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Exhibit 10.8
REGISTRATION RIGHTS AGREEMENT
December 19, 1995
To the several persons named
at the foot hereof
Ladies and Gentlemen:
This will confirm that (a) with respect to the several individuals and
entities named as Purchasers in the Securities Purchase Agreement dated as of
December , 1995 (the "Purchase Agreement") among New American Healthcare
Corporation, a Tennessee corporation (the "Company"), Welsh, Carson, Xxxxxxxx &
Xxxxx VII, L.P., a Delaware limited partnership ("WCAS VII") and the other
several purchasers named in Schedule I thereto (WCAS VII and such other several
purchasers shall hereinafter be called, collectively, the "Purchasers"), in
consideration of (i) the purchase by the Purchasers on the date hereof of an
aggregate 5,000,000 shares of Common Stock, $.01 par value, of the Company
("Common Stock") and (ii) the possible future purchases by the Purchasers of (A)
up to an aggregate 250,000 shares of Series A Non-Convertible Cumulative
Preferred Stock, $.01 par value, of the Company ("Series A Preferred Stock") and
(B) up to an aggregate 235,000 shares of Series B Convertible Preferred Stock,
$.01 par value, of the Company ("Series B Preferred Stock"), and as an
inducement to the Purchasers to consummate the transactions contemplated by the
Purchase Agreement, and (b) with respect to the several shareholders of the
Company named in Annex I hereto who hold an aggregate 2,800,000 shares of Common
Stock and one additional executive officer of the Company to be designated as
contemplated by Section 3.7 of the Restricted Stock Agreement who will have the
right to purchase 200,000 shares of Common Stock (collectively, the
"Stockholders"), which Stockholders (other than such additional executive
officer) acquired certain rights under the Purchase Agreement to purchase
securities of the Company, in consideration of your consent to the transactions
contemplated by the Purchase Agreement including without limitation the
execution of this Registration Rights Agreement as a condition to the closing
thereof, the Company hereby covenants and agrees with each of you. and with
each subsequent holder of Restricted Stock (as such term is defined herein), as
follows:
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1. Certain Definitions. As used herein, the following terms shall
have the following respective meanings:
"Commission" means the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"Common Stock" means the Common Stock, $.01 par value, of the
Company, as constituted as of the date of this Agreement, subject to
adjustment pursuant to the provisions of Section 10 hereof.
"Conversion Stock" means shares of Common Stock issuable upon
conversion of the Series B Preferred Stock.
"Exchange Act" means the Securities Exchange Act of 1934 or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Existing Stock" means the 3,000,000 shares of Common Stock owned by
the Stockholders as of the date hereof and to be issued to the additional
executive officer of the Company referred to in the preamble to this
Agreement.
"Registration Expenses" means the expenses so described in Section 8
hereof.
"Restricted Stock" means (i) the aggregate 5,000,000 shares of Common
Stock to be sold and delivered to the Purchasers pursuant to the Purchase
Agreement, (ii) the Series B Preferred Stock, (iii) the Conversion Stock,
and (iv) any securities issued upon exchange, adjustment or transfer of any
such shares referred to in (i), (ii) or (iii) above the certificates for
which are required to bear the legend set forth in Section 2 hereof.
"Securities Act" means the Securities Act of 1933 or any similar
federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" means the expenses so described in Section 8
hereof.
2. Restrictive Legend. Each certificate representing the Restricted
Stock, the Series A Preferred Stock and the Existing Stock and each certificate
issued upon exchange or transfer thereof, other than in a public sale or as
otherwise permitted by the last paragraph of Section 3 hereof, shall be stamped
or otherwise imprinted with a legend substantially in the following form:
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"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS THEY HAVE BEEN REGISTERED UNDER THAT ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE."
3. Notice of Proposed Transfer. Prior to any proposed transfer of any
Restricted Stock, Series A Preferred Stock or Existing Stock, as the case may be
(other than under the circumstances described in Sections 4, 5 or 6 hereof), the
holder thereof shall give written notice to the Company of its intention to
effect such transfer. Each such notice shall describe the manner of the proposed
transfer and, if requested by the Company, shall be accompanied, at the expense
of the proposed transferor, by an opinion of counsel addressed to the Company
and reasonably satisfactory to the Company (it being agreed that Reboul,
MacMurray, Xxxxxx, Xxxxxxx & Kristol and Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner,
P.C. shall be satisfactory) to the effect that the proposed transfer of the
Restricted Stock, Series A Preferred Stock or Existing Stock, as the case may
be, may be effected without registration under the Securities Act, whereupon the
holder of such Restricted Stock, Series A Preferred Stock or Existing Stock, as
the case may be, shall be entitled to transfer such Restricted Stock, Series A
Preferred Stock or Existing Stock, as the case may be in accordance with the
terms of its notice. Each certificate for Restricted Stock, Series A Preferred
Stock or Existing Stock, as the case may be, transferred as above provided shall
bear the legend set forth in Section 2, unless (i) such transfer is in
accordance with the provisions of Rule 144 (or any other rule permitting public
sale without registration under the Securities Act) or (ii) the opinion of
counsel referred to above is to the further effect that the transferee and any
subsequent transferee (other than an affiliate of the Company) would be entitled
to transfer such securities in a public sale without registration under the
Securities Act.
