EXHIBIT 99.5
REGISTRATION RIGHTS AGREEMENT
by and among
NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.,
NEW MOUNTAIN PARTNERS, L.P.,
and
NEW MOUNTAIN AFFILIATED INVESTORS, L.P.
dated as of
March 19, 2004
REGISTRATION RIGHTS AGREEMENT, dated as of March 19, 2004, by and
among National Medical Health Card Systems, Inc., a Delaware corporation
(the "Company"), New Mountain Partners, L.P., a Delaware limited
partnership ("New Mountain"), New Mountain Affiliated Partners, L.P., a
Delaware limited partnership (together with New Mountain, the "Purchasers")
and such other persons who become signatories hereto from time to time as
provided for herein.
WHEREAS, pursuant to the Amended and Restated Preferred Stock
Purchase Agreement, dated as of November 26, 2003 (the "Purchase
Agreement"), by and between the Company and New Mountain, upon the terms
and subject to the conditions contained therein, the Company will issue and
sell to the Purchasers 6,956,522 shares of Series A Preferred Stock, par
value $0.10 per share, of the Company (the "Series A Preferred Stock");
WHEREAS, to induce New Mountain to execute and deliver the
Purchase Agreement and as a condition to New Mountain consummating the
transactions contemplated thereby, the Company has agreed to provide the
Purchasers with the rights set forth in this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Definitions. As used herein, unless the context
otherwise requires, the following terms have the following respective
meanings:
1.1. "Affiliate" means with respect to any Person, any other
Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person.
1.2. "Assignee" has the meaning set forth in Section 4.2.
1.3. "Board of Directors" means the board of directors of the
Company.
1.4. "Common Stock" means any shares of common stock, par value
$0.001 per share, of the Company, now or hereafter authorized to be issued,
and any and all securities of any kind whatsoever of the Company or any
successor thereof which may be issued on or after the date hereof in
respect of, in exchange for, or upon conversion of shares of Common Stock
pursuant to a merger, consolidation, stock split, reverse split, stock
dividend, recapitalization of the Company or otherwise.
1.5. "Company" shall mean National Medical Health Card Systems,
Inc., a Delaware corporation, and shall include any successor thereto by
merger, consolidation, acquisition of substantially all the assets thereof,
or otherwise.
1.6. "Convertible Securities" shall mean (i) any options or
warrants to purchase or other rights to acquire Common Stock, (ii) any
securities by their terms convertible into or exchangeable for Common
Stock, and (iii) any options or warrants to purchase or other rights to
acquire any such convertible or exchangeable securities.
1.7. "Demand Exercise Notice" has the meaning set forth in
Section 2.1(a).
1.8. "Demand Registration" has the meaning set forth in Section
2.1(h).
1.9. "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Exchange Act shall include a
reference to the comparable section, if any, of any such similar federal
statute.
1.10. "Form S-3" means a Form S-3 registration statement under
the Securities Act, and any successor or similar form thereto.
1.11. "Holder" means any of the Purchasers and any Assignee.
1.12. "Holder Demand" has the meaning set forth in Section
2.1(a).
1.13. "indemnified party" means any Person seeking
indemnification pursuant to Section 2.6.
1.14. "indemnifying party" means any Person from whom
indemnification is sought pursuant to Section 2.6.
1.15. "Indemnitees" has the meaning set forth in Section 2.6(a).
1.16. "Initiating Holder" means the party or parties delivering a
Holder Demand as provided for under Section 2.1(a).
1.17. "Losses" has the meaning set forth in Section 2.6(a).
1.18. "Majority Participating Holders" means, at any time,
Participating Holders holding more than 50% of the Registrable Securities
proposed to be included in any offering of Registrable Securities by such
Participating Holders pursuant to Section 2.1 or Section 2.2.
1.19. "NASD" means National Association of Securities Dealers,
Inc.
1.20. "Nasdaq" has the meaning set forth in Section 2.3(a)(x).
1.21. "Participating Holders" means any Holder participating in
any offering of Registrable Securities pursuant to Section 2.1 or Section
2.2.
1.22. "Partner Distribution" has the meaning set forth in Section
2.1(a).
1.23. "Person" means an individual, a corporation, a partnership,
a limited liability company, a business, an association, a trust, an
individual, or any other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
1.24. "Postponement Period" has the meaning set forth in Section
2.1(j).
1.25. "Purchase Agreement" has the meaning set forth in the
recitals.
1.26. "Purchasers" has the meaning set forth in the introduction.
1.27. "Registrable Securities" means any of the following when
held by a Holder: (i) any shares of Common Stock issued upon the conversion
of the Series A Preferred Stock, (ii) any shares of Common Stock acquired
by the Holders from the Company after the date hereof, including shares of
Common Stock acquired upon exercise or conversion of Convertible Securities
that are acquired by the Holders from the Company after the date hereof,
and (iii) any shares of the Series A Preferred Stock. For purposes of this
Agreement, a Person will be deemed to a Holder of Registrable Securities
whenever such Person has the right to acquire, directly or indirectly, such
Registrable Securities (upon conversion, exercise or exchange of any
Convertible Securities but disregarding any restrictions or limitations
upon the exercise of such right), whether or not such acquisition has
actually been effected, and such Person shall not be required to convert,
exercise or exchange such Convertible Security (or otherwise acquire such
Registrable Security) to participate on any registered offering hereunder
until the closing of such offering. As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when
(a) a registration statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities
shall have been disposed of in accordance with such registration statement
or (b) when such securities shall have been sold pursuant to Rule 144 under
the Securities Act or similar rule then in effect.
1.28. "Registration Expenses" means all fees and expenses
incurred in connection with the Company's performance of or compliance with
Section 2 hereof, including, without limitation, (i) all registration,
filing and applicable SEC fees, NASD fees, national securities exchange or
inter-dealer quotation system fees, and fees and expenses of complying with
state securities or blue sky laws (including fees and disbursements of
counsel to the underwriters and the Participating Holders in connection
with "blue sky" qualification of the Registrable Securities and
determination of their eligibility for investment under the laws of the
various jurisdictions), (ii) all printing (including printing certificates
for the Registrable Securities in a form eligible for deposit with The
Depository Trust Company and printing preliminary and final prospectuses),
word processing, duplicating, telephone and facsimile expenses, and
messenger and delivery expenses, (iii) all fees and disbursements of
counsel for the Company and of its independent public accountants,
including the expenses of "cold comfort" letters or any special audits
required by, or incident to, such registration, (iv) all reasonable fees
and expenses of one law firm or other counsel selected by the Majority
Participating Holders for the benefit of all of the Participating Holders,
(v) all reasonable fees and expenses of any special experts or other
Persons retained by the Company in connection with any registration, (vi)
Securities Act liability insurance or similar insurance if the Company so
desires or the underwriters so require in accordance with then-customary
underwriting practices, (vii) all applicable rating agency fees with
respect to the Registrable Securities, (viii) reasonable fees and expenses
of a Qualified Independent Underwriter (as such term is defined in Schedule
E to the By-Laws of the NASD) and its counsel, (ix) all fees and
disbursements of the underwriters (other than underwriting discounts and
commissions but, including reasonable fees and disbursements of one counsel
for such underwriters), (x) all transfer taxes, and (xi) all expenses
incurred in connection with promotional efforts or "roadshows" (as
negotiated by the Company with the underwriters); provided, however, that
Registration Expenses shall exclude, and the Participating Holders shall
pay ratably, underwriting discounts and commissions in respect of the
Registrable Securities being registered for such Participating Holders.
1.29. "SEC" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
1.30. "Section 2.2 Sale Amount" has the meaning set forth in
Section 2.2(c).
1.31. "Securities Act" means the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
References to a particular section of the Securities Act shall include a
reference to the comparable section, if any, of any such similar federal
statute.
