1
EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), is entered into
as of August 11, 1997, by and between Horizon Health Corporation, a Delaware
corporation formerly known as Horizon Mental Health Management, Inc.
("Horizon"), and Xxxxxx X. Xxxxxx, Xxxx Xxxxxxxx, Xxxxx Xxxxx, Argentum Capital
Partners, L.P. a Delaware limited partnership, Xxxxxx Xxxxxx, Xxx Xxxxxx, G.
Xxxxxxx Xxxxxxxx, Xxxxxxx X. XxXxxxxx and NME Management Services, Inc., a
Delaware corporation (individually a "Shareholder" and collectively the
"Shareholders").
WHEREAS, Horizon and the Shareholders are simultaneously consummating
the transactions contemplated by that certain Share Exchange Reorganization
Agreement (the "Reorganization Agreement"), dated April 25, 1997, by and among
Horizon, the Shareholders and Specialty Healthcare Management, Inc., a Delaware
corporation ("Specialty"); and
WHEREAS, the Shareholders pursuant to the Reorganization Agreement
received unregistered shares of Common Stock of Horizon in a private offering
transaction (the "Share Exchange"); and
WHEREAS, Horizon and the Shareholders agreed to enter into this
Agreement pursuant to the Reorganization Agreement simultaneously with the
Share Exchange;
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
6. Definitions.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Common Stock, $.01 par value, of Horizon
issued in the Share Exchange pursuant to the Reorganization Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" means a Shareholder or any assignee or transferee of a
Registrable Security.
"Registrable Securities" means the shares of Common Stock issued to
the Shareholders in the Share Exchange pursuant to the Reorganization
Agreement, other than the shares of Common Stock held in escrow under the
Post-Closing Escrow Agreement executed pursuant to the Reorganization
Agreement. Any Registrable Security will cease to be a Registrable Security
when (i) a registration statement covering such Registrable Security has been
declared effective by the Commission and the Registrable Security has been
disposed of pursuant to such effective registration statement, (ii) the
Registrable Security is sold under circumstances in which all of the applicable
conditions of Rule 144 (or any similar provisions then in force) under the
Securities Act are met or (iii) the Registrable Security has been otherwise
transferred, Horizon has delivered a new certificate or other evidence of
ownership for the Registrable Security not bearing a legend restricting further
transfer, and the Registrable Security may be resold without subsequent
registration under the Securities Act.
Page 1
2
"Registration Statement" means the registration statement contemplated
by this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Holder" means a Holder who is selling Registrable Securities
pursuant to the Registration Statement.
"Underwriters" means a securities dealer which purchases any
Registrable Securities as principal and not as part of such dealer's
market-making activities.
7. Unregistered Securities.
Each Shareholder acknowledges that the shares of Common Stock
issued in the Share Exchange are unregistered securities and are subject to
Rule 144 under the Securities Act for the purposes of any resales of shares of
the Common Stock. Each Shareholder hereby represents and warrants to, and
agrees with, Horizon as follows:
(a) The Shareholder will not sell or otherwise transfer
any of the Common Stock in violation of the Securities Act or the
rules and regulations promulgated thereunder. The Shareholder has not
and will not, in any event, sell or otherwise transfer or enter into
any contract or otherwise agree to sell or otherwise transfer any of
the Common Stock until such time as financial results covering at
least thirty days of combined operations of Horizon and Specialty
after the Share Exchange have been published and distributed to the
stockholders of Horizon.
(b) The Shareholders hereby consent to the placing of a
legend on the certificate or certificates evidencing the Common Stock
referring to the issuance thereof in a private offering transaction
under the Securities Act and to the giving of stop transfer
instructions to the transfer agent for the Common Stock with respect
to such certificate or certificates. The legend will state in
substance:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 or the Blue Sky
Laws of any state and may not be sold or otherwise
transferred in the absence of (a) an effective registration
statement for the sale of such shares under the Securities
Act of 1933 or (b) an opinion of counsel reasonably
satisfactory to Horizon to the effect that the transfer may
be made without such registration."
(c) Except as set forth herein, each Shareholder
understands that Horizon is under no obligation to take any action to
facilitate the sale, transfer or other disposition by any Shareholder,
or on behalf of any Shareholder, of any of the Common Stock.
