8/01/00
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of August 3, 2000, by and between MIM Corporation, a Delaware
corporation (the "Company"), and Xxxxxxxxxx Group LLC, a Maryland limited
liability company (the "Stockholder").
WHEREAS, the Company and MIM Health Plans, Inc., a wholly owned
subsidiary of the Company ("MIM Subsidiary") on the one hand, and Radix Capital
Investment Group, LLC, Xxxxxxxxx Xxxxxxxx, Xxxxx Xxxxx, Xxx Xxxxxxxxx, Xxxx Xxxx
and Xxxxxx Xxxxx, on the other hand (collectively, the "Sellers"), are entering
into a Purchase Agreement, dated as of August 3, 2000 (the "Purchase
Agreement"), pursuant to which MIM Subsidiary has agreed to purchase all of the
outstanding membership interests in American Disease Management Associates,
L.L.C., a Delaware limited liability company, from the Sellers, for $19 million
in cash and an aggregate of 2,697,947 shares of the Company's common stock, par
value $0.0001 per share (the "Common Stock") of which 2,181,818 shares will
initially be delivered to First Union National Bank, as Escrow Agent, pursuant
to the Escrow Agreement, dated August 3, 2000, between the Stockholder and First
Union National Bank and 516,129 shares will be delivered to the Stockholder;
WHEREAS, to induce the Stockholder to enter into the Purchase
Agreement, the Company has agreed to provide to the Stockholder the registration
rights provided herein with respect to the Eligible Common Stock (as defined
below).
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements set forth herein, intending to be legally bound, the parties
hereto hereby agree as follows:
SECTION 1. Certain Definitions:
"Affiliate" shall mean, with respect to a specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person and, with respect to any fund
or trust, any Person which is a participant in or beneficiary of such fund or
trust. For purposes of this definition, "control" means the power, direct or
indirect, to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Common Stock" shall mean the common stock of the Company and its
successors in interest, whether by operation of law or otherwise, as well as any
stock or securities into which or for which the common stock may be changed,
converted or exchanged and any stock (or security exchangeable, convertible or
exercisable into common stock) issued or distributed to Holders (as hereafter
defined) upon any stock split, dividend, merger or similar transactions.
"Company" shall mean MIM Corporation, a Delaware corporation, and its
successors in interest, whether by operation of law or otherwise.
"Current Market Price" shall mean, on the date of any determination
thereof, the average of the last sale prices per share of the Common Stock
reported on the Nasdaq Stock Market's Small Cap Market (or the principal trading
market or stock exchange for the Common Stock if other than the Nasdaq Stock
Market's Small Cap Market) for the 10 business days preceding the date of such
determination.
"Demand" shall have the meaning set forth in Section 2(a).
"Distribution Period" shall mean, with respect to a distribution of
Eligible Common Stock in a firm commitment underwritten public offering, the
period extending until, but not beyond, such time as each underwriter has
completed its initial distribution of all securities purchased by it, and with
respect to any other distribution of Eligible Common Stock in any other
registration, the period extending until, but not beyond, the earlier of the
sale of all Eligible Common Stock covered thereby or 90 days following the
effective date of the registration statement utilized in connection with such
registration under the Securities Act.
"Eligible Common Stock" shall mean shares of Common Stock acquired by
the Stockholder pursuant to the Purchase Agreement or held by its Permitted
Transferees pursuant to Section 10(d) hereof on the date of determination;
provided, however, that shares of Common Stock will cease to be Eligible Common
Stock when (i) a Registration Statement covering such shares of Eligible Common
Stock has been declared effective by the SEC and such shares have been sold
pursuant to the registration statement, (ii) such shares have been sold pursuant
to Rule 144 (or any similar provision then in force) under the Securities Act,
or (iii) such shares have been otherwise transferred (other than to a Permitted
Transferee) and may be resold by such transferee without registration under the
Securities Act and without restriction under Rule 144.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"Holder" means any person who holds Eligible Common Stock.
"Lockout Period" means the period commencing on the Closing Date (as
defined in the Purchase Agreement) and ending on the first anniversary of the
Closing Date.
"Majority Holders" means Holders collectively holding more than 50% of
the Eligible Common Stock.