1.32. "Selected Courts" has the meaning set forth in Section
4.4(b).
1.33. "Series A Preferred Stock" has the meaning set forth in the
recitals.
SECTION 2. Registration Under Securities Act.
2.1. Registration on Demand.
(a) Demand. At any time or from time to time, a Holder or
Holders holding a majority of Registrable Securities then outstanding may
require the Company to effect the registration under the Securities Act of
all or part of their respective Registrable Securities, by delivering a
written request (a "Holder Demand") therefor to the Company specifying the
number of shares of Registrable Securities to be registered and the
intended method of distribution thereof. As promptly as practicable, but no
later than 10 days after receipt of a Holder Demand, the Company shall give
written notice (the "Demand Exercise Notice") of the Holder Demand to all
Holders of Registrable Securities. Such Holders shall have the option,
within 20 days after the receipt of the Demand Exercise Notice (or, 10 days
if, at the request of the Initiating Holder, the Company states in such
written notice or gives telephonic notice to each Holder, with written
confirmation to follow promptly thereafter, stating that (i) such
registration will be on Form S-3 and (ii) such shorter period of time is
required because of a planned filing date), to request, in writing, that
the Company include in such registration any Registrable Securities held by
such Holder (which request shall specify the maximum number of Registrable
Securities intended to be disposed of by such Holder). The Company shall as
expeditiously as possible use its best efforts to effect the registration
under the Securities Act of the Registrable Securities which the Company
has been so requested to register by the Initiating Holder and any other
Holders which have made such written request. The Company shall (i) use its
best efforts to effect the registration of Registrable Securities for
distribution in accordance with the intended method of distribution set
forth in a written request delivered by the Majority Participating Holders,
which may include, at the option of such Majority Participating Holders, a
distribution to, and resale by, the partners of such Holder or Holders (a
"Partner Distribution"), and (ii) if requested by the Majority
Participating Holders, obtain acceleration of the effective date of the
registration statement relating to such registration.
(b) Partner Distributions. Notwithstanding anything
contained herein to the contrary, the Company shall, at the request of any
Participating Holder seeking to effect a Partner Distribution, file any
prospectus supplement or post-effective amendments and shall otherwise take
any action necessary to include such language, if such language was not
included in the initial registration statement, or revise such language if
deemed necessary by such Participating Holder, to effect such Partner
Distribution.
(c) Registration Statement Form. Registrations under this
Section 2.1 shall be on such appropriate form of the SEC (i) as shall be
selected by the Company and as shall be reasonably acceptable to the
Majority Participating Holders and (ii) as shall permit the disposition of
such Registrable Securities in accordance with the intended method or
methods of disposition specified in such Participating Holders' requests
for such registration, including, without limitation, a Partner
Distribution or a continuous or delayed basis offering pursuant to Rule 415
under the Securities Act. The Company agrees to include in any such
registration statement all information which, in the opinion of counsel to
the Participating Holders and counsel to the Company, is necessary or
desirable to be included therein.
(d) Expenses. The Company shall pay, and shall be
responsible for, all Registration Expenses in connection with any
registration requested pursuant to this Section 2.1. Notwithstanding the
foregoing, the provisions of this Section 2.1(d) shall be deemed amended to
the extent necessary to cause these expense provisions to comply with "blue
sky" laws of each state or the securities laws of any other jurisdiction in
the United States and its territories in which the offering is made.
(e) Effective Registration Statement. A registration
requested pursuant to this Section 2.1 shall not be deemed a Demand
Registration (including for purposes of Section 2.1(h)) unless a
registration statement with respect thereto has become effective and has
been kept continuously effective for the period set forth in Section
2.3(a)(i) or, if such registration statement relates to an underwritten
offering, such longer period as in the opinion of counsel for the
underwriter or underwriters a Prospectus is required by law to be delivered
in connection with sales of Registrable Securities by an underwriter or
dealer. Should a Demand Registration not become effective due to the
failure of a Participating Holder to perform its obligations under this
Agreement, or in the event the Majority Participating Holders withdraw or
do not pursue the request for the Demand Registration as provided for in
Section 2.1(g) (in each of the foregoing cases, provided that at such time
the Company is in compliance in all material respects with its obligations
under this Agreement), then, such Demand Registration shall be deemed to
have been effected (including for purposes of Section 2.1(h)); provided,
that, if (i) the Demand Registration does not become effective because a
material adverse change has occurred, or is reasonably likely to occur, in
the condition (financial or otherwise), prospects, business, assets or
results of operations of the Company and its subsidiaries taken as a whole
subsequent to the date of the delivery of the Demand Exercise Notice, (ii)
after the Demand Registration has become effective, such registration is
interfered with by any stop order, injunction, or other order or
requirement of the SEC or other governmental agency or court, (iii) the
Demand Registration is withdrawn at the request of the Majority
Participating Holders due to the advice of the managing underwriter(s) that
the Registrable Securities covered by the registration statement could not
be sold in such offering within a price range acceptable to the Majority
Participating Holders, (iv) the Demand Registration is withdrawn for any
reason at any time during a Postponement Period or within ten days
thereafter, or (v) the Participating Holders reimburse the Company for any
and all Registration Expenses incurred by the Company in connection with
such request for a Demand Registration that was withdrawn or not pursued,
then the Demand Registration shall not be deemed to have been effected and
will not count as a Demand Registration).
(f) Selection of Underwriters. The underwriters of each
underwritten offering of the Registrable Securities pursuant to this
Section 2.1 shall be selected by the Majority Participating Holders, which
underwriters shall be reasonably acceptable to the Company.
(g) Right to Withdraw. Any Participating Holder shall have
the right to withdraw its request for inclusion of Registrable Securities
in any registration statement pursuant to this Section 2.1 at any time
prior to the effective date of such registration statement (but in no event
less than 24 hours prior to such date) by giving written notice to the
Company of its request to withdraw. Upon receipt of notices from the
Majority Participating Holders to such effect, the Company shall cease all
efforts to obtain effectiveness of the applicable registration statement,
and whether the Initiating Holder's request for registration pursuant to
this Section 2.1 shall be counted as a Demand Registration for purposes of
Section 2.1(h) shall be determined in accordance with Section 2.1(e) above.
(h) Limitations on Registration on Demand. The Holders shall
be entitled to require the Company to effect, and the Company shall be
required to effect, four (4) registrations in the aggregate pursuant to
this Section 2.1 (each, a "Demand Registration"); provided, however, that
the Company shall not be required to have a registration statement declared
effective pursuant to a Demand Registration until at least 90 days after
the effective date of any other registration statement filed by the Company
pursuant to a previous Demand Registration. The aggregate offering value of
the shares to be registered pursuant to any such registration shall be at
least $5 million (determined as of the date the demand is made), unless the
registration is of the balance of the Registrable Securities held by the
Holders.
(i) Priority in Registrations on Demand. Whenever the
Company effects a registration pursuant to this Section 2.1 in connection
with an underwritten offering by Holders, no securities other than
Registrable Securities shall be included among the securities covered by
such registration unless the Majority Participating Holders consent in
writing to the inclusion therein of such other securities, which consent
may be subject to terms and conditions determined by the Majority
Participating Holders in their sole discretion. If any registration
pursuant to a Holder Demand involves an underwritten offering and the
managing underwriter(s) of such offering shall inform the Company in
writing of its belief that the number of Registrable Securities requested
to be included in such registration pursuant to this Section 2.1, when
added to the number of any other securities to be offered in such
registration, would materially adversely affect such offering, then the
Participating Holders shall be entitled to participate on a pro rata basis
based on the number of shares of Registrable Securities requested to be
included in the offering by each such Participating Holder prior to the
inclusion of any securities other than Registrable Securities.