(d) In the event of any sale or transfer of any of the
Common Stock in a transaction not involving a sale pursuant to Rule
144 under the Securities Act or not involving a sale in a registered
public offering, the Shareholder will obtain from each transferee of
the Common Stock in such transaction a letter agreement substantially
similar to this Section 2 or a letter containing such other
information reasonably required by Horizon to evidence an exception
from the applicable registration requirements of federal or state
securities laws, which is binding and enforceable by Horizon against
the transferee.
Page 2
3
It is understood and agreed that the legend set forth in paragraph (b)
above shall be removed, and the related stock transfer restrictions shall be
lifted forthwith in connection with the sale or other transfer of Common Stock
(i) if the sale or other transfer of the shares of Common Stock shall have been
registered under the Securities Act, or (ii) if the sale or other transfer of
the shares of Common Stock is not so registered, the Shareholder is not at the
time of such sale or other transfer an affiliate of Horizon and has held the
Stock for at least one year (or such other period as may be prescribed by the
Securities Act and the rules and regulations thereunder) and Horizon, for at
least twelve months immediately preceding the sale or other transfer, has filed
with the Commission all of the reports it is required to file under Exchange
Act, or (iii) if Horizon shall have received either a letter from the staff of
the Commission or an opinion of legal counsel acceptable to Horizon, to the
effect that the stock transfer restrictions and the legend are not required and
may be removed.
8. The Registration Statement.
(a) Registration Statement. Subject to the provisions of
this Section 3, Horizon agrees that it shall prepare and file with the
Commission as soon as practicable after the date hereof, but in no event
earlier than October 15, 1997, a registration statement (the "Registration
Statement") on any form for which Horizon then qualifies and Horizon considers
appropriate and which is available to sell the Registrable Securities;
provided, however, that it is understood that Horizon shall be required to
proceed with the Registration Statement only after its 1997 fiscal year-end
audited financial statements are available to be used for the purposes of the
Registration Statement. Horizon further agrees to use its best efforts to cause
the Registration Statement to be filed and declared effective within thirty
(30) days after the Horizon 1997 fiscal year-end audited financial statements
are available. Prior to the filing of the Registration Statement, Horizon shall
request from each Holder the number of shares of Registrable Securities owned
by the Holder desired to be included in the Registration Statement. Subject to
the provisions of Section 3(b) below, Horizon will include in the Registration
Statement all Registrable Securities with respect to which Horizon has received
written requests for inclusion therein within twenty (20) days after the
receipt by the applicable Holder of Horizon's notice. Each such request from a
Holder will specify the number of shares of Registrable Securities to be
registered. Unless the Holder or Holders of a majority of the Registrable
Securities to be registered in the Registration Statement shall consent in
writing, Horizon shall not be permitted to include any other securities under
the Registration Statement.
(b) Underwritten Offering. Horizon may elect to proceed
with the Registration Statement pursuant to Section 3(a) above in the form of
an underwritten offering and, in such event, the Holders participating in the
Registration Statement hereby agree that the offering shall be in the form of
an underwritten offering. In such event, Horizon shall select the managing
underwriter(s) and such additional investment bankers and managers to be used
in connection with the offering; provided, that such underwriter and additional
investment bankers and managers must be reasonably satisfactory to the Holders
participating in the Registration Statement. If the managing underwriter or
underwriters of such offering advise Horizon and the Holders in writing that in
their opinion the number of shares of Registerable Securities requested to be
included in such offering is sufficiently large to materially and adversely
affect the success of such offering, Horizon will only include in the
Registration Statement the Registrable Securities (and no securities offered by
Horizon or any other party) limited to an aggregate number of the Registrable
Securities which in the opinion of such managing Underwriter or Underwriters
can be sold without any such material adverse effect, and such amount shall be
allocated to the Holders of Registrable Securities based on the number of
Registrable Securities requested to be included in the Registration Statement.
As to any Registrable Securities requested to be included in the offering by
the Holders, but not included due to such opinion of the Managing Underwriters,
the Holders of such Registrable Securities shall have the piggyback
registration rights provided under Section 4 below.
