EXHIBIT 99.4
SUPPORT AGREEMENT
AGREEMENT, dated as of October 30, 2003 by and among National Medical
Health Card Systems, Inc., a Delaware corporation (the "Company"), the
Persons listed as stockholders on Schedule A attached hereto (each a
"Stockholder" and collectively, the "Stockholders"), and New Mountain
Partners, L.P. (the "Purchaser").
WHEREAS, simultaneously with the execution hereof, the Company and the
Purchaser are entering into a Preferred Stock Purchase Agreement (as
amended or supplemented from time to time, the "Purchase Agreement";
capitalized terms used without definition herein having the meanings
ascribed thereto in the Purchase Agreement), pursuant to which, among other
things, the Company agrees to sell and the Purchaser agrees to purchase,
pursuant to the terms and subject to the conditions thereof, the Series A
Preferred Stock;
WHEREAS, as of the date hereof, each Stockholder owns of record the
number of shares of Common Stock, par value $0.001 per share, of the
Company (the "Common Stock"), options to purchase the number of shares of
Common Stock, and warrants to purchase the number of shares of Common
Stock, each as set forth opposite such Stockholder's name on Schedule A
hereto;
WHEREAS, the Company has advised the Purchaser that the Board of
Directors and Special Committee of the Board of Directors of the Company
have, prior to the execution of this Agreement, duly and validly approved,
among other things, the execution and delivery of this Agreement and the
Purchase Agreement, and the consummation of the Contemplated Transactions,
and such approval has not been withdrawn;
WHEREAS, approval of the Contemplated Transactions by the Company's
stockholders is a condition to the consummation of the Purchase Agreement;
and
WHEREAS, as a condition to its entering into the Purchase Agreement,
the Purchaser has required that each Stockholder agree, and each
Stockholder has agreed, to enter into this Agreement and to make the
undertakings contained herein.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Agreement to Vote.
(a) From and after the date hereof until the Termination Date (as
defined in Section 1(b)), each Stockholder hereby agrees to attend the
Stockholders Meeting (or any other meeting of stockholders of the Company
at which the matters contemplated by the Purchase Agreement or this
Agreement are to be presented to a vote of stockholders of the Company), in
person or by proxy, and to vote (or cause to be voted) all shares of Common
Stock and any other Voting Securities of the Company (including any such
securities acquired hereafter but excluding any shares of Common Stock or
other securities the Stockholder has the right to acquire but has not
acquired) that such Stockholder owns or has the right to vote or direct the
voting (collectively, the "Voting Shares" and, together with any securities
of the Company that the Stockholder currently owns that are not Voting
Securities, any other securities of the Company acquired hereafter, and any
shares of Common Stock or other securities of the Company the Stockholder
has the right to acquire but has not acquired, the "Covered Securities"),
for authorization and approval of the Contemplated Transactions, including
the approval of the Articles of Amendment, and against any action
inconsistent therewith, such agreement to vote to apply also to any
adjournment or adjournments or postponement or postponements of the
Stockholders Meeting of the Company (or any such other meeting). Each
Stockholder hereby further agrees that until the Termination Date, it
shall, from time to time, in connection with any solicitation for a written
consent, including to call a Stockholders Meeting relating to the
Contemplated Transactions, timely execute and deliver (or cause to be
timely executed and delivered) a written consent with respect to its Voting
Shares in favor of the authorization and approval of the Contemplated
Transactions. Notwithstanding any provision of this Agreement to the
contrary, including without limitation this Section 1(a) and Sections 1(b),
4(a), 4(b) and 4(c), nothing in this Agreement shall limit or restrict any
Stockholder from acting in such Stockholder's capacity as a director or
officer of the Company (it being understood that this Agreement shall apply
to the Stockholders solely in the Stockholders' capacity as stockholders of
the Company). So long as the proxy granted under Section 1(d) is a valid
uncontested proxy that is effective to deliver the votes of the Voting
Shares covered thereby, the Stockholders shall be deemed to be fulfilling
their obligations under this Section 1(a). If Purchaser believes that such
proxy is not a valid proxy or if Purchaser otherwise does not wish to
utilize the proxy, it will so notify the Stockholders so that the
Stockholders will be able to perform their obligations under this Section
1(a).
(b) From and after the date hereof until the Termination Date, each
Stockholder hereby agrees to vote (or cause to be voted) any Voting Shares
owned by such Stockholder against (1) any Acquisition Proposal (other than
the Contemplated Transactions) and any related action reasonably required
in furtherance thereof, and (2) any motion to adjourn or postpone a meeting
of the stockholders in which any matters contemplated by the Purchase
Agreement or this Agreement are to be presented for a vote of the
stockholders of the Company to a date that is later than April 30, 2004, at
any meeting of stockholders of the Company (including any adjournments or
postponements thereof). Each Stockholder further agrees that, until the
Termination Date, in connection with any solicitation for a written consent
relating to an Acquisition Proposal or to any adjournment or postponement
of a meeting of stockholders in which any matters contemplated by the
Purchase Agreement or this Agreement are to be presented for a vote, such
Stockholder will withhold and not grant its written consent with respect to
any Voting Shares for any Acquisition Proposal (other than the Contemplated
Transactions) or adjournment or postponement of a meeting as contemplated
by the immediately preceding sentence. For purposes hereof, the term
"Termination Date" shall mean the date of termination of the Purchase
Agreement in accordance with its terms.
(c) If the Board of Directors of the Company makes a Change in the
Board Recommendation, then the Stockholders shall not be bound by the
provisions of this Agreement other than paragraph (f) of Section 3, Section
6 and Section 8.
(d) Without in any way limiting the Stockholder's right to vote the
Voting Shares in its sole discretion on any other matters that may be
submitted to a stockholder vote, consent or other approval, each
Stockholder hereby irrevocably grants to, and appoints, Purchaser and
Xxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxx, in their respective capacities as
designees of Purchaser, and each of them individually, such Stockholder's
proxy and attorney-in-fact (with full power of substitution), for and in
the name, place and stead of such Stockholder, to vote such Stockholder's
Voting Shares, or grant or withdraw a consent or approval in respect of
such Voting Shares, on the matters, in the manner and during the time
periods specified in Sections 1(a) and 1(b). Such Stockholder represents
that any proxies heretofore given with respect to such matters in respect
of such Stockholder's Voting Shares are not irrevocable, and that all such
proxies are hereby revoked. Such Stockholder hereby affirms that the
irrevocable proxy set forth in this Section 1(d) is given in connection
with the execution by Purchaser of the Purchase Agreement and that such
irrevocable proxy is given to secure the performance of the duties of the
Stockholder under Sections 1(a) and 1(b) of this Agreement. Such
Stockholder hereby further affirms that the irrevocable proxy set forth in
this Section 1(d) is coupled with an interest and as such shall survive the
death, incapacity, mental illness or insanity of the Stockholder and may
under no circumstances be revoked unless (x) the Board of Directors of the
Company makes a Change in the Board Recommendation or (y) the Purchase
Agreement or this Agreement is terminated in accordance with its terms, in
which event this proxy shall automatically be revoked without any further
action by any party. Such Stockholder hereby ratifies and confirms all that
such irrevocable proxy may lawfully do or cause to be done by virtue of the
irrevocable proxy set forth in this Section 1(d). Such irrevocable proxy
set forth in this Section 1(d) is executed and intended to be irrevocable
in accordance with the provisions of Section 212(e) of the DGCL.
SECTION 2. Disposition of Shares.