(j) Postponement. The Company shall be entitled once in any
twelve-month period to postpone for a reasonable period of time (but not
exceeding 90 days) (the "Postponement Period") the filing of any
registration statement required to be prepared and filed by it pursuant to
this Section 2.1 if the Company determines, in its reasonable judgment,
upon advice of counsel, as authorized by a resolution of the Board of
Directors, that such registration and offering would require premature
disclosure of any material financing, material corporate reorganization or
other material transaction involving the Company, and promptly gives the
Participating Holders written notice of such determination, containing a
specific statement of the reasons for such postponement and an
approximation of the anticipated delay.
2.2. Incidental Registration.
(a) Right to Include Registrable Securities. If the Company
at any time proposes to register any of its equity securities under the
Securities Act by registration on Form ▇-▇, ▇-▇ or S-3, or any successor or
similar form(s) (except registrations (i) pursuant to Section 2.1, (ii)
solely for registration of equity securities in connection with an employee
benefit plan (as defined in 405 of the Securities Act) or dividend
reinvestment plan on Form S-8 or any successor form thereto or (iii) in
connection with any acquisition or merger on Form S-4 or any successor form
thereto), whether or not for sale for its own account, it will each such
time give prompt written notice (but in no event less than 30 days prior to
the initial filing of a registration statement with respect thereto) to
each of the Holders of its intention to do so and such notice shall offer
the Holders of such Registrable Securities the opportunity to register
under such registration statement such number of Registrable Securities as
each such Holder may request in writing. Upon the written request of any of
the Holders (which request shall specify the maximum number of Registrable
Securities intended to be disposed of by such Holder), made as promptly as
practicable and in any event within 20 days after the receipt of any such
notice (or, 10 days if the Company states in such written notice or gives
telephonic notice to each Holder, with written confirmation to follow
promptly thereafter, stating that (i) such registration will be on Form S-3
and (ii) such shorter period of time is required because of a planned
filing date), the Company shall include in such registration under the
Securities Act all Registrable Securities which the Company has been so
requested to register by each Holder; provided, however, that if, at any
time after giving written notice of its intention to register any equity
securities and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for
any reason not to register or to delay registration of such equity
securities, the Company shall give written notice of such determination and
its reasons therefor to the Holders and (i) in the case of a determination
not to register, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration (but not from
any obligation of the Company to pay the Registration Expenses in
connection therewith as provided for in Section 2.2(d)), without prejudice,
however, to the rights of the Holders to request that such registration be
effected as a registration under Section 2.1 and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering
any Registrable Securities, for the same period as the delay in registering
such other securities. No registration effected under this Section 2.2
shall relieve the Company of its obligation to effect any registration upon
request under Section 2.1.
(b) Right to Withdraw; Option to Participate in Shelf
Takedowns. Any Holder shall have the right to withdraw its request for
inclusion of Registrable Securities in any registration statement pursuant
to this Section 2.2 at any time prior to the effective date of such
registration statement (but in no event less than 24 hours prior to such
date) by giving written notice to the Company of its request to withdraw.
In the event that the Holder has requested inclusion of Registrable
Securities in a shelf registration, the Holder shall have the right, but
not the obligation, to participate in any offering of the Company's equity
securities under such shelf registration.
(c) Priority in Incidental Registrations. If any
registration pursuant to this Section 2.2 involves an underwritten offering
and the managing underwriter(s) of such offering shall inform the Company
in writing of its belief that the number of Registrable Securities
requested to be included in such registration or offering, when added to
the number of other equity securities to be offered in such registration or
offering, would materially adversely affect such offering, then the Company
shall include in such registration or offering, to the extent of the number
and type which the Company is so advised can be sold in (or during the time
of) such registration or offering without so materially adversely affecting
such registration or offering (the "Section 2.2 Sale Amount"), (i) all of
the securities proposed by the Company to be sold for its own account; (ii)
thereafter, to the extent the Section 2.2 Sale Amount is not exceeded, the
Registrable Securities requested by the Participating Holders (provided
that if all of the Registrable Securities requested by the Participating
Holders may not be included, the Participating Holders shall be entitled to
participate on a pro rata basis based on the aggregate number of shares of
Registrable Securities requested by the Participating Holders to be
registered); and (iii) thereafter, to the extent the Section 2.2 Sale
Amount is not exceeded, any other securities of the Company requested to be
included by Company stockholders holding other such registration rights.
(d) Expenses. The Company shall pay, and shall be
responsible for, all Registration Expenses in connection with any
registration requested pursuant to this Section 2.2. Notwithstanding the
foregoing, the provisions of this Section 2.2(d) shall be deemed amended to
the extent necessary to cause these expense provisions to comply with "blue
sky" laws of each state or the securities laws of any other jurisdiction in
the United States and its territories in which the offering is made.
(e) Selection of Underwriters. The underwriters of each
underwritten offering of the Registrable Securities pursuant to this
Section 2.2 shall be selected by the Company provided that the Majority
Participating Holders shall have the right to select a co-managing
underwriter.
(f) Plan of Distribution; Partner Distributions. Any
participation by Holders in a registration by the Company shall be in
accordance with the Company's plan of distribution, which shall include,
upon the written request of such Holder or Holders, a Partner Distribution.
Notwithstanding anything contained herein to the contrary, the Company
shall, at the request of any Holder seeking to effect a Partner
Distribution, file any prospectus supplement or post-effective amendments
and otherwise take any action necessary to include such language, if such
language was not included in the initial registration statement, or revise
such language if deemed reasonably necessary by such Holder to effect such
Partner Distribution.
(g) Right to Terminate Registration. The Company shall have
the right to terminate or withdraw any registration initiated by it under
this Section 2.2 prior to the effectiveness of such registration, whether
or not any Holder has elected to include Registrable Securities in such
registration.