"Permitted Transferee" shall mean a Person to whom the Stockholder has
transferred Common Stock which is either (i) a spouse, parent, grandparent,
child or grandchild of the Stockholder or (ii) a trust, the grantor and sole
beneficiaries of which are either a spouse, parent, grandparent, child or
grandchild of the Stockholder.
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"Person" shall mean any individual, partnership, corporation, trust,
limited liability company, banking association or unincorporated organization,
or a government or agency or political subdivision thereof.
"Piggyback Registration" has the meaning set forth in Section 3(a).
"Piggyback Registration Request" has the meaning set forth in Section
3(a).
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of Common Stock covered by the Registration Statement, and by
all other amendments and supplements to such Prospectus, including
post-effective amendments, and in each case including all material incorporated
by reference therein.
"Purchase Agreement" has the meaning specified in the preliminary
statements.
"Registration Expenses" has the meaning set forth in Section 6.
"Registration Statement" shall mean any registration statement of the
Company, on an appropriate form under the Securities Act (other than any
registration statement filed on a Form S-4 or S-8 or any other forms prescribed
for the same or similar purposes) and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all materials incorporated by
reference therein and all exhibits thereto (including those incorporated by
reference).
"Rule 144" means Rule 144 promulgated under the Securities Act (or any
successor provision), as the same shall be amended from time to time.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
"Selling Expenses" has the meaning set forth in Section 6.
"Stockholder" has the meaning specified in the preliminary statements.
"underwritten registration" or "underwritten offering" shall mean an
offering of the Common Stock pursuant to a Registration Statement in which
Common Stock of the Company is sold to the public by one or more underwriters.
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SECTION 2. Demand Registration.
(a) At any time commencing on the date that is the nine month
anniversary of the Closing Date and ending on the sixth anniversary of the
Closing Date, upon the request of the Majority Holders (each such request, a
"Demand"), the Company shall use its reasonable best efforts to file, within 30
days (if the Company is eligible to use Form S-3) or 90 days (in the event the
Company is not eligible to use Form S-3) after receiving written notice of such
Demand, and cause to be declared effective (which effectiveness shall in no
event occur on or before the date that is the one year anniversary of the
Closing Date) a Registration Statement with respect to all or a part of the
Eligible Common Stock held by the electing Holders and requested to be
registered, provided that no such demand may be made unless it relates to at
least 400,000 shares of Eligible Common Stock or such lesser amount if all the
remaining shares of Eligible Common Stock held by the Holders are to be
registered; provided further that the electing Holders shall use their
reasonable best efforts to sell such Eligible Common Stock requested to be
registered. All registrations requested pursuant to this Section 2(a) are
referred to herein as "Demand Registrations".
(b) The Demand will set forth the number of shares of Eligible Common
Stock proposed to be sold by the electing Holders and the intended method of
distribution of such shares. If the Majority Holders so elect, the offering of
such Eligible Common Stock pursuant to such Demand Registration may be in the
form of an underwritten offering.
(c) The Company shall not be required to effect more than three Demand
Registrations of Eligible Common Stock pursuant to this Section 2.
Notwithstanding anything to the contrary contained herein, a registration shall
count as a Demand Registration only when (i) a Registration Statement covering
all Eligible Common Stock as to which registration has been requested shall have
become effective and the Company has maintained the effectiveness of such
registration statement for the applicable Distribution Period (unless such
Registration Statement ceases to remain effective as a result of some act or
omission by an electing Holder), or (ii) a registration statement filed by the
Company pursuant to a request for a Demand Registration shall be abandoned or
withdrawn upon the request of an electing Holder, unless the electing Holders
pay (or reimburse) all Registration Expenses and Selling Expenses (if any)
incurred by the Company in connection therewith.
(d) The Company shall be entitled to include in any Demand Registration
referred to in this Section 2, shares of Common Stock or other securities of the
Company to be sold by the Company for its account or by other stockholders of
the Company for their own accounts, except that if, in the case of an
underwritten offering, the managing underwriter(s) advise the Company in writing
that in their opinion the number of shares of Common Stock requested to be
included in such registration exceeds the number which can be sold in such
offering without having a material adverse effect on the offering, then the
Company will include in such registration
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(i) first, Eligible Common Stock requested to be registered by the electing
Holders, (ii) second, Common Stock or other securities proposed to be sold by
the Company and (iii) third, all other securities of the Company requested to be
included in such registration statement.