Page 3
4
(c) Other Form of Offering. In the event that Horizon
elects not to proceed or is unable to effect the offering pursuant to the
Registration Statement as an underwritten offering, then Horizon shall
nevertheless still be obligated to proceed with the Registration Statement and
an offering of the Registerable Securities on a non-underwritten basis;
provided, however, that Horizon agrees to proceed in such event in the same
manner and at the same times as specified in Section 3(a) but provided further,
however, that the Holders agree that, in such event, the Shareholders shall
initially for at least a two week period after the effective date of the
Registration Statement attempt to sell the Registerable Securities through
block sales arranged by a broker/dealer selected by Horizon and reasonably
satisfactory to the Holders.
(d) Effective Registration and Expenses. A registration
will not count as the Registration Statement until it has become effective
(unless the Holders withdraw the Registrable Securities, in which case such
registration will count as the Registration Statement unless the Holders of
such Registrable Securities agree to pay all Registration Expenses (as
hereinafter defined)). Except as provided above, Horizon will pay all
Registration Expenses in connection with any Registration Statement whether or
not it becomes effective.
9. Xxxxxx Piggyback Registration Rights.
(a) If at any time after the offering pursuant to the
Registration Statement contemplated under Section 3 above is completed and
before the expiration of one(1) year after the date of this Agreement, the
Company proposes for any reason to register any shares of Common Stock under
the Securities Act (other than pursuant to a registration statement on Form S-4
or Form S-8 (or a similar or successor form) with respect to an offering of
Common Stock by the Company for its own account or for the account of any of
its security holders, it shall at each such time promptly give written notice
to Xxxxxx X. Xxxxxx ("Xxxxxx") of its intention to do so (but in no event less
than ten days before the anticipated filing date). Such notice shall offer
Xxxxxx the opportunity to register such number of shares of Registrable
Securities as Xxxxxx may request.
(b) The Company shall use its best efforts to cause the
managing Underwriter or Underwriters of a proposed underwritten offering to
permit the shares of Registrable Securities requested by Xxxxxx to be included
in the registration statement for such offering to be included (on the same
terms and conditions as the Common Stock of the Company included therein to the
extent appropriate). Notwithstanding the foregoing, if in the reasonable
judgment of the managing Underwriter or Underwriters, due to the size of the
offering which the Company or such other persons or entities intend to make,
the success of the offering would be adversely affected by inclusion of the
Registrable Securities requested to be included by Xxxxxx then, if the offering
is by the Company for its own account or is an offering by other holders
registering shares of Common Stock of the Company pursuant to demand
registration rights, then the number of shares of Common Stock to be offered
for the account of Xxxxxx and any other holders registering shares of Common
Stock of the Company pursuant to similar piggyback registration rights, if any,
shall be reduced pro rata based on the relative percentage ownership of all
shares of Common Stock then outstanding owned by Xxxxxx and such other holders
to the extent necessary to reduce the total number of shares of Common Stock to
be included in such offering to the amount recommended by such managing
Underwriter or Underwriters.
10. Holdback Agreements.
(a) Restrictions on Public Sale by Holders of Registrable
Securities. Each Holder whose securities are included in a Registration
Statement agrees not to effect any public sale or distribution of the issue
being registered or a similar security of Horizon or any securities convertible
into or exchangeable or exercisable
Page 4
5
for such securities, including a sale pursuant to Rule 144 or Rule 144A under
the Securities Act, during the ten days prior to, and during the 90-day period
beginning on, the effective date of the Registration Statement (except as part
of such registration), if and to the extent requested by Horizon in the case of
a non-underwritten public offering or if and to the extent requested by the
managing Underwriter or Underwriters in the case of an underwritten public
offering.
(b) Restrictions on Public Sale By Horizon. Horizon agrees
not to effect any public sale or distribution of any securities similar to
those being registered, or any securities convertible into or exchangeable or
exercisable for such securities (except pursuant to a registration statement on
Form S-4 or S-8 or any substitute form therefor that may be adopted by the
Commission), during the ten days prior to, and during the 90-day period
beginning on, the effective date of the Registration Statement (except as part
of the Registration Statement where the Holders of a majority of the
Registrable Securities to be included in the Registration Statement consent).