2.3. Registration Procedures.
(a) If and whenever the Company is required to effect the
registration of any Registrable Securities under the Securities Act
pursuant to either Section 2.1 or Section 2.2 hereof, the Company shall as
expeditiously as possible:
(i) prepare and file with the SEC as soon as practicable
(and in the case of a demand pursuant to Section 2.1, within 30 days after
receipt by the Company of a Demand Exercise Notice) a registration
statement on an appropriate registration form of the SEC for the
disposition of such Registrable Securities in accordance with the intended
method of disposition thereof (including, without limitation, a Partner
Distribution) which registration statement shall comply as to form in all
material respects with the requirements of the applicable form and include
all financial statements required by the SEC to be filed therewith, and
thereafter use its best efforts to cause such registration statement to
become and remain effective (A) with respect to an underwritten offering,
for a period of at least 90 days or until all shares subject to such
registration statement have been sold and (B) with respect to a shelf
registration, until the earlier of (1) the sale of all Registrable
Securities thereunder and (2) the earlier of the tenth anniversary of the
date of this Agreement and the third anniversary of the effective date of
such shelf registration;
(ii) prepare and file with the SEC any amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities covered by
such registration statement in accordance with the intended methods of
disposition by the Participating Holders set forth in such registration
statement for such period as provided for in Section 2.3(a)(i) above;
(iii) furnish, without charge, to each Participating
Holder and each underwriter such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including each
preliminary prospectus and summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as the
Majority Participating Holders and such underwriters may request (it being
understood that the Company consents to the use of such prospectus or any
amendment or supplement thereto by each Participating Holder and the
underwriters in connection with the offering and sale of the Registrable
Securities covered by such prospectus or any amendment or supplement
thereto);
(iv) use its best efforts (A) to register or qualify all
Registrable Securities and other securities covered by such registration
statement under such state securities or blue sky laws where an exemption
is not available and as the Majority Participating Holders or any managing
underwriter shall reasonably request, (B) to keep such registration or
qualification in effect for so long as such registration statement remains
in effect, and (C) to take any and all other actions which may be necessary
or advisable to enable the Participating Holders or underwriters to
consummate the disposition in such jurisdictions of the securities to be
sold by the Participating Holders or underwriters, except that the Company
shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not,
but for the requirements of this Section 2.3(a)(iv), be obligated to be so
qualified;
(v) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary in the opinion of counsel to the Company and counsel to the
Participating Holders to consummate the disposition of such Registrable
Securities;
(vi) furnish to each Participating Holder and each
underwriter a signed counterpart of (A) an opinion of counsel for the
Company and (B) a "comfort" letter signed by the independent public
accountants who have certified the Company's financial statements included
or incorporated by reference in such registration statement, in each case,
addressed to each Participating Holder and each underwriter covering
matters with respect to such registration statement (and the prospectus
included therein) as such Majority Participating Holders and managing
underwriter(s) shall request;
(vii) promptly notify each Participating Holder and each
managing underwriter (A) when such registration statement, any
pre-effective amendment, the prospectus or any prospectus supplement
related thereto or post-effective amendment to such registration statement
has been filed, and, with respect to such registration statement or any
post-effective amendment, when the same has become effective; (B) of the
receipt by the Company of any comments from the SEC or receipt of any
request by the SEC for additional information with respect to any
registration statement or the prospectus related thereto or any request by
the SEC for amending or supplementing the registration statement and the
prospectus used in connection therewith; (C) of the issuance by the SEC of
any stop order suspending the effectiveness of such registration statement
or the initiation of any proceedings for that purpose; (D) of the receipt
by the Company of any notification with respect to the suspension of the
qualification of any of the Registrable Securities for sale under the
securities or blue sky laws of any jurisdiction or the initiation of any
proceeding for such purpose; and (E) at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, upon
discovery that, or upon the happening of any event as a result of which,
the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, in the light of the circumstances under
which they were made, and in the case of this clause (E), promptly prepare
and furnish, at the Company's expense, to each Participating Holder and
each managing underwriter a number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such 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 in the light of the circumstances under which they
were made; and (F) at any time when the representations and warranties of
the Company contemplated by Section 2.4(a) or (b) hereof cease to be true
and correct;
(viii) otherwise comply with all applicable rules and
regulations of the SEC, and make available to its security holders, as soon
as practicable (and in any event within 16 months after the effective date
of the registration statement), an earnings statement covering the period
of at least twelve (12) consecutive months beginning with the first full
calendar month after the effective date of such registration statement,
which earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act and Rule 158 promulgated thereunder;
(ix) provide and cause to be maintained a transfer agent
and registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
registration statement;
(x) (A) use its best efforts to cause all Registrable
Securities covered by such registration statement to be listed on the
principal securities exchange on which similar securities issued by the
Company are then listed (if any), if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (B) if no
similar securities are then so listed, use its best efforts to (1) cause
all such Registrable Securities to be listed on a national securities
exchange or (2) secure designation of all such Registrable Securities as a
National Association of Securities Dealers, Inc. Automated Quotation System
("Nasdaq") "national market system security" within the meaning of Rule
11Aa2-1 of the SEC or (3) failing that, to secure Nasdaq authorization for
such shares and, without limiting the generality of the foregoing, to
arrange for at least two market makers to register as such with respect to
such shares with the NASD;
(xi) deliver promptly to counsel to the Participating
Holders and each underwriter, if any, participating in the offering of the
Registrable Securities, copies of all correspondence between the SEC and
the Company, its counsel or auditors and all memoranda relating to
discussions with the SEC or its staff with respect to such registration
statement;
(xii) use its best efforts to obtain the withdrawal of
any order suspending the effectiveness of the registration statement;
(xiii) provide a CUSIP number for all Registrable
Securities, no later than the effective date of the registration statement
and provide the applicable transfer agents with printed certificates for
the Registrable Securities which are in a form eligible for deposit with
The Depository Trust Company; and
(xiv) cause its officers and employees to participate in,
and to otherwise facilitate and cooperate with the preparation of the
registration statement and prospectus and any amendments or supplements
thereto (including participating in meetings, drafting sessions, due
diligence sessions and the marketing of the Registrable Securities covered
by the registration statement (including, without limitation, participation
in "road shows") taking into account the Company's business needs;
(xv) enter into and perform its obligations under such
customary agreements (including, without limitation, if applicable, an
underwriting agreement as provided for in Section 2.4 herein) and take such
other actions as the Majority Participating Holders or managing
underwriter(s) shall reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities;
(xvi) promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter(s) or
Majority Participating Holders reasonably request to be included therein
relating to the plan of distribution with respect to such Registrable
Securities; and make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable after being notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment;
(xvii) cooperate with each Participating Holder and each
underwriter, and their respective counsel in connection with any filings
required to be made with the NASD, New York Stock Exchange, or any other
securities exchange on which such Registrable Securities are traded or will
be traded;
(xviii) promptly prior to the filing of any document
which is to be incorporated by reference into the registration statement or
the prospectus contained therein (after the initial filing of such
registration statement) provide copies of such document to counsel for the
Participating Holders and to each managing underwriter, and make the
Company's representatives available for discussion of such document and
make such changes in such document concerning the Participating Holders
prior to the filing thereof as counsel for such Participating Holders or
underwriters may request;
(xix) furnish to each Participating Holder and each
managing underwriter(s), without charge, at least one signed (which may be
a conforming signature) copy of the registration statement and any
post-effective amendments thereto, including financial statements and
schedules, all documents incorporated therein by reference and all exhibits
(including those incorporated by reference);
(xx) cooperate with the Participating Holders and the
managing underwriter(s) to facilitate the timely preparation and delivery
of certificates not bearing any restrictive legends representing the
Registrable Securities to be sold, and cause such Registrable Securities to
be issued in such denominations and registered in such names in accordance
with the underwriting agreement prior to any sale of Registrable Securities
to the underwriters or, if not an underwritten offering, in accordance with
the instructions of the Participating Holders at least five business days
prior to any sale of Registrable Securities and instruct any transfer agent
or registrar of Registrable Securities to release any stop transfer orders
in respect thereof;
(xxi) to the extent required by the rules and regulations
of the NASD, retain a Qualified Independent Underwriter, which shall be
reasonably acceptable to the Majority Participating Holders; and
(xxii) take no direct or indirect action prohibited by
Regulation M under the Exchange Act; provided, however, that to the extent
that any prohibition is applicable to the Company, the Company will take
such action as is necessary to make any such prohibition inapplicable.
(b) Each Participating Holder agrees that upon receipt of
any notice from the Company of the happening of any event of the kind
described in Section 2.3(a)(vii)(C) or (E), each Participating Holder will,
to the extent appropriate, discontinue its disposition of Registrable
Securities pursuant to the registration statement relating to such
Registrable Securities until, in the case of Section 2.3(a)(vii)(E), its
receipt of the copies of the supplemented or amended prospectus
contemplated by Section 2.3(a)(vii)(E) and, if so directed by the Company,
will deliver to the Company (at the Company's expense) all copies, other
than permanent file copies, then in its possession, of the prospectus
relating to such Registrable Securities current at the time of receipt of
such notice. If the disposition by a Participating Holder of its securities
is discontinued pursuant to the foregoing sentence, the Company shall
extend the period of effectiveness of the registration statement by the
number of days during the period from and including the date of the giving
of such notice to and including the date when the Participating Holder
shall have received copies of the supplemented or amended prospectus
contemplated by Section 2.3(a)(vii)(E); and, if the Company shall not so
extend such period, the Participating Holder's request pursuant to which
such registration statement was filed shall not be counted for purposes of
the requests for registration to which the Participating Holder is entitled
pursuant to Section 2.1 hereof. If for any other reason the effectiveness
of any registration statement filed pursuant to Section 2.1 or Section 2.2
is suspended or interrupted prior to the expiration of the time period
regarding the maintenance of the effectiveness of such Registration
Statement required by Section 2.3(a)(i) so that Registrable Securities may
not be sold pursuant thereto, the applicable time period shall be extended
by the number of days equal to the number of days during the period
beginning with the date of such suspension or interruption to and ending
with the date when the sale of Registrable Securities pursuant to such
registration statement may be resumed.