(e) Notwithstanding anything in this Section 2 to the contrary, the
Company shall not be required to file a registration statement in connection
with a Demand Registration (i) within six months after the effective date of a
registration statement filed in connection with any other Demand Registration;
provided that the Stockholder shall have been afforded the opportunity to sell
Eligible Common Stock included in such prior registration statement, (ii) the
Company elects within 15 days after receiving a request for a Demand
Registration to purchase all but not less than all of the Eligible Common Stock
as to which registration has been requested at a price per share equal to the
Current Market Price, and the Company closes such purchase within 90 days after
delivery of written notice to the electing Holders that the Company has elected
to purchase such Eligible Common Stock, or (iii) the Board of Directors of the
Company makes a good faith determination that filing a registration statement is
not in the best interests of the Company or its stockholders and delivers
written notice to the electing Holders whose shares are to be registered
pursuant to such registration statement certifying that the Board of Directors
has made such good faith determination; provided, however, that any such
deferral of the filing of the registration statement shall not exceed a period
equal to 90 days after the date of the Demand.
SECTION 3. Piggyback Registration.
(a) At any time commencing on the date that is the one year anniversary
of the Closing Date and ending on the sixth anniversary of the Closing Date,
whenever the Company proposes to file a Registration Statement for the
registration of shares of Common Stock in connection with an underwritten public
offering on behalf of the Company or an underwritten secondary public offering
on behalf of other Persons (except with respect to registration statements on
Form S-4 or Form S-8 or another form not available for registering the Eligible
Common Stock for sale to the public) (a "Piggyback Registration"), the Company
shall in each case give written notice to the Stockholder at least 20 days
before the anticipated filing date of its intention to effect such registration.
Upon the written request of any Holder given within 10 days after receipt of
such notice from the Company to register any of such electing Holders' Eligible
Common Stock (a "Piggyback Registration Request"), the Company shall use its
reasonable best efforts to cause the Eligible Common Stock as to which
registration has been requested to be included in the registration statement on
the same terms and conditions as the Common Stock otherwise being sold in such
registration.
(b) If a Piggyback Registration is an underwritten registration and the
managing underwriter(s) determines and advises the Company in writing that the
inclusion in the Registration Statement of all securities proposed to be
included would adversely affect the success of the proposed underwritten
offering, the Company shall include in such registration (i) first, the
securities, if any, the Company proposes to sell, (ii) second, all securities of
the Company to be sold by any other stockholder who has exercised his demand or
similar right to
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require the Company to file a registration statement with respect to all or a
portion of the securities of the Company held by such stockholder and (iii)
third, all other Common Stock proposed to be included in such Piggyback
Registration allocated pro rata among the electing Holders entitled to
participate in the Piggyback Registration on the basis of the number of shares
of Eligible Common Stock requested to be registered by each such Holder. The
rights set forth in this Section 3(b) shall be exercisable in connection with
any Registration Statement covering Common Stock.
(c) In connection with any offering by the Company to which the
Stockholder has Piggyback Registration rights (and notwithstanding anything in
Section 5 to the contrary), the Company, in its sole discretion, shall determine
(i) whether to initiate, proceed with or terminate such registration, (ii) the
pricing (including underwriting discounts and commissions) for such offering and
(iii) the timing of such offering. The Company may withdraw any Registration
Statement and abandon any proposed sale of Common Stock without the consent of
the Holders, notwithstanding the request of any Holder to participate therein in
accordance with this Agreement, if the Company determines in its sole discretion
to so withdraw and abandon such proposed sale. Any Holder may withdraw some or
all of such Holder's shares from such proposed sale (subject to any restrictions
imposed by the underwriters, in the event of an underwritten offering) if, in
such Holder's sole discretion, the net per share proceeds to the Holder in such
offering will be inadequate.
SECTION 4. Holdback Agreements.
The Stockholder agrees, and any Permitted Transferee of the
Stockholder, by acceptance of any Eligible Common Stock, agrees that, if so
requested by the managing underwriter(s) in an underwritten offering, it will
not effect any public or private sale or distribution of securities of the
Company of the same class as the securities included in the Registration
Statement during the 14 day period prior to, and during the 90 day period (or
such longer period requested by the managing underwriter(s), but not to exceed
180 days) beginning on the effective date of such Registration Statement,
including a sale pursuant to Rule 144 or Rule 144A under the Securities Act, to
the extent notified in writing by the Company or the managing underwriter(s),
provided that each officer or director of the Company who owns beneficially and
of record in excess of 750,000 shares of Common Stock enters into similar
agreements.