(a) Each Stockholder hereby agrees that from the date hereof until the
earlier of the Closing or the Termination Date, except as otherwise
provided in this Section 2(a), such Stockholder will not directly or
indirectly sell, pledge, encumber, grant any proxy (except the proxy
granted in Section 1(d)) or enter into any voting or similar agreement with
respect to, transfer or otherwise dispose of (collectively, "Transfer"), or
agree or contract to Transfer, Covered Securities with respect to which a
Stockholder directly or indirectly controls the right to Transfer, except
pursuant to the Offer as provided in Section 2(b); provided, however, that
(i) if a Stockholder is an individual, then the Stockholder may Transfer
Covered Securities to the spouse, parent, sibling, child, step-child,
grandchild, niece or nephew of such Stockholder, or the spouse thereof and
any trust for the benefit of such Stockholder, any of the foregoing or any
other lineal descendants of such Stockholder, to the executor or
administrator of such Stockholder's estate or, subject to the receipt by
Purchaser and the Company of the legal opinion described below, to a
charitable remainder trust (as defined in Sections 664(d)(1) and (2) of the
Code) where all private interests are for the benefit of the Stockholders
or any of the foregoing, to a charitable organization described in Section
170(c) of the Code or to a charitable foundation established by any
Stockholder and (ii) if a Stockholder is a trust, then the Stockholder may
Transfer Covered Securities to the beneficiaries of such trust or, subject
to the receipt by Purchaser and the Company of the legal opinion described
below, to a charitable foundation established by any Stockholder, provided
that (x) as a condition to any Transfer described in clause (i) or (ii),
the transferee executes a counterpart to this Agreement pursuant to which
such transferee represents to the Company and the Purchaser the matters set
forth in Section 6 (as of the date of such Transfer) and agrees to be bound
by this Agreement (other than Sections 3(b) and 3(c)) as a Stockholder and
(y) in the case of a Transfer to a charitable remainder trust, a charitable
organization or a charitable foundation, prior to such Transfer, the
Company and Purchaser shall receive a written opinion of counsel in form
and substance reasonably acceptable to, and from counsel reasonably
acceptable to, the Company and the Purchaser to the effect that such trust,
organization or foundation has the requisite power and authority to execute
and become a party to this Agreement and that this Agreement will be a
legal, valid and binding agreement of such trust, organization or
foundation, as applicable. Notwithstanding the provisions of this paragraph
2(a), from the date hereof until the earlier of the Closing or the
Termination Date, the Stockholders shall be permitted to grant to the
Company or the Company's designees a proxy to vote such Stockholder's
Voting Shares on matters, other than the matters covered by Section 1(d),
so long as such Stockholder directs how such shares should be voted and
such vote shall be in compliance with this Agreement. Notwithstanding
anything to the contrary in this Section 2(a), if any Transfer prior to the
Closing otherwise permitted under clause (i) or (ii) of this Section 2(a)
would result in the loss or forfeiture of any of the rights of the
Purchaser under Sections 1, 2(b) and 3(f) or the loss or forfeiture in any
material respect of any of the other rights of the Purchaser under this
Agreement, then such Transfer shall not be permitted.
(b) Each Stockholder hereby agrees, from and after the date hereof
until the Termination Date, to irrevocably tender into the Offer, upon
commencement of the Offer and the request of the Purchaser (and agrees that
it will not withdraw from the Offer except upon the request of the
Purchaser or if the Offer is terminated), pursuant to and in accordance
with the terms of the Purchase Agreement, the number of shares of Common
Stock set forth opposite such Stockholder's name under the column entitled
Tendered Shares on Schedule A hereto (the shares so required to be
tendered, the "Tendered Shares"). Within two Business Days after
commencement of the Offer and the request of the Purchaser, each
Stockholder shall (x) deliver to the depositary for the Offer (i) a
completed and executed letter of transmittal in customary form with respect
to the Tendered Shares complying with the terms of the Offer, (ii)
certificates representing the Tendered Shares and (iii) any other documents
or instruments required to be delivered pursuant to the terms of the Offer,
and/or (y) instruct its broker or such other Person who is the holder of
record of any Tendered Shares beneficially owned by such Stockholder to
irrevocably tender into the Offer such Tendered Shares for cash pursuant to
the terms and conditions of the Offer.
(c) Each Stockholder hereby agrees that, for so long as the Initial
Holders (as defined in the Registration Rights Agreement) beneficially own
10% or more of the combined voting power of the then outstanding Voting
Securities, during the Applicable Period, it shall not, without the prior
written consent of the Board of Directors of the Company (including a
majority of the Designated Directors (as defined in the Certificate of
Designations), if any), Transfer any Covered Securities, other than any
Transfer (i) which would be permitted by Section 2(a) if it were being
effected during the time period set forth in Section 2(a), (ii) in
connection with the registration rights provided for in this Section 2(c),
(iii) pursuant to and in compliance with Rule 144 under the Securities Act,
provided that the number of Covered Securities in such Transfer complies
with the volume limitations set forth in Rule 144(e) under the Securities
Act, regardless of whether such volume limitations shall otherwise be
applicable or (iv) in any tender offer, consolidation, share exchange or
reclassification or merger or similar transaction that has been approved by
the Board of Directors of the Company, including a majority of the
Designated Directors, if any; provided, however, that Xxxx X. Xxxxxxx
("BEB") may pledge up to 50% of the Covered Securities held by BEB as
security for one or more loans from a financial institution if, but only
if, the beneficiary of or counterparty to, such pledge agreement delivers a
letter substantially in the form of Annex A to the Purchaser and the
Company prior to such Transfer. In addition, each Stockholder may Transfer
Covered Securities in a transaction that is exempt from or not subject to
the registration requirements of the Securities Act; provided, that (x)
prior to such Transfer by such Stockholder, the Company and Purchaser shall
receive a written opinion of counsel in form and substance reasonably
acceptable to, and from counsel reasonably acceptable to, the Company and
the Purchaser to the effect that such Transfer is exempt from or not
subject to the registration requirements of the Securities Act; (y) the
number of Covered Securities in such Transfer by such Stockholder complies
with the volume limitations set forth in Rule 144(e) under the Securities
Act, as if such volume limitations had been applicable; and (z) the
aggregate number of Covered Securities so Transferred by all Stockholders
(whether in a single Transfer or in multiple Transfers) to a single
transferee (and any Affiliates or Associates (as defined in the Exchange
Act) of such transferee) represents less than 4% of the then outstanding
Voting Securities. The parties agree that each of the Stockholders will
have the same rights and obligations that the Purchaser has or is subject
to under the Registration Rights Agreement in effect from time to time;
provided, that no Stockholder shall have any right to be an Initiating
Holder under the Registration Rights Agreement, and provided, further, that
for so long as the Initial Holders continue to own 10% or more of the
combined voting power of the outstanding Voting Securities, any amendment
to the Registration Rights Agreement will be binding on the Stockholders so
long as such amendment does not disproportionately affect the Stockholders
relative to the Initial Holders. For the purposes of Section 2(a) and this
Section 2(c) only, "Transfer" does not include the completion, execution or
delivery of any proxy distributed by the Company in connection with the
election of directors, a transaction or any other proposal to the extent
such election, transaction or proposal has been approved or recommended by
the Board of the Directors of the Company, including a majority of the
Designated Directors, if any.
(d) For the purposes of this Agreement, the "Applicable Period" means
the period commencing on the Closing Date and ending on the later of (x)
two years from the Closing Date and (y) one year from such Stockholder's
last date of employment with or, if later, service as a director of the
Company or any of its Subsidiaries.
SECTION 3. Other Agreements.