11. Registration Procedures.
In connection with the Registration Statement, Horizon will:
(a) prepare and file with the Commission a registration
statement on any form for which Horizon then qualifies and which Horizon shall
deem appropriate and which form shall be available for the sale of the
Registrable Securities to be registered thereunder in accordance with the
intended method of distribution thereof, and use its best efforts to cause such
filed registration statement to become effective; provided, (i) that at least
five days before filing a registration statement or prospectus or as promptly
as practicable prior to filing any amendments or supplements thereto, Horizon
will furnish to one counsel selected by the Holders of a majority of the
Registrable Securities covered by such registration statement copies of all
such documents proposed to be filed, which documents will be subject to the
review of such counsel, and (ii) that after the filing of the registration
statement, Horizon will promptly notify each Selling Holder of Registrable
Securities covered by such registration statement of comments received from, or
any stop order issued or threatened by, the Commission and take all reasonable
actions required to respond to such comments or, as the case may be, prevent
the entry of such stop order or to remove it if it has been entered;
(b) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective pursuant to Section 3 for a period of not less than ninety (90) days
or such shorter period which will terminate when all Registrable Securities
covered by such registration statement have been sold (but not before the
expiration of the period referred to in subsection 4(3) of the Securities Act
and Rule 174 thereunder, if applicable) and comply with the provisions of the
Securities Act applicable to it with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the Selling Holders
thereof set forth in much registration statement;
(c) furnish to each Selling Holder, prior to filing the
registration statement, if requested, copies of such registration statement as
proposed to be filed, and thereafter furnish to such Selling Holder such number
of copies of such registration statement, each amendment and supplement thereto
(in each case including all exhibits thereto), the prospectus included in such
registration statement (including each preliminary prospectus), and such other
documents as such Selling Holder may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Selling Holder;
Page 5
6
(d) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
states as any Selling Holder reasonably (in light of such Selling Holder's
intended plan of distribution) requests and do any and all other acts and
things which may be reasonably necessary to enable such Selling Holder to
consummate the disposition in such states of the Registrable Securities owned
by such Selling Holder; provided that Horizon will not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subsection, (ii) subject itself
to taxation in any such jurisdiction, or (iii) consent to general service of
process in any such jurisdiction;
(e) use its best efforts to cause such Registrable
Securities to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the business and
operations of Horizon to enable the Selling Holder or Selling Holders thereof
to consummate the disposition of such Registrable Securities; provided that
Horizon will not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
subsection, (ii) subject itself to taxation in any such jurisdiction or (iii)
consent to general service of process in any such jurisdiction;
(f) notify each Selling Holder of such Registrable
Securities, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the occurrence of an event requiring the
preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, 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 not misleading and promptly make available to each Selling
Holder any such supplement or amendment;
(g) enter into and perform customary agreements (including
an underwriting agreement in customary form with the managing Underwriter, if
any) and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of such Registrable Securities;
(h) make available for inspection by any Selling Holder of
such Registrable Securities, any Underwriter participating in any disposition
pursuant to such registration statement, and any attorney, accountant, or other
professional retained by any such Selling Holder or Underwriter (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents, and properties of Horizon (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause Horizon's officers, directors, and employees to
supply all information reasonably requested by any such Inspectors in
connection with such registration statement. Records which Horizon determines,
in good faith, to be confidential and which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) in the
judgment of counsel to Horizon the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in such registration statement or
(ii) the release of such Records is ordered pursuant to a subpoena or other
order from a court or government agency of competent jurisdiction. Each Selling
Holder of such Registrable Securities agrees that information obtained by it as
a result of such inspections shall be deemed confidential and shall not be used
by it as the basis for any market transactions in the securities of Horizon
unless and until such is made generally available to the public. Each Selling
Holder of such Registrable Securities further agrees that it will, upon
learning that disclosure of such Records is sought in a court or government
agency of competent jurisdiction, give notice to Horizon and allow Horizon, at
its expense, to undertake appropriate action to prevent disclosure of the
Records deemed confidential;
(i) if such sale is pursuant to an underwritten offering,
use its best efforts to obtain a comfort letter or comfort letters from
Horizon's independent public accountants in customary form and covering such
Page 6
7
matters of the type customarily covered by comfort letters as the Selling
Holders of a majority of the Registrable Securities or the managing Underwriter
reasonably request;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders, as soon as reasonably practicable, an
earnings statement covering a period of 12 months, beginning within three
months after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act;
and
(k) use its best efforts to cause all such Registrable
Securities to be listed on each securities exchange on which similar securities
issued by Horizon are then listed, or on the Nasdaq National Market, if
applicable, provided that the applicable listing requirements are satisfied.
