EXECUTION COPY
EQUITY REGISTRATION RIGHTS AGREEMENT
DATED AS OF
May 13, 2002
BY AND AMONG
MARINER HEALTH CARE, INC.
AND
THE PERSONS LISTED ON THE
SIGNATURE PAGES ATTACHED HERETO
TABLE OF CONTENTS
PAGE
ARTICLE I. Definitions and Rules of Construction................................................................ 2
1.1 Definitions......................................................................................... 2
1.2 Rules of Construction............................................................................... 5
ARTICLE II. Shelf Registration.................................................................................. 5
2.1 Filing of Shelf Registration Statement.............................................................. 5
2.2 Underwriting Procedures............................................................................. 6
ARTICLE III. Demand Registration................................................................................ 7
3.1 Right to Demand Registration........................................................................ 7
3.2 Exceptions to Demand Registrations.................................................................. 8
3.3 Blackout Period..................................................................................... 8
3.4 Priority in Registration............................................................................ 9
3.5 Effective Demand Registration...................................................................... 10
3.6 Revocation of Demand Registration.................................................................. 10
3.7 Continuous Effectiveness of Registration Statement................................................. 10
3.8 Selection of Underwriters in an Underwritten Demand Registration................................... 11
ARTICLE IV. Piggyback Registration............................................................................. 11
4.1 Right to Piggyback................................................................................. 11
4.2 Priority in Piggyback Registration................................................................. 12
ARTICLE V. Procedures and Expenses............................................................................. 13
5.1 Registration Procedures............................................................................ 13
5.2 Information from Holder............................................................................ 17
5.3 Roadshows.......................................................................................... 18
5.4 Holdback Agreements................................................................................ 18
5.5 Suspension of Disposition.......................................................................... 18
5.6 Registration Expenses.............................................................................. 19
ARTICLE VI. Indemnification.................................................................................... 20
6.1 Indemnification by the Company..................................................................... 20
6.2 Indemnification by Holders......................................................................... 20
6.3 Conduct of Indemnification Proceedings............................................................. 21
6.4 Contribution, etc.................................................................................. 22
ARTICLE VII. Miscellaneous..................................................................................... 23
7.1 Additional Parties................................................................................. 23
7.2 Notices............................................................................................ 23
7.3 Assignment......................................................................................... 24
7.4 No Third-Party Beneficiaries....................................................................... 24
7.5 Counterparts....................................................................................... 24
7.6 Entire Agreement................................................................................... 24
7.7 Amendment and Waiver............................................................................... 24
7.8 No Waiver.......................................................................................... 24
7.9 Headings........................................................................................... 24
7.10 Severability....................................................................................... 25
7.11 GOVERNING LAW...................................................................................... 25
7.12 Specific Performance............................................................................... 25
7.13 Further Assurances................................................................................. 25
EQUITY REGISTRATION RIGHTS AGREEMENT
This EQUITY REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as
of May 13, 2002 (the "Effective Date"), is made by and among Mariner HEALTH
CARE, Inc., a Delaware corporation formerly known as Mariner Post-Acute
Network, Inc. (the "Company"), each of the Holders that is the Beneficial Owner
as of the Effective Date of at least 10% or more of the outstanding Shares (as
defined in Section 1.1) on the Effective Date, as listed on the signature pages
attached hereto, each Permitted Transferee (as defined in Section 1.1) and any
other Holders that are the Beneficial Owners as of the Effective Date of at
least 10% or more of the outstanding Shares on the Effective Date who may
become parties to this Agreement from time to time pursuant to and in
accordance with Section 7.1 of this Agreement.
RECITALS
A. The Company, its subsidiaries and affiliated partnerships,
joint ventures and limited liability companies that are debtors and debtors in
possession have filed with the United States Bankruptcy Court in the District
of Delaware the Joint Plan of Reorganization, dated as of November 30, 2001 (as
amended for confirmation and confirmed by an order of the United States
Bankruptcy Court for the District of Delaware, dated April 3, 2002, including
all exhibits thereto and all documents incorporated by reference therein or
contained in the documentary supplement thereto, the "Joint Plan").
B. Pursuant to the Joint Plan and the transactions contemplated
thereby, each of the Holders may become the Beneficial Owner (as defined in
Section 1.1) of shares or Warrants (as defined in Section 1.1) exercisable to
purchase shares of common stock, par value $.01 per share, of the Company to be
issued on the Effective Date or reserved for issuance after the Effective Date,
together with any other equity securities that may be issued by the Company in
substitution therefor pursuant to the Joint Plan ("New Common Stock").
C. In accordance with the terms of the Joint Plan, the Company
desires to provide for the registration of the sale by the Holders of the
Registrable Securities (as defined in Section 1.1) from time to time, on the
terms and subject to conditions set forth below.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing and the covenants
and agreements herein contained, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
ARTICLE I.
Definitions and Rules of Construction
1.1 Definitions. All terms defined in the Joint Plan shall have
such defined meanings when used herein or in any Exhibit hereto unless
otherwise defined herein or therein. As used in this Agreement, the following
terms shall have the following meanings:
"Advice" shall have the meaning defined in Section 5.5.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person means
the power, directly or indirectly, either to (a) vote 10% or more of the
securities having ordinary voting power for the election of directors of such
Person or (b) direct or cause the direction of the management and policies of
such Person, whether by contract or otherwise.
"Agreement" shall have the meaning defined in the Preamble.
"Beneficial Owner" or "Beneficial Ownership" shall have the meaning
defined in Rule 13d-3 under the Exchange Act.
"Blackout Period" shall have the meaning defined in Section 3.3.
"Board" means the Board of Directors of the Company or any committee
thereof duly authorized to act on behalf of such Board of Directors.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required by law to
close.
"Company" shall have the meaning defined in the Preamble.
"Demand Registration" shall have the meaning defined in Section 3.1.
"Demand Registration Notice" shall have the meaning defined in
Section 3.1.
"Demand Request" shall have the meaning defined in Section 3.1.
"Demand Request Threshold" shall have the meaning defined in
Section 3.1.
"Effective Date" shall have the meaning defined in the Preamble.
"Effective Period" shall have the meaning defined in Section 2.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Extension Period" shall have the meaning defined in Section 5.5.
"Holders" means the parties to this Agreement on the Effective Date
that are the Beneficial Owners of at least 10% or more of the outstanding
Shares on the Effective Date and each other Person that becomes a party to this
Agreement from time to time after the Effective Date pursuant to and in
accordance with Section 7.1 of this Agreement that was the Beneficial Owner on
the Effective Date of at least 10% or more of the outstanding Shares on the
Effective Date.
"Indemnified Party" shall have the meaning defined in Section 6.3.
"Indemnifying Party" shall have the meaning defined in Section 6.3.
"Joint Plan" has the meaning defined in Recital A.
"Losses" shall have the meaning defined in Section 6.1.
"Nasdaq" means the Nasdaq Stock Market, Inc.
"New Common Stock" shall have the meaning as defined in Recital B.
"New Warrant Agreement" means that certain Warrant Agreement dated
May 13, 2002 between the Company and American Stock Transfer & Trust Company,
as the Warrant Agent.
"Other Holders" shall have the meaning defined in Section 4.2.
"Permitted Transferee" means any Person who (i) acquires from a Holder
or Holders, in compliance with all applicable securities laws, all or a portion
of such Holder's Registrable Securities and, as a result of such transfer or
transfers, has Beneficial Ownership of 10% or more of the shares of New Common
Stock then outstanding and (ii) agrees to be bound by the terms of this
Agreement.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Prospectus" means, with respect to any Registration Statement: if
Rule 434 under the Securities Act is relied on, the term sheet that is first
filed pursuant to Rule 424(b) (7) under the Securities Act, together with the
preliminary prospectus identified therein that such term sheet supplements; if
Rule 434 under the Securities Act is not relied on, the prospectus first filed
with the SEC pursuant to Section 424(b) under the Securities Act; and if Rule
434 under the Securities Act is not relied on and no prospectus is required to
be filed pursuant to Rule 424(b) under the Securities Act, the prospectus
included in such Registration Statement at the time when it is or was declared
effective; in each case, as amended or supplemented by any prospectus
supplement, all other amendments and supplements to such prospectus (including
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post-effective amendments), and all exhibits and all material incorporated by
reference or deemed to be incorporated by reference in such prospectus.
"Registration Request" shall have the meaning defined in Section 2.2.
"Registrable Securities" means (i) the Shares, including a Holder's or
Holders' Shares purchasable upon the exercise of Warrants and held by such
Holder or Holders and (ii) any securities paid, issued or distributed in
respect of any of the Shares by way of stock dividend, stock split or
distribution, or in connection with a combination of shares or a
reclassification of shares, recapitalization, reorganization, merger or
consolidation, or otherwise, including a Holder's or Holders' Shares
purchasable upon the exercise of Warrants and held by such Holder or Holders;
provided, however, that as to any Registrable Securities, such securities will
irrevocably cease to constitute "Registrable Securities" if: (A) such
securities are disposed of pursuant to an effective registration statement
under the Securities Act; (B) such securities are distributed to the public
pursuant to Rule 144; (C) such securities have been transferred to any Person
other than a Permitted Transferee; or (D) such securities cease to be
outstanding.
"Registration Expenses" shall have the meaning defined in Section 5.6.
"Registration Statement" means any registration statement of the
Company under the Securities Act on a form the Company is then eligible to use
that covering any of the Registrable Securities pursuant to the provisions of
this Agreement, including the related Prospectus, all amendments and
supplements to such registration statement (including post-effective
amendments), and all exhibits and all materials incorporated by reference or
deemed to be incorporated by reference in such registration statement.
"SEC" means the Securities and Exchange Commission (or any successor
thereto).
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" mean the shares of New Common Stock issued to the Holders
pursuant to the Joint Plan on or after the effective date of the Joint Plan.
"Shelf Registration Statement" shall have the meaning defined in
Section 2.1.
"Underwritten Offering Notice" shall have the meaning defined in
Section 2.2.
"Underwritten Registration" or "Underwritten Offering" means a
registration in which securities of the Company are sold to one or more
underwriters for reoffering to the public pursuant to a firm commitment
offering.
"Underwriting Request Threshold" shall have the meaning defined in
Section 2.2.
"Violation" shall have the meaning defined in Section 6.1.
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"Warrants" means the warrants to purchase shares of New Common Stock
issued under the Joint Plan pursuant to the New Warrant Agreement.
1.2 Rules of Construction. Unless the context otherwise requires,
(a) all references to Articles or Sections are to Articles or Sections of this
Agreement, (b) each term defined in this Agreement has the meaning assigned to
it, (c) all uses of "herein," "hereto," "hereof" and words similar thereto in
this Agreement refer to this Agreement in its entirety, and not solely to the
Article, Section or provision in which it appears, (d) "or" is disjunctive but
not necessarily exclusive, and (e) words in the singular include the plural and
vice versa.
ARTICLE II.
Shelf Registration
2.1 Filing of Shelf Registration Statement. (a) As promptly as
practicable following the Effective Date, the Company shall file with the SEC a
Registration Statement covering the resale of the Registrable Securities by the
Holders on a continuous basis pursuant to Rule 415 under the Securities Act
(the "Shelf Registration Statement"). The Company shall use its best efforts to
cause the Shelf Registration Statement (i) to be declared effective under the
Securities Act within 90 days (but in no event more than 180 days) following
the Effective Date and (ii) once effective, to remain continuously effective
for a period ending on the earlier of: (A) the first date on which there ceases
to be any Registrable Securities; and (B) the second anniversary of the date on
which the SEC declares such Shelf Registration Statement effective ("Effective
Period") (subject to extension pursuant to Section 5.5). The Company shall not
register any securities other than Registrable Securities pursuant to the Shelf
Registration Statement; provided, however, that, as contemplated by the
registration rights agreement covering certain Junior Lender Notes (as defined
in the Joint Plan), dated as of even date herewith, among the Company and the
parties named therein, the Company shall be permitted to register pursuant to
the Shelf Registration Statement other securities of the Company issued
pursuant to the Joint Plan. The plan of distribution contained in the Shelf
Registration Statement shall permit Underwritten Offerings. The Shelf
Registration Statement shall comply as to form in all material respects with
the requirements of the Securities Act and the rules and regulations
promulgated thereunder, permitting registration of such Registrable Securities
for resale by the Holders in the manner or manners designated by them
(including, without limitation, one or more underwritten public offerings). If
the Shelf Registration Statement ceases to be effective for any reason at any
time during the Effective Period (other than because of the sale of all of the
securities registered thereunder, the Company shall use its best efforts to
obtain the prompt withdrawal of any order suspending the effectiveness thereof,
and the Effective Period shall be extended pursuant to Section 5.5 for the
Extension Period.
(b) Effective Registration. A registration shall not be deemed to have
been effected pursuant to a Shelf Registration Statement (i) unless the Shelf
Registration Statement with respect thereto has been declared effective by the
SEC or become effective in accordance with the Securities Act and the rules and
regulations thereunder and kept effective as
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contemplated by this Section 2.1(b), (ii) if, after it has become effective,
such registration becomes subject to any stop order, injunction or other order
or requirement of the SEC or other governmental agency or court for any reason
other than an act or omission by a Holder or an underwriter selected by the
Holders (provided that this item 2.1(b)(ii) will not be deemed applicable if
the Company obtains the removal of the relevant stop order, injunction or other
order or requirement and extends the Effective Period as provided in Section
5.5), or (iii) the conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such registration are
not satisfied, other than by reason of some act or omission by Holders or an
underwriter. If a registration pursuant to this Section is deemed not to have
been effected, then the Company shall continue to be obligated to effect a
registration pursuant to Section 2.1(a) until such registration is effected.
The provisions of Sections 3.3(a), (b) and (c) shall apply to the Shelf
Registration Statement.
2.2 Underwriting Procedures. (a) If Holders of at least the lesser of
20% of the Registrable Securities, determined as of the date hereof, or
Registrable Securities with a then-current market value of $50 million (the
"Underwriting Request Threshold") so request in writing (a "Registration
Request"), the Company shall effect pursuant to the Shelf Registration
Statement an Underwritten Offering; provided, however, that the Company shall
not be required to take any action in response to any such request:
(i) if the Company has effected an Underwritten Offering
pursuant to this Section 2.2(a) within the 270-day
period immediately preceding such request;
(ii) if, following the receipt of all responses to the
Underwritten Offering Notice, the Registrable
Securities requested to be included in the
Underwritten Offering have a then-current market
value of less than $50.0 million;
(iii) if the Holders making such request have not secured
the services of an underwriter or underwriters (it being understood
that the Company shall have no obligation to secure the services of an
underwriter on behalf of the Holders); or
(iv) if entitled to delay action pursuant to Section 3.3.
The Company shall give written notice (an "Underwritten Offering Notice") of
the proposed Underwritten Offering to all Holders within 15 calendar days after
receipt of a valid Registration Request. Such notice shall offer the Holders
the opportunity to include in such Underwritten Offering such amount of
Registrable Securities as each Holder may request. The Company shall include in
such Underwritten Offering all Registrable Securities for which the Company has
received written requests for inclusion within 15 calendar days after delivery
of the Underwritten Offering Notice, subject to Section 2.2(b).
(b) The Company shall cause the managing underwriter or underwriters
of a proposed Underwritten Offering to permit the Holders that have requested
Registrable
6
Securities to be included in an Underwritten Offering, undertaken pursuant to
Section 2.2(a) above, to include all such Registrable Securities on the same
terms and conditions as all other Registrable Securities to be included.
Notwithstanding the foregoing, if the managing underwriter or underwriters of
such Underwritten Offering advises the Company and the selling Holders that the
total amount of Registrable Securities that such Holders propose to include in
such Underwritten Offering is such as to materially and adversely affect the
success of such Underwritten Offering, then the Company shall include in such
Underwritten Offering up to the full amount of Registrable Securities requested
to be included in such Underwritten Offering by the Holders (allocated pro rata
among the Holders on the basis of the amount of Registrable Securities
initially requested to be included therein by each such Holder) so that the
total amount of Registrable Securities to be included in such Underwritten
Offering is the full amount that, in the written opinion of such managing
underwriter or underwriters, can be sold without materially and adversely
affecting the success of such Underwritten Offering.
(c) Any Registrable Securities may be withdrawn from a proposed
Underwritten Offering at any time before the execution and delivery by such
Holder of the underwriting agreement relating to such Underwritten Offering. In
the event that the number of Holders withdrawing Registrable Securities from a
proposed Underwritten Offering before the execution and delivery of an
underwriting agreement relating to such Underwritten Offering causes the number
of Holders participating in such offering to drop below the requirement set
forth in Section 2.2(a)(ii) above, the Holders withdrawing their Registrable
Securities shall reimburse the Company for all of its out-of-pocket fees and
expenses (including counsel fees and expenses) incurred in connection with the
proposed Underwritten Offering in excess of the amount of expenses relating
solely to the maintenance of the Shelf Registration Statement and the Company
shall have no obligation to proceed with the applicable request for an
underwritten offering; provided, however, that if such withdrawal was based on
the Company's failure to comply with its obligations hereunder, such
reimbursement shall not be required and the requested Underwritten Offering
shall not be deemed to have been effected for purposes of Section 2.2(a).
(d) The managing underwriter or underwriters of the Underwritten
Offering relating thereto shall be selected by the Holders of at least a
majority of the Registrable Securities proposed to be included in such
Underwritten Offering, subject to the approval of the Company (which approval
shall not be unreasonably withheld or unreasonably delayed).
ARTICLE III.
Demand Registration
3.1 Right to Demand Registration. Upon termination of the
Effective Period, Holders holding in the aggregate at least 10% or more of the
Registrable Securities (determined as of the Effective Date) (the "Demand
Request Threshold") have the right to request in writing ("Demand Request")
that the Company effect the registration of all or part of such Holder's or
Holders' Registrable Securities with the SEC under and in accordance with
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the provisions of the Securities Act (which written request shall specify the
aggregate number of shares of Registrable Securities requested to be registered
and the intended means of disposition of such shares of Registrable Securities)
("Demand Registration"). The Company shall give written notice (a "Demand
Registration Notice") of the proposed Demand Registration to all Holders within
15 calendar days after receipt of a valid Demand Request. Such notice shall
offer the Holders the opportunity to register such amount of Registrable
Securities as each Holder may request. Following receipt of the Demand Request,
if applicable, the provisions of Section 2.2 hereof shall apply to the subject
Demand Registration. Subject to Section 3.4, the Company shall file a
Registration Statement covering such Holder's or Holders' Registrable
Securities requested to be registered as promptly as practicable (and, in any
event within 60 days) after receipt of such written requests received within 15
calendar days after delivery of the Demand Registration Notice.
3.2 Exceptions to Demand Registrations. Notwithstanding anything
in Section 3.1 above to the contrary, the Company shall not be required to take
any action pursuant to this Article III:
(i) if the Holder or Holders making such request are not
Affiliates of the Company at the time such request
is made;
(ii) if the Company has effected a registration
contemplated by this Article III or Section 2.1
within the 180-day period next preceding such
request (unless the provisions of Section 2.2 are
applicable to a Demand Request in which case the
terms of Section 2.2(a)(i) shall apply);
(iii) if a shelf registration is effective at the time
such request is made pursuant to which the Holder or
Holders that requested registration could effect the
disposition of such Holder's or Holders' Registrable
Securities in the manner requested and the Company
offered, in accordance with the procedures set forth
herein, to include or did include such Holder's or
Holders' Registrable Securities in such shelf
registration;
(iv) if the Registrable Securities requested to be
registered shall have a then-current market value of
less than $50.0 million; or
(v) during the pendency of any Blackout Period (as
defined in Section 3.3 hereof).
3.3 Blackout Period. (a) If (i) at any time during the Effective
Period or the period during which Holders may request a Demand Registration
pursuant to Section 3.1, the Company files or proposes to file a registration
statement with respect to an offering of equity securities of the Company for
its own account and (ii) with reasonable notice (and subject to the completion
of an offering that may have been initiated pursuant to a previously delivered
Underwritten Offering Notice) (A) the Company (in the case of an offering that
is not an
8
Underwritten Offering) advises the Holders in writing that the Board of
Directors of the Company has determined, in the good faith exercise of its
reasonable business judgment, that a sale or distribution of Registrable
Securities (whether pursuant to the Shelf Registration Statement or a Demand
Registration) would adversely affect such offering or (B) the managing
underwriter or underwriters, if any, advise the Company in writing (in which
case the Company shall notify the Holders) that a sale or distribution of
Registrable Securities (whether pursuant to the Shelf Registration Statement or
a Demand Registration) would adversely affect such offering, then: (x) the
Holders agree to suspend sales pursuant to the Shelf Registration Statement
during the Blackout Period (as defined below), or (y) the Company shall not be
obligated to effect the initial filing of a Registration Statement pursuant to
Section 3.1 during the Blackout Period. As used herein the term "Blackout
Period" shall mean the 45 days prior to the date the Company in good faith
estimates (as certified in writing by an officer of the Company to the
applicable Holders) shall be the date of the filing of, and ending on the date
which is 90 days following the effective date of, the registration statement
proposed to be filed by the Company for its own account (the "Blackout
Period").
(b) If the Board determines, in the good faith exercise of its
reasonable business judgment, that the registration and distribution of
Registrable Securities (i) would materially impede, delay or interfere with any
financing, acquisition, corporate reorganization or other significant
transaction involving the Company or (ii) would require disclosure of
non-public material information, the disclosure of which would materially and
adversely affect the Company, the Company shall promptly give the Holders
written notice of such determination and shall be entitled to (x) require that
Holders suspend resale transactions pursuant to the Shelf Registration
Statement or (y) postpone the filing or effectiveness of a Registration
Statement for a reasonable period of time not to exceed 120 days; provided,
however, that the Company shall deliver to the applicable Holders a general
statement, signed by an officer of the Company, of the reasons for such
postponement or restriction on use (without any need to identify with
specificity the underlying event or issue which is the predicate for such
delay) and an estimate of the duration of the anticipated delay. The Company
shall promptly notify the applicable Holders of the expiration or earlier
termination of such a period.
(c) Notwithstanding anything in this Section 3.3 to the
contrary, there shall be no more than one delay period as contemplated by this
Section 3.3 during any consecutive 12 month period during the time in which
Holders may request a Demand Registration pursuant to Section 3.1.
3.4 Priority in Registration. If the Company seeks to include in
any underwritten Demand Registration any securities which are not Registrable
Securities and the managing underwriter advises the Company in writing that in
its opinion the number of Registrable Securities proposed to be included in the
Demand Registration exceeds the number of Registrable Securities and other
securities which can be sold in such offering, the Company shall include in
such registration: (i) first, the Registrable Securities requested to be
included which, in the opinion of such underwriters, can be sold, by the
selling Holders pro rata based upon the total number of Registrable Securities
which such Holder proposed to include in such
9
registration and (ii) second, the securities proposed to be included in such
registration by any other holders as determined by the Company and the managing
underwriter.
3.5 Effective Demand Registration. (a) The Company may satisfy
its obligations under Section 3.1 by amending (to the extent permitted by
applicable law) any registration statement previously filed by the Company
under the Securities Act so that such amended registration statement will
permit the disposition (in accordance with the intended methods of disposition
specified as aforesaid) of all of the Registrable Securities for which a Demand
Request has been properly made under Section 3.1. If the Company so amends a
previously filed registration statement, it shall be deemed to have effected a
registration for purposes of Section 3.1.
(b) A registration requested pursuant to Section 3.1 shall not be
deemed to be effected for purposes of Section 3.1: (i) unless it has been
declared effective by the SEC or become effective in accordance with the
Securities Act and the rules and regulations thereunder and kept effective as
contemplated by Section 3.7, provided that a registration which does not become
effective after the Company has filed a registration statement with respect
thereto solely by reason of the refusal of a selling Holder to proceed (other
than a refusal to proceed based upon the reasonable advice of counsel relating
to a matter with respect to the Company) shall be deemed to have been effected
by the Company at the request of such selling Holder unless such selling Holder
shall have elected to pay all Registration Expenses in connection with such
registration, (ii) if, after it has become effective, such registration becomes
subject to any stop order, injunction or other order or requirement of the SEC
or other governmental agency or court for any reason other than an act or
omission of a Holder or an underwriter selected by the Holders, or (iii) the
conditions to closing specified in the purchase agreement or underwriting
agreement entered into in connection with such registration are not satisfied,
other than by reason of some act or omission by Holders or an underwriter
selected by the Holders.
3.6 Revocation of Demand Registration. A Holder of Registrable
Securities to be included in a Registration Statement pursuant to Section 3.1
may, at any time prior to the effective date of the Registration Statement
relating to such registration, revoke its request to have Registrable
Securities included therein by providing a written notice to the Company. In
the event the number of Holders of Registrable Securities revoking their
request causes the amount of Registrable Securities participating in such
request to fall below the requirement set forth in Section 3.2(iv), the Holders
of Registrable Securities who revoke such request shall reimburse the Company
for all its out-of-pocket fees and expenses (including counsel fees and
expenses) incurred in the preparation, filing and processing of the
Registration Statement and the Company shall have no obligation to proceed with
the applicable Demand Registration; provided, however, that, if such revocation
was based on the Company's failure to comply in any material respect with its
obligations hereunder, such reimbursement shall not be required and the
requested registration that has been revoked shall not be deemed to have been
effected for purposes of Section 3.1.
3.7 Continuous Effectiveness of Registration Statement. The
Company shall use its best efforts to keep a Registration Statement that has
become effective as contemplated
10
by this Article III continuously effective for a period of 90 days (subject to
extension pursuant to Section 5.5) or such shorter period that will terminate
when all Registrable Securities covered by such Registration Statement have
been sold pursuant to such Registration Statement; provided, however, that in
no event will such period expire prior to the expiration of the applicable
period referred to in Section 4(3) of the Securities Act and Rule 174
promulgated thereunder.
3.8 Selection of Underwriters in an Underwritten Demand Registration.
In the event that a registration requested pursuant to Section 3.1 is to be an
Underwritten Registration, the managing underwriter or underwriters of the
Underwritten Offering relating thereto shall be selected by the Holders of at
least a majority of the Registrable Securities proposed to be included in such
Underwritten Registration, subject to the approval of the Company (which
approval shall not be unreasonably withheld or unreasonably delayed).
ARTICLE IV.
Piggyback Registration
4.1 Right to Piggyback. If at any time the Company proposes to
file a registration statement under the Securities Act with respect to an
offering of any class of equity securities (other than a registration statement
on Form X-0, Xxxx X-0 or any successor forms thereto and the Shelf Registration
Statement, whether or not for its own account, then the Company shall give
written notice (the "Piggyback Notice") of such proposed filing to the Holders
at least 30 days before the anticipated filing date. Such notice shall offer
the Holders the opportunity to register such amount of Registrable Securities
as each Holder may request (a "Piggyback Registration"). The Company shall
include in each Piggyback Registration all Registrable Securities for which the
Company has received written requests for inclusion within 15 days after
delivery of the Piggyback Notice, subject to Section 4.2; provided, that if, at
any time after giving written notice of its intention to register any
securities and prior to the effective date of the Registration Statement filed
in connection with such registration, the Company shall determine for any
reason either not to register or to delay registration of such securities, the
Company may, at its election, give written notice of such determination to each
selling Holder and, thereupon, (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with the such registration (but not from its
obligation to pay the Registration Expenses in connection with therewith),
without prejudice, however, to the rights of any selling Holder to request that
such registration be effected as a registration under Section 3.1, 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
4.1 shall relieve the Company of its obligation to effect any registration upon
request under Section 3.1, nor shall any such registration hereunder be deemed
to have been effected pursuant to Section 3.1. The Holders may withdraw all or
part of the Registrable Securities from a Piggyback Registration by giving
written notice to the Company of such withdrawal any
11
time before the fifth Business Day immediately preceding the effective date of
such Piggyback Registration.
4.2 Priority in Piggyback Registration. (a) The Company shall
cause the managing underwriter or underwriters of a proposed Underwritten
Offering to permit the Holders that have requested Registrable Securities to be
included in the Piggyback Registration to include all such Registrable
Securities on the same terms and conditions as any similar securities, if any,
of the Company. Notwithstanding the foregoing, if the managing underwriter or
underwriters of such Underwritten Offering advises the Company and the selling
Holder or Holders that the total amount of securities that the Company, such
Holders and any other Persons having rights to participate in such Piggyback
Registration ("Other Holders") propose to include in such offering is such as
to materially and adversely affect the success of such Underwritten Offering,
then:
(b) if such Piggyback Registration is a primary registration by
the Company for its own account, the Company shall include in such Piggyback
Registration: (i) first, all securities to be offered by the Company; and (ii)
second, up to the full amount of securities requested to be included in such
Piggyback Registration by the Holders and Other Holders having rights to
participate in such Piggyback Registration (allocated pro rata among such
Holders and Other Holders on the basis of the amount of securities requested to
be included therein by each such Holder or Other Holder) so that the total
amount of securities to be included in such Underwritten Offering is the full
amount that, in the opinion of such managing underwriter or underwriters, can
be sold without materially and adversely affecting the success of such
Underwritten Offering; and
(c) if such Piggyback Registration is an underwritten secondary
registration for the account of holders of securities of the Company, the
Company shall include in such registration: (i) first, all securities of the
Persons exercising "demand" registration rights requested to be included
therein (including without limitation the Person who demands registration and
any Persons who are entitled to participate in such Piggyback Registration
pursuant to the same agreement as the Person demanding such registration); and
(ii) second, up to the full amount of securities requested to be included in
such Piggyback Registration by the Holders and Other Holders having rights to
participate in such Piggyback Registration (allocated pro rata among such
Holders and Other Holders on the basis of the amount of securities requested to
be included therein by each such Holder or Other Holder) so that the total
amount of securities to be included in such Underwritten Offering is the full
amount that, in the written opinion of such managing underwriter or
underwriters, can be sold without materially and adversely affecting the
success of such Underwritten Offering.
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ARTICLE V.
Procedures and Expenses
5.1 Registration Procedures. (a) In connection with the
Company's registration obligations pursuant to Articles II, III and IV, the
Company shall effect such registrations to permit the sale of Registrable
Securities by a Holder in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Company shall as promptly as
reasonably practicable:
(b) Prepare and file with the SEC a Registration Statement or
Registration Statements available for the sale of the Registrable Securities by
the selling Holder in accordance with the intended method or methods of
distribution thereof; provided, however, that the Company (i) shall, before
filing, furnish to each selling Holder, its counsel and the managing
underwriter or underwriters, if any, copies of the Registration Statement or
Prospectus proposed to be filed, which documents shall be subject to the review
of such Holder, its counsel and such underwriters, (ii) shall provide such
Persons with a reasonable opportunity to review and comment on such
Registration Statement or Prospectus, and (iii) shall not file any such
Registration Statement or amendment thereto or any such Prospectus or
supplement thereto (including such documents incorporated by reference and
proposed to be filed after the initial filing of the Registration Statement) to
which such selling Holder, its counsel or such underwriter or underwriters, if
any, shall reasonably object on a timely basis, provided, however, that the
Company may file such document in a form required by law or upon the advice of
its counsel.
(c) Prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary;
cause the related Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provision then in force) 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 during the applicable period
in accordance with the intended methods of disposition by each selling Holder
set forth in such Registration Statement as so amended, or in such Prospectus
as so supplemented.
(d) Promptly notify each selling Holder, its counsel and the
managing underwriter or underwriters, if any, in writing (i) when a Prospectus
or any Prospectus supplement or post-effective amendment has been filed, and,
with respect to a Registration Statement or any post-effective amendment, when
the same has become effective, (ii) of any request by the SEC or any other
federal or state governmental authority for amendments or supplements to a
Registration Statement or related Prospectus or for additional information,
(iii) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose, (iv) of the
receipt by the Company of any notification with respect to the suspension of
the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation of any proceeding for
such
13
purpose, (v) of the occurrence of any event which makes any statement made in
such Registration Statement or Prospectus untrue in any material respect or
which requires the making of any changes in a Registration Statement or
Prospectus or other documents so that, (A) in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading and (B) in the case of the Prospectus, it
will not contain any untrue statement of a material fact or omit to state any
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 (vi) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
(e) Use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement, or the lifting of any
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, at the earliest
practicable date.
(f) If requested by the managing underwriter or underwriters, if
any, or the selling Holder, (i) promptly incorporate in a Prospectus supplement
or post-effective amendment such information as the managing underwriter or
underwriters, if any, and such selling Holder reasonably agree should be
included therein under applicable law and (ii) make all required filings of
such Prospectus supplement or such post-effective amendment as soon as
practicable after the Company has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective amendment;
provided, however, that the Company shall not be required to take any actions
under this Section 5.1(f) that are not, in the opinion of counsel for the
Company, in compliance with applicable law.
(g) Furnish to each selling Holder, its counsel and each managing
underwriter, if any, at least one conformed copy of the Registration Statement
and any post-effective amendment thereto, including financial statements (but
excluding all schedules, all documents incorporated or deemed incorporated
therein by reference and all exhibits).
(h) Deliver to each selling Holder, its counsel and the managing
underwriter or underwriters, if any, as many copies of the Prospectus relating
to such Registrable Securities (including each preliminary Prospectus) and any
amendment or supplement thereto as such Persons may reasonably request and, by
such delivery, the Company shall be deemed to have consented to the use of such
Prospectus or such amendment or supplement thereto by the selling Holder and
the underwriter or underwriters, if any, in connection with the offering and
sale of the Registrable Securities covered by such Prospectus or any amendment
or supplement thereto.
(i) Prior to any public offering of Registrable Securities,
register or qualify, or cooperate with each selling Holder, the managing
underwriter or underwriters, if any, and their respective counsel in connection
with the registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions within the United States as
such selling Holder or underwriter or underwriters reasonably request in
writing; keep each such registration or
14
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective; and do any and all
other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by the
Registration Statement; provided, however, that the Company shall not be
required to (i) qualify generally to do business in any jurisdiction in which
it is not then so qualified or (ii) take any action that would subject it to
general service of process in any jurisdiction in which it is not then so
subject.
(j) Cooperate with the selling Holders and the managing
underwriter or underwriters, if any, to facilitate any filings with the NASD
and the timely preparation and delivery of certificates representing
Registrable Securities to be sold, which certificates shall not bear any
restrictive legends pertaining to resale of such Registrable Securities under
the Securities Act, and cause such certificates to be in such denominations and
registered in such names as the managing underwriter or underwriters, if any,
shall request at least two Business Days prior to any sale of Registrable
Securities to the managing underwriter or underwriters.
(k) As promptly as practicable upon the occurrence of any event
contemplated by Section 5.1(d) (v) or 5.1(d) (vi) hereof, prepare a supplement
or post-effective amendment to each Registration Statement or a supplement to
the related Prospectus, or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable Securities being sold
thereunder, such Prospectus will not contain an untrue statement of a material
fact or omit to state any 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.
(l) Use its best efforts to cause all Registrable Securities
covered by such Registration Statement to be listed on Nasdaq or any other
national securities exchange; provided, however, that the Company then meets
the listing criteria of Nasdaq or any such other national securities exchange.
(m) Engage an appropriate transfer agent and provide such
transfer agent with printed certificates for the Registrable Securities in a
form eligible for deposit with The Depository Trust Company, and provide a
CUSIP number for the Registrable Securities not later than the effective date
of a Registration Statement.
(n) Enter into such agreements (including, in the event of an
Underwritten Offering, an underwriting agreement in form, scope and substance
as is customary in Underwritten Offerings) and take all such other actions in
connection therewith (including those reasonably requested by any selling
Holder or, in the event of an Underwritten Offering, those reasonably requested
by the managing underwriter or underwriters) reasonably necessary or desirable
to expedite or facilitate the disposition of such Registrable Securities, in
connection with an Underwritten Registration, and (i) make such representations
and warranties to each selling Holder and the managing underwriter or
underwriters, if any, with respect to the business of the Company and its
subsidiaries, the Registration Statement or Prospectus, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
Underwritten Offerings and confirm the same if and when requested, (ii) use its
commercially
15
reasonable best efforts to obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriter or underwriters,
if any) addressed to such selling Holder and the managing underwriter or
underwriters, if any, covering the matters customarily covered in opinions
requested in Underwritten Offerings, (iii) use its commercially reasonable best
efforts to obtain "comfort" letters and updates thereof from the independent
certified public accountants of the Company (and, if necessary, any other
certified public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and financial
data is, or is required to be, included in the Registration Statement),
addressed to each of the managing underwriter or underwriters, if any, such
letters to be in customary form and covering matters of the type customarily
covered in "comfort" letters in connection with Underwritten Offerings, and
(iv) deliver such documents (not including the delivery of opinions of counsel
under clause (ii) above to the selling Holder) and certificates as may be
reasonably requested by the selling Holder, its counsel, managing underwriter
or underwriters, if any, to evidence the continued validity of the
representations and warranties of the Company and its subsidiaries made
pursuant to clause (i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or similar agreement entered
into by the Company. The foregoing actions shall be taken in connection with
each closing under such underwriting or similar agreement as and to the extent
required thereunder.
(o) Give any selling Holder, its underwriter or underwriters, if
any, and their counsel and accountants, the reasonable 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, make available for inspection by each of them all pertinent
financial and other records, pertinent corporate documents and properties of
the Company and its subsidiaries, cause the officers, directors and employees
of the Company and its subsidiaries to supply all information reasonably
requested by any such representative, underwriter, attorney or accountant in
connection with such Registration Statement and give each of them such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary, in the reasonable opinion of such selling Holder's and such
underwriter's or underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act; provided, however, that
any records, information or documents that are designated by the Company as
confidential at the time of delivery of such records, information or documents
shall be kept confidential by such Persons unless (i) such records, information
or documents are in the public domain or otherwise publicly available (other
than by reason of breach of this confidentiality provision), (ii) disclosure of
such records, information or documents is required by court or administrative
order or is necessary to respond to inquires of regulatory authorities, or
(iii) disclosure of such records, information or documents, in the reasonable
opinion of counsel to such Person, is otherwise required by law or regulation
(including without limitation pursuant to the requirements of the Securities
Act or regulations promulgated thereunder); provided, however, that in the case
of subsections (ii) and (iii) hereof, prior to making such disclosure the
Holder shall, subject to applicable law, advise and consult with the Company
and its counsel as to the timing and content of such disclosure and the nature
and wording of such disclosure and shall use its reasonable best efforts to
obtain, at the
16
Company's expense, confidential treatment therefor. Also, if possible, the
Company shall be given a reasonable time to intervene with the appropriate
authorities in order to prevent disclosure of the confidential information.
(p) Comply with all applicable rules and regulations of the SEC
and make generally available to its security holders earning statements
satisfying the provisions of Section 11(a) of the Securities Act, provided that
the Company shall be deemed to have complied with this Section 5.1(p) if it has
satisfied the provisions of Rule 158 under the Securities Act (or any similar
rule promulgated under the Securities Act).
(q) During the period when a Prospectus is required to be
delivered under the Securities Act, promptly file all documents required to be
filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act.
(r) If the selling Holders of at least a majority of the
Registrable Securities proposed to be included in any Registration Statement so
request, request acceleration of effectiveness of the Registration Statement
from the SEC, provided at the time of such request the Company does not, in
good faith, believe it is necessary to amend further the Registration Statement
in order to comply with the provisions of this Section 5.1. If the Company
wishes to further amend the Registration Statement prior to requesting
acceleration, it shall have five Business Days to so amend prior to requesting
acceleration.
5.2 Information from Holder. (a) The Company may require each
Holder including its Registrable Securities in any Registration Statement to
furnish to the Company such information regarding the Holder and its intended
plan and method of disposition of such Registrable Securities as the Company
may, from time to time, reasonably request in writing. The Company may refuse
to proceed with the registration of such Holder's Registrable Securities if
such Holder fails to furnish such information within a reasonable time after
receiving such request.
(b) Each selling Holder shall (i) notify the Company of the occurrence
of any event that makes any statement made in a Registration Statement or
Prospectus regarding such selling Holder untrue in any material respect or that
requires the making of any changes in a Registration Statement or Prospectus so
that, in such regard, (A) in the case of a Registration Statement, it will not
contain any untrue statement of a material fact or omit any material fact
required to be stated therein or necessary to make the statements not
misleading and (B) in the case of a Prospectus, it will not contain any untrue
statement of a material fact or omit any material fact required to be stated or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading and (ii) provide the Company with such
information as may be required to enable the Company to prepare a supplement or
post-effective amendment to any such Registration Statement or a supplement to
such Prospectus as contemplated by Section 5.1(k).
(c) With respect to any Underwritten Offering, the inclusion of a
Holder's Registrable Securities therein will be conditioned upon the execution
and delivery by such Holder of an underwriting agreement in form, scope and
substance as is customary in
17
Underwritten Offerings, provided that a Holder will not be required to make any
representations or warranties other than with respect to such Holder, such
Holder's Registrable Securities, such Holder's intended method of distribution
and such other representations as may be required by law.
(d) If any such Registration Statement to be filed pursuant to this
Agreement refers to any Holder by name or otherwise as a 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, 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 required by the Securities Act or any similar federal statue
then in force, the deletion of the reference to such Holder.
5.3 Roadshows. In connection with any Underwritten Offering, the
Company and members of its management (which shall include the President and
the Chief Financial Officer) or such other members of its management acceptable
to the managing underwriter or underwriters shall participate in roadshows and
other similar selling efforts as the managing underwriter or underwriters shall
reasonably deem to be necessary.
5.4 Holdback Agreements. The Company agrees to if so required by
the managing underwriter or underwriters not to sell, make any short sale of,
loan, grant any option for the purchase of (other than options pursuant to a
Company stock option plan, which options are not by their terms expected to be
exercisable for at least 90 days following the date of grant), effect any
public sale or distribution of or otherwise dispose of its equity securities or
securities convertible into or exchangeable or exercisable for any of such
securities during the seven days prior to and the 90 days after any
Underwritten Registration pursuant to Section 3.8 or 4.1 has become effective,
except as part of such Underwritten Registration and except pursuant to
registrations on Form X-0, X-0 or any successor forms thereto. During any
Blackout Period, the Holders agree, if so required by the managing underwriter
or underwriters, not to sell, make any short sale of, loan, grant any option
for the purchase of, effect any public sale or distribution of or otherwise
dispose of any of the Company's equity securities or securities convertible
into or exchangeable or excisable for any of such securities.
5.5 Suspension of Disposition. Each selling Holder shall be
deemed to have agreed that, upon receipt of any notice from the Company of the
occurrence of any event of the kind described in Section 5.1(d)(ii),
5.1(d)(iii), 5.1(d)(iv), 5.1(d)(v) or 5.1(d)(vi), such Holder shall discontinue
disposition of Registrable Securities covered by a Registration Statement or
Prospectus until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5.1(k) or until it is advised in
writing (the "Advice") by the Company that the use of the applicable Prospectus
may be resumed and has received copies of any additional or supplemental
filings that are incorporated or deemed to be incorporated by reference in such
Prospectus. In the event the Company shall give any such notice, the period of
time during which a Registration Statement should remain effective as set forth
in Section 2.1 or Section 3.7 shall be extended by the number of days
comprising the time period
18
commencing on and including the date of the giving of such notice to and
including the date when each seller of Registrable Securities covered by such
Registration Statement shall have received (i) the copies of the supplemented
or amended Prospectus contemplated by Section 5.1(k) or (ii) the Advice (the
"Extension Period"). The Company shall use its commercially reasonable efforts
and take such actions as are reasonably necessary to render the Advice as
promptly as practicable.
5.6 Registration Expenses. (a) (a) Subject to Section 2.2(c) and
3.6, all fees and expenses incurred by the Company in complying with Articles
II, III and IV and Section 5.1 ("Registration Expenses") shall be borne by the
Company. Such fees and expenses shall include without limitation (i) all
registration and filing fees (including without limitation fees and expenses
(A) with respect to filings required to be made with the National Association
of Securities Dealers, Inc. and (B) of compliance with securities or blue sky
laws), (ii) printing expenses (including without limitation the expenses of
printing certificates for securities in a form eligible for deposit with The
Depository Trust Company and of printing Prospectuses if the printing of
Prospectuses is requested by the selling Holder), (iii) messenger, telephone
and delivery expenses, (iv) reasonable fees and disbursements of counsel for
the Company, (v) reasonable fees and disbursements of one counsel for all
selling Holders and Other Holders collectively (which counsel will be selected
by Holders and Other Holders holding a majority of the securities sought to be
included in the Registration Statement), (vi) reasonable fees and disbursements
of all independent certified public accountants referred to in Section 5.1(n)
(iii) (including the expenses of any "comfort" letters required by or incident
to such performance), (vii) reasonable fees and expenses of any qualified
"independent underwriter" or other independent appraiser participating in an
offering pursuant to Section 2720(c) of the Conduct Rules of the National
Association of Securities Dealers, Inc., and (viii) reasonable fees and
expenses all other Persons retained by the Company. In addition, the Company
shall pay its internal expenses (including without limitation all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit, and the fees and expenses incurred in
connection with the listing of Registrable Securities with each securities
exchange, if any, on which similar securities issued by the Company are then
listed or the quotation of such securities on Nasdaq if similar securities
issued by the Company are then quoted on Nasdaq.
(b) Notwithstanding anything to the contrary herein contained,
all underwriting fees, discounts, selling commissions and transfer taxes, if
any, in connection with the sale of Registrable Securities shall be borne by
the Holders proportionately (based on the number of Registrable Securities sold
by a Holder in such offering in relation to the total number of Registrable
Securities sold in such offering).
(c) Notwithstanding anything to the contrary herein contained,
each selling Holder may have its own separate counsel (in addition to the
counsel referred to in clause (v) of Section 5.6(a)) in connection with the
registration of any of its Registrable Securities, which counsel may
participate therein to the full extent provided herein; provided, however, that
all fees and expenses of such separate counsel shall be paid for by such
selling Holder.
19
ARTICLE VI.
Indemnification
6.1 Indemnification by the Company. (a) The Company shall
indemnify and hold harmless, to the fullest extent permitted by law, each
Holder owning Registrable Securities registered pursuant to this Agreement, its
officers, directors, trustees, agents and employees, each Person who controls
such Holder (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, trustees, agents and
employees of any such controlling Person, from and against all losses, claims,
damages, liabilities, costs (including without limitation the costs of
investigation and attorneys' fees) and expenses (collectively, "Losses"), as
incurred, arising out of or based upon (i) any untrue or alleged untrue
statement of a material fact contained or incorporated by reference in any
Registration Statement, Prospectus or preliminary prospectus, (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 or alleged violation by the Company of the Securities Act, the
Exchange Act, any federal or state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any federal or state
securities law in connection with the offering covered by any Registration
Statement, (each a "Violation") except for a Violation based solely upon
written information furnished to the Company through an instrument provided by
such Holder for use therein or in the preparation thereof; provided, however,
that the Company shall not be liable to any Holder to the extent that any such
Losses arise out of or are based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any preliminary prospectus if
either (i) (A) such Holder failed to send or deliver a copy of the Prospectus
with or prior to the delivery of written confirmation of the sale by such
Holder of a Registrable Security to the Person asserting the claim from which
such Losses arise and (B) the Prospectus would have corrected such untrue
statement or alleged untrue statement or such omission or alleged omission or
(ii) such untrue statement or alleged untrue statement or such omission or
alleged omission is corrected in an amendment or supplement to the Prospectus
previously furnished by or on behalf of the Company, such Holder was furnished
with copies of the Prospectus as so amended or supplemented, and such Holder
thereafter failed to deliver such Prospectus as so amended or supplemented
prior to or concurrently with the sale of a Registrable Security to the Person
asserting the claim from which such Losses arise.
(b) Notwithstanding the foregoing, if in connection with an
underwritten public offering of any Registrable Securities, the Company, the
selling Holder and the underwriters enter into an underwriting or purchase
agreement relating to such offering which contains provisions covering
indemnification among the parties, the indemnification provided thereunder
shall be in addition to (and not in lieu of) the indemnification provided to
the Holders hereunder.
6.2 Indemnification by Holders. Each Holder selling Registrable
Securities in any Registration Statement filed pursuant to the terms hereof
shall, severally and not jointly,
20
hold harmless, to the fullest extent permitted by law, the Company, its
officers, directors, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act), and the directors, officers, agents and employees of any such
controlling Person, from and against all Losses, as incurred, arising out of or
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation is based solely upon written information furnished to the
Company through an instrument provided by such Holder specifically for use
therein or in the preparation thereof. In no event shall the liability of any
Holder hereunder be greater in amount than the dollar amount of the proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.
6.3 Conduct of Indemnification Proceedings. If any Person becomes
entitled to indemnity hereunder (an "Indemnified Party"), such Indemnified
Party shall give prompt notice to the party from which such indemnity is sought
(the "Indemnifying Party") of any claim or of the commencement of any action or
proceeding with respect to which such Indemnified Party seeks indemnification
or contribution pursuant hereto; provided, however, that the failure to so
notify the Indemnifying Party shall not relieve the Indemnifying Party from any
obligation or liability except to the extent that the Indemnifying Party has
been prejudiced materially by such failure. If such an action or proceeding is
brought against the Indemnified Party, the Indemnifying Party shall be entitled
to participate therein and, to the extent it may elect by written notice
delivered to the Indemnified Party promptly after receiving the notice referred
to in the immediately preceding sentence, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. Notwithstanding the
foregoing, the Indemnified Party shall have the right to employ its own counsel
in any such case, but the fees and expenses of such counsel shall be at the
expense of the Indemnified Party unless (i) the employment of such counsel
shall have been authorized in writing by the Indemnifying Party, (ii) the
Indemnifying Party shall not have employed counsel (reasonably satisfactory to
the Indemnified Party) to take charge of such action or proceeding within a
reasonable time after notice of commencement thereof, or (iii) the Indemnified
Party reasonably shall have concluded (based on the advice of counsel) that
there may be defenses or actions available to it which are different from or
additional to those available to the Indemnifying Party which, if the
Indemnifying Party and the Indemnified Party were to be represented by the same
counsel, could result in a conflict of interest for such counsel or materially
prejudice the prosecution of defenses or actions available to the Indemnified
Party. If any of the events specified in clause (i), (ii) or (iii) of the
immediately preceding sentence are applicable, then the fees and expenses of
one separate counsel for the Indemnified Party shall be borne by the
Indemnifying Party. If, in any case, the Indemnified Party employs separate
counsel, the Indemnifying Party shall not have the right to direct the defense
of such action or proceeding on behalf of the Indemnified Party. All fees and
expenses required to be paid to the Indemnified Party pursuant to this Article
VI shall be paid periodically during the course of the investigation or
defense, as and when reasonably itemized bills therefor are delivered to the
Indemnifying Party in respect of any particular Loss that is incurred.
Notwithstanding anything to the contrary contained in this Section 6.3, an
Indemnifying Party shall not be liable for the settlement of any action or
proceeding effected without its prior written consent. The Indemnifying Party
shall not consent to entry of any judgment or enter into any settlement or
otherwise seek to terminate any action
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or proceeding in which any Indemnified Party is or could be a party and as to
which indemnification or contribution could be sought by such Indemnified Party
under this Article VI, unless such judgment, settlement or other termination
provides solely for the payment of money and includes as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release, in form and substance satisfactory to the Indemnified Party, from all
liability in respect of such claim or litigation for which such Indemnified
Party would be entitled to indemnification hereunder.
6.4 Contribution, etc. (a) If the indemnification provided for in
this Article VI is unavailable to an Indemnified Party under Section 6.1 or 6.2
in respect of any Losses or is insufficient to hold such Indemnified Party
harmless, then each applicable Indemnifying Party (severally and not jointly),
in lieu of indemnifying such Indemnified 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 or Indemnifying Parties, on the one hand, and such Indemnified Party, on
the other hand, in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party or Indemnifying Parties, on the
one hand, and such Indemnified Party, on the other hand, shall be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission of a material fact, has been taken or made by, or related to
information supplied by, such Indemnifying Party or Indemnifying Parties or
such Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include any legal or other fees or expenses incurred by such party
in connection with any action or proceeding.
(b) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6.4 were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding anything contained in this Section 6.4 to the
contrary, an Indemnifying Party that is a selling Holder shall not be required
to contribute any amount in excess of the amount by which the total price at
which the Registrable Securities were sold by such selling Holder to the public
exceeds the amount of any damages which such selling Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. 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.
(c) The provisions of this Article VI will survive indefinitely,
notwithstanding any transfer of the Registrable Securities by any Holder.
Nothing herein shall be deemed to abrogate the effects of the statutes of
limitation with respect to causes of action that may be brought under this
Article VI.
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ARTICLE VII.
Miscellaneous
7.1 Additional Parties. A Person may become a party to this
Agreement and cause the Shares issued to it on the Effective Date pursuant to
the Joint Plan to be Registrable Securities by delivering to the Company (a)
evidence reasonably satisfactory to the Company that it was the Beneficial
Owner on the Effective Date of Shares in an amount equal to at least 10% of the
aggregate amount of all Shares issued by the Company on the Effective Date and
(b) an executed acknowledgement by which such Person agrees to be bound by the
terms of this Agreement, which to be effective must be acknowledged by the
Company. Once so acknowledged by the Company, such Person will be a Holder and
a party hereto for all purposes of this Agreement.
7.2 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made by
delivery in person, by courier service, by facsimile transmission or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
7.2).
(a) If to the Company:
Mariner Health Care, Inc.
Xxx Xxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: General Counsel
Telecopy: (000) 000-0000
Powell, Goldstein, Xxxxxx and Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
(b) If to a Holder, to the address thereof set forth on the
signature page hereto.
The Company or the Holder by notice to the other may designate additional or
different addresses for subsequent notices or communications.
All such notices and communications shall be deemed to have been delivered or
given: upon delivery, if personally delivered; one Business Day after being
dispatched, if dispatched by
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same-day or next-day courier guaranteeing timely delivery; when receipt
acknowledged, if sent by facsimile transmission; and five Business Days after
being deposited in the mail, if mailed.
7.3 Assignment. Neither this Agreement nor the rights and
obligations hereunder may be assigned by operation of law or otherwise except
that this Agreement and rights and obligations hereunder may be assigned by any
Holder to a Permitted Transferee thereof, which Permitted Transferee shall be
deemed to be a Holder and a party hereto for all purposes of this Agreement
upon receipt by the Company of such Permitted Transferee's written agreement to
be bound by the terms hereof. Notwithstanding the foregoing, nothing herein
contained shall restrict the right of any Holder to transfer securities of the
Company held by it.
7.4 No Third-Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their respective
successors and permitted assigns and nothing herein, express or implied, is
intended to or shall confer upon any other Person any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
7.5 Counterparts. This Agreement may be executed simultaneously
in any number of counterparts, each of which shall be deemed an original, but
all such counterparts shall together constitute one and the same instrument.
7.6 Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both written and oral, among
the parties with respect to the subject matter hereof.
7.7 Amendment and Waiver. This Agreement may not be amended or
modified or any provision hereof waived except by an instrument in writing
signed by the Company and both (x) Holders of at least a majority of the
Registrable Securities and (y) each Holder of 10% or more of the Registrable
Securities. Notwithstanding anything contained herein to the contrary, a waiver
that does not adversely affect all of the parties hereto may be executed by
only the adversely affected party or parties.
7.8 No Waiver. No failure or delay on the part of any party
hereto in exercising any right, shall operate as a waiver thereof nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the simultaneous or later exercise of any other right, power or privilege. The
rights and remedies herein expressly provided are cumulative and not exclusive
of any rights or remedies which any party hereto would otherwise have.
7.9 Headings. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
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7.10 Severability. If any term or other provision of this
Agreement is invalid, illegal or unenforceable under any law or public policy,
all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect. Upon such determination that any term or other provision
is invalid, illegal or unenforceable, the parties hereto shall endeavor in good
faith to replace the invalid, illegal or unenforceable provisions with valid,
legal and enforceable provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
7.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE.
7.12 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled as a matter of right, without proof of actual damages, to specific
performance of the terms hereof, in addition to any other remedy at law or
equity.
7.13 Further Assurances. The parties hereto shall do such further
acts and things necessary to ensure that the terms of this Agreement are
carried out and observed.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement as
of the date first written above.
MARINER HEALTH CARE, INC.
By:
------------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
OCM ADMINISTRATIVE SERVICES II, L.L.C.
By: OAKTREE CAPITAL MANAGEMENT, LLC
Its Manager
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address: c/o Oaktree Capital Management, LLC
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxx
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ACKNOWLEDGEMENT
Reference is hereby made to the Equity Registration Rights Agreement
dated as of May 13, 2002, (the "Agreement"), among Mariner Health Care, Inc., a
Delaware corporation formerly known as Mariner Post-Acute Network, Inc., and
each of the Holders as of the Effective Date of at least 10% or more of the
outstanding Shares on the Effective Date, as listed on the signature pages
thereto, in which this Acknowledgement is incorporated. The undersigned Holder
represents that it was the Beneficial Owner as of the Effective Date of at
least 10% or more of the outstanding Shares on the Effective Date. The
undersigned Holder and the Company each agree that the Holder will be a party
to the Agreement for all purposes thereof. Capitalized terms used herein
without definition are defined in the Agreement.
[HOLDER]
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address:
------------------------------------
------------------------------------
Acknowledged and Agreed:
MARINER HEALTH CARE, INC.
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
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