(c) If any such registration statement or comparable
statement under "blue sky" laws refers to any Holder by name or otherwise
as the Holder of any securities of the Company, then such Holder shall have
the right to require (i) the insertion therein of language, in form and
substance satisfactory to such Holder and the Company, to the effect that
the holding by such Holder of such securities is not to be construed as a
recommendation by such Holder of the investment quality of the Company's
securities covered thereby and that such holding does not imply that such
Holder will assist in meeting any future financial requirements of the
Company, or (ii) in the event that such reference to such Holder by name or
otherwise is not in the judgment of the Company, as advised by counsel,
required by the Securities Act or any similar federal statute or any state
"blue sky" or securities law then in force, the deletion of the reference
to such Holder.
(d) Holders may seek to register different types of
Registrable Securities simultaneously and the Company shall use its
reasonable best efforts to effect such registration and sale in accordance
with the intended method or methods of disposition specified by such
holders.
2.4. Underwritten Offerings.
(a) Demanded Underwritten Offerings. If requested by the
underwriters for any underwritten offering by the Participating Holders
pursuant to a registration requested under Section 2.1, the Company shall
enter into a customary underwriting agreement with the managing
underwriter(s) selected by the Majority Participating Holders (in
accordance with Section 2.1(f) hereto). Such underwriting agreement shall
be reasonably satisfactory in form and substance to the Majority
Participating Holders and shall contain such representations and warranties
by, and such other agreements on the part of, the Company and such other
terms as are generally prevailing in agreements of that type, including,
without limitation, customary provisions relating to indemnification and
contribution which are no less favorable to the recipient than those
provided in Section 2.6 hereof. Each Participating Holder shall be a party
to such underwriting agreement and may, at their option, require that any
or all of the representations and warranties by, and the other agreements
on the part of, the Company to and for the benefit of such underwriters
shall also be made to and for the benefit of each Participating Holder and
that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to
the obligations of each Participating Holder. No Participating 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 Participating Holder, its ownership of and title
to the Registrable Securities, and its intended method of distribution; and
any liability of any Participating Holder to any underwriter or other
person under such underwriting agreement shall be limited to liability
arising from breach of its representations and warranties and shall be
limited to an amount equal to the proceeds (net of expenses and
underwriting discounts and commissions) that it derives from such
registration.
(b) Incidental Underwritten Offerings. In the case of a
registration pursuant to Section 2.2 hereof, if the Company shall have
determined to enter into an underwriting agreement in connection therewith,
all of the Registrable Securities to be included in such registration shall
be subject to such underwriting agreements. The Participating Holders may,
at their option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and
for the benefit of such underwriters shall also be made to and for the
benefit of the Participating Holders and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement be conditions precedent to the obligations of the Participating
Holders. None of the Participating Holders 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 Participating Holder, its ownership of and title to the Registrable
Securities and its intended method of distribution; and any liability of
any Participating Holder to any underwriter or other Person under such
underwriting agreement shall be limited to liability arising from breach of
its representations and warranties and shall be limited to an amount equal
to the proceeds (net of expenses and underwriting discounts and
commissions) that it derives from such registration.
(c) Participation in Underwritten Registrations. In the case
of an underwritten registration pursuant to Section 2.1 or Section 2.2
hereof, as the Company may from time to time reasonably request in writing,
the Company may require the Participating Holders (i) to furnish the
Company such information regarding such Participating Holders and the
distribution of the Registrable Securities to enable the Company to comply
with the requirements of applicable laws or regulations in connection with
such registration and (ii) to complete and execute all customary
questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents reasonably required under the terms of such
underwriting arrangements. The Company shall not be obligated to effect the
registration of any Registrable Securities of a particular Participating
Holder unless such information and documents regarding such Participating
Holder and the distribution of such Participating Holder's Registrable
Securities is provided to the Company.
2.5. Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement under the
Securities Act pursuant to this Agreement, the Company will give the
Participating Holders, the managing underwriter(s), and their respective
counsel, accountants and other representatives and agents the opportunity
to participate in the preparation of such registration statement, each
prospectus included therein or filed with the SEC, and each amendment
thereof or supplement thereto or comparable statements under securities or
blue sky laws of any jurisdiction, and give each of the foregoing parties
access to its books and records, all financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries, and
such opportunities to discuss the business of the Company and its
subsidiaries with their respective directors, officers and employees and
the independent public accountants who have certified the Company and its
subsidiaries' financial statements, and supply all other information and
respond to all inquiries requested by such Participating Holders, managing
underwriter(s), or their respective counsel, accountants or other
representatives or agents in connection with such registration statement,
as shall be necessary or appropriate, in the opinion of counsel to such
Participating Holder or managing underwriter(s), to conduct a reasonable
investigation within the meaning of the Securities Act, and the Company
shall not file any registration statement or amendment thereto or any
prospectus or supplement thereto to which the Majority Participating
Holders or the managing underwriter(s) shall object.
2.6. Indemnification.
(a) Indemnification by the Company. The Company agrees that
in the event of any registration of any Registrable Securities under the
Securities Act, the Company shall, and hereby does, indemnify and hold
harmless, to the fullest extent permitted by law, (i) each of the Holders
and their Affiliates, (ii) each of the Holders' and their Affiliates'
respective Affiliates, officers, directors, successors, assigns, members,
partners, shareholders, employees, advisors, representatives, and agents,
(iii) each other Person who participates as an underwriter or Qualified
Independent Underwriter in the offering or sale of such securities, (iv)
each Person who controls (within the meaning of the Securities Act or the
Exchange Act) any of the Persons listed in clauses (i), (ii), (iii) or
(iv), and (v) any representative (legal or otherwise) of any of the Persons
listed in clauses (i), (ii), (iii) or (iv) (collectively, the
"Indemnitees"), from and against any losses, penalties, fines, liens,
judgments, suits, claims, damages, liabilities, costs and expenses
(including reasonable attorney's fees and any amounts paid in any
settlement effected in compliance with Section 2.6(e)) or liabilities,
joint or several (or actions or proceedings, whether commenced or
threatened, in respect thereof, and whether or not such Indemnitee is a
party thereto) ("Losses"), to which such Indemnitee has become or may
become subject under the Securities Act or otherwise, insofar as such
Losses arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in any registration
statement under which such securities were registered under the Securities
Act, or any preliminary prospectus, final prospectus or summary prospectus
contained therein, any amendment or supplement thereto, or any documents
incorporated by reference therein, (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, or (iii) any violation by the
Company of any federal, state or common law rule or regulation applicable
to the Company and relating to action required of or inaction by the
Company in connection with any such registration, and the Company shall
reimburse such Indemnitee for any reasonable legal or any other fees or
expenses incurred by it in connection with investigating or defending any
such Loss; provided that the Company shall not be liable to an Indemnitee
to the extent that any such Loss arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made
in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement, or document
incorporated by reference, in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Indemnitee,
which specifically states that it is for use in the preparation of such
registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement.