The foregoing restrictions on transferability of Restricted Stock,
Series A Preferred Stock and Existing Stock shall terminate as to any particular
shares of Restricted Stock or Existing Stock when such shares shall have been
effectively registered under the Securities Act and sold or otherwise disposed
of in accordance with the intended method of disposition by the seller or
sellers thereof set forth in the registration statement concerning such shares.
Whenever a holder of Restricted Stock or Existing Stock is able to demonstrate
to the Company (and its counsel), in a manner reasonably acceptable to the
Company, that the provisions of Rule 144(k) of the Securities Act are available
to such holder without limitation, such holder of Restricted Stock or Existing
Stock shall be entitled to
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receive from the Company, without expense for the same, a new certificate not
bearing the restrictive legend set forth in Section 2.
4. Required Registration.
(a) At any time after two (2) years from the date of this agreement
either (i) the holders of at least a majority of the shares of Restricted
Stock at the time outstanding or (ii) subject to the provisions of Section
4(d) below, the holders of Existing Stock constituting at least a majority
of the shares of Existing Stock at the time outstanding may request the
Company to register under the Securities Act all or any portion of the
Restricted Stock (and, in the case of holders of Existing Stock, Existing
Stock) held by such requesting holder or holders for sale in the manner
specified in such notice provided, however, that the only securities which
the Company shall be required to register pursuant hereto shall be shares
of Common Stock, provided, further, however, that in any such case the
reasonably anticipated price to public of the shares so requested to be
registered shall not be less than $10 million. For the purposes of
calculating the number of shares of Restricted Stock outstanding, holders
of Series B Preferred Stock shall be treated as the holders of the number
of shares of Conversion Stock then issuable upon conversion of such shares.
(b) Promptly following receipt of any notice under this Section 4, the
Company shall immediately notify (i) in the case of a request received
pursuant to clause (i) of Section 4(a), any holders of Restricted Stock
purchased by the Purchasers from whom notice has not been received and (ii)
in the case of a request received pursuant to clause (ii) of Section 4(a),
holders of Existing Stock from whom notice has not been received, and shall
use its reasonable best efforts to register under the Securities Act, for
public sale in accordance with the method of disposition specified in such
notice from such requesting holders, in the case of clause (i), the number
of shares of Restricted Stock specified in such notice (and in any notices
received from other such holders of Restricted Stock within 20 days after
their receipt of such notice from the Company) and, in the case of clause
(ii), the number of shares of Existing Stock specified in notices received
from holders of Existing Stock within 20 days after their receipt of such
notice from the Company; provided, however, that if the proposed method of
disposition specified by the requesting holders shall be an underwritten
public offering, the number of shares to be included in such an offering
may be reduced pro rata among the requesting holders based on the number of
shares requested to be registered if and to the extent that the managing
underwriter shall be of the opinion that such
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inclusion would adversely affect the marketing of the Restricted Stock
and/or Existing Stock to be sold. If such method of disposition shall be an
underwritten public offering, the Company may designate the managing
underwriter of such offering, subject to the approval of the selling
holders of a majority of the Restricted Stock and/or Existing Stock
included in the offering, which approval shall not be unreasonably
withheld. Notwithstanding anything to the contrary contained herein, the
obligation of the Company under this Section 4 shall be deemed satisfied
only when a registration statement covering all shares of Restricted Stock
and Existing Stock specified in notices received as aforesaid, for sale in
accordance with the method of disposition specified by the requesting
holder, shall have become effective and, if such method of disposition is a
firm commitment underwritten public offering, all such shares shall have
been sold pursuant thereto, provided, however, that if such notice is given
and a registration statement covering the shares so requested to be
registered is filed under the Securities Act and the registration is
thereafter terminated for any reason other than determination by the
Company not to proceed with the same, then, unless the requesting holders
shall pay all Registration Expenses in connection therewith, such attempted
registration shall count as a required registration by the holders of
Restricted Stock or Existing Stock, as the case may be, requesting the same
for purposes of paragraph (d) below, in which event, the Company will
permit such parties an additional registration in which all Registration
Expenses (as well as all Selling Expenses) will be paid by the sellers.