(a) Confidentiality. Each Stockholder hereby agrees that, from and
after the date hereof until the later of (x) four years from the Closing
and (y) four years from such Stockholder's last date of employment with or,
if later, service as a director of the Company or any of its Subsidiaries,
it shall hold in a fiduciary capacity for the benefit of the Company and
its Subsidiaries all secret, confidential or proprietary information,
knowledge or data relating to the Company or any such Subsidiary and their
respective businesses that such Stockholder obtains or has obtained from
the Company or such Subsidiary (including, in the case of BEB, during his
employment with or service as a director of the Company or such Subsidiary)
and that is not public knowledge (it being expressly understood that
information disclosed as a result of such Stockholder's violation of this
Section 3(a) is not information that is public knowledge) ("Confidential
Information"). Each Stockholder hereby agrees that, from and after the date
hereof until the later of (x) four years from the Closing and (y) four
years from such Stockholder's last date of employment with or, if later,
service as a director of the Company or any of its Subsidiaries, it shall
not communicate, divulge or disseminate Confidential Information at any
time to any person other than any director, officer or representative of
the Company or any of its Subsidiaries, except (i) a Stockholder may
disclose Confidential Information to its legal or financial advisor for the
purposes of receiving legal or financial advice from such advisor (it being
understood that such advisor will be informed by the Stockholder of the
confidential nature of such information and shall be directed by the
Stockholder to treat the information confidentially), (ii) with the prior
written consent of the Purchaser and the Company, or (iii) as otherwise
required by law or legal process.
(b) Non-Solicitation. Each Stockholder hereby agrees that, from and
after the date hereof until the later of (x) two years from the Closing and
(y) two years from such Stockholder's last date of employment with or, if
later, service as a director of the Company or any of its Subsidiaries, it
will not, without the prior written consent of the Purchaser and the
Company, directly or indirectly (through any controlled Affiliates) employ,
or solicit (other than solicitation through general advertisement not
directed to employees or officers of the Company or its Subsidiaries or any
of their respective Affiliates) the employment of (whether as an employee,
officer, director, agent, consultant or independent contractor), any person
who was or is at any time during the six (6) months preceding such date of
determination an employee or officer of the Company or any of its
Subsidiaries. The provisions of this paragraph 3(b) shall only be
applicable for so long as the Initial Holders beneficially own (x) 33% or
more of the Series A Preferred Stock issued on the Closing Date (as
adjusted for any split, subdivision, combination, recapitalization or
similar event from the Closing Date until the date of determination) or (y)
15% or more of the combined voting power of the then outstanding Voting
Securities, whichever is lower.
(c) Competitive Activity. From and after the Closing until the later
of (x) two years from the Closing and (y) two years from BEB's last date of
employment with or, if later, service as a director of the Company or any
of its Subsidiaries, BEB shall not, without the prior written consent of
the Purchaser and the Company, engage in or become associated with a
Competitive Activity. The parties hereto agree that the non-competition
covenant in this Section 3(c) shall be in lieu of the non-competition
covenant in BEB's employment agreement with the Company and the employment
agreement non-competition covenant shall have no force and effect upon
effectiveness of this Section 3(c). For purposes of this Agreement: (i) a
"Competitive Activity" means any business or other endeavor, in any county
of any state of the United States or a comparable jurisdiction in Canada or
any other country, of a kind relating to pharmacy benefit management
services, mail service pharmacies or specialty pharmacies; and (ii) such
Stockholder only shall be considered to have "engaged in and become
associated with a Competitive Activity" if he becomes directly or
indirectly involved as an owner, principal, employee, officer, director,
independent contractor, representative, stockholder, financial backer,
agent, partner, advisor, lender, service provider, administration
participant, or in any other individual or Representative Capacity with any
individual, partnership, corporation or other organization that is
principally engaged in a Competitive Activity; provided, that to the extent
otherwise prohibited hereunder each Stockholder may make and retain passive
investments of less than one percent of the outstanding equity of any
entity engaged in a Competitive Activity, if such equity is listed on a
national securities exchange or regularly traded in an over-the-counter
market.
(d) Resignation. BEB agrees that he shall, effective as of the Closing
Date and upon receipt by BEB of the payments that BEB is entitled to upon a
termination by the Company without cause pursuant to his employment
agreement with the Company (other than any severance and "gross up"
payments that are provided for in his employment agreement, which shall be
paid in accordance with the letter agreement between the Company and BEB
dated as of October 30, 2003), resign his positions as (i) Chairman of the
Board of Directors of the Company and member of any committee of such Board
of Directors and (ii) officer and/or member of the board of directors (and
any committees thereof) of any Subsidiary of the Company.
(e) Severability. With respect to any provision of this Section 3
finally determined by a court of competent jurisdiction to be
unenforceable, the Stockholders and the Company hereby agree that such
court shall have jurisdiction to reform this Agreement or any provision
hereof so that it is enforceable to the maximum extent permitted by law,
and the parties agree to abide by such court's determination. If any of the
covenants of this Section 3 are determined to be wholly or partially
unenforceable in any jurisdiction, such determination shall not be a bar to
or in any way diminish the Company's right to enforce any such covenant in
any other jurisdiction.
(f) Additional Consideration.
(i) If a Trigger Event (as defined below) has occurred, each
Stockholder shall severally pay to the Purchaser, at the time and on the
terms described below, an amount equal to such Stockholder's Third Party
Acquisition Proposal Profit (as defined below) earned (as set out below) by
such Stockholder from any Acquisition Proposal that is entered into or
consummated within twelve months after the Termination Date. A "Trigger
Event" means (x) an event which causes the Purchase Agreement to become
terminable pursuant to Section 10.1(a)(ii) or 10.1(a)(v) of the Purchase
Agreement (regardless of whether the Purchase Agreement is actually
terminated) or (y) a breach by a Stockholder of its obligations pursuant to
Section 1(a), 1(b), 2(a) or 2(b) of this Agreement. For purposes of Section
3(f)(i), the "Third Party Acquisition Proposal Profit" earned by a
Stockholder from the consummation of any Acquisition Proposal shall equal
(x) the total consideration received by such Stockholder for all Tendered
Shares of such Stockholder disposed of by such Stockholder pursuant to such
Acquisition Proposal, valuing any non-cash consideration at its Fair Market
Value (as defined below) on the date of the consummation of the Acquisition
Proposal, minus the product of (A) $11.00 multiplied by (B) the number of
Tendered Shares disposed of by such Stockholder pursuant to such
Acquisition Proposal, plus (y) subject to Section 3(f)(v), the Fair Market
Value, determined as of the date of disposition, of all Tendered Shares of
such Stockholder disposed of after the occurrence of a Trigger Event other
than pursuant to such Acquisition Proposal (provided, that so long as such
Stockholder participated in the Acquisition Proposal with respect to its
Tendered Shares to the fullest extent permitted by the terms of such
Acquisition Proposal, then only those Tendered Shares that were disposed of
prior to the later of twelve months following the Termination Date and four
months following consummation of the Acquisition Proposal shall be included
in the calculation made pursuant to (y) above), minus the product of (A)
$11.00 multiplied by (B) the number of Tendered Shares so disposed of by
such Stockholder. Notwithstanding the foregoing, for purposes of
calculating the Third Party Acquisition Proposal Profit earned by a
Stockholder, shares of Common Stock that are Transferred to (x) an
Affiliate or an Associate (as defined in the Exchange Act) of a
Stockholder, (y) a trust or other entity for the economic benefit of an
Affiliate or an Associate or (z) a charitable organization or entity shall
not be deemed to be "disposed of" and the Third Party Acquisition Proposal
Profit shall be calculated assuming such shares had been retained by the
Stockholder and disposed of pursuant to the Acquisition Proposal; provided
that, if the Transfer was permitted by and effected in accordance with
Section 2(a), then the transferor Stockholder's obligation to pay any Third
Party Acquisition Proposal Profit to Purchaser under this Section 3(f)(i)
in respect of such shares shall be reduced by the amount of Third Party
Acquisition Proposal Profit paid by the transferee to Purchaser in respect
of such shares.
(ii) In the event that the Purchaser or any of its Affiliates,
within twelve months after the date hereof or the Termination Date, as
applicable, proposes or consummates a transaction that would have
constituted an Acquisition Proposal, if it had been proposed by any Person
other than the Purchaser or any of its Affiliates including, for the
avoidance of doubt, amendments to the Contemplated Transactions (a
"Purchaser Acquisition Proposal"), each Stockholder hereby agrees that (x)
it will not be entitled to receive, and hereby waives all right to, any
Purchaser Acquisition Proposal Profit (as defined below) that such
Stockholder would have otherwise received on the Tendered Shares disposed
of by such Stockholder in such Purchaser Acquisition Proposal and such
Stockholder understands and agrees that the full amount of any such
Purchaser Acquisition Proposal Profit shall be payable only to those
Persons who own capital stock of the Company other than the Stockholders
and to the Stockholders with respect to their shares other than their
Tendered Shares (and if any Purchaser Acquisition Proposal Profit is
received by such Stockholder it shall pay any such Profit over to the
Purchaser) and (y) subject to Section 3(f)(v), if such Stockholder disposed
of any Tendered Shares other than pursuant to such Purchaser Acquisition
Proposal, such Stockholder severally agrees that it will pay to the
Purchaser any Transfer Profit (as defined below) earned (as set out below)
by such Stockholder from such disposition. For purposes of Section
3(f)(ii)(x), the "Purchaser Acquisition Proposal Profit" of a Stockholder
from the consummation of any Purchaser Acquisition Proposal shall equal (x)
the total consideration that such Stockholder would have otherwise (but for
this paragraph 3(f)(ii)) received for all Tendered Shares of such
Stockholder disposed of by such Stockholder pursuant to such Purchaser
Acquisition Proposal minus (y) the product of (A) $11.00 multiplied by (B)
the number of Tendered Shares disposed of by such Stockholder pursuant to
such Purchaser Acquisition Proposal. For purposes of Section 3(f)(ii)(y),
the "Transfer Profit" earned by such Stockholder from any disposition of
Tendered Shares shall equal (x) the Fair Market Value, determined as of
date of disposition, of all Tendered Shares of such Stockholder disposed of
after the occurrence of a Trigger Event other than pursuant to such
Purchaser Acquisition Proposal (provided, that so long as such Stockholder
participated in the Purchaser Acquisition Proposal with respect to its
Tendered Shares to the fullest extent permitted by the terms of such
Purchaser Acquisition Proposal, then only those Tendered Shares that were
disposed of prior to the later of (1) twelve months from the date hereof or
the Termination Date, as applicable, and (2) four months following
consummation of the Purchaser Acquisition Proposal shall be included in the
calculation made pursuant to this clause (x)), minus (y) the product of (A)
$11.00 multiplied by (B) the number of Tendered Shares so disposed of by
such Stockholder. Notwithstanding the foregoing, for purposes of
calculating the Purchaser Acquisition Proposal Profit of a Stockholder,
shares of Common Stock that are Transferred to (x) an Affiliate or an
associate of a Stockholder, (y) a trust or other entity for the economic
benefit of an Affiliate or an associate or (z) a charitable organization or
entity shall not be deemed to be "disposed of" and the Purchaser
Acquisition Proposal Profit shall be calculated assuming such shares had
been retained by the Stockholder and disposed of pursuant to the Purchaser
Acquisition Proposal; provided that, if the Transfer was permitted by and
effected in accordance with Section 2(a), then the transferor Stockholder's
obligation to pay any Purchaser Acquisition Proposal Profit or Transfer
Profit to Purchaser under this Section 3(f)(ii) in respect of such shares
shall be reduced by the amount of Purchaser Acquisition Proposal Profit or
Transfer Profit paid by the transferee to Purchaser in respect of such
shares.
For the purpose of clauses (i) and (ii) of this Section 3(f),
provided that the Purchaser has previously been advised in writing of the
name and address of any transferee of Tendered Shares which received its
shares in a Transfer pursuant to Section 2(a), then, after any Profit
becomes payable hereunder, the Purchaser will send a written request for
payment to such transferee at the address so provided and if payment is not
received from such transferee within five Business Days of such request,
then the applicable Stockholder shall promptly make such payments to the
Purchaser.
(iii) For purposes of this Section 3(f), the Fair Market Value of
any non-cash consideration consisting of:
(1) securities listed on a national securities exchange or
traded on the NASDAQ shall be equal to the average
closing price per share of such security as reported on
such exchange or the NASDAQ (the "Closing Price") for
the ten trading days prior to the date of determination
multiplied by the number of securities comprising such
non-cash consideration; and
(2) consideration which is other than securities of the
form specified in clause (1) of this Section 3(f)(iii)
shall be determined by a nationally recognized
independent investment banking firm mutually agreed
upon by the parties within ten Business Days of the
event requiring selection of such banking firm;
provided, however, that if the parties are unable to
agree within two Business Days after the date of such
event as to the investment banking firm, then the
parties shall each select one firm, and those firms
shall select a third investment banking firm, which
third firm shall make such determination; provided
further, that the fees and expenses of such investment
banking firm shall be borne equally by the Purchaser,
on the one hand, and the Stockholders, on the other
hand. The determination of the investment banking firm
shall be binding upon the parties.
(iv) For purposes of this Section 3(f), the Fair Market Value of
any Tendered Share, if such disposition represented a bona fide transfer
for value to a third party other than an Affiliate or an Associate of a
Stockholder (and the Stockholder provides the Purchaser with a signed
letter representing and warranting to the Purchaser that the only
consideration in such disposition is as set forth in such letter) or was
executed on the NASDAQ, shall be equal to amount received in such Transfer
and otherwise shall be equal to the Closing Price of such share.
(v) To the extent payable by a Stockholder, any payment of any
Third Party Acquisition Proposal Profit, Purchaser Acquisition Proposal
Profit or Transfer Profit (collectively, "Profit") required to be paid
under this Section 3(f) (a "Profit Payment") shall be paid in the same form
as the consideration received by the Stockholder (and on the same terms and
conditions) (and, if the consideration received by the Stockholder was in
more than one form, in the same proportion as the forms of consideration
received), and to the extent paid in cash, shall be paid by wire transfer
of same day funds to an account designated by the Purchaser and to the
extent paid through a transfer of securities, shall be paid through
delivery of such securities, suitably endorsed for transfer. If the
securities to be delivered are subject to securities laws restrictions, the
Purchaser agrees that it will provide a customary letter representing as to
the Purchaser's investor status and agreeing only to Transfer such
securities in compliance with applicable securities laws; provided, that
the Purchaser shall be entitled to benefit pro rata from all registration
rights granted to such Stockholder with respect to such securities. Such
Profit Payment shall be made (x) if such payment is of Third Party
Acquisition Proposal Profit or Purchaser Acquisition Proposal Profit, no
later than the fourth Business Day after the Stockholder has received the
payment giving rise to the Stockholder's obligation under Section 3(f) and
(y) if such payment is of Transfer Profit, no later than the fourth
Business Day after the Purchaser Acquisition Proposal has been consummated
(or if later, four Business Days after the Stockholder has received the
payment giving rise to the Stockholder's obligation under Section 3(f)) or
if such Transfer is made after the consummation of the Purchaser
Acquisition Proposal in accordance with Section 3(f)(ii), no later than the
fourth Business Day after the Stockholder has received the payment giving
rise to the Stockholder's obligation under Section 3(f). Notwithstanding
anything in this Section 3(f) to the contrary, the Stockholders shall not
be liable to the Purchaser for any Profit on Transfers of up to an
aggregate of 1,500,000 shares of Common Stock after a Trigger Event and
prior to the Company's entering into any agreement with respect to, or
consummating, an Acquisition Proposal or Purchaser Acquisition Proposal if,
and only if, on the date of any such Transfer, BEB has provided the
Purchaser with a signed letter representing and warranting to the Purchaser
that as of the date of such Transfer to BEB's knowledge the Company has not
received an Acquisition Proposal that is then outstanding and to BEB's
knowledge there is no Acquisition Proposal or Purchaser Acquisition
Proposal pending or contemplated.
(vi) The Purchaser agrees that it will indemnify each Stockholder
for any net additional federal, state and local tax liability of the
Stockholder (and interest and penalties attributable thereto), resulting
from receipt by the Stockholder of the funds comprising any Profit Payment
(and from the receipt of any indemnity payment hereunder), with the amount
of any such additional tax liability to be determined only after giving
effect to the benefit to the Stockholder of any loss or deduction available
to the Stockholder as a result of making any Profit Payment. In the event
the Purchaser makes an indemnification payment to a Stockholder for any
such additional tax liability for a given year and in a subsequent year the
Stockholder actually realizes a net tax benefit as a result of a loss or
deduction attributable to the Profit Payment (or any payments made by the
Stockholder hereunder to the Purchaser), then the Stockholder will pay over
to the Purchaser the amount of such benefits when and to the extent
actually realized by the Stockholder. Each Stockholder agrees that it will
treat the Profit Payment to Purchaser as giving rise to a capital loss,
under section 1234A of the Code, in the amount of the Profit Payment, at
the time the Profit Payment is made (unless advised by reputable counsel
that there is no reasonable basis for claiming the loss as a capital loss)
and will take no position inconsistent with such treatment and accordingly
that no indemnity shall be payable (at least with respect to federal income
taxes) in the event that both (i) the Profit Payment is made in the same
taxable year of the Stockholder as the realization of the income
corresponding to the Profit Payment and (ii) the Profit Payment gives rise
to a capital loss in the amount of the Profit Payment under section 1234A
or otherwise. The Purchaser shall have the right to control at Purchaser's
own cost the conduct of any audit, litigation or other proceeding with
respect to the tax character of loss resulting from the Profit Payment (a
"Tax Dispute"), and the Stockholder shall not settle or compromise any such
Tax Dispute without the Purchaser's consent, which consent shall not be
unreasonably withheld or delayed. The Stockholder may participate in the
Tax Dispute at its own cost. Payments under this clause (vi) of Section
3(f) shall be made promptly after the end of the taxable year in which the
benefit or detriment giving rise to the payment is realized and, in the
case of indemnity payments made by the Purchaser, delivery by the
Stockholder of a written calculation showing the amount owing.
Each Stockholder agrees to use its reasonable efforts and to act
in good faith to seek to cause the taxable income arising from a sale or
disposition resulting in a Profit Payment to be recognized in the same
taxable year as any deduction or loss resulting from such Profit Payment;
provided, however, that the foregoing shall not require a Stockholder to
take any action, or forego taking any action, that would cause the
Stockholder to suffer an economic detriment in excess of $25,000.
(vii) The parties agree that if the Contemplated Transactions are
consummated, the provisions of this Section 3(f) shall have no further
force and effect; provided, however, that if the Offer Consideration is
increased above $11.00 the provisions of Section 3(f)(ii) to the extent
applicable shall continue to apply in accordance with their terms.
(g) Closing of the Offer. Prior to consummation of the Contemplated
Transactions the Company will have irrevocably accepted for payment all of
the shares of Common Stock, including the Stockholders' shares validly
tendered into the Offer and not withdrawn, not to exceed the Maximum
Number. Promptly following the Closing, the Company shall pay the Offer
Consideration for all Shares accepted for payment, subject to the
provisions of Section 3(f)(ii) to the extent applicable.
SECTION 4. Acquisition Proposals; Voting of Excess Shares.
(a) Without limiting the Stockholders' other obligations under this
Agreement, each Stockholder hereby agrees that, from the date hereof until
the earlier of the Termination Date and the Closing, neither such
Stockholder nor any of its controlled Affiliates shall (and both such
Stockholder and its controlled Affiliates shall use reasonable best efforts
to cause their agents and representatives, including any investment banker,
attorney or accountant retained by such Stockholder or Affiliates, not to),
directly or indirectly, (i) initiate, solicit, encourage or knowingly
facilitate (including by way of furnishing information) any inquiries or
the making of any Acquisition Proposal or otherwise make any Acquisition
Proposal, (ii) have any discussion with or provide any Confidential
Information to any Person relating to an Acquisition Proposal, or engage in
any negotiations concerning an Acquisition Proposal, or knowingly
facilitate any effort or attempt to make or implement an Acquisition
Proposal, (iii) approve or recommend, or propose publicly to approve or
recommend, any Acquisition Proposal, (iv) approve or recommend, or propose
to approve or recommend, or execute or enter into, any letter of intent,
agreement in principle, merger agreement, acquisition agreement, option
agreement or other similar agreement or propose publicly or agree to do any
of the foregoing related to any Acquisition Proposal, (v) acquire, offer,
agree or propose to acquire, beneficial ownership of any of the securities,
assets or businesses of the Company or any of its Subsidiaries (other than
the exercise of options or warrants for shares of Common Stock held by such
Stockholder on the date hereof or issued to such Stockholder by the Company
after the date hereof in compliance with the terms of the Purchase
Agreement) or (vi) request permission for any waiver or amendment of the
terms of this Section 4(a) or disclose any intention, plan or arrangement
inconsistent with any of the foregoing. Each Stockholder agrees that (i) it
will promptly keep the Purchaser informed of the status and terms of any
Acquisition Proposal that such Stockholder is aware of by any Person
(whether written or oral), including the identity of the parties involved
and (ii) it will, and will cause its controlled Affiliates to, immediately
cease and cause to be terminated any activities, discussions or
negotiations existing as of the date of this Agreement with any Persons
(other than the Purchaser and its respective Affiliates) conducted
heretofore with respect to any Acquisition Proposal. Notwithstanding
anything to the contrary contained in this Agreement, in the event that the
Company or any of its Subsidiaries receives a Qualified Acquisition
Proposal, then the Stockholders may engage in negotiations and discussions
with the Special Committee of the Board of Directors of the Company with
respect to such Qualified Acquisition Proposal.
(b) Each Stockholder hereby agrees that, from the Closing until the
later of (x) two years from the Closing and (y) two years from such
Stockholder's last date of employment with or, if later, service as a
director of the Company or any of its Subsidiaries, it will not, and it
will not permit any of its controlled Affiliates or Associates to, directly
or indirectly, make any Acquisition Proposal, or acquire, offer, agree or
propose to acquire, beneficial ownership of any of the securities, assets
or businesses of the Company or any of its Subsidiaries (other than the
exercise of options or warrants for shares of Common Stock held by such
Stockholder on the date hereof or issued to such Stockholder by the Company
after the date hereof in compliance with the Purchase Agreement and the
Certificate of Designations, to the extent applicable); participate in any
solicitation of proxies (except on behalf of the Company) with respect to
any securities of the Company or any of its Subsidiaries; seek to advise,
encourage or influence (except on behalf of the Company) any Person
(except, in the case of BEB only, members of his immediate family that are
Stockholders hereunder) with respect to the voting of any securities of the
Company or any of its Subsidiaries; make any proposal (except in such
Stockholder's position as a member of the Board of Directors of the Company
or any of its Subsidiaries) to the Board of Directors of the Company or the
board of directors of any of the Company's Subsidiaries; seek or propose to
influence or control the management or policies of the Company or any of
its Subsidiaries (except in such Stockholder's position as a member of the
Board of Directors of the Company or any of its Subsidiaries); make any
public statement with respect to the Company or any of its Subsidiaries
(except in such Stockholder's position as a member of the Board of
Directors of the Company or any of its Subsidiaries) or otherwise act to
disparage the Company or any of its Subsidiaries; take any action which is
reasonably likely to require the Company or any of its Subsidiaries to make
any public disclosure (except in such Stockholder's position as a member of
the Board of Directors of the Company or any of its Subsidiaries); enter
into any discussions, negotiations, arrangements or understandings with any
third party with respect to any of the foregoing matters (except in such
Stockholder's position as a member of the Board of Directors of the Company
or any of its Subsidiaries); assist or encourage others to do any of the
foregoing activities (except in such Stockholder's position as a member of
the Board of Directors of the Company or any of its Subsidiaries); request
permission for any waiver or amendment of the terms of this Section 4(b) or
disclose any intention, plan or arrangement inconsistent with any of the
foregoing (except in such Stockholder's position as a member of the Board
of Directors of the Company or any of its Subsidiaries). Notwithstanding
the foregoing, from the Closing until the later of (x) two years from the
Closing and (y) two years from BEB's last date of employment with or, if
later, service as a director of the Company or any of its Subsidiaries, BEB
and his Affiliates may acquire shares of Common Stock to increase their
aggregate ownership to not more than 9.5% of the then outstanding Voting
Securities and may request that the Board of Directors of the Company
consent to permitting such Stockholder to acquire shares of Common Stock in
excess of such amount, which consent will be effective if approved by the
Board of Directors, including a majority of the Designated Directors, if
any.
(c) BEB hereby agrees that, from the Closing until the later of (x)
two years from the Closing and (y) two years from BEB's last date of
employment with or, if later, service as a director of the Company or any
of its Subsidiaries, if at any time BEB and his Affiliates and Associates
beneficially own in the aggregate more than 9.5% of the then outstanding
Voting Securities (the number of shares of Common Stock above such 9.5%
amount, the "Excess Shares"), BEB will cause the Company to vote (including
by executing a proxy authorizing designees of the Company to vote) the
Excess Shares at any meeting of the stockholders of the Company (including
any adjournments or postponements thereof) in favor of or against each
proposal voted upon at such meeting in the same proportion as the votes
cast in respect of all the Voting Securities excluding the Excess Shares on
such proposal.
(d) For purposes of this Section 4 and Section 5, the Company and its
Subsidiaries shall not be treated as an "Affiliate" of any of the
Stockholders, it being understood that the restrictions applicable to the
Company and its Subsidiaries are set forth in the Purchase Agreement.
SECTION 5. Further Assurances. Each party shall execute and deliver
such additional instruments and other documents and shall take such further
actions as may be reasonably necessary or appropriate to effectuate, carry
out and comply with all of its obligations under this Agreement. Each
Stockholder agrees to (and to cause such Stockholder's Affiliates and
Associates to) cooperate with the Company and the Purchaser in connection
with any filings required to be made by the Company or the Purchaser in
connection with this Agreement, the Purchase Agreement or the Contemplated
Transactions.
SECTION 6. Representations and Warranties of the Stockholders.
As of the date hereof, each Stockholder, severally and not jointly,
represents and warrants to the Company and the Purchaser, as follows:
(a) Such Stockholder (i) if an individual, has all requisite legal
capacity and authority, (ii) if a trust, has all requisite trust power and
authority and (iii) if another form of Person, has all requisite power and
authority, in each case, to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, including without
limitation, all power and authority to vote, or execute a consent with
respect to, all Voting Shares, to grant the irrevocable proxy provided for
in Section 1(d), to tender all Tendered Shares, to waive all Profit to the
extent required herein, to pay all Profit to the Purchaser to the extent
required herein and to take all actions that are contemplated to be taken
hereby by such Stockholder. This Agreement has been duly authorized,
executed and delivered by such Stockholder. This Agreement constitutes the
valid and binding agreement of such Stockholder enforceable against such
Stockholder in accordance with its terms subject to Equitable Principles.
If such Stockholder is married and the Covered Securities of such
Stockholder constitute community property or otherwise need spousal or
other approval for this Agreement to be legal, valid and binding with
respect to such Covered Securities, this Agreement has been duly executed
and delivered by, and constitutes a valid and binding agreement of, such
Stockholder's spouse, enforceable against such spouse in accordance with
its terms subject to Equitable Principles. If such Stockholder is a trust,
no consent of any beneficiary is required for the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
(b) Such Stockholder is the record and beneficial owner of, or is a
trust that is the record holder of and whose beneficiaries are the
beneficial owners of, and has good title to, the Covered Securities set
forth opposite such Stockholder's name on Schedule A hereto, free and clear
of all liens, claims, security interests, proxies, voting trusts or
agreements, understandings or arrangements or any other encumbrances
whatsoever ("Liens") other than (i) Liens imposed by this Agreement and
(ii) Liens imposed by federal or state securities laws. As of the date
hereof, such Stockholder does not own, of record or beneficially, any
shares of capital stock of the Company or securities by their terms
convertible into or exchangeable for capital stock of the Company other
than the Covered Securities set forth opposite such Stockholder's name on
Schedule A hereto. Such Stockholder has the sole right to vote, or to
dispose, of such Covered Securities, and none of such Covered Securities is
subject to any agreement, arrangement or restriction with respect to the
voting of such Covered Securities, except as contemplated by this
Agreement. Except as described on Schedule A hereto, there are no
agreements or arrangements of any kind, contingent or otherwise, obligating
such Stockholder to Transfer, or cause to be Transferred, any of the
Covered Securities, and no Person has any contractual or other right or
obligation to purchase or otherwise acquire any of the Covered Securities.
(c) The execution and delivery by each Stockholder of this Agreement
and the consummation by such Stockholder of the transactions contemplated
hereby do not violate, breach, or result in a breach, or constitute a
default (with or without due notice of lapse of time or both) under any
provision of any judgment, order, decree, contract, instrument, agreement,
or arrangement to which such Stockholder is a party or by which such
Stockholder or such Stockholder's property or assets is bound.
(d) Except as set forth on Schedule 6(d), the execution and delivery
of this Agreement by such Stockholder do not, and the performance of this
Agreement by such Stockholder will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any
Governmental Authority, except (i) for any filings by one or more
Stockholders pursuant to Rules 13d-1, 13d-2 and 16a-3 promulgated by the
Commission under the Exchange Act and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not, individually or in the aggregate, prevent or
materially delay the performance by such Stockholder of any of its
obligations under this Agreement.
SECTION 7. Effectiveness. It is a condition precedent to the
effectiveness of this Agreement that the Purchase Agreement shall have been
duly executed and delivered by the Company and the Purchaser.
SECTION 8. Miscellaneous.
(a) Notices, Etc. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered personally,
telecopied or sent by certified, registered or express mail, postage
prepaid. Any such notice shall be deemed given if delivered personally or
telecopied, on the date of such delivery, or if sent by reputable overnight
courier, on the first Business Day following the date of such mailing, as
follows:
If to the Company:
National Medical Health Card Systems, Inc.
00 Xxxxxx Xxxx Xxxxx
Xxxx Xxxxxxxxxx, Xxx Xxxx 00000
Attn: Chief Financial Officer
Telecopy: (000) 000-0000
with a copy to:
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
If to the Stockholders, to their address as set forth in the records
of the Company
with a copy to:
Xxxxxx Xxxxxxx & Xxxx LLP
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
If to the Purchaser:
New Mountain Partners, L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
With a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
Any party may by notice given in accordance with this Section 8(a)
designate another address or Person for receipt of notices hereunder.
(b) Amendments, Waivers, Etc. (i) This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated except by
an instrument in writing signed by each of the parties hereto.
(ii) If there shall occur a Fundamental Amendment of the Purchase
Agreement, then, BEB on his own behalf and on behalf of the other
Stockholders shall have the right to terminate this Agreement with no
liability to any party but only by written notice to the Company and the
Purchaser no later than two Business Days following receipt by BEB of
written notice from the Company or the Purchaser of the occurrence of a
Fundamental Amendment. The Company and the Purchaser agree to provide BEB
with a copy of a Fundamental Amendment promptly upon its execution.
"Fundamental Amendment" means the execution by the Company and the
Purchaser of an amendment to or waiver by the Company or the Purchaser of
any provision of the Purchase Agreement that
(1) reduces the amount or changes the form of the Offer
Consideration or has any other economic detriment to
the Stockholders,
(2) extends the date set forth in Section 10.1(a)(i)(A) of
the Purchase Agreement,
(3) modifies Section 10.1(a)(ii) or 10.1(a)(v) of the
Purchase Agreement or any defined term used in any such
Section in a manner that adversely affects the
Stockholders, or
(4) otherwise affects a Stockholder in a materially adverse
manner.
If BEB does not exercise the termination right described above,
then this Agreement shall give effect to any modified terms incorporated
from the Purchase Agreement and, except as so modified, shall continue in
full force and effect.
(c) Entire Agreement. This Agreement and the Purchase Agreement are
intended by the parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter
contained herein and therein. There are no restrictions, promises,
warranties or undertakings, in respect of the subject matter contained
herein and therein other than those set forth or referred to herein or
therein. This Agreement and the Purchase Agreement supersede all prior
agreements and understandings between the parties with respect to such
subject matter.
(d) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect
and of the remaining provisions hereof shall not be in any way impaired,
unless the provisions held invalid, illegal or unenforceable shall
substantially impair the benefits of the remaining provisions hereof and
provided that in the event any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable in any respect for any reason, the parties shall
negotiate in good faith in an attempt to agree to another provision (in
lieu of the term or application held to be invalid or unenforceable) that
will be valid and enforceable and will carry out the parties' intentions
hereunder.
(e) Specific Performance. The parties acknowledge that money damages
are not an adequate remedy for violations of this Agreement and that any
party may, in its sole discretion, apply to a court of competent
jurisdiction for specific performance or injunctive or such other relief as
such court may deem just and proper in order to enforce this Agreement or
prevent any violation hereof and, to the extent permitted by applicable
law, each party waives any objection to the imposition of such relief.
(f) Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or
beginning of the exercise of any thereof by any party shall not preclude
the simultaneous or later exercise of any other such right, power or remedy
by such party.
(g) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any
other party hereto with its obligations hereunder, and any custom or
practice of the parties at variance with the terms hereof, shall not
constitute a waiver by such party of its right to exercise any such or
other right, power or remedy or to demand such compliance.
(h) Assignment, No Third Party Beneficiaries. Except as otherwise
provided herein, this Agreement shall not be assignable or otherwise
Transferable by a party without the prior consent of the other parties, and
any attempt to so assign or otherwise Transfer this Agreement without such
consent shall be void and of no effect; provided that Purchaser may, in its
sole discretion, assign or Transfer all or any of its rights, interests and
obligations under this Agreement to any Affiliate of Purchaser. This
Agreement shall be binding upon the respective heirs, successors, legal
representatives and permitted assigns of the parties hereto and as set
forth in Section 2(a). Nothing in this Agreement shall be construed as
giving any Person, other than the parties hereto and their heirs,
successors, legal representatives and permitted assigns, any right, remedy
or claim under or in respect of this Agreement or any provision hereof.
(i) Jurisdiction; Waiver of Trial by Jury. Each of the parties hereto
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of New York and of the United
States of America, in each case located in the County of New York, for any
Action arising out of or relating to this Agreement and the Contemplated
Transactions (and agrees not to commence any Action relating thereto except
in such courts), and further agrees that service of any process, summons,
notice or document by U.S. registered mail to its respective address set
forth in this Agreement, or such other address as may be given by one or
more parties to the other parties in accordance with the notice provisions
of Section 8(a) shall be effective service of process for any action, suit
or proceeding brought against it in any such court. Each of the parties
hereto hereby irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in the courts of the
State of New York or the United States of America, in each case located in
the County of New York, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such
Action brought in any such court has been brought in an inconvenient forum.
Each of the parties irrevocably and unconditionally waives, to the fullest
extent permitted by applicable Requirements of Law, any and all rights to
trial by jury in connection with any action, suit or proceeding arising out
of or relating to this Agreement or the transactions contemplated hereby.
(j) Rule 144. The Company agrees to file all reports required to be
filed by it under the Securities Act and the Exchange Act and shall take
such further action as the BEB may reasonably request, all to the extent
required to enable the Stockholders to sell the Covered Securities pursuant
to and in accordance with Rule 144. Such action shall include, but not be
limited to, making available adequate current public information meeting
the requirements of paragraph (c) of Rule 144.
(k) No Recourse. The Company and the Purchaser agree that they shall
have no recourse against any of the Stockholders with respect to any
claims, losses, damages, liabilities, indemnities or other obligations
arising from any breach by the Company of any of its obligations or
representations or warranties under the Purchase Agreement.
(l) Governing Law. This Agreement shall be governed by and construed
in accordance with the Requirements of Law of the State of New York without
giving effect to the principles of conflict of laws except for ss.5-1401
and ss.5-1402 of the General Obligations Law Provisions of the State of New
York.
(m) Name, Captions, Gender. The name assigned to this Agreement and
the section captions used herein are for convenience of reference only and
shall not affect the interpretation or construction hereof. Whenever the
context may require, any pronoun used herein shall include the
corresponding masculine, feminine or neuter forms.
(n) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one instrument. Each counterpart may
consist of a number of copies each signed by less than all, but together
signed by all, the parties hereto.
(o) Expenses. Each Stockholder shall bear its own expenses incurred in
connection with this Agreement and the Purchase Agreement and the
transactions contemplated hereby and thereby.
(p) Certain Definitions. For purposes of this Agreement,
"Representative Capacity" means as a proxy, an executor or administrator of
any estate, a trustee of any trust or in any other fiduciary or
representative capacity (other than as trustee or administrator of any
employee benefit plan) if such Person, in such capacity, directly or
indirectly possesses the power to vote or dispose or direct the voting of
any shares of Common Stock.
For purposes of this Agreement only, BEB and his Affiliates shall
not be deemed to have made an Acquisition Proposal solely by reason of the
acquisition of shares of Common Stock through the exercise of options or
warrants issued by the Company.
For purposes of this Agreement, it is agreed that, with respect
to any time periods that are determined based on a Stockholder's employment
with or service as a director of the Company or any of its Subsidiaries,
such determination will be made by reference to the Person that is the
Stockholder at the time of determination and therefore such time period may
be different for each Stockholder.
(q) Attorney-in-Fact. Upon execution of this Agreement, each
Stockholder hereby irrevocably makes, constitutes and appoints BEB as its
true and lawful agent and attorney-in-fact, with full powers of
substitution, to act in such Stockholder's name, place and stead for all
purposes of this Agreement including (i) to execute and deliver on behalf
of such Stockholder any consent, amendment or waiver hereto, provided, that
such consent, amendment or waiver does not treat such Stockholder
differently than any of the other Stockholders; (ii) to take all other
actions to be taken by or on behalf of such Stockholder in connection
herewith; (iii) to negotiate, settle, compromise and otherwise handle all
claims of the Purchaser or the Company hereunder; (iv) to terminate this
Agreement in accordance with its terms; and (v) to do each and every act
and exercise any and all rights which such Stockholder or the Stockholders
collectively are permitted or required to do or exercise under this
Agreement. Each Stockholder hereby ratifies and confirms all that BEB shall
do or cause to be done by virtue of his appointment as such Stockholder's
agent and attorney-in-fact. The appointment of BEB shall be deemed coupled
with an interest and as such shall be irrevocable and shall survive the
death, incompetency, mental illness or insanity of the Stockholder, and any
person dealing with BEB may conclusively and absolutely rely, without
inquiry, upon any act of BEB as the act of the Stockholder in all matters
referred to in this Section 8(q).
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxx
----------------------------------------
Name: Xxxxx X. Xxxx
Title: President & CEO
PURCHASER:
NEW MOUNTAIN PARTNERS, L.P.
By: New Mountain Investments, L.P.,
its general partner
By: New Mountain GP, LLC,
its general partner
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
P.W. CAPITAL CORP.
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
/s/ Xxxx X. Xxxxxxx
----------------------------------------
Xxxx X. Xxxxxxx
/s/ Xxx Xxxxx Xxxxxxx
----------------------------------------
Xxx Xxxxx Xxxxxxx
/s/ Xxxxx X. Xxxxxxx
----------------------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxxx Xxxxxxx Xxxxxx
----------------------------------------
Xxxxxxx Xxxxxxx Xxxxxx
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
XXXXXX X. XXXXXXX, not individually,
but solely as the sole trustee of:
(i) That certain Trust created
pursuant to an Agreement by and
between Xxxx X. Xxxxxxx, as Grantor,
and Xxxxxx X. Xxxxxxx, as Trustee,
dated May 24, 1999
(ii) That certain Trust created
pursuant to an Agreement by and
between Xxx Xxxxx Xxxxxxx, as
Settlor, and Xxxxxx X. Xxxxxxx, as
Trustee, dated January 1, 2002
(iii) That certain Trust created
pursuant to an Agreement by and
between Xxxxx Xxxxx Xxxxxxx, as
Settlor, and Xxxxxx X. Xxxxxxx, as
Trustee, dated February 1, 2001
(iv) That certain Trust created
pursuant to an Agreement by and
between Xxxxxxx Xxxxxx Xxxxxxx, as
Settlor, and Xxxxxx X. Xxxxxxx, as
Trustee, dated February 1, 2001
(v) That certain Trust created
pursuant to an Agreement by and
between Xxxxxxx Xxxxxxx Xxxxxx f/k/a
Xxxxxxx Xxxxxxx Xxxxxxx, as Settlor,
and Xxxxxx X. Xxxxxxx, as Trustee,
dated February 1, 2001
Schedule A
Ownership of Covered Securities
-------------------------------
Total Shares of Total Total Total Tendered
Stockholder Common Stock Options Warrants Covered Securities Shares
------------------------------ ----------------- ------------- ------------ -------------------- ------------
Xxxx X. Xxxxxxx 2,993,070 300,000 30,000 3,323,070 2,990,763
Xxxx X. Xxxxxxx Revocable 100,000 - 0 - - 0 - 100,000 90,000
Trust dated May 24, 1999
P.W. Capital Corp. 1,725 - 0 - - 0 - 1,725 1,553
Xxx Xxxxx Xxxxxxx 369,461 - 0 - - 0 - 369,461 332,515
The Irrevocable Trust of Xxx 10,144 - 0 - - 0 - 10,144 9,130
Xxxxx Xxxxxxx dated January 1,
2002
Xxxxx Xxxxx Xxxxxxx 369,462 - 0 - - 0 - 369,462 332,516
The Irrevocable Trust of Xxxxx 10,145 - 0 - - 0 - 10,145 9,131
Xxxxx Xxxxxxx dated February
1, 2001
Xxxxxxx Xxxxxx Xxxxxxx 369,461 - 0 - - 0 - 369,461 332,515
The Irrevocable Trust of 10,145 - 0 - - 0 - 10,145 9,131
Xxxxxxx Xxxxxx Xxxxxxx dated
February 1, 2001
Xxxxxxx Xxxxxxx Xxxxxx 369,461 - 0 - - 0 - 369,461 332,515
The Irrevocable Trust of 10,145 - 0 - - 0 - 10,145 9,131
Xxxxxxx Xxxxxxx Xxxxxx dated
February 1, 2001
TOTAL 4,613,219 300,000 30,000 4,943,219 4,448,900
The following trust agreements contain obligations on the Stockholder to
Transfer the Covered Securities in accordance with the terms of such trust
agreements:
That certain Trust created pursuant to an Agreement by and between
Xxxx X. Xxxxxxx, as Grantor, and Xxxxxx X. Xxxxxxx, as Trustee, dated
May 24, 1999
That certain Trust created pursuant to an Agreement by and between Xxx
Xxxxx Xxxxxxx, as Settlor, and Xxxxxx X. Xxxxxxx, as Trustee, dated
January 1, 2002
That certain Trust created pursuant to an Agreement by and between
Xxxxx Xxxxx Xxxxxxx, as Settlor, and Xxxxxx X. Xxxxxxx, as Trustee,
dated February 1, 2001
That certain Trust created pursuant to an Agreement by and between
Xxxxxxx Xxxxxx Xxxxxxx, as Settlor, and Xxxxxx X. Xxxxxxx, as Trustee,
dated February 1, 2001
That certain Trust created pursuant to an Agreement by and between
Xxxxxxx Xxxxxxx Xxxxxx f/k/a Xxxxxxx Xxxxxxx Xxxxxxx, as Settlor, and
Xxxxxx X. Xxxxxxx, as Trustee, dated February 1, 2001
Annex A
[Bank Letterhead]
[Date]
Health, Inc.
Attention: Chief Financial Officer
The Stockholders Listed on Schedule A Hereto
New Mountain Partners, L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: [___________]
Dear Sir or Madam:
Reference is made to the Support Agreement, dated as of October 30, 2003,
by and among Health, Inc. (the "Company"), certain other stockholders of
the Company as set forth therein (each, a "Stockholder"), and New Mountain
Partners, L.P. (the "Support Agreement"), a copy of which has been provided
to [Bank] ("Bank"). Bank hereby agrees that effective as of any foreclosure
with respect to any of the shares of common stock of the Company pledged by
_______ (the "Pledged Shares") pursuant to the [pledge security agreement,
the loan agreement related to the pledge security agreement, and any other
agreement to which Bank and ______ is a party] (collectively, the "Bank
Agreements"), this letter agreement will constitute a counterpart to the
Support Agreement pursuant to which Bank (a) represents and warrants to the
Company and the Purchaser as to the matters set forth in Section 6 of the
Support Agreement (such representations to be made as of date of the
foreclosure) and (b) agrees to be bound, with respect to the Pledged
Shares, by all sections of the Support Agreement other than Sections
3(b)[Non-Solicitation], 3(c)[Competitive Activity] and 3[(d)][Resignation]
to the same extent as a Stockholder thereunder.
This letter may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall be deemed to
be one and the same instrument.
[BANK]
By:
----------------------------------------
Name:
Title:
Acknowledged and agreed:
NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.
By:
----------------------------------------------------
Name:
Title:
NEW MOUNTAIN PARTNERS, L.P.
By: New Mountain Investments, L.P.,
its general partner
By: New Mountain GP, LLC,
its general partner
By:
--------------------------------------------
Name:
Title:
[Insert signature block for appropriate Stockholder]