(b) Indemnification by Participating Holders. As a condition
to including any Registrable Securities in any registration statement, the
Company shall have received an undertaking reasonably satisfactory to it
from each Participating Holder so including any Registrable Securities to,
severally and not jointly, to the fullest extent permitted by law,
indemnify and hold harmless (i) the Company, each director and officer of
the Company (including each officer of the Company that signed the
registration statement), employees and agents and each other Person, if
any, who controls the Company within the meaning of the Securities Act or
Exchange Act and (ii) any underwriters of the Registrable Securities, their
officers and directors and each person who controls such underwriters
(within the meaning of the Securities Act or the Exchange Act), with
respect to any statement or alleged statement in or omission or alleged
omission from such registration statement, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment
or supplement thereto, but only to the extent such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished by such Participating Holder
to the Company specifically for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement and such Participating Holder shall reimburse such
indemnified party for any reasonable legal or any other fees or expenses
reasonably incurred by them in connection with investigating or defending
any such Loss; provided, however, that the liability of such indemnifying
party under this Section 2.6(b) shall be limited to the amount of proceeds
(net of expenses and underwriting discounts and commissions) received by
such indemnifying party in the offering giving rise to such liability. Each
Participating Holder shall also indemnify and hold harmless all other
prospective sellers and Participating Holders, their respective Affiliates,
officers, directors, successors, assigns, members, partners, shareholders,
employees, advisors, representatives, and agents, and each Person who
controls (within the meaning of the Securities Act or the Exchange Act) any
such seller or Participating Holder to the same extent as provided above
with respect to indemnification of the Company and underwriters.
(c) Notices of Claims. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in Section 2.6(a) or Section 2.6(b), such
indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to such indemnifying
party of the commencement of such action or proceeding; provided, however,
that the failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations under Section
2.6(a) or Section 2.6(b), except to the extent that the indemnifying party
is actually and materially prejudiced by such failure to give notice, and
shall not relieve the indemnifying party from any liability which it may
have to the indemnified party otherwise than under this Section 2.6.
(d) Defense of Claims. In case any such action or proceeding
is brought against an indemnified party, except as provided for in the next
sentence, the indemnifying party shall be entitled to participate therein
and assume the defense thereof, jointly with any other indemnifying party,
with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and approval by the indemnified
party of such counsel, the indemnifying party shall not be liable to such
indemnified party for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than costs
of investigation and the indemnified party shall be entitled to participate
in such defense at its own expense. If (i) the indemnifying party fails to
notify the indemnified party in writing, within 15 days after the
indemnified party has given notice of the action or proceeding, that the
indemnifying party will indemnify the indemnified party from and against
all Losses the indemnified party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the claim, (ii) the
indemnifying party fails to provide the indemnified party with evidence
acceptable to the indemnified party that the indemnifying party will have
the financial resources to defend against the claim or proceeding and
fulfill its indemnification obligations hereunder, (iii) the indemnifying
party fails to defend diligently the action or proceeding within 15 days
after receiving notice of such failure from such indemnified party; (iv)
such indemnified party reasonably shall have concluded (upon advice of its
counsel) that there may be one or more legal defenses available to such
indemnified party or other indemnified parties which are not available to
the indemnifying party; or (v) if such indemnified party reasonably shall
have concluded (upon advice of its counsel) that, with respect to such
claims, the indemnified party and the indemnifying party may have
different, conflicting, or adverse legal positions or interests then, in
any such case, the indemnified party shall have the right to assume or
continue its own defense and the indemnifying party shall be liable for any
fees and expenses therefor.
(e) Consent to Entry of Judgment and Settlements. No
indemnifying party shall be liable for any settlement of any action or
proceeding effected without its written consent, which consent shall not be
unreasonably withheld, provided, that, in the case where the indemnifying
party shall have failed to take any of the actions listed in clauses (i),
(ii) or (iii) of the last sentence of Section 2.6(d), the indemnified party
shall have the right to compromise or settle such action on behalf of and
for the account, expense, and risk of the indemnifying party and the
indemnifying party will remain responsible for any Losses the indemnified
party may suffer resulting from, arising out of, relating to, in the nature
of, or caused by the action or proceeding to the fullest extent provided in
this Section 2.6. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party
is an actual or potential party to such action or claim) unless such
settlement, compromise or judgment (A) includes an unconditional release of
the indemnified party from all liability arising out of such action or
claim, (B) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party
and (C) does not require any inaction or action other than the payment of
money by the indemnifying party.
(f) Contribution. If for any reason the indemnification
provided for in Sections 2.6(a), (b) or (g) is unavailable to an
indemnified party or insufficient in respect of any Losses referred to
therein, then, in lieu of the amount paid or payable under Sections 2.6(a),
(b) or (g), the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such Loss (i) in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand, and the indemnified party on the other,
with respect to the statements or omissions which resulted in such Loss, as
well as any other relevant equitable considerations, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law
or if the allocation provided in this clause (ii) provides a greater amount
to the indemnified party than clause (i) above, in such proportion as shall
be appropriate to reflect not only the relative fault but also the relative
benefits received by the indemnifying party and the indemnified party from
the offering of the securities covered by such registration statement as
well as any other relevant equitable considerations. The relative fault
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
indemnifying party or the indemnified party and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The parties hereto agree that it
would not be just and equitable if contributions pursuant to this Section
2.6(f) were to be determined by pro rata allocation or by any other method
of allocation which does not take into account the equitable considerations
referred to in the preceding sentence of this Section 2.6(f). 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. The amount paid or
payable by an indemnified party as a result of the Losses referred to in
Sections 2.6(a), (b) or (g) shall be deemed to include, subject to the
limitations set forth in Sections 2.6(a), (b) and (g), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding
anything in this Section 2.6(f) to the contrary, no Participating Holder
shall be required to contribute any amount in excess of the proceeds (net
of expenses and underwriting discounts and commissions) received by such
Participating Holder from the sale of the Registrable Securities in the
offering to which the Losses of the indemnified parties relate.
(g) Other Indemnification. Indemnification and contribution
similar to that specified in the preceding subsections of this Section 2.6
(with appropriate modifications) shall be given by the Company and the
Participating Holders with respect to any required registration or other
qualification of securities under state or blue sky law or regulation. The
indemnification agreements contained in this Section 2.6 shall be in
addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made
by or on behalf of any Indemnitee or other indemnified party and shall
survive the transfer of any of the Registrable Securities by any such
party.
(h) Indemnification Payments. The indemnification and
contribution required by this Section 2.6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or a Loss is incurred.
2.7. Limitation on Sale of Securities.
(a) For the Company and Others. If the Company receives a
request for registration pursuant to an underwritten offering of
Registrable Securities pursuant to Section 2.1 or 2.2 hereof, and if such a
request is being implemented or has not been withdrawn or abandoned, the
Company agrees that (i) the Company shall not effect any public or private
offer, sale, distribution or other disposition of any of its equity
securities or of any security convertible into or exchangeable or
exercisable for any equity security of the Company or effect any
registration of any of such securities under the Securities Act (in each
case, other than (x) option grants to employees pursuant to the Company's
option plan, (y) as part of such registration and (z) as a registration
using Form S-8 or any successor or similar form which is then in effect),
whether or not for sale for its own account, during the period beginning on
the date the Company receives such request until 90 days after the
effective date of such registration (or such shorter period as the managing
underwriter(s) may require) and (ii) the Company shall use its reasonable
best efforts to obtain from each of its officers, directors and beneficial
owners of 5% or more of Common Stock, an agreement not to effect any public
or private offer, sale, distribution or other disposition of Common Stock,
or any securities that are convertible or exchangeable or exercisable for
Common Stock, during the period referred to in clause (i) of this
paragraph, including, without limitation, a sale pursuant to Rule 144 under
the Securities Act. The Company agrees to cause each holder of Common
Stock, or any securities that are convertible or exchangeable or
exercisable for Common Stock, purchased or otherwise acquired from the
Company (other than in a public offering) at any time after the date of
this Agreement to agree not to effect any public or private offer, sale,
distribution or other disposition of any such securities during the period
referred to in clause (i) of the preceding sentence, including, without
limitation, a sale pursuant to Rule 144 under the Securities Act.