(c) The Company shall be entitled to include in any registration
statement referred to in this Section 4, for sale in accordance with the
method of disposition specified by the requesting holders, shares of Common
Stock to be sold by the Company for its own account, except as and to the
extent that, in the opinion of the managing underwriter (if such method of
disposition shall be an underwritten public offering), such inclusion would
adversely affect the marketing of the Restricted Stock or Existing Stock,
as applicable, to be sold. Except as provided in this paragraph (c), and
except for registration statements on Form S-8 or another form available
exclusively to employee benefit plans, the Company will not effect any
other registration of its Common Stock, whether for its own account or that
of other holders, from the date of receipt of a notice from requesting
holders pursuant to this Section 4 until the completion of the period of
distribution of the registration contemplated thereby.
(d) Notwithstanding anything to the contrary contained herein, the
Company shall be obligated to register
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Restricted Stock or Existing Stock pursuant to this Section 4 (i) at the
request of the holders of Restricted Stock, on two occasions only and (ii)
at the request of the holders of Existing Stock, on one occasion only,
provided, however, that the Company shall be obligated to register shares
pursuant to a request of the holders of Existing Stock only after (A) the
Purchasers, as a group, shall have sold shares of Restricted Stock yielding
net proceeds to them equal in the aggregate to the aggregate purchase price
paid for all Restricted Stock purchased by them, or (B) if there is a
public market for the Common Stock, based on the average trading price of
the Common Stock during the prior twelve (12) months, the aggregate fair
market value of all the Restricted Stock exceeds three (3) times the
aggregate purchase price paid for all Restricted Stock.
5. Form S-3 Registration.
(a) If the Company shall receive from any holder or holders of
Restricted Stock or Existing Stock, a written request or requests that the
Company effect a registration on Form S-3 and any related qualification or
compliance with respect to Restricted Stock or Existing Stock, as the case may
be, owned by such holder or holders, the reasonably anticipated aggregate price
to the public of which would exceed $1,500,000 (provided that the distribution
of shares pursuant to such registration is to involve only states in which
registration is not required, whether by reason of the Common Stock being listed
on the a registered securities exchange or the NASDAQ national market or
otherwise), the Company will:
(i) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other holders of Restricted
Stock and Existing Stock; and
(ii) as soon as practicable, use its reasonable best efforts to effect
such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualifications
under applicable blue sky or other state securities laws and appropriate
compliance with applicable regulations issued under the Securities Act and
any other government requirements or regulations) as may be so requested
and as are required to permit the sale and distribution of all or such
portion of such holder's or holders' Restricted Stock or Existing Stock, as
the case may be, as are specified in such request, together with all or
such portion of the Restricted Stock or Existing Stock of any holder or
holders joining in such request as are specified in a written request given
within thirty (30) days after receipt of such written notice from the
Company, provided, however, that the Company shall not be obligated to
effect any such registration,
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qualification or compliance pursuant to this Section 5 (A) more than once
in any 180-day period, or (B) if the Company is not entitled to use Form
S-3 or if registration is required under state securities laws as noted
above, provided, further, however, that the only securities which the
Company shall be required to register pursuant hereto shall be shares of
Common Stock. Subject to the foregoing, the Company shall file a
registration statement covering the Restricted Stock and Existing Stock so
requested to be registered as soon as reasonably practicable after receipt
of the request or requests of the holders of the Restricted Stock and
Existing Stock, as the case may be.
(b) Registrations effected pursuant to this Section 5 (i) shall not
be counted as requests for registration effected pursuant to Section 4 and (ii)
unless the Company shall otherwise agree, shall not involve a firm commitment
underwriting.