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SECTION 5. Registration Procedures.
In connection with the Company's registration obligations pursuant to
Section 2 and 3 hereof, the Company will use its reasonable best efforts to
effect the registration of the Eligible Common Stock in accordance with the
intended method or methods of distribution thereof, and pursuant thereto the
Company shall:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the Securities Act, which form shall be available for the
sale of the Eligible Common Stock in accordance with the intended method or
methods of distribution thereof and use its reasonable efforts to cause such
Registration Statement to become effective;
(b) prepare and file with the SEC such amendments to the Registration
Statement as may be necessary to keep the Registration Statement effective for
the Distribution Period; cause the Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
under the Securities Act; and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such Registration
Statement;
(c) notify each Holder of Eligible Common Stock covered by the
Registration Statement and the managing underwriter(s), if any, promptly, and
(if requested by any such Person) confirm such advice in writing, (i) when the
Registration Statement has become effective and when any post-effective
amendment or supplements thereto become effective, (ii) of the issuance by the
SEC of any stop order suspending the effectiveness of the Registration Statement
or the initiation of any proceedings for the purpose, (iii) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Eligible Common Stock for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose and (iv) at any
time when a Prospectus is required to be delivered under the Securities Act, of
the happening of any event which makes any statement made in the Registration
Statement or the Prospectus or any document incorporated therein by reference
untrue or misleading or which requires the making of any changes in the
Registration Statement or the Prospectus or any document incorporated therein by
reference to make the statements therein not misleading;
(d) upon request, furnish to each managing underwriter, if any, and
each Holder of Eligible Common Stock covered by the Registration Statement,
without charge, at least one signed copy of the Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits (including
those incorporated by reference);
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(e) deliver to each Holder of Eligible Common Stock covered by the
Registration Statement, and each underwriter, if any, without charge, as many
copies of the Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as the each Holder of Eligible Common Stock
covered by the Registration Statement and each underwriter, if any, may
reasonably request;
(f) use its reasonable best efforts to register or qualify or cooperate
with the underwriters, if any, and their respective counsel in connection with
the registration or qualification of such shares of Eligible Common Stock for
offer and sale under the securities or blue sky laws of such jurisdictions as a
majority in interests of the electing Holders or any underwriter reasonably
requests in writing, and do any and all other reasonable acts or things
necessary to enable the underwriters or each Holder of Eligible Common Stock
covered by the Registration Statement, to consummate the disposition in such
jurisdictions of the Eligible Common Stock covered by the Registration
Statement; provided that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it is not then so qualified,
(ii) subject itself to taxation in any such jurisdiction; or (iii) take any
action, other than filing a consent to service of process with a state
securities regulatory authority, to the extent required, which would subject it
to general service of process in any such jurisdiction where it is not then so
subject;
(g) cooperate with each Holder of Eligible Common Stock covered by the
Registration Statement, and the managing underwriter(s), if any, to facilitate
the timely preparation and delivery of certificates representing the Eligible
Common Stock to be sold and not bearing any restrictive legends; and enable such
shares of Eligible Common Stock to be in such denominations and registered in
such names as the managing underwriters or each Holder of Eligible Common Stock
covered by the Registration Statement, may request at least two business days
prior to any sale of the Eligible Common Stock;
(h) use its reasonable best efforts to cause all the Eligible Common
Stock covered by the Registration Statement to be listed on the primary
securities exchange or automated quotation system, if any, on which similar
securities issued by the Company are then listed; and
(i) if the offering is underwritten, use its reasonable best efforts to
obtain any customary opinions of counsel or customary accountants' "cold
comfort" letters in form and substance as is customarily given to underwriters
in an underwritten public offering and reasonably satisfactory to a majority in
interest of the Holders participating in such registration and enter into such
other customary agreements and take all such other reasonable actions in
connection with such registration to expedite or facilitate the disposition of
the Eligible Common Stock as contemplated by the Registration Statement.
