John Adams Life Insurance Company of New York and BALP.
Exhibit 7.3
JOINT FILING AGREEMENT
Each of the undersigned hereby acknowledges and agrees, in
compliance with the provisions of Rule 13d-1(k)(1) promulgated under the
Securities Exchange Act of 1934, as amended, that the Schedule 13D to which this
Agreement is attached as an Exhibit and any amendments thereto, will be filed
with the Securities and Exchange Commission jointly on behalf of the
undersigned.
This Agreement may be executed in one or more counterparts.
Dated: August 10, 1999
CAPITAL Z FINANCIAL SERVICES
FUND II, L.P., a Bermuda limited partnership
By: Capital Z Partners, L.P., a Bermuda
limited partnership, its General Partner
By: Capital Z Partners, Ltd., a Bermuda
exempt company, its General Partner
By: /s/ Robert A. Spass
-----------------------
Name: Robert A. Spass
Title: Deputy Chairman of the Board
CAPITAL Z FINANCIAL SERVICES
PRIVATE FUND, L.P., a Bermuda limited
partnership
By: Capital Z Partners, L.P., a Bermuda
limited partnership, its General Partner
By: Capital Z Partners, Ltd., a Bermuda
exempt company, its General Partner
By: /s/ Robert A. Spass
-----------------------
Name: Robert A. Spass
Title: Deputy Chairman of the Board
<PAGE>
Page 2 of 2
CAPITAL Z MANAGEMENT, LLC, a
Delaware limited liability company
By: /s/ Robert A. Spass
-----------------------
Name: Robert A. Spass
Title: Deputy Chairman of the Board
CAPITAL Z PARTNERS, L.P.,
a Bermuda limited partnership
By: Capital Z Partners, Ltd., a Bermuda
exempt company, its General Partner
By: /s/ Robert A. Spass
-----------------------
Name: Robert A. Spass
Title: Deputy Chairman of the Board
CAPITAL Z PARTNERS, LTD.,
a Bermuda exempt company
By: /s/ Robert A. Spass
-----------------------
Name: Robert A. Spass
Title: Deputy Chairman of the Board
/s/Steven M. Gluckstern
-----------------------
Steven M. Gluckstern
/s/Robert A. Spass
------------------
Robert A. Spass