6. Incidental Registration. If the Company at any time (other than
pursuant to Section 4 or 5 hereof) proposes to register any of its Common Stock
under the Securities Act for sale to the public, whether for its own account or
for the account of other security holders or both (except with respect to
registration statements on Form S-4 or S-8 or another form not available for
registering the Restricted Stock for sale to the public), it will give written
notice at such time to all holders of outstanding Restricted Stock and Existing
Stock of its intention to do so. Upon the written request of any such holder,
given within 20 days after receipt of any such notice by the Company, to
register any of its Restricted Stock or Existing Stock or both, as the case may
be, (which request shall state the intended method of disposition thereof), the
Company will use its reasonable best efforts to cause the Restricted Stock or
Existing Stock or both, as the case may be, as to which registration shall have
been so requested to be included in the securities to be covered by the
registration statement proposed to be filed by the Company, all to the extent
requisite to permit the sale or other disposition by the holder (in accordance
with its written request) of such Restricted Stock or Existing Stock, as the
case may be, so registered, provided, however, that nothing herein shall prevent
the Company from abandoning or delaying such registration at any time. In the
event that any registration pursuant to this Section 6 shall be, in whole or in
part, an underwritten public offering of Common Stock, any request by a holder
pursuant to this Section 6 to register Restricted Stock or Existing Stock, as
the case may be, shall specify that either (i) such Restricted Stock or Existing
Stock, as the case may be, is to be included in the underwriting on the same
terms and conditions as the shares of Common Stock otherwise being sold through
underwriters under such registration or (ii) subject to the final undesignated
paragraph of this Section 6, such Restricted Stock or Existing Stock, as the
case may be, is to be sold in the open market without any underwriting, on terms
and
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conditions comparable to those normally applicable to offerings of common stock
in reasonably similar circumstances. The number of shares of Restricted Stock or
Existing Stock or both, as the case may be, to be included in such an
underwriting may be reduced (first, pro rata among the requesting holders of
Existing Stock based upon the number of shares of Existing Stock so requested to
be registered and, second, pro rata among the requesting holders of Restricted
Stock based upon the number of shares of Restricted Stock so requested to be
registered) if and to the extent that the managing underwriter shall be of the
opinion that such inclusion would adversely affect the marketing of the
securities to be sold by the Company therein, provided, however, that such
number of shares of Restricted Stock or Existing Stock or both, as the case may
be, shall not be reduced if any shares are to be included in such underwriting
for the account of any other person other than the Company or the pro rata
portion of the Restricted Stock permitted by the underwriter.
Notwithstanding anything to the contrary contained in this Section 6,
in the event that there is a firm commitment underwritten public offering of
securities of the Company pursuant to a registration covering Restricted Stock
or Existing Stock or both, as the case may be, and a holder of Restricted Stock
or Existing Stock, as the case may be, does not elect to sell his Restricted
Stock or Existing Stock, as the case may be, to the underwriters of the
Company's securities in connection with such offering, such holder shall refrain
from selling such Restricted Stock or Existing Stock, as the case may be, so
registered pursuant to this Section 6 during the period of distribution of the
Company's securities by such underwriters and the period in which the
underwriting syndicate participates in the after market, provided, however, that
such holder shall, in any event, be entitled to sell its Restricted Stock or
Existing Stock, as the case may be, commencing on the 90th day after the
effective date of such registration statement or, if later, on such date (but in
no event later than the 180th day after such effective date) as contractual
"lockup" restrictions imposed by the underwriters shall expire or be released.
7. Registration Procedures. If and whenever the Company is required by
the provisions of Section 4, 5 or 6 hereof to use its reasonable best efforts to
effect the registration of any of the Restricted Stock or Existing Stock or
both, as the case may be, under the Securities Act, the Company will, as
expeditiously as possible:
(a) prepare (and afford counsel for the selling holders reasonable
opportunity to review and comment thereon) and file with the Commission a
registration statement (which, in the case of an underwritten public
offering pursuant to Section 4 hereof, shall be on Form S-1 or another form
of general applicability satisfactory to the
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managing underwriter selected as therein provided) with respect to such
securities and use its reasonable best efforts to cause such registration
statement to become and remain effective for the period of the distribution
contemplated thereby (determined as hereinafter provided);
(b) prepare (and afford counsel for the selling holders reasonable
opportunity to review and comment thereon) and file with the Commission
such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective for the period specified in paragraph (a)
above and as comply with the provisions of the Securities Act with respect
to the disposition of all Restricted Stock or Existing Stock or both, as
the case may be, covered by such registration statement in accordance with
the sellers' intended method of disposition set forth in such registration
statement for such period;
(c) furnish to each seller and to each underwriter such reasonable
number of copies of the registration statement and the prospectus included
therein (including each preliminary prospectus) as such persons may
reasonably request in order to facilitate the public sale or other
disposition of the Restricted Stock or Existing Stock or both, as the case
may be, covered by such registration statement;
(d) use its reasonable best efforts to register or qualify the
Restricted Stock or Existing Stock or both, as the case may be,
covered by such registration statement under the securities or
blue sky laws of such jurisdictions as the sellers of Restricted
Stock or Existing Stock or both, as the case may be, or, in the
case of an underwritten public offering, the managing
underwriter, shall reasonably request (provided that the Company
will not be required to (i) qualify generally to do business in
any jurisdiction where it would not otherwise be required to
qualify but for this paragraph (d), (ii) subject itself to