The Company may require each electing Holder of Eligible Common Stock
covered by the Registration Statement (i) to furnish to the Company such
information regarding such Holder and the distribution of the Eligible Common
Stock as the Company may from time to time reasonably request in writing and
(ii) to enter into an underwriting agreement providing for the
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sale of such Eligible Common Stock which shall be customary in form, substance
and scope and shall contain customary requirements for representations,
warranties, covenants and opinions of counsel. Reasonable compliance with the
foregoing obligations shall be a condition to the rights afforded the Holders
hereunder.
Each Holder agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 5(c)(iv) hereof,
such Holder will forthwith discontinue the offering and disposition of any
Eligible Common Stock included in such offering (i) until the Holder receives
copies of the supplemented or amended Prospectus or (ii) until it is advised in
writing (the "Advice") by the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings which
are incorporated by reference in the Prospectus, and, if so directed by the
Company, such Holder will deliver to the Company all copies, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Eligible Common Stock current at the time of receipt of such
notice. In the event the Company shall give any such notice to suspend the
offering and disposition of the Eligible Common Stock, the time periods
regarding the maintenance of the applicable Registration Statement shall be
extended by the number of days during the period from and including the date of
the giving of such notice pursuant to Section 5(c) hereof to and including the
date when the Holders shall have received the copies of the supplemented or
amended Prospectus.
Notwithstanding the foregoing and in addition to the provisions of
Section 2(e), (a) the Company may delay for up to 90 days the filing or
effectiveness of any Registration Statement or any amendment thereof or any
supplement to the related Prospectus, and (b) in the case of an effective
Registration Statement, upon the request of the Company, the Holders of Eligible
Common Stock participating in such registration shall refrain from selling any
shares pursuant to such Registration Statement, if (i) the Company determines in
good faith that such registration or sale would (A) interfere with or adversely
affect the negotiation or completion of any material transaction that is being
contemplated by the Company at the time the right to delay is exercised or a
request is made or (B) involve initial or continuing disclosure obligations not
otherwise required by law or the rules and regulations of the SEC or the
principal exchange on which the Common Stock is traded, which disclosure would
have an adverse effect on the Company, provided that the Company delivers
written notice to the electing Holders whose shares are to be registered
pursuant to such registration statement certifying that the Board of Directors
has made such good faith determination or (ii) in the written opinion of an
investment bank delivered to the Company and electing Holders, that the Company
is unable to consummate an underwritten offering on reasonable terms due to then
currently prevailing market conditions.
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SECTION 6. Registration and Selling Expenses.
In connection with any Demand Registration or Piggyback Registration,
the Company shall pay the following expenses incurred in connection with such
registration (the "Registration Expenses"): (i) all filing fees with the SEC,
state and foreign registration and filing fees and fees with respect to filings
required to be made with the National Association of Securities Dealers, Inc.,
(ii) fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications), (iii) printing expenses, (iv) the fees and expenses incurred in
connection with the listing of the Eligible Common Stock on the principal
exchange on which shares of Common Stock are then listed, (v) fees and expenses
of counsel and independent certified public accountants for the Company
(including the expenses of any comfort letters pursuant to Section 5(i) hereof),
(vi) the fees of transfer agents, and (vii) the reasonable fees and expenses of
any additional experts retained by the Company in connection with such
registration. The Holders of Eligible Common Stock so registered shall pay any
underwriting fees, discounts or commissions attributable to the sale of such
Eligible Common Stock, and any out-of-pocket expenses of the Holders of Eligible
Common Stock so registered (including such expenses of any underwriter) (the
"Selling Expenses"), pro rata with all other shares offered in the registration.
The Holders of Eligible Common Stock also shall pay the fees and expenses of
such Holders' counsel.
SECTION 7. Indemnification; Contribution.
