EXHIBIT 4.6
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
RES-CARE, INC.
AND
ONEX PARTNERS LP, ONEX AMERICAN HOLDINGS III, LLC, ONEX U.S.
PRINCIPALS LP, AND RES-CARE EXECUTIVE INVESTO LLC
DATED AS OF
MARCH 10, 2004
REGISTRATION RIGHTS AGREEMENT, dated as of March 10, 2004, by and among
Res-Care, Inc., a Kentucky corporation (the "Company"), Onex Partners LP, a
Delaware limited liability company, Onex American Holdings III, LLC a Delaware
limited liability company, Onex U.S. Principals LP, a Delaware limited liability
company, and Res-Care Executive Investo LLC, a Delaware limited liability
company (collectively the "Purchaser") and such other persons who become
signatories hereto from time to time as provided for herein.
WHEREAS, pursuant to the Preferred Stock Purchase Agreement, dated as
of March 10, 2004 (the "Preferred Stock Purchase Agreement"), by and among the
Company and the Purchasers, upon the terms and subject to the conditions
contained therein, the Company will issue and sell to the Purchasers an
aggregate of 48,095 shares of Series A Preferred Stock of the Company (the
"Series A Preferred Stock");
WHEREAS, pursuant to a Stock Purchase Agreement dated as of March 10,
2004 (the "Common Stock Purchase Agreement"), by and among the Purchaser and the
shareholders named therein ("Selling Shareholders"), Purchaser will purchase
3,700,000 shares of Common Stock from the Selling Shareholders;
WHEREAS, to induce the Purchaser to execute and deliver the Purchase
Agreement and as a condition to Purchaser consummating the transactions
contemplated thereby, the Company has agreed to provide the Purchaser with the
rights set forth in this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION I
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 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 Res-Care, Inc., a Kentucky corporation,
and shall include any successor thereto by merger, consolidation, acquisition of
substantially all the assets thereof, or otherwise.
1.6. "Common Stock Purchase Agreement" has the meaning set forth in
the recitals.
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 the Purchaser 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).
2
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. "Preferred Stock Purchase Agreement" has the meaning set forth
in the recitals.
1.26. "Purchaser" has the meaning set forth in the preamble.
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, and, (ii) any shares of Common Stock acquired by
Purchaser from Selling Shareholders pursuant to the Common Stock Purchase
Agreement. For purposes of this Agreement, a Person will be deemed to be a
Holder of Registrable Securities whenever such Person has the right to acquire,
directly or indirectly, such Registrable Securities whether or not such
acquisition has actually been effected, and such Person shall not be required to
convert any shares of Series A Preferred Stock to participate in 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, (b) when
such securities shall have been sold pursuant to Rule 144 under the Securities
Act or similar rule then in effect or (c) when Rule 144 or another similar
exemption under the Securities Act is available for the sale of all of such
Holder's shares during a ninety (90) day period without registration.
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
3
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.
4
(a) Demand. At any time or from time to time beginning
six months from the date of issuance of the Series A Preferred Stock, 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
5
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.
6
(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, two (2) 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 $15 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 or event
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 X-0, X-0 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
7
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
8
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
9
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
10
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
11
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;
(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
12
(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
13
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.
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.
14
(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),
15
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
16
(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
17
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 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
18
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 and directors 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
19
use its reasonable best efforts to obtain from each of its executive officers,
directors and each affiliate thereof that is in each case the beneficial owner
of 1% 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.
(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 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 judgment of the Purchaser or
managing underwriter(s) such combination or subdivision would enhance the
marketability of the Registrable Securities.
20
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
the Purchaser, 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 Purchaser; 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
21
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 Purchasers, to:
Onex Partners LP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. XxXxxxx, Managing Director
With a copy to (which shall not constitute notice):
22
Xxxxxx & Xxxxxxxx PLLC
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
(b) If to the Company, to:
Res-Care, Inc.
00000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Chairman, President and CEO
With a copy to (which shall not constitute notice):
Xxxxx Xxxxx Xxxx LLC
000 Xxxx Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: C. Xxxxxx Xxxxxxxxx
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 Commonwealth of Kentucky, without
regard to or application of its conflicts of laws principles.
(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 Commonwealth of Kentucky in Jefferson County and the United States
District Court for the Western District of Kentucky (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
23
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
24
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.
25
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized.
RES-CARE, INC.
By:_____________________________
Name:___________________________
Title:__________________________
ONEX PARTNERS LP
By:_____________________________
Name:___________________________
Title:__________________________
ONEX AMERICAN HOLDINGS III, LLC
By:_____________________________
Name:___________________________
Title:__________________________
ONEX U.S. PRINCIPALS LP
By:_____________________________
Name:___________________________
Title:__________________________
RES-CARE EXECUTIVE INVESTO LLC
By:_____________________________
Name:___________________________
Title:__________________________
26
ANNEX A
[TO BE EXECUTED AT SIGNING OF REGISTRATION RIGHTS AGREEMENT]
March 10, 2004
TO:
Onex Partners LP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Registration Rights Agreement to be entered into ("Agreement") by
and between Res-Care, Inc., a Kentucky corporation (the "Company") and Onex
Partners LP, a Delaware limited liability company (the "Investor"), a form of
which is attached as Exhibit ___ to the Purchase Agreement dated as March 10,
2004, 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 Investor hereby acknowledge and agree that the
registration rights granted at Closing (as defined in the Purchase Agreement) to
the Investor, as a holder 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 Investor under the Agreement
to register the Investor's 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.
RES-CARE, INC.
By:_____________________________
Name:___________________________
Title:__________________________
Agreed and accepted as of the
date first above written:
ONEX PARTNERS LP
By:_____________________________
Name:___________________________
Title:__________________________