taxation in any such jurisdiction or (iii) consent to general
service of process in any jurisdiction);
(e) immediately notify each seller under such registration statement
and each underwriter, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus contained in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state any
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material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, provided, if the untrue statement of a material fact or omission
relates to information provided by a selling holder, the Company shall
immediately notify each Seller when it becomes aware of the happening of
such event;
(f) use its reasonable best efforts (if the offering is underwritten)
to furnish, at the request of any seller, on the date that Restricted Stock
or Existing Stock or both, as the case may be, is delivered to the
underwriters for sale pursuant to such registration: (i) an opinion of
counsel representing the Company for the purposes of such registration,
addressed to the underwriters and to such seller and dated such date,
stating that such registration statement has become effective under the
Securities Act and that (A) to the best knowledge of such counsel, no stop
order suspending the effectiveness thereof has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act, (B) the registration statement, the
related prospectus, and each amendment or supplement thereof, comply as to
form in all material respects with the requirements of the Securities Act
and the applicable rules and regulations of the Commission thereunder
(except that such counsel need express no opinion as to financial
statements, the notes thereto, and the financial schedules and other
financial and statistical data contained therein) and (C) to such other
effects as may reasonably be requested by counsel for the underwriters or
by the majority in interest of such Sellers or their counsel, and (ii) a
letter dated such date from the independent public accountants retained by
the Company, addressed to the underwriters, stating that they are
independent public accountants within the meaning of the Securities Act and
that, in the opinion of such accountants, the financial statements of the
Company included in the registration statement or the prospectus, or any
amendment or supplement thereof, comply as to form in all material respects
with the applicable accounting requirements of the Securities Act, and such
letter shall additionally cover such other financial matters (including
information as to the period ending no more than five business days prior
to the date of such letter) with respect to the registration in respect of
which such letter is being given as such underwriters or the majority in
interest of the Seller may reasonably request; and
(g) make available for inspection by each seller, any underwriter
participating in any distribution pursuant to such registration statement,
and any attorney, accountant or other agent retained by such seller or
underwriter, all financial and other records, pertinent corporate documents
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and properties of the Company, and cause the Company's officers, directors
and employees to supply all available information reasonably requested by
any such seller, underwriter, attorney, accountant or agent in connection
with such registration statement and permit such seller, attorney,
accountant or agent to participate in the preparation of such registration
statement.
For purposes of paragraphs (a) and (b) above and of Section 4(c) hereof, the
period of distribution of Restricted Stock or Existing Stock or both, as the
case may be, in a firm commitment underwritten public offering shall be deemed
to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Restricted Stock
or Existing Stock or both, as the case may be, in any other registration shall
be deemed to extend until the earlier of the sale of all Restricted Stock or
Existing Stock or both, as the case may be, covered thereby or six months after
the effective date thereof.
In connection with each registration hereunder, the selling holders
of Restricted Stock and Existing Stock, if applicable, will promptly when
requested furnish to the Company in writing such information with respect to
themselves and the proposed distribution by them (including without limitation
executed stock powers) as shall be reasonably necessary in order to assure
compliance with federal and applicable state securities laws. In the event any
selling holder fails to deliver any of such information within five (5) days of
a second written request by the Company, the Company may proceed with the
registration and exclude from the registration such selling holder's Restricted
Stock or Existing Stock.
In connection with each registration pursuant to Sections 4, 5 and 6
hereof covering an underwritten public offering, the Company agrees to enter
into a written agreement with the managing underwriter selected in the manner
herein provided in such form and containing such provisions as are customary in
the securities business for such an arrangement between major underwriters and
companies of the Company's size and investment stature, provided, however, that
such agreement shall not contain any such provision applicable to the Company
which is inconsistent with the provisions hereof and provided, further, however,
that the time and place of the closing under said agreement shall be as mutually
agreed upon among the Company, such managing underwriter and the selling holders
of Restricted Stock and Existing Stock, if applicable.
8. Expenses. All expenses incurred by the Company in complying with
Sections 4, 5 and 6 hereof, including without limitation all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees of the National Association
of
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Securities Dealers, Inc., fees of transfer agents and registrars and reasonable
and documented fees and expenses of one counsel for the sellers of Restricted
Stock and the sellers of Existing Stock (or, if there shall be no sellers of
Restricted Stock, one counsel for the sellers of Existing Stock), but excluding
any Selling Expenses, are herein called "Registration Expenses". All
underwriting discounts and selling commissions and transfer taxes applicable to
the sale of Restricted Stock or Existing Stock or both, as the case may be, are
herein called "Selling Expenses".
The Company will pay all Registration Expenses in connection with each
registration statement filed pursuant to Section 4, 5 or 6 hereof, except as
expressly provided in section 4(b). All Selling Expenses in connection with any
registration statement filed pursuant to Section 4, 5 or 6 hereof, and any other
expense specifically provided in this Agreement to be borne by the participating
sellers, shall be borne by the participating sellers in proportion to the number
of shares sold by each, or by such persons other than the Company (except to the
extent the Company shall be a seller) as they may agree.