Horizon may require each Selling Holder of Registrable
Securities to promptly furnish in writing to Horizon such information regarding
the distribution of the Registrable Securities as it may from time to time
reasonably request and such other information as may be legally required in
connection with such registration.
Each Selling Holder agrees that, upon receipt of any notice
from Horizon of the happening of any event of the kind described in subsection
6(f) hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subsection 6(f) hereof and,
if so directed by Horizon such Selling Holder, will deliver to Horizon all
copies, other than permanent file copies then in such Selling Holder's
possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice. If Horizon shall give such notice,
Horizon shall extend the period during which such registration statement shall
be maintained effective (including the period referred to in subsection 6(b)
hereof) by the number of days during the period from and including the date of
the giving of notice pursuant to subsection 6(f) hereof to the date when
Horizon shall make available to the Selling Holders of Registrable Securities
covered by such registration statement a prospectus supplemented or amended to
conform with the requirements of subsection 6(f) hereof.
l2. Registration Expenses.
In connection with the Registration Statement required to be
filed hereunder, Horizon shall pay the following registration expenses (the
"Registration Expenses"): (i) all registration and filing fees; (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 of
the Registrable Securities); (iii) printing expenses; (iv) internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties); (v) fees and expenses
incurred in connection with the listing of the Registrable Securities if
Horizon shall choose to list such Registrable Securities; (vi) fees and
disbursements of counsel for Horizon and customary fees and expenses for
independent certified public accountants retained by Horizon (including the
expenses of any comfort letters or costs associated with the delivery by
independent certified public accountants of a comfort letter or comfort letters
requested pursuant to subsection 6(i) hereof); and (vii) fees and expenses of
any special experts retained by Horizon in connection with such registration.
Horizon shall not have any obligation to pay any underwriting fees, discounts,
or commissions attributable to the sale of Registrable Securities, or any
out-of-pocket expenses or fees, including attorney's fees, of the Holders or
Xxxxxx.
Page 7
8
13. Indemnification; Contribution.
(a) Indemnification by Horizon. Horizon agrees to
indemnify and hold harmless each Selling Holder of Registrable Securities, its
officers, directors, shareholders, partners, trustees, beneficiaries and
agents, and each person or entity, if any, who controls such Selling Holder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation) arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating to the
Registrable Securities or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or based upon 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; except insofar as such
losses, claims, damages, liabilities, or expenses arise out of, or are based
upon, any such untrue statement or omission or allegation thereof based upon
information furnished in writing to Horizon by such Selling Holder or on such
Selling Holder's behalf expressly for use therein; provided, that with respect
to any untrue statement or omission or alleged untrue statement or omission
made in any preliminary prospectus, the indemnity agreement contained in this
subsection shall not apply to the extent that any such loss, claim, damage,
liability, or expense results from the fact that a current copy of the
prospectus was not sent or given to the person asserting any such loss, claim,
damage, liability, or expense at or prior to the written confirmation of the
sale of the Registrable Securities to such person if it is determined that it
was the responsibility of such Selling Holder to provide such person with a
current copy of the prospectus and such current copy of the prospectus would
have cured the defect giving rise to such loss, claim, damage, liability or
expense. Horizon also agrees to indemnify any Underwriters of the Registrable
Securities, their officers and directors, and each person who controls such
Underwriters on substantially the same basis as that of the indemnification of
the Selling Holders provided in this section 8(a).
(b) Indemnification by Holders of Registrable Securities.
Each Selling Holder agrees to indemnify and hold harmless Horizon, its
directors and officers, and each person, if any, who controls Horizon within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, to the same extent as the foregoing indemnity from Horizon to
such Selling Holder, but only with respect to information furnished in writing
by such Selling Holder or on such Selling Holder's behalf expressly for use in
any registration statement or prospectus relating to the Registrable
Securities, any amendment or supplement thereto, or any preliminary prospectus.
In case any action or proceeding shall be brought against Horizon or its
directors or officers, or any such controlling person, in respect of which
indemnity may be sought against such Selling Holder, such Selling Holder shall
have the rights and duties given to Horizon, and Horizon or its directors or
officers or such controlling person shall have the rights and duties given to
such Selling Holder, by the preceding subsection. Each Selling Holder also
agrees to indemnify and hold harmless Underwriters of the Registrable
Securities, their officers and directors, and each person who controls such
Underwriters on substantially the same basis as that of the indemnification of
Horizon provided in this section 8(b).
