EXECUTION COPY
EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS
AGREEMENT (the “Agreement”) is made as of
October 1, 2007 by and between HealthSpring, Inc., a Delaware
corporation (the “Company”), and the Persons listed on
the signature page to this Agreement (collectively, the
“Sellers” and each individually, a
“Seller”). All capitalized terms not otherwise defined
in this Agreement shall have the definitions set forth in the Stock
Purchase Agreement (the “Purchase Agreement”) by and
between the Company, the Sellers, Leon Medical Centers Health
Plans, Inc., a Florida corporation, and NewQuest, LLC, , a Texas
limited liability company, dated as of August 9, 2007.
RECITALS
WHEREAS , the Company has
issued to the Sellers the Shares pursuant to, and subject to the
restrictions, conditions and terms set forth in, the Purchase
Agreement and the Escrow Agreement; and
WHEREAS , the Company and the
Sellers have agreed to enter into this Agreement to provide for
certain registration rights in favor of the Holders, subject to the
terms and conditions hereinafter provided.
NOW, THEREFORE , in
consideration of the premises and the mutual promises and covenants
contained in this Agreement and the Purchase Agreement, the receipt
and sufficiency of which are hereby acknowledged, the parties
mutually agree as follows:
1. Registration
Rights
1.1 Certain Definitions . The
following terms shall have the following respective meanings:
“
Automatic Shelf Registration Statement ” an automatic
shelf registration statement within the meaning of Rule 405
under the Securities Act.
“
Holder ” shall mean each of the Sellers and any Person
holding Registrable Securities to whom the rights under this
Section 1 have been transferred in accordance with
Section 1.7 .
“
Holder Representative ” shall mean Benjamin Leon, Jr.
until the appointment of his successor by written notice executed
by all of the Holders and delivered to the Company.
“
Prospectus ” shall mean the prospectus or prospectuses
included in any Registration Statement, as amended or supplemented
by any prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by
such Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments
and all material incorporated by reference in such prospectus or
prospectuses.
“
Registrable Securities ” means (i) each and all
of the Shares, and (ii) any and all shares of HealthSpring
Stock issued or distributed by HealthSpring on or after the Closing
Date in respect of the Shares (including in connection with any
dividend or other distribution, recapitalization, stock split,
reverse stock split, reorganization, reclassification, merger,
consolidation, split-up, spin-off, combination, repurchase or
exchange of HealthSpring Stock or other securities of HealthSpring
or other similar corporate transaction or event affecting the
HealthSpring Stock); provided, however, that Registrable Securities
shall not include any Registrable Securities that (A) have
been transferred to a Person that is
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not a
Holder pursuant to the Registration Statement or other effective
registration statement under the Securities Act or in compliance
with Rule 144 or any other provision of the Securities Act,
(B) have been tendered to HealthSpring by the Sellers in order
to satisfy any amounts owed to a Buyer Party by Sellers pursuant to
Section 11 (Indemnification) of the Purchase Agreement, or (C)
have been forfeited by Sellers as a result of the Share Release
Condition not having been satisfied on or prior to the Share
Release Deadline (as the same may be extended as provided in the
Purchase Agreement).
“
register ,” “ registered ” and
“ registration ” refer to a registration
effected by preparing and filing a Registration Statement in
compliance with the Securities Act, and, if necessary, the
declaration or ordering by the SEC of the effectiveness of such
Registration Statement.
“
Registration Expenses ” shall mean all expenses
incurred by the Company in complying with Section 1.2
including, without limitation, all registration, qualification,
listing and filing fees and expenses, transfer agent’s and
registrar’s fees and expenses, cost of distributing
Prospectuses as well as any amendments and supplements thereto,
printing expenses, escrow fees, fees and disbursements of counsel
for the Company and all independent certified public accountants
and other Persons retained by the Company, blue sky fees and
expenses, fees and expenses of any special audits incident to or
required by any such registration and all other costs and expenses
of the Company incident to the preparation, printing and filing
under the Securities Act of the Registration Statement and all
amendments and supplements thereto.
“
Registration Statement ” shall mean a registration
statement of the Company on Form S-3 (or the applicable successor
form then in effect), or such other form available to the Company,
which covers the Registrable Securities pursuant to the provisions
of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including
post-effective amendments, all exhibits and all materials
incorporated by reference in such Registration Statement.
“
Rule 144 ” shall mean Rule 144 as
promulgated by the SEC under the Securities Act, as such Rule may
be amended from time to time, or any successor rule that may be
promulgated by the SEC.
“
Selling Expenses ” shall mean all fees and
disbursements of counsel and other advisors retained by the Holders
and all selling commissions and stock transfer taxes applicable to
the sale of Registrable Securities by the Holders.
“
Trigger Date ” shall mean ninety (90) days prior
to the date the Share Release Condition is contemplated to be
satisfied in accordance with the Purchase Agreement as reasonably
determined and certified by the Holder Representative in good
faith.
“
WKSI ” means a “well-known seasoned
issuer” as defined in Rule 405 under the Securities
Act.
1.2 Requested
Registration.
(a)
Request for Re-sale Registration . If at any time on or
after the Trigger Date, the Company shall receive from the Holder
Representative a written request (the “Demand Notice”)
that the Company file a Registration Statement for a public re-sale
of Registrable Securities (which will not be an underwritten
offering), the Company will (subject to Section 1.8), in
accordance with the registration procedures set forth in
Section 1.4:
(i) promptly
give written notice of the proposed registration to all other
Holders;
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(ii) if
the Company is then a WKSI, as promptly as practicable, but in any
event no later than the date the Share Release Condition is
satisfied (the “ Effectiveness Deadline ”)),
file and cause to be immediately effective a Registration
Statement, which Registration Statement shall be an Automatic Shelf
Registration Statement, which shall provide for the registration,
sale and distribution of all Registrable Securities by the Holders
as the selling securityholders thereunder in the manner of
distribution reasonably specified in the Demand Notice (which will
not be an underwritten offering);
(iii) if
the Company is not then a WKSI, as promptly as practicable but in
all events within ten (10) business days (to the extent the
Company is then Form S-3 eligible) or within sixty (60) days (to
the extent the Company is not then Form S-3 eligible) following
delivery of the Demand Notice, file a Registration Statement which
shall provide for the registration, sale and distribution of all
Registrable Securities by the Holders as the selling
securityholders thereunder in the manner of distribution reasonably
specified in the Demand Notice (which will not be an underwritten
offering), and use its commercially reasonable best efforts to
cause such Registration Statement to be declared effective on the
Effectiveness Deadline or, if after the exercise of such efforts
the Registration Statement is not declared effective on the
Effectiveness Deadline, use commercially reasonable best efforts to
cause such Registration Statement to be declared effective in all
events within thirty (30) days thereafter.
Notwithstanding the foregoing, the
Company shall not be obligated to take any action to file if then a
WKSI, or to cause to become effective otherwise, any such
registration pursuant to this Section 1.2 if the
Company shall furnish to the Holder Representative a certificate,
signed by an executive officer of the Company, stating that in the
good faith judgment of the Company’s Board of Directors it
would be seriously detrimental to the Company or its stockholders
for a Registration Statement to be filed in the near future, then
the Company’s obligation to register under this
Section 1.2 shall be deferred for a period not to
exceed ninety (90) days from the date of receipt of the
written request from the Holder Representative.
(b) The
Company shall only be obligated to file one Registration Statement
under this Agreement.
(c) The
Company may suspend the availability to the Holders of the
Registration Statement and the underlying Prospectus if (i) an
event occurs and is continuing as a result of which such Prospectus
contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading in light of
the circumstances under which they were made and (ii) if the Board
of Directors of the Company determines in good faith that the
disclosure of such event at such time would be impracticable (given
the nature of the event) or otherwise seriously detrimental to the
Company or its stockholders; provided , however, that upon
the occurrence of any event described in clauses (i) and
(ii) of this Section 1.2(c) (a “ Suspension
Event ”), the Company shall (A) provide to the
Holders a certificate, signed by an executive officer of the
Company, to the effect that a Suspension Event has occurred, and
(B) give written and telephonic notice to the Holder
Representative that the availability of the Registration Statement
and the underlying Prospectus is suspended and, upon actual receipt
by the Holder Representative of such notice, each Holder agrees not
to offer or sell any Registrable Securities pursuant to the
Registration Statement until such Holder’s receipt of copies
of a supplemented or amended Prospectus correcting the applicable
misstatement or omission with respect to such Suspension Event. The
period(s) during which the availability of the Registration
Statement and any Prospectus may be suspended as hereinabove
provided (the “ Suspension Period ”) shall in no
event exceed an aggregate of 60 days in any 90-day period or
an aggregate of 120 days in any 360-day period. The Company
shall not be required to specify in the certificate and notice to
the Holders the nature of the event giving rise to the Suspension
Period.
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1.3 Expenses of Registration .
All Registration Expenses incurred in connection with the
registration pursuant to Section 1.2 shall be borne by the
Company and all Selling Expenses relating to such registration
shall be borne by the Holders pro rata on the basis of the
number of Registrable Securities so registered.
1.4 Registration Procedures .
In the case of the registration effected by the Company pursuant to
this Section 1 , the Company will keep each Holder
advised in writing as to the initiation of such registration and as
to the completion and effectiveness thereof. At its expense, the
Company will:
(a) Prepare
and file with the SEC the Registration Statement with respect to
all Registrable Securities and, if required, use commercially
reasonable best efforts to cause such Registration Statement to
become effective, in each case, in accordance with the provisions
of Section 1.2(a), and, subject to Section 1.2(c), keep
such Registration Statement continuously effective with respect to
each Holder until the earlier of (i) the completion of the
distribution described in the Registration Statement or
(ii) the date such Holder’s Registrable Securities may
be sold in accordance with Rule 144 in any 90 day period;
provided, however, that before filing such Registration Statement
or any amendments or supplements thereto, the Company will furnish
to the Holder Representative copies of all such documents proposed
to be filed, the of portion which documents that relate to
information with respect to the Holders will be subject to the
review and reasonable comment of the Holders and their
counsel;
(b) Prepare
and, subject to Section 1.2(c), file with the SEC such
amendments and supplements to such Registration Statement
(including the Prospectus used in connection with such Registration
Statement) as may be necessary to keep such Registration Statement
continuously effective for the period specified in
Section 1.4(a) and to comply with the provisions of the
Securities Act with respect to the Holders’ intended method
of disposition of all securities covered by such Registration
Statement as set forth in such Registration Statement;
(c) Furnish
to the Holders, as expeditiously as practicable, such numbers of
copies of the Registration Statement, including the Prospectus, and
each amendment and supplement thereto, in conformity with the
requirements of the Securities Act, and such other documents as
they may reasonably request in order to facilitate the disposition
of Registrable Securities owned by them.
(d) Use
its commercially reasonable best efforts to register and qualify
the securities covered by such Registration Statement under such
other securities or Blue Sky laws of such jurisdictions as shall be
reasonably requested by the Holders; provided that the Company
shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, unless the
Company is already subject to service in such jurisdiction and
except as may be required by the Securities Act.
(e) Subject
to Section 1.2(c), notify each Holder covered by such
Registration Statement at any time when a Prospectus relating
thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the Prospectus included
in such Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the
statemen
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