9. Indemnification. In the event of a registration of any of the
Restricted Stock or Existing Stock or both, as the case may be, under the
Securities Act pursuant to Section 4, 5 or 6 hereof, the Company will indemnify
and hold harmless each seller of such Restricted Stock or Existing Stock, as the
case may be, thereunder and each underwriter of Restricted Stock or Existing
Stock or both, as the case may be, thereunder and each other person, if any, who
controls such seller or underwriter within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
such seller or underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such Restricted Stock or Existing Stock
or both, as the case may be, was registered under the Securities Act pursuant to
Section 4, 5 or 6, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse each such seller, each such underwriter and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that (i) the Company will not be liable
in any such case if and to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished by such seller, such underwriter or such
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controlling person in writing specifically for use in such registration
statement or prospectus and (ii) the Company shall not be liable to any such
seller (in the case of a non-underwritten sale pursuant to a shelf registration)
such underwriter or person who controls such underwriter within the meaning of
the Securities Act to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any preliminary prospectus to
the extent that any such loss, claim, damage, liability or expense of such
seller (in the case of a non-underwritten sale pursuant to a shelf registration)
such underwriter or controlling person results from the fact that (A) such
underwriter or seller (in the case of a non-underwritten sale pursuant to a
shelf registration) failed to send or deliver a copy of the prospectus with or
prior to the delivery of written confirmation of the sale of Restricted Stock or
Existing Stock, or both, as the case may be, (B) the prospectus would have
completely corrected such untrue statement or omission and (C) the Company had
previously furnished copies thereof to such underwriter; and provided, further,
that the Company shall not be liable to any such seller (in the case of a
non-underwritten sale pursuant to a shelf registration) such underwriter or
person who controls such underwriter within the meaning of the Securities Act to
the extent that any such loss, claim, damage, liability or expense arises out of
or is based upon any untrue statement or alleged untrue statement or omission or
alleged omission in the prospectus, if such untrue statement or alleged untrue
statement or omission or alleged omission is completely corrected in an
amendment or supplement to the prospectus and if, having previously been
furnished by or on behalf of the Company with copies of the prospectus as so
amended or supplemented, such seller (in the case of a non-underwritten sale
pursuant to a shelf registration) or such underwriter thereafter fails to
deliver such prospectus as so amended or supplemented, prior to or concurrently
with the sale or delivery of written confirmation of the sale of Restricted
Stock or Existing Stock, or both, as the case may be, to the person asserting
such loss, claim, damage, liability or expense, or purchase of such Restricted
Stock or Existing Stock, or both, as the case may be, which is the subject
thereof from such holder.]
In the event of a registration of any of the Restricted Stock or
Existing Stock or both, as the case may be, under the Securities Act pursuant to
Section 4, 5 or 6 hereof, each seller of such Restricted Stock or Existing
Stock, as the case may be, thereunder, severally and not jointly, will indemnify
and hold harmless the Company and each person, if any, who controls the Company
within the meaning of the Securities Act, each officer of the Company who signs
the registration statement, each director of the Company, each underwriter and
each person who controls any underwriter within the meaning of the Securities
Act, against all losses, claims, damages or liabilities, joint or several, to
which the Company or such officer or director or underwriter or
14
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement under
which such Restricted Stock or Existing Stock or both, as the case may be, was
registered under the Securities Act pursuant to Section 4, 5 or 6, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company and each such officer, director, underwriter and controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that such seller will be liable hereunder in any such case if
and only to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with information
pertaining to such seller, as such, furnished in writing to the Company by such
seller specifically for use in such registration statement or prospectus;
provided, further, however, that the liability of each seller hereunder shall be
limited to the proceeds (net of underwriting discounts and commissions) received
by such seller from the sale of Restricted Stock or Existing Stock, as the case
may be, covered by such registration statement.
Promptly after receipt by an indemnified party hereunder of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party other than under this Section 9. In case any such action
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel satisfactory to such indemnified
party, and, after notice from the indemnifying party to such indemnified party
of its election so to assume and undertake the defense thereof, the indemnifying
party shall not be liable to such indemnified party under this Section 9 for any
legal expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation and of
liaison with counsel so selected; provided, however, that, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be
reasonable defenses available to it
15
which are different from or additional to those available to the indemnifying
party, or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, the indemnified party
shall have the right to select a separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
reasonable and documented expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the indemnifying
party as incurred.
Notwithstanding the foregoing, any indemnified party shall have the
right to retain its own counsel in any such action, but the fees and
disbursements of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party shall have failed to retain counsel for the
indemnified person as aforesaid or (ii) the indemnifying party and such
indemnified party shall have mutually agreed to the retention of such counsel.