(c) Conduct of Indemnification Proceedings. If any action
or proceeding (including any governmental investigation) shall be brought or
asserted against any person entitled to indemnification under subsections (a)
or (b) above (an "Indemnified Party") in respect of which indemnity may be
sought from any party who has agreed to provide such indemnification (an
"Indemnifying Party"), the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Party, and shall assume the payment of all expenses. Such Indemnified Party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (i) the Indemnifying
Party has agreed to pay such fees and expenses
Page 8
9
or (ii) the named parties to any such action or proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by counsel that there
is a conflict of interest on the part of counsel employed by the Indemnifying
Party to represent such Indemnified Party (in which case, if such Indemnified
Party notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense of such action or
proceeding on behalf of such Indemnified Party; it being understood, however,
that the Indemnifying Party shall not, in connection with any one such action
or proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for all such Indemnified Parties, which firm shall be designated in
writing by such Indemnified Parties). The Indemnifying Party shall not be
liable for any settlement of any such action or proceeding effected without its
written consent, but if settled with its written consent, or if there be a
final judgment for the plaintiff in any such action or proceeding, the
Indemnifying Party shall indemnify and hold harmless such Indemnified Parties
from and against any loss or liability (to the extent stated above) by reason
of such settlement or judgment.
(d) Contribution. If the indemnification provided for in
this Section 8 is unavailable to the Indemnified Parties in respect of any
losses, claims, damages, liabilities, or judgments referred to herein, then
each Indemnifying Party, 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, claims, damages, liabilities, and judgments as between Horizon
on the one hand and each Selling Holder on the other, in such proportion as is
appropriate to reflect the relative fault of Horizon and of each Selling Holder
in connection with such statements or omissions, as well as any other relevant
equitable considerations. The relative fault of Horizon on the one hand and of
each Selling Holder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
Horizon and the Selling Holders agree that it would not be
just and equitable if contribution pursuant to this subsection 8(d) were
determined by pro rata allocation (even if the Selling Holders 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 the immediately
preceding paragraph. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding subsection shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection 8(d), no
Selling Holder shall be required to contribute any amount in excess of the
amount by which the total price at which the securities of such Selling Holder
were offered 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 Subsection 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) Survival. The indemnity and contribution agreements
contained in this Section 8 shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement or any
Page 9
10
underwriting agreement, (ii) any investigation made by or on behalf of any
Indemnified Party or by or on behalf of Horizon, and (iii) the consummation of
the sale or any successive resale of the Registrable Securities.
14. Participation in Underwritten Registrations.
No person or entity may participate in any underwritten
registration hereunder unless such person or entity (a) agrees to sell such
person's or entity's securities on the basis provided in any underwriting
arrangements approved by the persons or entities entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and this Agreement.
15. Miscellaneous.
(a) Remedies. Each Holder of Registrable Securities, in
addition to being entitled to exercise all rights provided herein and granted
by law, including recovery of damages, will be entitled to specific performance
of its rights under this Agreement. Horizon agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Agreement and hereby agrees to waive the defense in
any action for specific performance that remedy at law would be adequate. Each
party waives all provisions of law requiring that a bond be posted in order to
effectuate any remedy under this Agreement.
(b) No Inconsistent Agreements. Horizon will not on or
after the date of this Agreement enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the Holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. Horizon has no outstanding agreement with respect to its
securities granting any registration rights to any other person.
(c) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified, or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless
Horizon has obtained the written consent of the Holders of at least a majority
of the Registrable Securities; provided that with respect to any such waiver or
consent relating to Registration Statement, Horizon shall obtain the consent of
the Holders of a majority of the Registrable Securities subject to such
registration.
