Document:

2006 Senior Executive Incentive Plan

NU SKIN ENTERPRISES,
INC.
2006 SENIOR EXECUTIVE
INCENTIVE PLAN 

Effective May 1, 2006 

        This
2006 Senior Executive Incentive Plan is adopted by Nu Skin Enterprises, Inc. (the
“Company”) to reward selected senior executives through the payment of cash
incentive awards for outstanding performance related to the accomplishment of strategic
business objectives and goals. This Plan is intended to permit the payment of awards that
may qualify as “performance-based” compensation under Section 162(m) of the
“Code” (as defined below). 

ARTICLE I 
DEFINITIONS 

        Section 1.1        
 Affiliate.
“Affiliate” shall mean any entity, directly or indirectly, controlling or
controlled by or under common control with the Company. 

        Section 1.2         Board.  "Board" shall
mean the Board of Directors of the Company. 

        Section 1.3         Code. “Code”
shall mean the Internal Revenue Code of 1986, as amended. Any reference to a section of
the Code herein shall be deemed to include a reference to the regulations promulgated
under such section. 

        Section 1.4         Committee.  "Committee"
shall mean the Special Compensation Committee of the Board described in Section 6.1. 

        Section 1.5         Disability.
“Disability” shall mean a Participant’s: (a) inability to engage in any
substantial gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death, or can be expected to last for a
continuous period of not less than twelve (12) months, or (b) receiving income replacement
benefits for a period of not less than three (3) months under an accident and health plan
covering employees of the Participant’s employer by reason of any medically
determinable physical or mental impairment which can be expected to result in death or can
be expected to last for a continuous period of not less than 12 months. Any question as to
the existence of a Participant’s physical or mental impairment as to which the
Participant or his representative and the Company cannot agree shall be determined in
writing by a qualified independent physician mutually acceptable to the person and the
Company (or its Affiliate, as applicable). If the Participant or his representative and
the Company (or its Affiliate, as applicable) cannot agree as to a qualified independent
physician, each shall appoint such a physician and those two (2) physicians shall select a
third (3rd) who shall make such determination in writing. The determination of
Disability made in writing to the Company or an Affiliate and the person shall be final
and conclusive for all purposes of the Plan. 

        Section 1.6         Executive Officer.
“Executive Officer” shall mean a person who is subject to Section 16(a) of the
Securities Exchange Act of 1934, as amended. 

        Section 1.7         Incentive Awards.
“Incentive Awards” shall mean cash incentive awards earned by Participants under
this Plan. 

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        Section 1.8         Incentive Period.
 "Incentive Period" shall have the meaning ascribed in Section 2.4 hereof. 

        Section 1.9         Participant.
“Participant” shall mean, with respect to any Incentive Period during the term
of the Plan, an Executive Officer selected by the Committee to participate in the Plan in
accordance with Section 2.2 hereof. 

        Section 1.10                    Plan.
 "Plan" shall mean this Nu Skin Enterprises, Inc. 2006 Senior Executive Incentive Plan. 

ARTICLE II 

INCENTIVE AWARDS 

        Section 2.1         Performance
Targets. A Participant shall be eligible to earn an Incentive Award under the Plan
based on the achievement of performance targets by the Company, as determined by the
Committee for each Incentive Period of the Company. The performance targets for any
Incentive Period shall be based on the following objective business criteria and measured
against past Company performance, as the Committee determines: (a) pre-tax income;
(b) revenue or sales; (c) operating income; (d) operating profit;
(e) net earnings; (f) net income; (g) cash flow; (h) earnings per
share or book value per share; (i) return on equity; (j) return on invested
capital or assets; (k) cost reductions or savings or expense management;
(l) funds from operations; (m) improvements in capital structure;
(n) maintenance or improvement of profit margins; (o) market share;
(p) working capital; (q) stock price; (r) consolidated earnings before any
one or more of the following items: interest, taxes, depreciation or amortization;
(s) implementation of the Company’s targets, critical processes and/or projects;
(t) gross margins, (u) specified product sales, (v) inventory turns; (w) distributor,
executive distributor, and/or preferred customer numbers, (x) product subscription
numbers; or (y) distributor and customer retention rates. 

        The
foregoing criteria may relate to the Company, one or more of its Affiliates, or one or
more of its markets, divisions, units or product lines, or any combination of the
foregoing, and may be applied on an absolute basis and/or be relative to one or more peer
group companies or indices, or any combination thereof, all as the Committee shall
determine. In addition, to the degree consistent with Section 162(m) and/or Section 409A
of the Code, the performance goals may be calculated without regard to extraordinary
items. Without limiting the generality of the foregoing and to the degree consistent with
Section 162(m) and/or Section 409A of the Code, the Committee may appropriately adjust any
evaluation of performance under a performance target to exclude any of the following
events that occurs during an Incentive Period: (A) the effects of currency fluctuations,
(B) any or all items that are excluded from the calculation of non-GAAP earnings, (C)
asset write-downs, (D) litigation or claim judgments or settlements, (D) the effect of
changes in tax law, accounting principles or other such laws or provisions affecting
reported results, (F) accruals for recapitalization, reorganization and restructuring
programs, (G) the discontinuation, disposal or acquisition of a business or division, and
(H) any other extraordinary, infrequent or non-operational items or events. 

        Section 2.2         Incentive Awards.
Each individual who (a) is an Executive Officer and (b) who is selected by the
Committee to participate in the Plan with respect to such Incentive Period, shall be
eligible for a Incentive Award with respect to such Incentive Period under this Section
2.2. The Committee shall establish objectively determinable performance targets with
respect to such Participant under this Section 2.2 for such Incentive Period, which shall
be based on the business criteria set forth in Section 2.1. Achievement of specified
levels of the performance target will result in a Incentive Award to such Participant
equal to a fixed dollar amount or a percentage of base salary, as determined by the
Committee; provided, however, that in all cases the maximum Incentive Award payable to any
Participant 

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with respect to any fiscal year of the Company shall not exceed $3,000,000.
The Committee shall establish such specified levels of the performance target and the
Incentive Award to be paid at each such specified level or a formula for determining the
amount of the Incentive Award based on actual performance. Prior to the payment of a
Incentive Award, the Committee shall certify in writing the level of performance attained
by the Company for the Incentive Period to which such Incentive Award relates. The
Committee shall have no discretion to increase the amount of a Participant’s maximum
Incentive Award but the Committee shall have unlimited discretion to reduce or eliminate
the amount of a Participant’s Incentive Award that would otherwise be payable to the
Participant upon the achievement of specified levels of the performance target or targets. 

        Section 2.3         Eligibility.
Subject to Article V hereof, to be eligible to receive an Incentive Award under the Plan,
a Participant must, unless otherwise approved by the Committee, be employed throughout the
duration of an Incentive Period and at the time of the payment of the Incentive Award. The
Committee shall determine, in its sole discretion and in accordance with the requirements
of Section 162(m) of the Code, whether and to what extent a Participant who has not been
continuously employed throughout an Incentive Period shall be eligible to participate in
the Plan or receive an Incentive Award hereunder. 

        Section 2.4         Incentive Periods.
The Committee shall have the discretion to determine the length of incentive periods
(each, an “Incentive Period”) under this Plan; provided, however, that in
no case shall an Incentive Period be of a duration that is less than three (3) months or
longer than five (5) years. The Committee shall establish in writing the applicable
Incentive Period(s) for Incentive Awards which may be granted under this Plan. 

ARTICLE III
PAYMENT OF INCENTIVE
AWARD 

        Section 3.1         Form of Payment.
Each Participant’s Incentive Award shall be paid in cash or, at the discretion of the
Committee, in shares of Common Stock of the Company, or in any combination of cash and
stock. Any stock bonuses shall be paid in accordance with the provisions of the
Company’s 2006 Stock Incentive Plan applicable to Full-Value Awards (as such term is
defined therein) granted pursuant to Section 8.7 of such plan. 

        Section 3.2         Timing of Payment.
The amount of an Incentive Award determined by the Committee for an Incentive Period shall
be paid to the Participant after the end of such Incentive Period at such time as
determined by the Committee in its sole discretion; provided, however, that any
payment shall be made within two and one-half (21⁄2) months of the end of the
Company’s fiscal year (or such longer or shorter period as may be required under the
“short-term deferral” rules under Section 409A of Code and the regulations
thereunder.) 

ARTICLE IV 
SECTION 162(m) 

        Section 4.1         Qualified Performance
Based Compensation. Except as set forth in Section 5.2, Incentive Awards are intended
to qualify as “performance-based compensation,” within the meaning of Section
162(m)(4)(C) of the Code and the Committee shall take such actions as are consistent with
the terms of the Plan to ensure that such Incentive Award will so qualify. 