(a) Indemnification by the Company. The Company shall indemnify and
hold harmless each Holder, if applicable, and each Person who controls such
Holder within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act with respect to each registration which has been effected
pursuant to Section 2 or 3 against any losses, claims, damages or liabilities,
joint or several, to which such Holder or such controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) ("Losses") arise out of
or are based upon an untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement under which such Eligible Common
Stock held by such Holder was registered under the Securities Act, or any
Prospectus contained therein or any amendment or supplement thereto, 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, in light of the circumstances under which they were made, not
misleading, and the Company such reimburse such Holders and controlling persons
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable to any such
Holder in any such case (i) 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, Prospectus, or amendment
or supplement, in reliance upon and in conformity with information
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furnished to the Company by any Holder; or (ii) to the extent any such Loss
arises out of or is based on any untrue or alleged untrue statement or omission
or alleged omission made in any preliminary prospectus if either (A) such Holder
failed to deliver a copy of the Prospectus with or prior to the delivery of
written confirmation of the sale by such Holder to the Person asserting the
claim and the Prospectus would have corrected such untrue statement or alleged
untrue statement or omission or alleged omission, (B) such untrue statement or
alleged untrue statement or omission or alleged omission is corrected in an
amendment or supplement to the Prospectus previously furnished or (C) such
Holder uses a prospectus following delivery by the Company of a notice described
in clause (iii) or (iv) of Section 5(c).
(b) Indemnification by the Holders and any Agents and Underwriters.
Each Holder agrees, severally and not jointly, if Eligible Common Stock held by
it is included in the securities as to which such registration, qualification or
compliance is being effected, to (i) indemnify and hold harmless the Company,
its directors, officers who sign any Registration Statement, and each Person, if
any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any Loss to which the
Company or such controlling Person may become subject, under the Securities Act
or otherwise, insofar as such Losses arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or any Prospectus contained therein or any amendment or
supplement thereto, 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, in the light of the circumstances
under which they were made, not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such Holder and such Holder has
at least 5 business days to review and comment on such registration statement
and (ii) reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that each
Holder's obligations under this paragraph 7(b) and 7(d) shall, cumulatively, be
limited to the proceeds received by such Holder in connection with the sale of
Eligible Common Stock in such offering.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action, such indemnified party shall,
if a claim in respect thereof is to be made against an indemnifying party under
this Section 7, notify such indemnifying party in writing of the commencement
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 7. In case any such action shall be brought against any
indemnified party and it shall notify an indemnifying party of the commencement
thereof, such indemnifying party shall be entitled to participate therein and,
in its discretion, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and, after notice from the
indemnifying party to such indemnified party
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of its election so to assume the defense thereof, such indemnifying party shall
not be liable to such indemnified party under this Section 7 for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. 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 shall 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.
(d) Contribution. If the indemnification provided for in this Section 7
is unavailable to or insufficient to hold harmless an indemnified party under
Section 7(a) or 7(b) above in respect of Losses referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and the
indemnified party in connection with the statements or omissions which resulted
in such Losses, as well as any other relevant equitable considerations;
provided, that a Holder shall not be required to contribute any amount greater
than the proceeds received by such Holder with respect to the sale of Eligible
Common Stock in the offering(s) that is the subject or basis of the claim for
contribution. The relative fault of such indemnifying party and indemnified
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by such
indemnifying party or by such indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 7(d) were determined by
pro rata allocation (even if the Holders or any underwriters, selling agents or
other securities professionals or all of them were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in this Section 7(d). The amount
paid or payable by an indemnified party as a result of the Losses referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. 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 obligations of the Holders and any underwriters, selling
agents or other securities professionals in this Section 7(d) to contribute
shall be several and not joint.
(e) Cumulative Remedies. The remedies provided in this Section 7 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to an indemnified party at law or in equity.
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SECTION 8. Rule 144.
The Company covenants that it will use its reasonable best efforts to
file in a timely manner any reports required to be filed by it under the
Securities Act and the Exchange Act at any time during which the Company is
subject to such reporting obligations, and that the Company will take such
further action as the Holders may reasonably request, all to the extent required
from time to time to enable the Holders to sell Eligible Common Stock without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the SEC.
Upon the request of one or more Holders, the Company will deliver to such
Holders a written statement as to whether it has complied with such
requirements, a copy of the most recent annual report of the Company, and such
other reports and documents of the Company as such Holders may reasonably
request in availing themselves of any rule or regulation of the SEC allowing the
Holders to sell any such securities without registration.
SECTION 9. Participation in Underwritten Registrations.
(a) The investment banker or investment bankers and manager or
managers, if any, that will administer the registration of the Eligible Common
Stock pursuant to a Demand will be selected by the Company after consultation
with, and upon the consent of, a majority in interest of the electing Holders.
(b) The Company will not permit any other Person (other than the
Company) to participate in any underwritten registration hereunder unless such
Person (x) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (y) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements. Nothing in this Section 9
shall be construed to create any additional rights regarding the registration of
Eligible Common Stock in any Person otherwise than as set forth herein.