It is understood that the indemnifying party shall not, in connection with any
action or related actions in the same jurisdiction, be liable for the fees and
disbursements of more than one separate firm qualified in such jurisdiction to
act as counsel for the indemnified party. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
If the indemnification provided for in the first two paragraphs of
this Section 9 is unavailable or insufficient to hold harmless an indemnified
party under such paragraphs in respect of any losses, claims, damages or
liabilities or actions in respect thereof referred to therein, then each
indemnifying party shall in lieu of indemnifying such indemnified party
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or actions in such proportion as
appropriate to reflect the relative fault of the Company, on the one hand, and
the underwriters and the sellers of such Restricted Stock or Existing Stock, as
the case may be, on the other, in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or actions as well
as any other relevant equitable considerations, including the failure to give
any notice under the third paragraph of this Section 9. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact relates to information supplied by the
Company, on the one hand, or the underwriters and the sellers of such Restricted
Stock or Existing Stock, as the case may be, on the other, and to the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and each of you agree that it
would not be just and equitable if
16
contributions pursuant to this paragraph were determined by pro rata allocation
(even if all of the sellers of such Restricted Stock were treated as one entity
for such purpose) or by any other method of allocation which did not take
account of the equitable considerations referred to above in this paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or action in respect thereof, referred to above in
this paragraph, shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim, subject to the limitations set forth
above. Notwithstanding the provisions of this paragraph, the sellers of such
Restricted Stock or Existing Stock, as the case may be, shall not be required to
contribute any amount in excess of the amount, if any, by which the total price
at which the Common Stock sold by each of them was offered to the public exceeds
the amount of any damages which they would have otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission. No person
guilty of fraudulent misrepresentations (within the meaning of Section 11(f) of
the Securities Act), shall be entitled to contribution from any person who is
not guilty of such fraudulent misrepresentation.
10. Changes in Common Stock. If, and as often as, there are any
changes in the Common Stock by way of stock split, stock dividend, combination
or reclassification, or through merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made in
the provisions hereof, as may be required, so that the rights and privileges
granted hereby shall continue with respect to the Common Stock as so changed.
11. Representations and Warranties of the Company. The Company
represents and warrants to you as follows:
(a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and
will not violate any provision of law, any order of any court or other
agency of government, the Certificate of Incorporation or By-laws of the
Company, or any provision of any indenture, agreement or other instrument
to which it or any of its properties or assets is bound, or conflict with,
result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other instrument, or
result in the creation or imposition of any lien, charge or encumbrance of
any nature whatsoever upon any of the properties or assets of the Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance
17
with its terms, subject to considerations of public policy in the case of
the indemnification provisions hereof.
12. Rule 144 Reporting. The Company agrees with you as follows:
(a) The Company shall make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities
Act, at all times from and after the date it is first required to do so
under the Securities Act, unless waived by a majority in interest of the
Purchasers.
(b) The Company shall file with the Commission in a timely manner all
reports and other documents as the Commission may prescribe under Section
13(a) or 15(d) of the Exchange Act at any time after the Company has become
subject to such reporting requirements of the Exchange Act.
(c) The Company shall furnish to such holder of Restricted Stock
forthwith upon request (i) a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 (at any time from
and after the date it first becomes subject to such reporting requirements)
and of the Securities Act and the Exchange Act (at any time from and after
it has become subject to such reporting requirements), (ii) a copy of the
most recent annual or quarterly report of the Company, and (iii) such other
reports and documents previously filed with the Commission as a holder may
reasonably request to avail itself of any rule or regulation of the
Commission allowing a holder of Restricted Stock or Existing Stock to sell
any such securities without registration.
13. Miscellaneous.
(a) This Agreement and all rights and obligations provided pursuant to
this Agreement shall terminate on the tenth anniversary of the date
hereof.
(b) All covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto whether so
expressed or not. Without limiting the generality of the foregoing, the
registration rights conferred herein on the holders of Restricted Stock and
Existing Stock shall inure to the benefit of any and all subsequent holders
from time to time of the Restricted Stock or Existing Stock, as the case
may be, for so long as the certificates representing the Restricted Stock
or Existing Stock, as the case may be, shall be required to bear the legend
specified in Section 2 hereof.
18
(c) All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly given: (a) if
delivered personally or sent by facsimile, on the date received, (b) if
sent by overnight courier, on the day after sending, and (c) if mailed,
five (5) days after mailing, postage prepaid, to the parties at the
following addresses or at such other addresses as shall be specified by the
parties by like notice:
if to the Company, to it at
New American Healthcare Corporation
000 Xxxx Xxxxxx
Xxxxx X-00
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxx
with a copy to
Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner, P.C.
1800 First American Center
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx XX, Esq.
if to any holder of Restricted Stock, to it at its address as set
forth in Annex II hereto;
if to any Stockholder, to it at its address as set forth in Annex I
hereto;
if to any subsequent holder of Restricted Stock or Existing Stock, to
it at such address as may have been furnished to the Company in writing by
such holder.
(D) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
(e) This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof. Without limiting the generality
of the foregoing, all other Registration Rights Agreements currently in
effect between the Company and the Existing Stockholders are hereby
terminated and superseded in their entirety by this Agreement. This
Agreement may not be modified or amended except in writing signed by the
Company and the holders of not less than 66 2/3% of the Applicable
Restricted Stock and Existing Stock then outstanding, provided that no
modification or amendment shall deprive any holder of Restricted Stock or
Existing Stock of any material right
19
under this Agreement without such holder's consent. The Company will not
grant any registration rights to any other person without the written
consent of the holders of 66 2/3% of the Applicable Restricted Stock and
Existing Stock then outstanding if such rights could reasonably be expected
to conflict with, or be on a parity with, the rights of holders of
Restricted Stock and Existing Stock granted under this Agreement.
(f) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
20
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this letter, whereupon this letter (herein
sometimes called "this Agreement") shall be a binding agreement between the
Company and you.
Very truly yours,
NEW AMERICAN HEALTHCARE CORPORATION
By
-----------------------------------
Title:
-------------------------------
AGREED TO AND ACCEPTED
as of the date first
above written.
PURCHASERS:
WELSH, CARSON, XXXXXXXX & XXXXX VII, L.P.
By WCAS VII PARTNERS, L.P.,
General Partner
By
------------------------------------
General Partner
WCAS Healthcare Partners, L.P.
By WCAS WP PARTNERS, L.P.,
General Partner
By
------------------------------------
General Partner
--------------------------------------
Xxxxxxx X. Xxxxx
--------------------------------------
Xxxxxxx X. Xxxxxx
--------------------------------------
Xxxxx X. Xxxxxxxx
21
--------------------------------------
Xxxxxxx X. Xxxxx
--------------------------------------
Xxxxxx X. Xxxx
--------------------------------------
Xxxxxx X. XxXxxxxxx
--------------------------------------
Xxxxx XxxXxxxx
--------------------------------------
Xxxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxxxx
--------------------------------------
Xxxxxxx X. xx Xxxxxx
XXXXX X. XXXXXX - TRUSTEE
PROFIT SHARING PLAN DLJSC -
CUSTODIAN FBO XXXXX X. XXXXXX
By
------------------------------------
HORIZON INVESTMENTS ASSOCIATES, I
By
------------------------------------
22
STOCKHOLDERS:
--------------------------------------
Xxxxxx X. Xxxxxx
--------------------------------------
Xxxx X. XxXxxxxx, Xx.
--------------------------------------
Xxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxx
23
Exhibit B-2
Annex II
Purchasers
Name and Address
-----------------
Welsh, Xxxxxx Xxxxxxxx
& Xxxxx VII, L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000-0000
WCAS Healthcare Partners, L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000-0000
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxx
Xxxxxx X. XxXxxxxxx
Xxxxx XxxXxxxx
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxxx X. xx Xxxxxx
In care of WCAS Management Corporation
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000-0000
Xxxxx X. Xxxxxx - Trustee
Profit Sharing Plan DLJSC-Custodian
FBO Xxxxx X. Xxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
copy to:
Xx. Xxxxxx Xxxxxxx
Sales Associate
Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Investment Services Group
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
HORIZON INVESTMENTS ASSOCIATES, I
c/o X.X. Xxxxxxxx
Continental Medical Systems, Inc.
000 Xxxxxx Xxxx
Xxxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Xxxxxxx X. Xxxx
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
24
As contemplated by Section 1 of that certain Registration Rights
Agreement dated December 19, 1995 among New American Healthcare Corporation,
(the "Company") Welsh, Xxxxxx Xxxxxxxx & Xxxxx VII, L.P. ("WCAS VII"), the
several other investors named in Annex I thereto (the "Purchasers") and the
several individuals named in Annex II thereto (the "Stockholders"), (the
"Registration Rights Agreement"), the undersigned acknowledges that he is a new
executive officer and hereby becomes a party to the Registration Rights
Agreement as a Stockholder and agrees to be bound by such agreement as if a
party to the original Registration Rights Agreement.
--------------------------
Xxxx X. XxXxxx
25
Annex I
STOCKHOLDERS
Name and Address
----------------
Xxxxxx X. Xxxxxx
000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxx X. XxXxxxxx, Xx.
Xxx Xxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxx X. Xxxxxx
00000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Xxxxxxx X. Xxxx
000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxx X. XxXxxx
000 Xxxxxxxx Xx.
Xxxxxxxx, XX 00000