        Section 4.2         Performance Goals.
With respect to any Incentive Award that qualifies as “performance-based
compensation,” within the meaning of Section 162(m)(4)(C) of the Code, any of the
performance targets described in Section 2.1, if applicable to such Incentive Award, shall
be established  

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 in writing by the Committee not later than 90 days after the commencement
of the Incentive Period to which the performance targets relate, provided that the outcome
is substantially uncertain at the time the Committee actually establishes the performance
targets; and, provided, further, that in no event shall the performance targets be
established after 25% of the Incentive Period (as scheduled in good faith at the time the
performance targets are established) has elapsed. No Incentive Award which is intended to
qualify as “performance-based compensation,” within the meaning of Section
162(m)(4)(C) of the Code, shall be paid to a Participant unless and until the Committee
makes a certification in writing with respect to the level of performance attained by the
Company for the Incentive Period to which such Incentive Award relates, as required by
Section 162(m) of the Code, and the regulations promulgated thereunder. 

ARTICLE V 

TERMINATIONS 

        Section 5.1         Effect of Termination
of Employment. A Participant who, whether voluntarily or involuntarily, is terminated,
demoted, transferred or otherwise ceases to be an Executive Officer at any time during an
Incentive Period shall not be eligible to receive an Incentive Award for such Incentive
Period unless: (i) the Committee determines that such Incentive Award will be paid, in
whole or in part, or (ii) the Participant had executed an individually negotiated
employment contract or similar agreement with the Company providing for the treatment of
Incentive Awards, in which case such Participant’s entitlement to an Incentive Award
for such Incentive Period shall be governed by the terms of such individually negotiated
contract or agreement. 

        Section 5.2         Discretionary Payment
of Incentive Awards. In the event of a Participant’s death or Disability, or in
the event of a change in ownership or control of the Company, the Committee may (but shall
not be obligated to), in its sole discretion, provide partial Incentive Awards to affected
Participants. 

ARTICLE VI 
ADMINISTRATION 

        Section 6.1         Special Compensation
Committee. The Special Compensation Committee (referred to herein as the
“Committee”) shall consist solely of two or more members of the Board who are
“outside directors,” within the meaning of Section 162(m) of the Code. 

        Section 6.2         Duties and Powers of
Committee. It shall be the duty of the Committee to conduct the general administration
of the Plan in accordance with its provisions. The Committee shall have the power to
interpret the Plan, and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret, amend or revoke any
such rules. All actions taken and all interpretations and determinations made by the
Committee or the Board in good faith shall be final and binding upon all parties. 

ARTICLE VII 

OTHER PROVISIONS 

        Section 7.1         Amendment, Suspension
or Termination of the Plan. This Plan does not constitute a promise to pay and may be
wholly or partially amended or otherwise modified, suspended or terminated at any time or
from time to time by the Board, subject, however to the requirements of Section 162(m) of
the Code and subject to the requirements of applicable laws. The Plan shall remain in
effect until the earliest of: (i) termination by the Board, (ii) the date any stockholder
approval requirement under Section 162(m) ceases to be met, or (iii) the date that is five
(5) years after the stockholder meeting in 2006 unless further stockholder approval of the
Plan is obtained at the 2011 stockholder meeting. To the 

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extent necessary pursuant to
Section 162(m) with respect to Incentive Awards which the Committee determines should
qualify as “performance-based compensation” as described in Section 162(m)(4)(C)
of the Code and except as otherwise provided in Sections 2.1 and 2.2, no action of the
Board may: (i) modify the performance targets described in Sections 2.1 if applicable to
such Incentive Award, (ii) increase the amount of compensation payable pursuant to an
Incentive Award, or (iii) cause compensation that is or may be payable hereunder to fail
to qualify as “performance-based compensation” within the meaning of Section
162(m) of the Code. 

        Section 7.2         Approval of Plan by
Shareholders. The Plan shall be submitted for the approval of the Company’s
shareholders at the 2006 Annual Meeting of Shareholders. In the event that the Plan is not
so approved, no Incentive Award shall be payable under the Plan, and the Plan shall
terminate and shall be null and void in its entirety. 

        Section 7.3         Participants Outside
of the United States. In the case of Participants employed outside the United States,
the Company or its Affiliates may vary the provisions of this Plan as deemed appropriate
to conform with or as required by or made desirable by local laws, practices and
procedures. 

        Section 7.4         Miscellaneous. 

             (a)    
          The Company shall have the right to deduct all federal, state, foreign and local
          taxes required by law or Company policy from any Incentive Award paid to a
          Participant hereunder. 

             (b)    
          In no event shall the Company be obligated to pay to any Participant an
          Incentive Award for an Incentive Period by reason of the Company’s payment
          of an Incentive Award to such Participant in any other Incentive Period. 

             (c)    
          The rights of Participants under the Plan shall be unfunded and unsecured.
          Amounts payable under the Plan are not and will not be transferred into a trust
          or otherwise set aside. The Company shall not be required to establish any
          special or separate fund or to make any other segregation of assets to assure
          the payment of any Incentive Award under the Plan. 

             (d)    
          The Company intends that Incentive Awards payable under the Plan shall satisfy
          and shall be interpreted in a manner that satisfies any applicable requirements
          as qualified “performance-based compensation” within the meaning of
          Section 162(m)(4)(C) of the Code. To the extent Incentive Awards under the Plan
          are intended to qualify as “performance-based compensation,” within
          the meaning of Section 162(m)(4)(C) of the Code, any provision, application or
          interpretation of the Plan that is inconsistent with this intent shall be
          disregarded with respect to Incentive Awards intended to qualify as
          “performance-based compensation” within the meaning of Section
          162(m)(4)(C) of the Code. 

             (e)    
          To the extent that any Incentive Award under the Plan is subject to Section 409A
          of the Code, the terms and administration of such Incentive Award shall comply
          with the provisions of Section 409A of the Code, applicable Internal Revenue
          Service guidance and good faith reasonable interpretations thereof, and, to the
          extent necessary to achieve compliance, shall be modified, replaced or
          terminated at the discretion of the Committee. At no time before the actual
          distribution to Participants under this Plan shall any Participant accrue any
          vested interest or right whatsoever under this Plan except as otherwise stated
          in this Plan. 

             (f)    
          Nothing contained herein shall be construed as a contract of employment or
          deemed to give any Participant the right to be retained in the employ of the
          Company or any Affiliate, or to interfere with the rights of the Company or any
          Affiliate to discharge any individual at any time, with or without  

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     cause, for
          any reason or no reason, and with or without notice except as may be otherwise
          agreed in writing. 

             (g)    
          No rights of any Participant to payments of any amounts under the Plan shall be
          sold, exchanged, transferred, assigned, pledged, hypothecated or otherwise
          disposed of other than by will or by laws of descent and distribution, and any
          such purported sale, exchange, transfer, assignment, pledge, hypothecation or
          disposition shall be void. 

             (h)    
          Any provision of the Plan that is prohibited or unenforceable shall be
          ineffective to the extent of such prohibition or unenforceability without
          invalidating the remaining provisions of the Plan. (i) This Plan shall be
          effective as of May 1, 2006. 

             (j)    
          The Plan and the rights and obligations of the parties to the Plan shall be
          governed by, and construed and interpreted in accordance with, the law of the
          State of Utah (without regard to principles of conflicts of law). 

B-5EXHIBIT 4.3

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is made
and entered into as of April 4, 2006, by and between CastlePoint
Holdings, Ltd., a Bermuda corporation (together with any successor entity
thereto, the “Company”), and Friedman, Billings, Ramsey & Co., Inc.,
a Delaware corporation (“FBR”), for the benefit of FBR, the purchasers
of the Company’s common shares, par value $0.01 per share, as participants (“Participants”)
in the private placement by the Company of its common shares (the “Private
Placement”), and the direct and indirect transferees of FBR, and each of
the Participants.

 

This Agreement is made pursuant to the Purchase/Placement Agreement
(the “Purchase/Placement Agreement”), dated as of March 27, 2006, by and
between the Company and FBR in connection with the purchase and sale or
placement of an aggregate of 23,500,000 shares of the Company’s common shares
(plus an additional 3,525,000 shares to cover additional allotments, if any). In
order to induce FBR to enter into the Purchase/Placement Agreement, the Company
has agreed to provide the registration rights provided for in this Agreement to
FBR, the Participants, and their respective direct and indirect transferees. The
execution of this Agreement is a condition to the closing of the transactions
contemplated by the Purchase/Placement Agreement.

 

The parties hereby agree as follows:

 

1.             Definitions

 

As used in this Agreement, the following terms shall have the following
meanings:

 

Accredited Investor Shares:  Shares initially sold by the Company to “accredited
investors” (within the meaning of Rule 501(a) promulgated under the Securities
Act) as Participants.

 

Agreement: As
defined in the preamble.

 

Affiliate:  As to any specified Person, (i) any
Person directly or indirectly owning, controlling or holding, with power to
vote, ten percent or more of the outstanding voting securities of such other
Person, (ii) any Person ten percent or more of whose outstanding voting
securities are directly or indirectly owned, controlled or held, with power to
vote, by such other Person, (iii) any Person directly or indirectly
controlling, controlled by or under common control with such other Person,
(iv) any executive officer, director, trustee or general partner of such
Person and (v) any legal entity for which such Person acts as an executive
officer, director, trustee or general partner. An indirect relationship shall
include circumstances in which a Person’s spouse, children, parents, siblings
or mother-, father-, sister- or brother-in-law is or has been associated with a
Person.