SECTION 10. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not, without the
consent of the Stockholder, on or after the date of this Agreement enter into
any agreement with respect to the Company's securities which is inconsistent
with the rights granted to the Stockholder in this Agreement or otherwise
conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given without the prior written consent of both parties.
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(c) Notices. All notices and other communications hereunder shall be in
writing and shall be mailed by certified mail, return receipt requested, postage
prepaid, or delivered by reliable overnight delivery service (receipt confirmed)
or facsimile transmission (receipt confirmed), addressed:
(i) if to the Company, initially at MIM Corporation, 000 Xxxxxxxxxx
Xxxx, Xxxxxxxx, XX 00000, Attention: Xxxxx Xxxxxx, Facsimile: 000-000-0000,
or at such other address as the Purchaser shall have furnished to the
Seller in writing, with a copy to: King & Xxxxxxxx, 0000 Avenue of the
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx X. Xxxxxx, Facsimile:
(000) 000-0000, or (ii) if to the Stockholder, initially at: 00 Xxxx Xxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxx, 00000, or at such other address as the
Stockholder shall have furnished in writing to the Company, with a copy to
Xxxxx, Xxxxxx & Xxxxxx, Xxxxx 0000, 000 X. Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxx, Facsimile: (000) 000-0000.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
confirmation is received, if faxed; and on the next business day, if timely
delivered to any air courier guaranteeing overnight delivery.
(d) Assignment of Registration Rights. Except as otherwise provided
below, none of the parties hereto may assign this Agreement or any of the rights
and obligations of the parties hereunder without the prior written consent of
the other parties:
(i) The Stockholder may assign this Agreement and all of its rights
and obligations hereunder to a Permitted Transferee who acquires from the
Stockholder all or a portion of the shares of Eligible Common Stock owned
by the Stockholder, provided, that such assignment shall not result in any
increased costs to the Company; or
(ii) the Company may assign this Agreement and all of its rights and
obligations under this Agreement to an Affiliate of the Company.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to such
jurisdiction's conflicts of law provisions. The federal and state courts of the
State of New York shall have exclusive jurisdiction over the subject matter
hereof, and the Company and Stockholder each attorns to and agrees to accept the
jurisdiction of such courts. Each of the parties hereto submits to the
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exclusive jurisdiction of the federal and New York state courts located in the
city of New York in connection with any dispute related to this Agreement or any
of the transactions contemplated hereby. Service of any process, summons, notice
or document by certified or registered mail, postage prepaid, addressed to a
party at the address set forth above shall be effective service of process
against such party for any suit, action or proceeding brought in any such court.
Each of the parties irrevocably and unconditionally waives any objection to the
laying of venue of any such suit, action or proceeding brought in any such court
and any claim that any such suit, action or proceeding has been brought in an
inconvenient forum.
(h) Severability. In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of such provision in
every other respect and of the remaining provisions contained herein shall not
be affected or impaired thereby.
(i) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
15
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
THE COMPANY:
MIM CORPORATION
By: /s/ Xxxxx Xxxxxx
----------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
THE STOCKHOLDER:
XXXXXXXXXX GROUP, LLC
By: Xxxx Xxxx
----------------------------------
Name: Xxxx Xxxx
Title: Manager
Exhibit A
ADDITIONAL PARTY COUNTERPART
The undersigned, after having received and reviewed to its satisfaction
a copy of the Registration Rights Agreement, dated as of August 3, 2000 (the
"Registration Rights Agreement"), by and among MIM Corporation and Xxxxxxxxxx
Group LLC, does hereby agree to become party to the Registration Rights
Agreement thereby accepting all the rights, benefits and obligations of a holder
of Eligible Common Stock thereunder. The Company may attach this page as a
counterpart to the Registration Rights Agreement and the undersigned agrees that
such attachment shall be deemed conclusive evidence of its acknowledgment and
acceptance of the terms thereof.
Defined terms used herein and not otherwise defined herein shall have
the meaning given such terms in the Registration Rights Agreement.
Dated: August 3, 2000
-----------------
[NAME]
[ADDRESS FOR NOTICES]
By: __________________________
Name:
Title:
Acknowledged and Accepted By:
MIM CORPORATION
By:________________________________
Name:
Title:
