HW&D Draft
May 1, 1996
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REGISTRATION RIGHTS AGREEMENT
AGREEMENT made as of the __th day of _____, 1996, by and among CRA MANAGED
CARE, INC., a Massachusetts corporation (the "Company"), and the Shareholders of
QMC3, Inc. listed on the signature pages hereto (collectively, the "QMC3
Shareholders").
WHEREAS, the Company, QMC3 Acquisition Corp., a wholly-owned subsidiary of
the Company ("Merger Sub"), QMC3, Inc., a Colorado corporation ("QMC3"), and the
QMC3 Shareholders have entered into an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which Merger Sub is merging with and into QMC3, with
QMC3 being the surviving corporation in consideration of the issuance by the
Company to the QMC3 Shareholders of _________ shares of Common Stock, par value
$.01 per share, of the Company (the "Common Stock") in accordance with the
Merger Agreement (the "Merger"); and
WHEREAS, Comprehensive Rehabilitation Associates, Inc. (predecessor to the
Company), J.H. Whitney & Co., Whitney 1990 Equity Fund, L.P., Whitney
Subordinated Debt Fund, L.P., First Union Corporation, Lois E. Silverman, and
Donald J. Larson are parties to a certain Registration Rights Agreement, dated
March 8, 1994 (the "CRA Registration Rights Agreement"); and
WHEREAS, pursuant to the terms of the Merger Agreement, the Company has
agreed to grant the QMC3 Shareholders certain rights to require the Company to
register their shares of Common Stock in accordance with the terms of this
Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
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shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission, or any
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other federal agency at the time administering the Securities Act (as
defined below).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
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amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the
time.
"Permitted Transferee" shall mean any QMC3 Shareholder who receives
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shares of Common Stock pursuant to the Merger and the spouse, children,
parents or siblings of a QMC3 Shareholder, or a trust for the benefit
of any such persons.
"Person" means a corporation, an association, a partnership, an
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organization, a business, an individual, a governmental or political
subdivision thereof, or a governmental agency.
"Registrable Securities" shall mean the _______ shares of Common Stock
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received by the QMC3 Shareholders pursuant to the Merger and held by
them on the date hereof (together with any other shares of Common Stock
which may be issued by the Company in respect of such shares by means
of stock splits, stock dividends or similar events), excluding shares
of Common Stock which have been sold, assigned or otherwise transferred
to a person who is not a Permitted Transferee.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
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any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
2. Securities Subject to this Agreement.
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(a) Registrable Securities. For the purposes of this Agreement,
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Registrable Securities will cease to be Registrable Securities when (i) a
registration statement covering such Registrable Securities has been declared
effective under the Act by the SEC and such Registrable Securities have been
disposed of pursuant to such effective registration statement or (ii) the entire
amount of Registrable Securities proposed to be sold in a single sale are or, in
the opinion of counsel satisfactory to the Company and the Holder, each in their
reasonable judgment, may be distributed to the public pursuant to Rule 144 (or
any successor provision then in effect) under the Act.
(b) Holders of Registrable Securities. A Person is deemed to be a
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holder of Registrable Securities (a "Holder") whenever such Person (i) is a
party to this Agreement (or a Permitted Transferee thereof) and (ii) owns of
record Registrable Securities. If the Company receives conflicting
instructions, notices, or elections from two or more persons with respect to the
same Registrable Securities, the Company may act upon the basis of the
instructions, notice, or election received from the registered owner of such
Registrable Securities.
3. Required Registration. If a registration statement covering any of the
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Company's equity securities (other than a registration statement on Form S-4 or
S-8 or any successor form thereto) is declared effective under the Securities
Act (i) during the period (the "Pooling Restriction Period") commencing on the
date of the Merger Agreement and ending at such time as financial results
(including combined sales and net income of QMC3, Inc.) covering at least 30
days of post-Merger operations have been published by the Company or (ii)
thereafter if the
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holders of Registerable Securities would be prevented by Section 6.5 of the
Merger Agreement from exercising their rights under Section 4 hereof (any
registration referred to in clause (i) or (ii) referred to herein as a
"Triggering Registration") then, if the Company shall receive a written request
from any record holder or holders of an aggregate of at least thirty-five
percent (35 %) of the Registrable Shares issued in the Merger, the Company shall
prepare and file a registration statement on Form S-3 under the Securities Act
covering the Registrable Shares which are the subject of such request and shall
use its best efforts to cause such registration statement to become effective;
provided that the Registrable Securities to be sold pursuant to such
registration statement should not be sold pursuant to an underwriter offering.
In addition, unless such request is made on behalf of all QMC3 Shareholders,
upon the receipt of such request, the Company shall promptly give written notice
to all other QMC3 Shareholders. The Company shall include in such registration
statement such Registrable Securities for which it has received written requests
to register by such other QMC3 Shareholders within 30 days after the delivery of
the Company's written notice to such other QMC3 Shareholders. The Company shall
be obligated to prepare, file and cause to become effective only one
registration statement (on Form S-3 or any successor form promulgated by the SEC
("Form S-3")) pursuant to this Section 3, and to pay the expenses associated
with such registration statement.
The Board of Directors may, by delivery of written notice to the Holders of
Registrable Securities requesting registration, cause the requested registration
to be delayed for not more than sixty (60) days if the Board of Directors
determines in good faith that, in connection with such registration, the Company
would be required to disclose information regarding a proposed transaction
involving the Company which, if disclosed, could have an adverse effect on the
Company, the other party or parties to such transaction, or the probability that
such transaction would be consummated on terms no less favorable to the Company
as would be available without such disclosure.
If, prior to the time of any request by holders of Registrable Securities
pursuant to this Section 3, the Company has publicly announced its intention to
register any of its securities for a public offering under the Securities Act,
whether such registration is for the sale of securities for the Company's own
account or for the account of others, no registration of Registrable Securities
shall be initiated pursuant to this Section 3 until the first to occur of (i)
120 days after the effective date of the registration so announced unless the
Company is no longer proceeding diligently to effect such registration, and (ii)
the expiration of any lock-up period agreed to by the Company in connection with
such registration.
4. Piggy Back Rights. In the case of any registered offering of
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securities by the Company under the Securities Act for its own account, or the
account of any selling shareholder of the Company, of any class of equity
security (other than a registration statement on Form S-4 or S-8 or any
successor form thereto and other than a Triggering Registration) under the
Securities Act, then the Company shall give written notice of such proposed
registered offering to each of the Holders at least thirty (30) days before the
anticipated effective date of the registration statement relating thereto, and
such notice shall describe in detail the proposed
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registered offering (including those jurisdictions where registration under the
securities or blue sky laws is intended) and offer such Holders the opportunity
to include in such registration the number of Registrable Securities as each
such Holder may request. The Company shall include in such registration such
Registrable Securities as the Holders request within fifteen (15) days after the
notice provided for in the preceding sentence. If the registration relates to
an underwritten public offering, the right of a Holder to include such
Registrable Securities in the registration shall be conditioned upon such
Holder's agreement to include such Registrable Securities in that offering on
the same terms and conditions that other securities of the same class are
included therein; provided that if the managing underwriter shall inform the
Company (or, in the case of a secondary offering, the selling stockholders
initiating such offering) of its belief that the number or type of Registrable
Securities and other securities (if any) requested to be included in such
registered offering would materially adversely affect such offering, then the
Company will include in such registered offering, to the extent of the number
and type which the Company is (or the selling stockholders initiating such offer
are) so advised can be sold in (or during the time of) such offering, first, all
securities proposed by the Company (or, in the case of a secondary offering, the
selling stockholders initiating such offering) to be sold for its (or their) own
account, second, such Registrable Securities requested to be included in such
registration and all other shares of Common Stock requested to be included in
such registration by any Person entitled to piggy back registration rights
ranking pari passu with the rights of Holders pursuant to the CRA Registration
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Rights Agreement or a similar agreement with the Company, pro rata among all
such Holders on the basis of the estimated gross proceeds of the securities of
such Holders requested to be so included, and, if all such Registrable
Securities and other shares of Common Stock can be so included, third, any other
securities of the Company requested to be included in such registration. The
Company shall not grant any piggyback registration rights that purport to rank
senior to the rights of the Holders granted by the Company pursuant to this
Section 4.
5. Holdback Agreements. In the case of any underwritten public offering
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by the Company of shares of Common Stock, whether for its own account or for the
account of any stockholder of the Company, each Holder selling shares of Common
Stock pursuant thereto agrees not to effect any public disposition (including
any sale pursuant to Rule 144 under the Securities Act) (a "Disposition") of any
Registrable Securities, and not to effect any such Disposition of any other
equity security of the Company or of any security convertible into or
exchangeable or exercisable for any equity security of the Company (in each
case, other than as part of such underwritten public offering) during the 90-day
period beginning on the effective date of such registration statement (except as
part of such registration), provided that each Holder of Registrable Securities
has received notice of such registration at least seven (7) days prior to such
effective date.
6. Registration Procedure. If and whenever the Company effects the
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registration of Registrable Securities under the Securities Act, the Company
will:
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(a) prepare and file with the SEC a registration statement with respect
to such securities, and, with respect to registrations effected pursuant to
Section 3, use its reasonable best efforts to cause such registration statement
to become and remain effective for such period as may be reasonably necessary to
effect the sale of such securities, not to exceed thirty (30) days from the date
such registration statement is declared effective by the SEC;
(b) with respect to registrations effected pursuant to Section 3,
prepare and file with the SEC such amendments to such registration statement and
supplements to the prospectus contained therein as may be necessary to keep such
registration statement effective for such period as may be reasonably necessary
to effect the sale of such securities, not to exceed thirty (30) days from the
date such registration statement is declared effective by the SEC;
(c) furnish to the security holders participating in such registration
such reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such security holders
or underwriters may reasonably request in order to facilitate the public
offering of such securities;
(d) use its best efforts to register or qualify the securities covered
by such registration statement under such state securities or blue sky laws of
such jurisdictions as such participating holders may reasonably request in
writing, except that the Company shall not for any purpose be required to
execute a general consent to service of process or to qualify to do business as
a foreign corporation in any jurisdiction wherein it is not so qualified;
(e) notify the security holders participating in such registration,
promptly after it shall receive notice thereof of the time when such
registration statement has become effective or a supplement to any prospectus
forming a part of such registration statement has been filed;
(f) notify such holders promptly of any such request by the SEC for the
amending or supplementing of such registration statement or prospectus or for
additional information;
(g) prepare and file with the SEC, promptly upon the request of any
such holders, any amendments or supplements to such registration statement or
prospectus which, in the opinion of counsel for such holders (and concurred in
by counsel for the Company), is required under the Securities Act or the rules
and regulations thereunder in connection with the distribution of the
Registrable Securities by such holder;
(h) promptly notify such holders of the filing of such amendment or
supplement to such registration statement or prospectus as may be necessary to
correct any statements or omissions if, at the time when a prospectus relating
to such securities is required to be delivered under the Securities Act, any
event shall have occurred as the result of which any such prospectus or any
other prospectus as then in effect would include an untrue statement of a
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material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they were made,
not misleading; and
(i) advise such holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued.
7. Expenses. With respect to such registration, the Company shall bear
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the following fees, costs and expenses: all registration, qualification, filing
and NASD fees, printing expenses, fees and disbursements of counsel and
accountants for the Company, including expenses of any regular or special audits
incident to or required by such registration, fees and expenses for up to one
counsel representing selling security holders in connection therewith, which
counsel shall be reasonably acceptable to the Company and shall be chosen by a
majority in interest of the shares being sold therein (whether being sold by
Holders or other security holders pursuant to such registration), all internal
expenses of the Company, and all legal fees and disbursements and other expenses
of complying with state securities or blue sky laws of any jurisdictions in
which the securities to be offered are to be registered or qualified. Fees and
disbursements of counsel and accountants for the selling security holders (other
than the one selling security holder counsel described in the immediately
preceding sentence), underwriting discounts and commissions, broker's fees and
commissions and transfer taxes, and any other expenses incurred by the security
holders not expressly included above shall be borne by the selling security
holders.
8. Indemnification. With respect to such registration:
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(a) The Company will indemnify and hold harmless each Holder of
Registrable Securities which are included in a registration statement pursuant
to the provisions of this Agreement from and against, and will reimburse such
Holder with respect to, any and all loss, damage, liability, cost and expense to
which such Holder may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are caused by
any untrue statement or alleged untrue statement of any material fact contained
in such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however, that
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the Company will not be liable in any such case to the extent that any such
loss, damage, liability, cost or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in reliance upon and in strict conformity with information furnished by
such Holder in writing specifically for use in the preparation thereof.
(b) Each Holder of Registrable Securities which are included in a
registration pursuant to the provisions of this Agreement will indemnify and
hold harmless the Company, its
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directors and officers, and any controlling person from and against, and will
reimburse the Company, its directors and officers, and any controlling person
with respect to, any and all loss, damage, liability, cost or expense to which
the Company, its directors or officers, and/or any controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue or alleged untrue
statement of any material fact contained in such registration statement, any
prospectus contained therein or any amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was so made in
reliance upon and in strict conformity with written information furnished by
such Holder specifically for use in the preparation thereof.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of paragraph (a) or (b) of this Section 8 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said paragraph
(a) or (b), notify the indemnifying party of the commencement thereof; but the
failure to so notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party unless the indemnifying
party is unduly prejudiced by the failure to receive prompt notice. In case
such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party, provided, however,
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if the defendants in any action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, or if there is a conflict of interest which would prevent
counsel for the indemnifying party from also representing the indemnified party,
the indemnified party or parties shall have the right to select separate counsel
to participate in the defense of such action on behalf of such indemnified party
or parties. After notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party pursuant to the provisions of said
paragraph (a) or (b) for any legal or other expense subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation, unless (i) the indemnified party shall have
employed counsel in accordance with the provision of the preceding sentence,
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after the notice of the commencement of the action or (iii) the indemnifying
party has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party.
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(d) If for any reason the foregoing indemnification is unavailable to
any indemnified party or insufficient to hold it harmless as and to the extent
contemplated by the preceding paragraphs of this Section 8, then each
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such loss, damage, liability, cost or expense
in such proportion as is appropriate to reflect the relative benefits received
by Company, on the one hand, and the applicable indemnified party, as the case
may be, on the other hand, and also the relative of fault of the Company and any
applicable indemnified party, as the case may be, as well as any other relevant
equitable considerations.
9. Miscellaneous.
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(a) All covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto (including without
limitation Permitted Transferees of any Registrable Securities), whether so
expressed or not.
(b) All notices, requests, consents and other communications hereunder
shall be in writing and shall be mailed by certified or registered mail, return
receipt requested, postage prepaid, or telecopied or sent by other facsimile
method to the addresses set forth in the Merger Agreement.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts.
(d) This Agreement may not be amended or modified, and no provision
hereof may be waived, without the written consent of the Company and the Holders
of at least a majority of the outstanding Registrable Securities.
(e) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(f) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
(g) In the event that any party hereto initiates an action or claim to
enforce any provision of this Agreement, the costs and expenses (including
attorneys' fees) of the prevailing party shall be paid by the other party, such
party to be deemed to have prevailed if such action or claim is concluded
pursuant to a court order or final judgment which is not subject to appeal, a
settlement agreement or dismissal of the principle claims.
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IN WITNESS WHEREOF, this Agreement has been executed by a duly authorized
officer of the Company and by the QMC3 Shareholders as of the date and year
first above written.
CRA MANAGED CARE, INC.
By:
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Donald J. Larson, President and
Chief Executive Officer
QMC3 SHAREHOLDERS:
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Kimberly A. Sutphin
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Henry J. Roth, M.D.
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Howard J. Entin, M.D.
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Ryan J. Conlon
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John Eric Griffiths, D.C.
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Paul M. Baker
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John Sbarbaro, M.D.
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53078-6 Nick Hilger
S-1