(d) Notices. Any notices, claims or demands which any
party is required or may desire to give to another under or in conjunction with
this Agreement shall be in writing, and shall be given by addressing the same
to such other party(ies) at the address set forth below, and by (i) depositing
the same so addressed, postage prepaid, first class, certified or registered,
in the United States mail (herein referred to as "Mailing"), (ii) overnight
delivery by a nationally recognized overnight courier service (e.g. UPS,
Federal Express), (iii) delivering the same personally to such other
party(ies), or (iv) transmitting by facsimile and Mailing the original. Any
notice shall be deemed to have been given five (5) U.S. Post Office delivery
days following the date of Mailing; one business day after timely delivery to
an overnight courier; if by personal delivery, upon such delivery; or if by
facsimile, the day of transmission if made within customary business hours, or
if not transmitted within customary business hours, the following business day.
Page 10
11
If to Horizon:
Horizon Mental Health Management, Inc.
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000-0000
Attention: Xxxxx Xxx Xxxxxx
Facsimile Number: (000) 000-0000
With a copy to:
Xxxxxxxxxxx & Price, L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Facsimile Number: (000) 000-0000
If to the Shareholders:
To the respective addresses
set forth on Exhibit A to the
Reorganization Agreement
With a copy to:
Howrey & Simon
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile Number: (000) 000-0000
Any of the parties hereto may change the address for notices to be sent to it
by written notice delivered pursuant to the terms of this section.
(e) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of
Horizon and the Holders.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Severability. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws
effective during the term of this Agreement, such provision shall be fully
severable; this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of this
Agreement; and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement. Furthermore,
in lieu of each such illegal, invalid or unenforceable provision,
Page 11
12
there shall be added automatically as a part of this Agreement a provision as
similar in terms to such illegal, invalid or unenforceable provision as may be
possible and be legal, valid and enforceable.
(h) Entire Agreement. This Agreement is intended by
Horizon and the Holders as a final expression of their agreement and is
intended to be a complete and exclusive statement of their agreement and
understanding in respect of the subject matter contained herein. This Agreement
supersedes all prior agreements and understandings between Horizon and the
Holders with respect to such subject matter. This Agreement may be amended only
in writing executed by Horizon and the Holders of a majority of the Registrable
Securities.
(i) Third Party Beneficiaries. This Agreement is intended
for the benefit of Horizon and the Holders and their respective successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person or entity.
(j) Attorney's Fees. In any proceeding brought to enforce
any provision of this Agreement, the successful party shall be entitled to
recover reasonable attorneys' fees in addition to its costs and expenses and
any other available remedy.
(k) Governing Law. This agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
regard to principles of conflicts or choice of law.
(l) Effectiveness. This Agreement shall become effective
as of the day first set forth above.
(m) Counterparts. This Agreement may be executed in a
number of identical counterparts and it shall not be necessary for Horizon and
the Holders to execute each of such counterparts, but when both have executed
and delivered one or more of such counterparts, the several parts, when taken
together, shall be deemed to constitute one and the same instrument,
enforceable against each in accordance with its terms. In making proof of this
Agreement, it shall not be necessary to produce or account for more than one
such counterpart executed by the party against whom enforcement of this
Agreement is sought.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
Page 12
13
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.
HORIZON: SHAREHOLDERS:
HORIZON HEALTH CORPORATION, /s/ Xxxxxx X. Xxxxxx
a Delaware corporation formerly known as ----------------------------------
HORIZON MENTAL HEALTH XXXXXX X. XXXXXX
MANAGEMENT, INC.
By:/s/ Xxxxx X. XxXxxx /s/ Xxxx Xxxxxxxx
---------------------------------- ----------------------------------
Title: Executive Vice President XXXX XXXXXXXX
Name: Xxxxx X. XxXxxx
/s/ Xxxxx Xxxxx
----------------------------------
XXXXX XXXXX
ARGENTUM CAPITAL PARTNERS, L.P.
By:/s/ Xxxxxx Xxxxxx
-------------------------------
Name: Xxxxxx Xxxxxx
Title: Chairman
/s/ Xxxxxx Xxxxxx
-----------------------------------
XXXXXX XXXXXX
/s/ Xxx Xxxxxx
-----------------------------------
XXX XXXXXX
/s/ G. Xxxxxxx Xxxxxxxx
-----------------------------------
G. XXXXXXX XXXXXXXX
/s/ Xxxxxxx X. XxXxxxxx
-----------------------------------
XXXXXXX X. XXXXXXXX
NME MANAGEMENT SERVICES, INC.
By:/s/ Xxxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Vice President
Page 13