 

Business Day:  With respect to any act to be performed
hereunder, each Monday, Tuesday, Wednesday, Thursday and Friday that is not a
day on which banking institutions in New York, New York or other applicable
places where

 

 

such act is to occur are authorized or obligated by applicable law,
regulation or executive order to close.

 

Closing Date:  April 4, 2006 or such other time or such
other date as FBR and the Company may agree.

 

Commission:  The Securities and Exchange Commission.

 

Common Shares:  The common shares, par value $0.01 per share,
of the Company.

 

Company:  As defined in the preamble.

 

Conditional No Objections Letter:  As defined in Section 4(t) hereof.

 

Controlling Person:  As defined in Section 6(a) hereof.

 

End of Suspension Notice:  As defined in Section 5(b) hereof.

 

Exchange
Act:  The Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the Commission pursuant
thereto.

 

FBR:  As defined in the preamble.

 

Holder:  Each record owner of any Registrable Shares
from time to time, including FBR and its Affiliates.

 

Indemnified
Party:  As defined in Section 6(c) hereof.

 

Indemnifying
Party:  As defined in Section 6(c) hereof.

 

IPO Registration
Statement:  As defined in Section 2(b) hereof.

 

Liabilities: 
As defined in Section 6(a) hereof.

 

NASD: 
The National Association of Securities Dealers, Inc.

 

Participant: As
defined in the preamble.

 

Person: 
An individual, partnership, corporation, trust, unincorporated
organization, government or agency or political subdivision thereof, or any
other legal entity.

 

Private Placement:  As defined in the preamble.

 

Prospectus: 
The prospectus included in any Registration Statement, including any preliminary
prospectus, and all other amendments and supplements to any such prospectus,
including post-effective amendments, and all material

 

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incorporated by reference or deemed to be incorporated by reference, if
any, in such prospectus.

 

Purchase/Placement Agreement:  As defined in the preamble.

 

Purchaser
Indemnitee:  As defined in Section 6(a) hereof.

 

Registrable
Shares:  The Rule 144A Shares, the Accredited Investor
Shares and the Regulation S Shares, upon original issuance thereof, and at all
times subsequent thereto, including upon the transfer thereof by the original
holder or any subsequent holder and any shares or other securities issued in
respect of such Registrable Shares by reason of or in connection with any stock
dividend, stock distribution, stock split, purchase in any rights offering or
in connection with any exchange for or replacement of such Registrable Shares
or any combination of shares, recapitalization, merger or consolidation, any
other equity securities issued in respect of Registrable Shares pursuant to any
other pro rata distribution with respect to the Common Shares until, in the
case of any such Rule 144A Share, Accredited Investor Share or Regulation S
Share, the earliest to occur of (i) the date on which it has been
registered effectively pursuant to the Securities Act and disposed of in
accordance with the Registration Statement relating to it, (ii) the date
on which either it is distributed to the public pursuant to Rule 144 (or any
similar provision then in effect) or is saleable pursuant to Rule 144(k)
promulgated by the Commission pursuant to the Securities Act, (iii) the
Registrable Shares are no longer outstanding, or (iv) the second anniversary of
the initial effective date of the Shelf Registration Statement (subject to
extension as provided in Section 5(c) hereof).

 

Registration
Expenses:  Any and all expenses incident to the
performance of or compliance with this Agreement, including, without
limitation: (i) all Commission, securities exchange, NASD registration,
listing, inclusion and filing fees, (ii) all fees and expenses incurred in
connection with compliance with international, federal or state securities or
blue sky laws (including, without limitation, any registration, listing and
filing fees and reasonable fees and disbursements of counsel in connection with
blue sky qualification of any of the Registrable Shares and the preparation of
a blue sky memorandum and compliance with the rules of the NASD), (iii) all
expenses in preparing or assisting in preparing, word processing, duplicating,
printing, delivering and distributing any Registration Statement, any
Prospectus, any amendments or supplements thereto, any underwriting agreements,
securities sales agreements, certificates and any other documents relating to
the performance under and compliance with this Agreement, (iv) all fees and
expenses incurred in connection with the listing or inclusion of any of the
Registrable Shares on any securities exchange or The Nasdaq Stock Market
pursuant to Section 4(n) of this Agreement, (v) the fees and disbursements of
counsel for the Company and of the independent public accountants of the
Company (including, without limitation, the expenses of any special audit and “cold
comfort” letters required by or incident to such performance), (vi) reasonable
fees and disbursements of one

 

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counsel (which
counsel shall be Lord, Bissell & Brook LLP unless another such counsel
shall have been selected by the Holders holding a majority of the Registrable
Shares), reasonably acceptable to the Company, for the Holders (such counsel, “Selling
Holders’ Counsel”) and (vii) any fees and disbursements customarily
paid in issues and sales of securities (including the fees and expenses of any
experts retained by the Company in connection with any Registration Statement);
provided,  however, that Registration Expenses shall
exclude brokers’ or underwriters’ discounts and commissions, if any, relating
to the sale or disposition of Registrable Shares by a Holder.

 

Registration
Statement:  Any registration statement of the Company
that covers the resale of Registrable Shares pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto and all material incorporated by reference or
deemed to be incorporated by reference, if any, in such registration statement.

 

Regulation
S:  Regulation S (Rules 901-905) promulgated by
the Commission under the Securities Act, as such rules may be amended from time
to time, or any similar rule or regulation hereafter adopted by the Commission
as a replacement thereto having substantially the same effect as such
regulation.

 

Regulation
S Shares:  Shares initially resold by FBR pursuant to
the Purchase/Placement Agreement to “non-U.S. persons” (in accordance with
Regulation S) in an “offshore transaction” (in accordance with Regulation S).

 

Rule 144:  Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission as a
replacement thereto having substantially the same effect as such rule.

 

Rule 144A: 
Rule 144A promulgated by the Commission pursuant to the Securities Act,
as such rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission as a replacement thereto having
substantially the same effect as such rule.

 

Rule 144A
Shares:  Shares initially resold by FBR pursuant to
the Purchase/Placement Agreement to “qualified institutional buyers” (as such
term is defined in Rule 144A).

 

Rule 158: 
Rule 158 promulgated by the Commission pursuant to the Securities Act,
as such rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission as a replacement thereto having
substantially the same effect as such rule.

 

Rule 415:  Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such rule may be amended from time to time,
or any similar

 

4

 

rule or regulation hereafter adopted by the Commission as a replacement
thereto having substantially the same effect as such rule.

 

Rule 424: 
Rule 424 promulgated by the Commission pursuant to the Securities Act,
as such rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission as a replacement thereto having
substantially the same effect as such rule.

 

Rule 429: 
Rule 429 promulgated by the Commission pursuant to the Securities Act,
as such rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission as a replacement thereto having
substantially the same effect as such rule.

 

Securities
Act:  The Securities Act of 1933, as amended, and
the rules and regulations promulgated by the Commission thereunder.

 

Shares: 
The Common Shares being offered and sold pursuant to the terms and
conditions of the Purchase/Placement Agreement.

 

Shelf
Registration Statement:  As defined in
Section 2(a) hereof.

 

Suspension
Event:  As defined in Section 5(b) hereof.

 

Suspension
Notice:  As defined in Section 5(b) hereof.

 

Underwritten
Offering:  A sale of securities of the Company to an
underwriter or underwriters for reoffering to the public.

 

2.             Registration Rights

 

(a)           Mandatory Shelf Registration. As set forth
in Section 4 hereof, the Company agrees to file with the Commission as soon as
reasonably practicable following the date of this Agreement (but in no event
later than the date that is 90 days after the date of this Agreement) a shelf
Registration Statement on Form S-1 or such other form under the Securities Act
then available to the Company providing for the resale of any Registrable
Shares pursuant to Rule 415 from time to time by the Holders (a “Shelf
Registration Statement”). The Company shall use its commercially reasonable
efforts to cause such Shelf Registration Statement to be declared effective by
the Commission as soon as practicable. Any Shelf Registration Statement shall
provide for the resale from time to time, and pursuant to any method or
combination of methods legally available (including, without limitation, an
Underwritten Offering, a direct sale to purchasers or a sale through brokers or
agents, which may include sales over the internet) by the Holders of any and
all Registrable Shares.

 

(b)           IPO Registration. If the Company proposes
to file a registration statement on Form S-1 or such other form under the
Securities Act providing for the initial public offering of Common Shares (the “IPO
Registration Statement”), the Company will notify each Holder of the
proposed filing and afford each Holder an opportunity to include in the IPO
Registration Statement all or any part of the Registrable Shares then held by
such Holder. Each Holder

 

5

 

desiring to include in the IPO Registration
Statement all or part of the Registrable Shares held by such Holder shall,
within twenty (20) days after mailing or other delivery of the above-described
notice from the Company, (i) so notify the Company in writing, and in such
notice shall inform the Company of the number of Registrable Shares such Holder
wishes to include in the IPO Registration Statement and (ii) complete and
return to the Company a selling shareholder questionnaire in customary form. Any
election by any Holder to include any Registrable Shares in the IPO
Registration Statement will not affect the inclusion of such Registrable Shares
in the Shelf Registration Statement until such Registrable Shares have been
sold under the IPO Registration Statement; provided, however, that at such time
of sale, the Company shall have the right to remove from the Shelf Registration
Statement the Registrable Shares sold pursuant to the IPO Registration
Statement.

 

(i)            Right to Terminate IPO Registration. The
Company shall have the right to terminate or withdraw the IPO Registration
Statement initiated by it referred to in this Section 2(b) prior to the
effectiveness of such registration whether or not any Holder has elected to
include Registrable Shares in such registration.

 

(ii)           Shelf Registration not Impacted by IPO Registration
Statement. The Company’s obligation to file the Shelf Registration
Statement pursuant to Section 2(a) hereof shall not be affected by the
filing or effectiveness of the IPO Registration Statement.

 

(c)           Underwriting. The Company shall advise all
Holders of the underwriter for the Underwritten Offering proposed under the IPO
Registration Statement. The right of any such Holder’s Registrable Shares to be
included in the IPO Registration Statement pursuant to Section 2(b) shall
be conditioned upon such Holder’s participation in such underwriting and the
inclusion of such Holder’s Registrable Shares in the underwriting to the extent
provided herein. All Holders proposing to distribute their Registrable Shares
through such underwriting shall enter into an underwriting agreement in
customary form with the managing underwriter(s) selected for such underwriting
and complete and execute any questionnaires, powers of attorney, indemnities,
securities escrow agreements and other documents reasonably required under the
terms of such underwriting, and furnish to the Company such information as the
Company may reasonably request in writing for inclusion in the Registration
Statement; provided, however, that no Holder shall be required
to make any representations or warranties to or agreements with the Company or
the underwriters other than representations, warranties or agreements regarding
such Holder and such Holder’s intended method of distribution and any other
representation required by law or reasonably requested by the underwriters. Notwithstanding
any other provision of this Agreement, if the managing underwriter(s)
determine(s) in good faith that marketing factors require a limitation on the
number of shares to be included, then the managing underwriter(s) may exclude
shares (including Registrable Shares) from the IPO Registration Statement and
Underwritten Offering, and any shares included in such IPO Registration
Statement and Underwritten Offering shall be allocated first, to the
Company, and second, to each of the Holders requesting inclusion of
their Registrable Shares in such IPO Registration Statement (on a pro rata basis based on the total number
of Registrable Shares then held by each such Holder who

 

6

 

is requesting inclusion); provided, however,
that the number of Registrable Shares to be included in the IPO Registration
Statement shall not be reduced unless all other securities of the Company held
by (i) officers, directors, other employees of the Company and
consultants; and (ii) other holders of the Company’s capital stock with
registration rights that are inferior (with respect to such reduction) to the
registration rights of the Holders set forth herein, are first entirely
excluded from the underwriting and registration; provided, further,
however, that Holders of
Registrable Shares shall be permitted to include Registrable Shares comprising
at least 25% of the total securities included in the Underwritten Offering
proposed under the IPO Registration Statement.

 

By electing to
include the Registrable Shares in the IPO Registration Statement, the Holder of
such Registrable Shares shall be deemed to have agreed not to effect any public
sale or distribution of securities of the Company of the same or similar class
or classes of the securities included in the IPO Registration Statement or any
securities convertible into or exchangeable or exercisable for such securities,
including a sale pursuant to Rule 144 or Rule 144A under the Securities Act,
during a period of sixty (60) days following the effective date of the IPO
Registration Statement).

 

If any Holder
disapproves of the terms of any such underwriting, such Holder may elect to
withdraw therefrom by written notice to the Company and the underwriter,
delivered at least ten (10) Business Days prior to the printing of the
preliminary Prospectus in connection with the IPO Registration Statement. Any
Registrable Shares excluded or withdrawn from such underwriting shall be
excluded and withdrawn from the registration.

 

(d)           Expenses. The Company shall pay all
Registration Expenses in connection with the registration of the Registrable
Shares pursuant to this Agreement. Each Holder participating in a registration
pursuant to this Section 2 shall bear such Holder’s proportionate share (based
on the total number of Registrable Shares sold in such registration) of all
discounts and commissions payable to underwriters or brokers in connection with
a registration of Registrable Shares pursuant to this Agreement.

 

(e)           CEO Bonus; Additional Payments. If the
Company does not file a Shelf Registration Statement as contemplated by Section
2(a) within ninety (90) days after the Closing Date, other than as a result of
the Commission being unable to accept such filings, each of Michael H. Lee,
Chairman of the Board, President and Chief Executive Officer of the Company,
and Joel S. Weiner, Senior Vice President and Chief Financial Officer of the
Company, shall forfeit any bonus to which he would be entitled as a result of
performance during the 2006 fiscal year, whether under an employment agreement
with the Company, a bonus plan or any other bonus arrangement, including any
bonus compensation for which payment would otherwise be deferred.

 

3.             Rules
144 and 144A Reporting; Other Reports and Communications

 

With a view to making available the benefits of certain rules and
regulations of the Commission that may at any time permit the sale of the
Registrable Shares to the public without registration, the Company agrees to:

 

7

 

(a)           make
and keep public information available, as those terms are understood and
defined in Rule 144 under the Securities Act, at all times after the effective
date of the first registration under the Securities Act filed by the Company
for an offering of its securities to the general public;

 

(b)           use
its commercially reasonable efforts to file with the Commission in a timely
manner all reports and other documents required to be filed by the Company under
the Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements);

 

(c)           so
long as a Holder owns any Registrable Shares, if the Company is not required to
file reports and other documents under the Securities Act and the Exchange Act,
it will make available other information as required by, and so long as
necessary to permit sales of Registrable Shares pursuant to, Rule 144 or Rule
144A, and in any event shall make available (either by mailing a copy thereof,
by posting on the Company’s website, or by press release) to each Holder a copy
of:

 

(i) the Company’s annual consolidated financial statements (including
at least balance sheets, statements of profit and loss, statements of
shareholders’ equity and statements of cash flows) prepared in accordance with
U.S. generally accepted accounting principles, accompanied by an audit report
of the Company’s independent accountants, no later than ninety (90) days after
the end of each fiscal year of the Company; and

 

(ii) the Company’s unaudited quarterly financial statements (including
at least balance sheets, statements of profit and loss, statements of
shareholders’ equity and statements of cash flows) prepared in a manner
consistent with the preparation of the Company’s annual financial statements,
no later than forty-five (45) days after the end of each fiscal quarter of the
Company;

 

and the Company shall hold, a reasonable time
after the availability of such financial statements and upon reasonable notice
to the Holders and FBR (either by mail, by posting on the Company’s website, or
by press release), a quarterly investor conference call to discuss such
financial statements, which call will also include an opportunity for the
Holders to ask questions of management with regard to such financial
statements; and

 

(d)           so
long as a Holder owns any Registrable Shares, to furnish to the Holder promptly
upon request (i) a written statement by the Company as to its compliance
with the reporting requirements of Rule 144 (at any time after ninety (90) days
after the effective date of the first registration statement filed by the
Company for an offering of its securities to the general public), and of the
Securities Act and the Exchange Act (at any time after it has become subject to
the reporting requirements of the Exchange Act), (ii) a copy of the most
recent annual or quarterly report of the Company, and (iii) such other
reports and documents of the Company, and take such further actions, as a
Holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing a Holder to sell any such Registrable Shares without
registration.

 

8

 

4.             Registration Procedures

 

In connection with the obligations of the Company with respect to any
registration pursuant to this Agreement, the Company shall use its commercially
reasonable efforts to effect or cause to be effected the registration of the
Registrable Shares under the Securities Act to permit the sale of such
Registrable Shares by the Holder or Holders in accordance with the Holder’s or
Holders’ intended method or methods of distribution, and the Company shall:

 

(a)           notify
FBR and Selling Holders’ Counsel, in writing, at least ten (10) Business Days
prior to filing a Registration Statement, of its intention to file a
Registration Statement with the Commission and, at least five (5) Business Days
prior to filing, provide a copy of the Registration Statement to FBR, its
counsel, and Selling Holders’ Counsel for review and comment; prepare and file
with the Commission, as specified in this Agreement, a Registration
Statement(s), which Registration Statement(s) (x) shall comply as to form in
all material respects with the requirements of the applicable form and include
all financial statements required by the Commission to be filed therewith and
(y) shall be reasonably acceptable to FBR, its counsel and Selling Holders’
Counsel; notify FBR and Selling Holders’ Counsel in writing, at least five (5)
Business Days prior to filing of any amendment or supplement to such
Registration Statement and, at least three (3) Business Days prior to filing,
provide a copy of such amendment or supplement to FBR, its counsel and Selling
Holders’ Counsel for review and comment; promptly following receipt from the
Commission, provide to FBR, its counsel and Selling Holders’ Counsel copies of
any comments made by the staff of the Commission relating to such Registration
Statement and of the Company’s responses thereto for review and comment; and
use its commercially reasonable efforts to cause such Registration Statement to
become effective as soon as practicable after filing and to remain effective,
subject to Section 5 hereof, until the earliest to occur of (i) such time
as all Registrable Shares covered thereby have been sold in accordance with the
intended distribution of such Registrable Shares, (ii) the date on which either
the Registrable Shares are distributed to the public pursuant to Rule 144 (or
any similar provision then in effect) or are saleable pursuant to Rule 144(k)
promulgated by the Commission pursuant to the Securities Act; (iii) there are
no Registrable Shares outstanding or (iv) the second anniversary of the
effective date of such Registration Statement (subject to extension as provided
in Section 5(c) hereof); provided, however,
that the Company shall not be required to cause the IPO Registration Statement
to remain effective for any period longer than ninety (90) days following the
effective date of the IPO Registration Statement (subject to extension as
provided in Section 5(c) hereof); provided,
further, that if the Company has
an effective Shelf Registration Statement on Form S-1 under the Securities Act
and becomes eligible to use Form S-3 or such other short-form registration
statement form under the Securities Act, the Company may, upon thirty (30)
Business Days prior written notice to all Holders, register any Registrable
Shares registered but not yet distributed under the effective Shelf
Registration Statement on such a short-form Shelf Registration Statement and,
once the short-form Shelf Registration Statement is declared effective,
de-register such shares under the previous Registration Statement or transfer
the filing fees from the previous Registration Statement (such transfer
pursuant to Rule 429, if applicable) unless any Holder registered under the
initial Shelf Registration Statement notifies the Company within ten (10)
Business Days of receipt of the Company notice that such a registration under a
new Registration Statement and de-registration of the initial Shelf
Registration Statement would interfere with its distribution of Registrable
Shares already in progress;

 

9

 

(b)           subject
to Section 4(i) hereof, (i) prepare and file with the Commission such
amendments and post-effective amendments to each such Registration Statement as
may be necessary to keep such Registration Statement effective for the period
described in Section 4(a) hereof; (ii) cause each Prospectus contained
therein to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 or any similar rule that may be
adopted under the Securities Act; and (iii) comply with the provisions of
the Securities Act with respect to the disposition of all securities covered by
each Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the selling Holders thereof;

 

(c)           furnish
to the Holders, without charge, as many copies of each Prospectus, including
each preliminary Prospectus, and any amendment or supplement thereto and such
other documents as such Holder may reasonably request, in order to facilitate
the public sale or other disposition of the Registrable Shares; the Company
consents, subject to Section 5, to the use of such Prospectus, including each
preliminary Prospectus, by the Holders, if any, in connection with the offering
and sale of the Registrable Shares covered by any such Prospectus;

 

(d)           use
its commercially reasonable efforts to register or qualify, or obtain exemption
from registration or qualification for, all Registrable Shares by the time the
applicable Registration Statement is declared effective by the Commission under
all applicable state securities or “blue sky” laws of such jurisdictions as FBR
or any Holder of Registrable Shares covered by a Registration Statement shall
reasonably request in writing, keep each such registration or qualification or
exemption effective during the period such Registration Statement is required
to be kept effective pursuant to Section 4(a) and do any and all other
acts and things that may be reasonably necessary or advisable to enable such
Holder to consummate the disposition in each such jurisdiction of such
Registrable Shares owned by such Holder; provided,
however, that the Company shall not be required to (i) qualify
generally to do business in any jurisdiction or to register as a broker or
dealer in such jurisdiction where it would not otherwise be required to qualify
but for this Section 4(d) and except as may be required by the Securities
Act, (ii) subject itself to taxation in any such jurisdiction, or
(iii) submit to the general service of process in any such jurisdiction;

 

(e)           use
its commercially reasonable efforts to cause all Registrable Shares covered by
such Registration Statement to be registered and approved by such other
governmental agencies or authorities as may be necessary to enable the Holders
thereof to consummate the disposition of such Registrable Shares;

 

(f)            notify
FBR and each Holder promptly and, if requested by FBR or any Holder, confirm
such advice in writing (i) when a Registration Statement has become
effective and when any post-effective amendments and supplements thereto become
effective, (ii) of the issuance by the Commission or any state securities
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose, (iii) of any
request by the Commission or any other federal, state or foreign governmental
authority for amendments or supplements to a Registration Statement or related
Prospectus or for additional information, (iv) of the happening of any
event during the period a Registration Statement is effective as a result of
which such Registration Statement or the related Prospectus or any document
incorporated by reference therein contains any untrue statement of a material
fact or

 

10

 

omits to state any material fact required to
be stated therein or necessary to make the statements therein not misleading
(which information shall be accompanied by an instruction to suspend the use of
the Prospectus until the requisite changes have been made) and (v) at the
request of any such Holder, promptly to furnish to such Holder 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 purchaser of such securities,
such Prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading;

 

(g)           make
every reasonable effort to avoid the issuance of, or if issued, to obtain the
withdrawal of, any order enjoining or suspending the use or effectiveness of a
Registration Statement or suspending of the qualification (or exemption from
qualification) of any of the Registrable Shares for sale in any jurisdiction,
as promptly as practicable;

 

(h)           upon
request, furnish to each requesting Holder of Registrable Shares, without
charge, at least one conformed copy of each Registration Statement and any
post-effective amendment or supplement thereto (without documents incorporated
therein by reference or exhibits thereto, unless requested); provided, however, that
the Company shall not be required to provide any Holder with any such
information that has been filed or furnished with the Commission by an
electronic transmission pursuant to the Electronic Data Gathering, Analysis and
Retrieval System (“EDGAR”) or an equivalent electronic database authorized by
the Commission and that is available to the public;

 

(i)            except
as provided in Section 5, upon the occurrence of any event contemplated by
Section 4(f)(iv) hereof, use its commercially reasonable efforts to promptly
prepare a supplement or post-effective amendment to a Registration Statement or
the related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Shares, such Prospectus will not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;

 

(j)            if
requested by the representative of the underwriters, if any, or any Holders of
Registrable Shares being sold in connection with such offering,
(i) promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the representative of the underwriters, if any,
or such Holders indicate relates to them or that they reasonably request be
included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;

 

(k)           in
the case of an Underwritten Offering, use its commercially reasonable efforts
to furnish to the underwriters, a signed counterpart, addressed to the
underwriters, of: (i) an opinion of counsel for the Company, dated the date of
each closing under the underwriting agreement, reasonably satisfactory to the
underwriters; and (ii) a “comfort” letter, dated the effective date of
such Registration Statement and the date of each closing under the underwriting
agreement, signed by the independent public accountants who have certified the
Company’s financial statements included in such Registration Statement,
covering substantially the same matters with

 

11

 

respect to such Registration Statement (and
the Prospectus included therein) and with respect to events subsequent to the
date of such financial statements, as are customarily covered in accountants’
letters delivered to underwriters in underwritten public offerings of
securities and such other financial matters as such underwriters may reasonably
request;

 

(l)            enter
into customary agreements (including in the case of an Underwritten Offering,
an underwriting agreement in customary form) and take all other action in
connection therewith in order to expedite or facilitate the distribution of the
Registrable Shares included in such Registration Statement and, in the case of
an Underwritten Offering, make representations and warranties to the Holders
covered by such Registration Statement and to the underwriters in such form and
scope as are customarily made by issuers to underwriters in underwritten
offerings and confirm the same to the extent customary if and when requested;

 

(m)          make
available for inspection by Selling Holders’ Counsel and the representative of
any underwriters participating in any disposition pursuant to a Registration
Statement and any special counsel or accountants retained by such Holders or
underwriters (the “Holders Representatives”), all financial and other records,
pertinent corporate documents and properties of the Company and cause the
respective officers, directors and employees of the Company to supply all
information reasonably requested by any of the Holders Representatives in
connection with a Registration Statement; provided,
however, that such records, documents or information that the
Company determines, in good faith, to be confidential and notifies such Holders
Representatives are confidential shall not be disclosed by the Holders
Representatives unless (i) the disclosure of such records, documents or
information is necessary to avoid or correct a misstatement or omission in a
Registration Statement or Prospectus (which Selling Holders’ Counsel reasonably
believes is material), (ii) the release of such records, documents or information
is ordered pursuant to a subpoena or other order from a court of competent
jurisdiction, or (iii) such records, documents or information have been
generally made available to the public;

 

(n)           use
its commercially reasonable efforts (including, without limitation, seeking to
cure any deficiencies cited by the exchange or market in the Company’s listing
or inclusion application) to list or include all Registrable Shares on the New
York Stock Exchange or The Nasdaq Stock Market;

 

(o)           prepare
and file in a timely manner all documents and reports required by the Exchange
Act and, to the extent the Company’s obligation to file such reports pursuant
to Section 15(d) of the Exchange Act expires prior to the expiration of
the effectiveness period of the Registration Statement as required by
Section 4(a) hereof, the Company shall register the Registrable Shares
under the Exchange Act and shall maintain such registration through the
effectiveness period required by Section 4(a) hereof;

 

(p)           provide
a CUSIP number for all Registrable Shares, not later than the effective date of
the Registration Statement;

 

(q)           (i) otherwise
use its commercially reasonable efforts to comply with all applicable rules and
regulations of the Commission, (ii) make generally available to its shareholders,
as soon as reasonably practicable, earnings statements covering at least 12
months that satisfy the

 

12

 

provisions of Section 11(a) of the Securities
Act and Rule 158 (or any similar rule promulgated under the Securities Act )
thereunder, but in no event later than sixty (60) days after the end of each
fiscal year of the Company beginning after the effective date of the
Registration Statement and (iii) not file any Registration Statement or
Prospectus or amendment or supplement to such Registration Statement or
Prospectus to which Selling Holders’ Counsel shall have reasonably objected on
the grounds that such Registration Statement or Prospectus or amendment or
supplement does not comply in all material respects with the requirements of
the Securities Act, such Holder and Selling Holders’ Counsel having been
furnished with a copy thereof at least two (2) Business Days prior to the
filing thereof;

 

(r)            provide
and cause to be maintained a registrar and transfer agent for all Registrable
Shares covered by any Registration Statement from and after a date not later
than the effective date of such Registration Statement;

 

(s)           in
connection with any sale or transfer of the Registrable Shares (whether or not
pursuant to a Registration Statement) that will result in the security being
delivered no longer being Registrable Shares, cooperate with the Holders and
the representative of the underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing the Registrable Shares to
be sold, which certificates shall not bear any transfer restrictive legends
(other than as required by the Company’s charter documents) and to enable such
Registrable Shares to be in such denominations and registered in such names as
the representative of the underwriters, if any, or the Holders may request at
least two (2) Business Days prior to any sale of the Registrable Shares;

 

(t)            in connection with the initial filing of a
Shelf Registration Statement and each amendment thereto with the Commission
pursuant to Section 2(a) hereof other than in connection with an underwritten
take-down off the Shelf Registration Statement, prepare and file with the NASD
such Shelf Registration Statement and amendments thereto within one Business
Day of such filing with the Commission, and file with the NASD all forms and
information required or requested by the NASD in order to obtain written
confirmation from the NASD that the NASD does not object to the fairness and
reasonableness of the underwriting terms and arrangements (or any deemed
underwriting terms and arrangements) (each such written confirmation, a “Conditional
No Objections Letter”) relating to the resale of Registrable Shares
pursuant to the Shelf Registration Statement, including, without limitation,
information provided to the NASD through its COBRADesk system, and pay all
costs, fees and expenses incident to the NASD’s review of the Shelf
Registration Statement and the related underwriting terms and arrangements,
including, without limitation, all filing fees associated with any filings or
submissions to the NASD and the reasonable out-of-pocket legal expenses, filing
fees and other reasonable out-of-pocket disbursements of FBR and any other NASD
member that is the holder of, or is affiliated or associated with an owner of,
Registrable Shares included in the Shelf Registration Statement (including in
connection with any initial or subsequent member filing);

 

(u)           in connection with the initial filing of a
Shelf Registration Statement and each amendment thereto with the Commission
pursuant to Section 2(a) hereof, provide to FBR and its representatives, the
opportunity to conduct due diligence, including, without limitation, an inquiry
of the Company’s financial and other records, and make available members of its
management for questions regarding information which FBR may request in order
to fulfill any

 

13

 

due diligence obligation on its part, and, concurrent with the initial
filing of a Shelf Registration Statement with the Commission pursuant to
Section 2(a) hereof, pay the sum of $75,000 to FBR, by wire transfer of
immediately available funds, to cover FBR’s costs and expenses associated with
its due diligence review of the Shelf Registration Statement and the
information contained therein; and

 

(v)           upon
effectiveness of the first Registration Statement filed under this Agreement,
the Company will take such actions and make such filings as are necessary to
effect the registration of the Common Shares under the Exchange Act
simultaneously with or immediately following the effectiveness of the
Registration Statement.

 

The Company may require the Holders to furnish to the Company such
information regarding the proposed distribution by such Holder of such
Registrable Shares as the Company may from time to time reasonably request in
writing or as shall be required to effect the registration of the Registrable
Shares, and no Holder shall be entitled to be named as a selling shareholder in
any Registration Statement and no Holder shall be entitled to use the
Prospectus forming a part thereof if such Holder does not provide such
information to the Company. Each Holder further agrees to furnish promptly to
the Company in writing all information required from time to time to make the
information previously furnished by such Holder not misleading.

 

Each Holder agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Sections 4(f)(ii), 4(f)(iii)
or 4(f)(iv) hereof, such Holder will immediately discontinue disposition of
Registrable Shares pursuant to a Registration Statement until such Holder’s
receipt of the copies of the supplemented or amended Prospectus. If so directed
by the Company, such Holder will deliver to the Company (at the expense of the
Company) all copies in its possession, other than permanent file copies then in
such Holder’s possession, of the Prospectus covering such Registrable Shares
current at the time of receipt of such notice.

 

5.             Black-Out Period

 

(a)           Subject
to the provisions of this Section 5 and a good faith determination by a
majority of the independent members of the Board of Directors of the Company
that it is in the best interests of the Company to suspend the use of the
Registration Statement, following the effectiveness of a Registration Statement
(and the filings with any international, federal or state securities
commissions), the Company, by written notice to FBR and the Holders, may direct
the Holders to suspend sales of the Registrable Shares pursuant to a
Registration Statement for such times as the Company reasonably may determine
is necessary and advisable (but in no event for more than an aggregate of
ninety (90) days in any rolling twelve (12)-month period commencing on the
Closing Date or more than sixty (60) days in any rolling 90-day period), if any
of the following events shall occur:  (i)
the representative of the underwriters of an Underwritten Offering of primary
shares by the Company has advised the Company that the sale of Registrable
Shares pursuant to the Registration Statement would have a material adverse
effect on the Company’s primary offering; (ii) the majority of the independent
members of the Board of Directors of the Company shall have determined in good
faith that (A) the offer or sale of any Registrable Shares would
materially impede, delay or interfere with any proposed financing, offer or
sale of securities, acquisition, amalgamation, merger, tender offer, business
combination,

 

14

 

corporate reorganization or other significant
transaction involving the Company or (B) after the advice of counsel, the
sale of Registrable Shares pursuant to the Registration Statement would require
disclosure of non-public material information not otherwise required to be
disclosed under applicable law, and (C)  (x) the Company has a bona
fide business purpose for preserving the confidentiality of the proposed
transaction, (y) disclosure would have a material adverse effect on the
Company or the Company’s ability to consummate the proposed transaction, or
(z) the proposed transaction renders the Company unable to comply with
Commission requirements, in each case under circumstances that would make it
impractical or inadvisable to cause the Registration Statement (or such
filings) to become effective or to promptly amend or supplement the
Registration Statement on a post-effective basis, as applicable; or
(iii) the majority of the independent members of the Board of Directors of
the Company shall have determined in good faith, after the advice of counsel,
that the Company is required by law, rule or regulation or that it is in the
best interests of the Company to supplement the Registration Statement or file
a post-effective amendment to the Registration Statement in order to
incorporate information into the Registration Statement for the purpose of
(1) including in the Registration Statement any prospectus required under
Section 10(a)(3) of the Securities Act; (2) reflecting in the prospectus
included in the Registration Statement any facts or events arising after the
effective date of the Registration Statement (or of the most-recent
post-effective amendment) that, individually or in the aggregate, represents a
fundamental change in the information set forth therein; or (3) including
in the prospectus included in the Registration Statement any material
information with respect to the plan of distribution not disclosed in the Registration
Statement or any material change to such information. Upon the occurrence of
any such suspension, the Company shall use its commercially reasonable best
efforts to cause the Registration Statement to become effective or to promptly
amend or supplement the Registration Statement on a post-effective basis or to
take such action as is necessary to make resumed use of the Registration
Statement compatible with the Company’s best interests, as applicable, so as to
permit the Holders to resume sales of the Registrable Shares as soon as
possible.

 

(b)           In
the case of an event that causes the Company to suspend the use of a
Registration Statement (a “Suspension Event”), the Company shall give
written notice (a “Suspension Notice”) to FBR and the Holders to suspend
sales of the Registrable Shares and such notice shall state generally the basis
for the notice and that such suspension shall continue only for so long as the
Suspension Event or its effect is continuing and the Company is using its commercially
reasonable best efforts and taking all reasonable steps to terminate suspension
of the use of the Registration Statement as promptly as possible. The Holders
shall not effect any sales of the Registrable Shares pursuant to such
Registration Statement (or such filings) at any time after it has received a
Suspension Notice from the Company and prior to receipt of an End of Suspension
Notice (as defined below). If so directed by the Company, each Holder will
deliver to the Company (at the expense of the Company) all copies other than
permanent file copies then in such Holder’s possession of the Prospectus
covering the Registrable Shares at the time of receipt of the Suspension Notice.
The Holders may recommence effecting sales of the Registrable Shares pursuant
to the Registration Statement (or such filings) following further notice to
such effect (an “End of Suspension Notice”) from the Company, which End
of Suspension Notice shall be given by the Company to the Holders and FBR in
the manner described above promptly following the conclusion of any Suspension
Event and its effect.

 

15

 

(c)           Notwithstanding
any provision herein to the contrary, if the Company shall give a Suspension
Notice pursuant to this Section 5, the Company agrees that it shall extend
the period of time during which the applicable Registration Statement shall be
maintained effective pursuant to this Agreement by the number of days during
the period from the date of receipt by the Holders of the Suspension Notice to
and including the date of receipt by the Holders of the End of Suspension
Notice and any copies of the supplemented or amended Prospectus necessary to
resume sales.

 

6.             Indemnification and Contribution

 

(a)           The
Company agrees to indemnify and hold harmless (i) each Holder of
Registrable Shares and any underwriter (as determined in the Securities Act)
for such Holder (including, if applicable, FBR), (ii) each Person, if any,
who controls (within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act), any such Person described in clause (i) (any of the
Persons referred to in this clause (ii) being hereinafter referred to as a “Controlling
Person”), and (iii) the respective officers, directors, partners,
employees, representatives and agents of any such Person or any Controlling
Person (any Person referred to in clause (i), (ii) or (iii) may hereinafter be
referred to as a “Purchaser Indemnitee”), to the fullest extent lawful,
from and against any and all losses, claims, damages, judgments, actions,
out-of-pocket expenses, and other liabilities (the “Liabilities”),
including without limitation and as incurred, reimbursement of all reasonable
costs of investigating, preparing, pursuing or defending any claim or action,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, including the reasonable fees and expenses of counsel
to any Purchaser Indemnitee, joint or several, directly or indirectly related
to, based upon, arising out of or in connection with any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus (as amended or supplemented if the Company shall have
furnished to such Purchaser Indemnitee any amendments or supplements thereto),
or any preliminary Prospectus or any issuer free writing prospectus (as defined
in Rule 433(h)(1) of the Securities Act) used to sell the Shares, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as
such Liabilities arise out of or are based upon (i) any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Purchaser Indemnitee furnished to
the Company or any underwriter in writing by such Purchaser Indemnitee
expressly for use therein or (ii) any untrue statement contained in or omission
from or alleged untrue statement contained in or alleged omission from a
preliminary Prospectus if a copy of the preliminary Prospectus (as then amended
or supplemented, if the Company shall have furnished or made available to or on
behalf of the Holder participating in the distribution relating to the relevant
Registration Statement any amendments or supplements thereto) was not sent or
given by or on behalf of such Holder to the Person asserting any such
Liabilities who purchased Shares, if such preliminary Prospectus (or
preliminary Prospectus as amended or supplemented) is furnished or made
available to the Holder prior to the time of sale of such Shares to such Person
and the untrue statement contained in or omission from or alleged untrue
statement contained in or alleged omission from such preliminary Prospectus was
corrected in the preliminary Prospectus, as amended or supplemented. The
Company shall notify the Holders promptly of the institution, threat or
assertion of any claim, proceeding (including any governmental investigation),
or litigation of which it shall have become aware in

 

16

 

connection with the matters addressed by this
Agreement which involves the Company or a Purchaser Indemnitee. The indemnity
provided for herein shall remain in full force and effect regardless of any
investigation made by or on behalf of any Purchaser Indemnitee.

 

(b)           In
connection with any Registration Statement in which a Holder of Registrable
Shares is participating, such Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, each Person who controls the Company
within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act and the respective partners, directors,
officers, members, representatives, employees and agents of such Person or
Controlling Person to the same extent as the foregoing indemnity from the
Company to each Purchaser Indemnitee, but only with reference to untrue
statements or omissions or alleged untrue statements or omissions made in
reliance upon and in strict conformity with information relating to such
Purchaser Indemnitee furnished to the Company in writing by such Purchaser
Indemnitee expressly for use in any Registration Statement or Prospectus, any
amendment or supplement thereto or any preliminary Prospectus. The liability of
any Purchaser Indemnitee pursuant to this paragraph shall in no event exceed
the net proceeds received by such Purchaser Indemnitee from sales of
Registrable Shares giving rise to such obligations.

 

(c)           If
any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any Person
in respect of which indemnity may be sought pursuant to paragraph (a) or (b)
above, such Person (the “Indemnified Party”), shall promptly notify the
Person against whom such indemnity may be sought (the “Indemnifying Party”),
in writing of the commencement thereof (but the failure to so notify an Indemnifying
Party shall not relieve it from any liability which it may have under this
Section 6, except to the extent the Indemnifying Party is materially
prejudiced by the failure to give notice), and the Indemnifying Party, upon
request of the Indemnified Party, shall retain counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified Party and any others the
Indemnifying Party may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding. Notwithstanding the foregoing, in any such proceeding, any
Indemnified Party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party,
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed in writing to the contrary, (ii) the Indemnifying Party failed within a
reasonable time after notice of commencement of the action to assume the
defense and employ counsel reasonably satisfactory to the Indemnified Party or
(iii) the named parties to any such action (including any impleaded parties),
include both such Indemnified Party and the Indemnifying Party, or any
Affiliate of the Indemnifying Party, and such Indemnified Party shall have been
reasonably advised by counsel that, either (x) there may be one or more legal
defenses available to it which are different from or additional to those
available to the Indemnifying Party or such Affiliate of the Indemnifying Party
or (y) a conflict may exist between such Indemnified Party and the Indemnifying
Party or such Affiliate of the Indemnifying Party (in which case the
Indemnifying Party shall not have the right to assume nor direct the defense of
such action on behalf of such Indemnified Party, it being understood, however,
that the Indemnifying Party shall not, in connection with any one such action
or separate but substantially similar or related actions arising out of the
same general allegations or circumstances, be liable for the fees and expenses
of more than one separate firm of attorneys (in addition to any local counsel),
for all such Indemnified Parties, which firm shall be designated in writing by
those Indemnified Parties who

 

17

 

sold a majority of the Registrable Shares
sold by all such Indemnified Parties and any such separate firm for the
Company, the directors, the officers and such control Persons of the Company as
shall be designated in writing by the Company). The Indemnifying Party shall
not be liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, but if settled with
such consent or if there is a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify any Indemnified Party from and against
any loss or liability by reason of such settlement or judgment. No Indemnifying
Party shall, without the prior written consent of the Indemnified Party, effect
any settlement of any pending or threatened proceeding in respect of which any
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such proceeding.

 

(d)           If
the indemnification provided for in paragraphs (a) and (b) of this
Section 6 is for any reason held to be unavailable to an Indemnified Party
in respect of any Liabilities referred to therein (other than by reason of the
exceptions provided therein) or is insufficient to hold harmless a party
indemnified thereunder, then each Indemnifying Party under such paragraphs, in
lieu of indemnifying such Indemnified Party thereunder, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such
Liabilities (i) in such proportion as is appropriate to reflect the
relative benefits of the Indemnified Party on the one hand and the Indemnifying
Party(ies) on the other in connection with the statements or omissions that
resulted in such Liabilities, or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Indemnifying Party(ies) and the
Indemnified Party, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and any Purchaser Indemnitees on
the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company or by such Purchaser Indemnitees and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

 

(e)           The
parties agree that it would not be just and equitable if contribution pursuant
to this Section 6 were determined by pro
rata allocation (even if such Indemnified Parties were treated as
one entity for such purpose), or by any other method of allocation that does
not take account of the equitable considerations referred to in paragraph 6(d)
above. The amount paid or payable by an Indemnified Party as a result of any
Liabilities referred to paragraph 6(d) shall be deemed to include, subject to
the limitations set forth above, any reasonable legal or other expenses actually
incurred by such Indemnified Party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 6, in no event shall a Purchaser Indemnitee be required to
contribute any amount in excess of the amount by which proceeds received by
such Purchaser Indemnitee from sales of Registrable Shares exceeds the amount
of any damages that such Purchaser Indemnitee has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. For purposes of this Section 6, each Person, if any, who
controls (within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act) FBR or a Holder of Registrable Shares
shall have the same rights to contribution as FBR or such Holder, as the case
may be, and each Person,

 

18

 

if any, who controls (within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act) the
Company, and each officer, director, partner, employee, representative, agent
or manager of the Company shall have the same rights to contribution as the
Company. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against another party or
parties, notify each party or parties from whom contribution may be sought, but
the omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 6 or otherwise, except to the extent that any
party is materially prejudiced by the failure to give notice. No Person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act), shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.

 

(f)            The
indemnity and contribution agreements contained in this Section 6 will be
in addition to any liability which the Indemnifying Parties may otherwise have
to the Indemnified Parties referred to above. The Purchaser Indemnitee’s
obligations to contribute pursuant to this Section 6 are several in
proportion to the respective number of Shares sold by each of the Purchaser
Indemnitees hereunder and not joint.

 

7.             Market Stand-off Agreement

 

Each Holder hereby agrees that it shall not directly or indirectly
sell, offer to sell (including without limitation any short sale), grant any option
or otherwise transfer or dispose of any Registrable Shares or other Common Shares
of the Company or any securities convertible into or exchangeable or
exercisable for Common Shares of the Company then owned by such Holder (other
than to donees or partners of the Holder who agree to be similarly bound) for a
period of sixty (60) days following the effective date of an IPO Registration
Statement of the Company filed under the Securities Act; provided, however,
that:

 

(a)           the
restrictions above shall not apply to Registrable Shares sold pursuant to the
IPO Registration Statement;

 

(b)           all
executive officers and directors of the Company then holding Common Shares of
the Company or securities convertible into or exchangeable or exercisable for
Common Shares of the Company shall enter into similar agreements, but for a
period of one hundred eighty (180) days following the effective date of an IPO
Registration Statement of the Company;

 

(c)           the
Holders shall be allowed any concession or proportionate release allowed to any
officer or director that entered into similar agreements (with such proportion
being determined by dividing the number of shares being released with respect
to such officer or director by the total number of issued and outstanding
shares held by such officer or director); provided,
that nothing in this Section 7(c) shall be construed as a right to
proportionate release for the executive officers and directors of the Company
upon the expiration of the 60-day period applicable to all Holders other than
the executive officers and directors of the Company;

 

19

 

(d)           this
Section 7 shall not be applicable if a Shelf Registration Statement of the
Company filed under the Securities Act has been declared effective prior to the
filing of an IPO Registration Statement.

 

In order to enforce the foregoing covenant, the Company shall have the
right to place restrictive legends on the certificates representing the
securities subject to this Section 7 and to impose stop transfer
instructions with respect to the Registrable Shares and such other securities
of each Holder (and the securities of every other Person subject to the
foregoing restriction) until the end of such period.

 

8.                                      Termination of the Company’s
Obligation

 

The Company shall have no obligation pursuant to this Agreement with
respect to any Registrable Shares proposed to be sold by a Holder in a
registration pursuant to this Agreement if, in the opinion of counsel to the
Company, all such Registrable Shares proposed to be sold by a Holder may be
sold in a three-month period without registration under the Securities Act
pursuant to Rule 144 under the Securities Act.

 

9.                                      Limitations on Subsequent
Registration Rights

 

From and after the date of this Agreement, the Company shall not,
without the prior written consent of Holders beneficially owning not less than
a majority of the then outstanding Registrable Shares (provided, however, that for purposes of
this Section 9, Registrable Shares that are owned, directly or indirectly, by
an Affiliate of the Company shall not be deemed to be outstanding), enter into
any agreement with any holder or prospective holder of any securities of the
Company that would allow such holder or prospective holder (a) to include
such securities in any Registration Statement filed pursuant to the terms
hereof, unless under the terms of such agreement, such holder or prospective
holder may include such securities in any such registration only to the extent
that the inclusion of his securities will not reduce the amount of Registrable
Shares of the Holders that is included, or (b) to have his securities
registered on a registration statement that could be declared effective prior
to, or within one hundred eighty (180) days of, the effective date of any
Registration Statement filed pursuant to this Agreement.

 

10.                               Miscellaneous

 

(a)           Remedies.
In the event of a breach by the Company of any of its obligations under this
Agreement, each Holder, in addition to being entitled to exercise all rights
provided herein or, in the case of FBR, in the Purchase/Placement Agreement, or
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. Subject to Section 6, the
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agree that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

 

(b)           Amendments
and Waivers. The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or
consents to or departures from the provisions hereof may not be given, without
the written

 

20

 

consent of the Company and Holders
beneficially owning not less than a majority of the then outstanding
Registrable Shares; provided, however,
that for purposes of this Section 10(b), Registrable Shares that are owned,
directly or indirectly, by an Affiliate of the Company shall not be deemed to
be outstanding. No amendment shall be deemed effective unless it applies
uniformly to all Holders. Notwithstanding the foregoing, a waiver or consent to
or departure from the provisions hereof with respect to a matter that relates
exclusively to the rights of a Holder whose securities are being sold pursuant
to a Registration Statement and that does not directly or indirectly affect,
impair, limit or compromise the rights of other Holders may be given by such
Holder; provided that the
provisions of this sentence may not be amended, modified or supplemented except
in accordance with the provisions of the immediately preceding sentence.

 

(c)           Notices.
All notices and other communications, provided for or permitted hereunder shall
be made in writing by delivered by facsimile (with receipt confirmed),
overnight courier or registered or certified mail, return receipt requested, or
by telegram

 

(i)            if
to a Holder, at the most current address given by the transfer agent and
registrar of the Shares to the Company;

 

(ii)           if
to the Company at the offices of the Company at Clarendon House, 2 Church
Street, Hamilton HM 11, Bermuda, Attention:  The Secretary; (facsimile: (441) 292-4720);
with copies (which shall not constitute notice) to: Baker & McKenzie LLP,
1114 Avenue of the Americas, New York, New York 10036, Attention: Roslyn Tom
(facsimile (212) 310-1771); and

 

(iii)          if to FBR, at the offices of FBR at 1001 Nineteenth Street North,
Arlington, Virginia 22209, Attention: Compliance Department (facsimile (703)
312-9698); with a copy (which shall not constitute notice) to: Lord, Bissell
& Brook LLP, 111 South Wacker Drive, Chicago, Illinois 60606, Attention: J.
Brett Pritchard (facsimile (312) 896-6773).

 

(d)           Successors
and Assigns. This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties hereto, including, without
limitation and without the need for an express assignment or assumption,
subsequent Holders. The Company agrees that the Holders shall be third party
beneficiaries to the agreements made hereunder by FBR and the Company, and each
Holder shall have the right to enforce such agreements directly to the extent
it deems such enforcement necessary or advisable to protect its rights
hereunder; provided, however,
that such Holder fulfills all of its obligations hereunder.

 

(e)           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.

 

(f)            Headings.
The headings in this Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof.

 

(g)           Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE

 

21

 

STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY STATE COURT IN THE STATE OF
NEW YORK OR ANY FEDERAL COURT SITTING IN NEW YORK IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH
OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.

 

(h)           Severability.
If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties hereto that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such
that may be hereafter declared invalid, illegal, void or unenforceable.

 

(i)            Entire
Agreement. This Agreement, together with the Purchase/Placement Agreement,
is intended by the parties hereto as a final expression of their agreement, and
is intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein.

 

(j)            Registrable
Shares Held by the Company or its Affiliates. Whenever the consent or
approval of Holders of a specified percentage of Registrable Shares is required
hereunder, Registrable Shares held by the Company or its Affiliates shall not
be counted in determining whether such consent or approval was given by the
Holders of such required percentage.

 

(k)           Survival.
This Agreement is intended to survive the consummation of the transactions
contemplated by the Purchase/Placement Agreement. The indemnification and
contribution obligations under Section 6 of this Agreement shall survive the
termination of the Company’s obligations under Section 2 of this Agreement.

 

(l)            Attorneys’
Fees. In any action or proceeding brought to enforce any provision of this
Agreement relating to the Company’s obligation to file the Shelf Registration
Statement, or where any provision hereof is validly asserted as a defense, the
prevailing party, as determined by the court, shall be entitled to recover its
reasonable attorneys’ fees in addition to any other available remedy.

 

22

 

IN WITNESS WHEREOF,
the parties have executed this Agreement as of the date first above written.

 

	
   

  	
  CASTLEPOINT HOLDINGS, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael H. Lee

  	
   

  
	
   

  	
  Name:  Michael H. Lee

  
	
   

  	
  Title:  Chairman of the Board,
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  FRIEDMAN, BILLINGS, RAMSEY & CO., INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James R. Kleeblatt

  	
   

  
	
   

  	
  Name:  James R. Kleeblatt

  
	
   

  	
  Title:  Senior Managing
  Director

  

 

The undersigned, Michael H. Lee, hereby acknowledges and agrees to the
provisions of Section 2(e) of the foregoing Registration Rights Agreement.

 

 

	
   

  	
  /s/ Michael H. Lee

  	
   

  
	
   

  	
  Michael H. Lee

  

 

The undersigned, Joel S. Weiner, hereby acknowledges and agrees to the
provisions of Section 2(e) of the foregoing Registration Rights Agreement.

 

 

	
   

  	
  /s/ Joel S. Weiner

  	
   

  
	
   

  	
  Joel S. Weiner

  

 

23

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