(b) For the Holders. If the Company receives a request for
registration pursuant to an underwritten offering of Registrable Securities
pursuant to Section 2.1 or 2.2 hereof, and if such a request is being
implemented or has not been withdrawn or abandoned, each Holder agrees
that, to the extent requested in writing by the managing underwriter(s), it
will not effect any public or private offer, sale, distribution or other
disposition of any Registrable Securities, or any securities convertible
into or exchangeable or exercisable for such Registrable Securities (other
than the conversion of shares of the Series A Preferred Stock), including,
without limitation, any sale pursuant to Rule 144 under the Securities Act,
during the 90-day period beginning on the effective date of such
registration statement (or such shorter period as the managing
underwriter(s) may require), provided, that each Holder has received the
written notice required by Sections 2.1(a) and 2.2(a); and further,
provided, that in connection with such underwritten offering each officer
and director of the Company is subject to restrictions substantially
equivalent to those imposed on the Holders.
2.8. No Required Sale. Nothing in this Agreement shall be deemed
to create an independent obligation on the part of any of the Holders to
sell any Registrable Securities pursuant to any effective registration
statement.
2.9. Rule 144; Rule 144A; Regulation S. The Company covenants
that, at its own expense, it will file the reports required to be filed by
it under the Securities Act and the Exchange Act, and it will take such
further action as any Holder may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the
limitation of the exemptions provided by (i) Rules 144, 144A or Regulation
S under the Securities Act or (ii) any similar rule or regulation hereafter
adopted by the SEC. Upon the request of a Holder, the Company, at its own
expense, will promptly deliver to such Holder (i) a written statement as to
whether it has complied with such requirements (and such Holder shall be
entitled to rely upon the accuracy of such written statement), (ii) a copy
of the most recent annual or quarterly report of the Company and (iii) such
other reports and documents as such Holder may reasonably request in order
to avail itself of any rule or regulation of the SEC allowing it to sell
any Registrable Securities without registration.
2.10. Adjustments. At the request of any Holder, in the event of
any change in the capitalization of the Company as a result of any stock
split, stock dividend, reverse split, combination, recapitalization,
merger, consolidation, or otherwise, the provisions of this Section 2 shall
be appropriately adjusted. The Company agrees that it shall not effect or
permit to occur any combination or subdivision of shares which would
adversely affect the ability of the Holders to include any Registrable
Securities in any registration contemplated by this Agreement or the
marketability of such Registrable Securities in any such registration. The
Company agrees, upon obtaining necessary approval, that it will take all
steps necessary to effect a combination or subdivision of shares if in the
reasonable judgment of the Purchasers, or in connection with an offering
pursuant to a Demand Registration or incidental registration under this
Section 2, the Majority Participating Holders or managing underwriter(s)
determine that such combination or subdivision would enhance the
marketability of the Registrable Securities.
SECTION 3. Subsequent Registration Rights; No Inconsistent
Agreements.
3.1. Limitations on Subsequent Registration Rights. From and
after the date of this Agreement until the Holders and their respective
assigns shall no longer hold any Registrable Securities, without the prior
written consent of each of the Purchasers, the Company shall not enter into
an agreement that grants a holder or prospective holder of any securities
of the Company demand or incidental registration rights that by their terms
are not subordinate to the registration rights granted to the Holders in
this Agreement. Notwithstanding the foregoing, if after the date of this
Agreement the Company enters into any other agreement with respect to the
registration of any of its equity securities, and the terms contained
therein are more favorable to, or less restrictive on, the other party
thereto than the terms and conditions contained in this Agreement (insofar
as they are applicable) with respect to the Holders, then the terms of this
Agreement shall immediately be deemed to have been amended without further
action by the Company or the Holders so that the Holders shall be entitled
to the benefit of any such more favorable or less restrictive terms or
conditions.
3.2. No Inconsistent Agreements. The Company will not, on or
after the date of this Agreement, enter into any agreement with respect to
its securities which is inconsistent with the rights granted to the Holders
in Section 2 or otherwise conflicts with the provisions of Section 2, other
than any customary lock-up agreement with the underwriters in connection
with any offering effected hereunder, pursuant to which the Company shall
agree not to register for sale, and the Company shall agree not to sell or
otherwise dispose of, Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, for a specified period (not
to exceed 180 days) following such offering. Except as set forth on
Schedule 3.6 of the Company Disclosure Schedules, the Company warrants that
the rights granted to the Holders hereunder do not in any way conflict with
and are not inconsistent with any other agreements to which the Company is
a party or by which it is bound. Except as set forth on Schedule 3.6 the
Company Disclosure Schedules, the Company has not previously entered into
any agreement with respect to its securities granting any registration
rights to any Person.
SECTION 4. Miscellaneous.
4.1. Amendments and Waivers. This Agreement and any of the
provisions hereof may be amended, waived (either generally or in a
particular instance and either retroactively or prospectively), modified or
supplemented, in whole or in part, only by written agreement of the Company
(by an independent committee of the Board of Directors) and the Purchasers;
provided, however, that any amendment, waiver, modification or supplement
of Section 2.6 shall require the written agreement of the Company and all
Holders; and provided, further, that the observance of any provision of
this Agreement may be waived in writing by the party that will lose the
benefit of such provision as a result of such waiver. The waiver by any
party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a further or continuing waiver of such breach or
as a waiver of any other or subsequent breach, except as otherwise
explicitly provided for in such waiver. Except as otherwise expressly
provided herein, no failure on the part of any party to exercise, and no
delay in exercising, any right, power or remedy hereunder, or otherwise
available in respect hereof at law or in equity, shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or
remedy by such party preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The execution of a
counterpart signature page to this Agreement after the date hereof by any
Person as provided for herein shall not require consent of any party hereto
and shall not be deemed an amendment to this Agreement.
4.2. Assignment; Third Party Beneficiaries. This Agreement shall
be binding upon and inure to the benefit of and be enforceable by the
parties hereto and any of their respective successors, personal
representatives and permitted assigns who agree in writing to be bound by
the terms hereof. The Company may not assign any of its rights or delegate
any of its duties under this Agreement without the prior written consent of
the Holders. Any Holder may, at its election and at any time or from time
to time, assign its rights and delegate its duties under this Agreement, in
whole or in part, to an Affiliate, to a partner of such Holder or Affiliate
or to any Person to whom the Holder sells, assigns or otherwise transfers
any of its Registrable Securities (an "Assignee"); provided that, no such
assignment shall be binding upon or obligate the Company to any such
Assignee unless and until the Assignee delivers to the Company (i) a
written notice stating the name and address of the Assignee and identifying
the securities with respect to which such rights are being assigned, if
any, and (ii) a written instrument by which such Assignee agrees to be
bound by the obligations imposed upon Holders under this Agreement to the
same extent as if such Assignee were a party hereto (or executes and
delivers to the Company a counterpart to this Agreement and agrees to be
treated as a "Holder" for all purposes of this Agreement).
4.3. Notice. Unless otherwise provided herein, all notices,
requests, demands, claims and other communications provided for under the
terms of this Agreement shall be in writing and shall be delivered
personally, telecopied or sent by certified, registered or express mail,
postage prepaid. Any such notice shall be deemed given if delivered
personally or telecopied, on the date of such delivery, or if sent by
reputable overnight courier, on the first business day following the date
of such mailing, as follows:
(a) If to any of the Holders, to:
New Mountain Partners, L.P.
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Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
With a copy to (which shall not constitute
notice):
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
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Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(b) If to the Company, to:
National Medical Health Card Systems, Inc.
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Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
With a copy to (which shall not constitute
notice):
Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Any party may by notice given in accordance with this
Section 4.3 designate another address or person for receipt of notices
hereunder.
4.4. Governing Law; Venue; Service of Process; Waiver of Jury
Trials.
(a) Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights and obligations of the parties
hereto shall be governed by, the laws of the State of New York, without
giving effect to the principles of conflicts of laws except for ss.5-1401
and ss.5-1402 of the General Obligations Law Provisions of the State of New
York.
(b) Venue and Service of Process. By execution and delivery
of this Agreement, each of the parties hereto hereby irrevocably and
unconditionally (i) consents to submit to the exclusive jurisdiction of the
courts of the State of New York in New York county and the United States
District Court for the Southern District of New York (the "Selected
Courts") for any action or proceeding arising out of or relating to this
Agreement and the transactions contemplated hereby, and agrees not to
commence any action or proceeding relating thereto except in the Selected
Courts, provided, that, a party may commence any action or proceeding in a
court other than a Selected Court solely for the purpose of enforcing an
order or judgment issued by one of the Selected Courts; (ii) consents to
service of any process, summons, notice or document in any action or
proceeding by registered first-class mail, postage prepaid, return receipt
requested or by nationally recognized courier guaranteeing overnight
delivery in accordance with Section 4.3 hereof and agrees that such service
of process shall be effective service of process for any action or
proceeding brought against it in any such court, provided, that, nothing
herein shall affect the right of any party hereto to serve process in any
other manner permitted by law; (iii) waives any objection to the laying of
venue of any action or proceeding arising out of this Agreement or the
transactions contemplated hereby in the Selected Courts; and (iv) waives
and agrees not to plead or claim in any court that any such action or
proceeding brought in any such Selected Court has been brought in an
inconvenient forum.
(c) Waiver of Jury Trial. With respect to any action or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby, each of the parties hereby irrevocably, to the extent
not prohibited by applicable law that cannot be waived, waives, and
covenants that it will not assert (whether as plaintiff, defendant or
otherwise), any right to trial by jury in any action arising in whole or in
part under or in connection with this Agreement or the transactions
contemplated hereby, whether now existing or hereafter arising, and whether
sounding in contract, tort or otherwise, and agrees that any of them may
file a copy of this paragraph with any court as written evidence of the
knowing, voluntary and bargained-for agreement among the parties
irrevocably to waive its right to trial by jury in any action or proceeding
whatsoever between them relating to this Agreement or the transactions
contemplated hereby. Such action or proceeding shall instead be tried in a
Selected Court by a judge sitting without a jury.
4.5. Remedies. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were
not performed in accordance with its specific terms or was otherwise
breached and further agree that money damages or other remedy at law would
not be a sufficient or adequate remedy for any breach or violation of, or a
default under, this Agreement by them and that, in addition to all other
remedies available to them, each of them shall be entitled to an injunction
restraining such breach, violation or default or threatened breach,
violation or default and to any other equitable relief, including, without
limitation, specific performance of the terms and provisions of this
Agreement. Any requirements for the securing or posting of any bond with
respect to such remedy are hereby waived by each of the parties hereto.
Each party further agrees that, in the event of any action for an
injunction or other equitable remedy in respect of such breach or
enforcement of specific performance, it will not assert the defense that a
remedy at law would be adequate. In any action or proceeding brought to
enforce any provision of this Agreement (including the indemnification
provisions thereof), or where any provision hereof is validly asserted as a
defense, the successful party to such action or proceeding shall be
entitled to recover, to the extent permitted by applicable law, attorneys'
fees in addition to its costs and expenses and any other available remedy.
4.6. Further Assurances. Each party hereto shall cooperate with
each other party, shall do and perform or cause to be done and performed
all further acts and things, and shall execute and deliver all other
agreements, certificates, instruments, and documents as any other party
hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
4.7. Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect
and of the remaining provisions hereof shall not be in any way impaired,
unless the provisions held invalid, illegal or unenforceable shall
substantially impair the benefits of the remaining provisions hereof.
4.8. Entire Agreement. This Agreement, the Purchase Agreement and
the documents referred to herein or therein or delivered pursuant hereto or
thereto, are intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to
herein or therein. This Agreement, the Purchase Agreement and the documents
referred to herein or therein or delivered pursuant hereto or thereto,
supersede all prior agreements and understandings between the parties with
respect to such subject matter.
4.9. Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, all 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.
4.10. Defaults. A default by any party to this Agreement in such
party's compliance with any of the conditions or covenants hereof or
performance of any of the obligations of such party hereunder shall not
constitute a default by any other party.
4.11. General Interpretive Principles. Whenever used in this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires, any noun or pronoun shall be deemed to include the
plural as well as the singular and to cover all genders. The headings of
the sections, paragraphs, subparagraphs, clauses and subclauses of this
Agreement are for convenience of reference only and shall not in any way
affect the meaning or interpretation of any of the provisions hereof.
Unless otherwise specified, the terms "hereof," "herein" and similar terms
refer to this Agreement as a whole, and references herein to Sections refer
to Sections of this Agreement. Words of inclusion shall not be construed as
terms of limitation herein, so that references to "include", "includes" and
"including" shall not be limiting and shall be regarded as references to
non-exclusive and non-characterizing illustrations.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly
authorized.
NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Chief Executive Officer
NEW MOUNTAIN PARTNERS, L.P.
By: New Mountain Investments, L.P.,
its general partner
By: New Mountain GP, LLC,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Executive Officer
NEW MOUNTAIN AFFILIATED INVESTORS, L.P.
By: New Mountain GP, LLC,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Executive Officer
ANNEX A
March 19, 2004
TO: New Mountain Partners, L.P.
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
New Mountain Affiliated Investors, L.P.
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Re: Registration Rights Agreement to be entered into ("AGREEMENT") by
and between National Medical Health Card Systems, Inc., a Delaware
corporation (the "COMPANY"), New Mountain Partners, L.P., a Delaware
limited partnership (the "NEW MOUNTAIN"), and New Mountain Affiliated
Investors, L.P., (together with New Mountain, the "INVESTORS"), a form of
which is attached as Exhibit H to the Amended and Restated Purchase
Agreement dated as of November 26, 2003, by and between the Company and the
Investor (the "PURCHASE AGREEMENT").
Ladies and Gentlemen:
This letter agreement is being entered into in connection with the
Agreement. Capitalized terms used but not otherwise defined in this letter
agreement are defined in the Agreement.
For good and valuable consideration, the receipt and sufficiency is
hereby acknowledged, the parties hereto hereby agree as follows:
1. The Company and the Investors hereby acknowledge and agree that the
registration rights granted at Closing (as defined in the Purchase
Agreement) to the Investors, as holders of Registrable Securities (as
contemplated in Section 2 of the Agreement) under the Agreement, are being
granted subject to certain registration rights that have been previously
granted by the Company to other persons, as referred to on Schedule 3.6 of
the Company Disclosure Schedule to the Purchase Agreement.
2. The obligations of the Company to the Investors under the Agreement
to register the Investors' Registrable Securities are subject to the
underwriter cut-back provisions which are part of the previously granted
registration rights, as described in Section 1.
3. Except as modified hereby, the Agreement shall remain in full force
and effect in accordance with its terms.
4. The parties hereto agree that this letter shall be an operative
agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY BLANK]
This letter agreement has been executed by the parties below effective
as of the date first above written.
NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇
Chief Executive Officer
Agreed and accepted as of the date first above written:
NEW MOUNTAIN PARTNERS, L.P.
By: New Mountain Investments, L.P.,
its general partner
By: New Mountain GP, LLC,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Executive Officer
NEW MOUNTAIN AFFILIATED INVESTORS, L.P.
By: New Mountain GP, LLC,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Executive Officer