Exhibit 10.6

K-V PHARMACEUTICAL COMPANY

SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

March 2, 2011

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TABLE OF CONTENTS

Page

 

Section 1.    Definitions      1    Section 2.    Initial Shelf Registration;
Liquidated Damages      5    Section 3.    Registrations      9    Section 4.   
Piggyback Registrations      11    Section 5.    Registration Procedures      12
   Section 6.    Registration Expenses      16    Section 7.    Indemnification
and Contribution      17    Section 8.    Underwritten Registrations; Suspended
Distributions      19    Section 9.    Current Public Information      20   
Section 10.    Subsidiary Public Offering      21    Section 11.    Lock-up     
21    Section 12.    General Provisions      21   

 

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K-V PHARMACEUTICAL COMPANY

SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

THIS SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this
“Agreement”) is made as of March 2, 2011, by and among K-V Pharmaceutical
Company, a Delaware corporation (the “Company”), U.S. Healthcare I, L.L.C.
(“U.S. Healthcare I”) and U.S. Healthcare II, L.L.C., (“U.S. Healthcare II”, and
together with U.S. Healthcare I and their registered assigns collectively
referred to herein as the “USH Investor”), and hereby amends and replaces in its
entirety that certain Amended and Restated Registration Rights Agreement (the
“Amended and Restated Registration Rights Agreement”), dated as of February 10,
2011, by and among the Company, U.S. Healthcare I and U.S. Healthcare II. Except
as otherwise specified herein, all capitalized terms used in this Agreement are
defined in Section 1.

The Company and the USH Investor are parties to that certain (i) Stock Warrant
Purchase Agreement, dated as of November 17, 2010 (the “Purchase Agreement”),
and (ii) Stock Warrant Purchase Agreement (Third Warrants), dated as of the date
hereof (the “Additional Purchase Agreement”, and together with the Original
Purchase Agreement, the “Purchase Agreements”), pursuant to which the USH
Investor purchased warrants to purchase shares of Class A Common Stock from the
Company (collectively, the “Warrants”). In order to induce the USH Investor to
enter into the Purchase Agreements, the Company has agreed to provide the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the consummation of the transactions under the
Purchase Agreements.

The Company is party to a Registration Rights Agreement dated as of February 14,
2011 (the “PIPE Registration Rights Agreement”), by and among the Company and
the investors listed on the “Schedule of Investors” attached thereto (each a
“PIPE Investor” and collectively, the “PIPE Investors”). Pursuant to the PIPE
Registration Rights Agreement, the Company has agreed, among other things, to
register under the Securities Act an aggregate of 9,950,000 shares of the
Class A Common Stock of the Company issued to the PIPE Investors (the “PIPE
Securities”).

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties to this Agreement hereby agree as follows:

Section 1. Definitions. Unless otherwise set forth below or elsewhere in this
Agreement, other capitalized terms contained herein have the meanings set forth
in the Purchase Agreements.

“Affiliate” of any Person means any other Person controlled by, controlling or
under common control with such Person; provided that the Company and its
Subsidiaries shall not be deemed to be Affiliates of any holder of Registrable
Securities. As used in this definition, “control” (including, with its
correlative meanings, “controlling,” “controlled by” and “under common control
with”) shall mean possession, directly or indirectly, of power to direct or
cause the direction of management or policies (whether through ownership of
securities, by contract or otherwise). With respect to any Person who is an
individual, “Affiliates” shall also include, without limitation, any member of
such individual’s Family Group.

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“Agreement” has the meaning set forth in the recitals.

“Allowable Grace Period” has the meaning set forth in Section 2(c).

“Amended and Restated Registration Rights Agreement” has the meaning set forth
in the recitals.

“Capital Stock” means (i) with respect to any Person that is a corporation, any
and all shares, interests or equivalents in capital stock of such corporation
(whether voting or nonvoting and whether common or preferred) and (ii) with
respect to any Person that is not a corporation, individual or governmental
entity, any and all partnership, membership, limited liability company or other
equity interests of such Person that confer on the holder thereof the right to
receive a share of the profits and losses of, or the distribution of assets of,
the issuing Person, including in each case any and all warrants (other than the
Warrants), rights (including conversion and exchange rights) and options to
purchase any of the foregoing.

“Common Stock” means the Company’s Class A common stock, par value $0.01 per
share.

“Company” has the meaning set forth in the preamble.

“Cut Back Shares” has the meaning set forth in Section 2(a)(i).

“Demand Registrations” has the meaning set forth in Section 3(a).

“Disclosure Date” has the meaning set forth in Section 2(d)(i).

“Effectiveness Period” has the meaning set forth in Section 2(a)(i).

“Event” has the meaning set forth in Section 2(b).

“Event Date” has the meaning set forth in Section 2(b).

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, or any successor federal law then in force, together with all rules and
regulations promulgated thereunder.

“Family Group” means, with respect to a Person who is an individual, (i) such
individual’s spouse and descendants (whether natural or adopted) (collectively,
for purposes of this definition, “relatives”), (ii) such individual’s executor
or personal representative, (iii) any trust, the trustee of which is such
individual or such individual’s executor or personal representative and which at
all times is and remains solely for the benefit of such individual and/or such
individual’s relatives, (iv) any corporation, limited partnership, limited
liability company or other tax flow-through entity the governing instruments of
which provide that such individual or such individual’s executor or personal
representative shall have the exclusive,

 

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nontransferable power to direct the management and policies of such entity and
of which the sole owners of stock, partnership interests, membership interests
or any other equity interests are limited to such individual, such individual’s
relatives and/or the trusts described in clause (iii) above, and (v) any
retirement plan for such individual or such individual’s relatives.

“Filing Deadline” has the meaning set forth in Section 2(a)(i).

“FINRA” means the Financial Industry Regulatory Authority.

“Grace Period” has the meaning set forth in Section 2(c).

“Indemnified Parties” has the meaning set forth in Section 7(a).

“Initial Shelf Registration” has the meaning set forth in Section 2(a)(i).

“Issuer Free-Writing Prospectus” means an issuer free-writing prospectus as
defined in Rule 433 under the Securities Act.

“Long-Form Registrations” has the meaning set forth in Section 3(a).

“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.

“Piggyback Registrations” has the meaning set forth in Section 4(a).

“PIPE Investor” and “PIPE Investors” has the meaning set forth in the recitals.

“PIPE Registration Rights Agreement” has the meaning set forth in the recitals.

“PIPE Securities” has the meaning set forth in the recitals.

“Public Offering” means any sale or distribution by the Company and/or holders
of Registrable Securities to the public of Common Stock of the Company pursuant
to an offering registered under the Securities Act.

“Purchase Agreements” has the meaning set forth in the recitals.

“Registrable Securities” means (i) any Common Stock issued pursuant to the
exercise of the Warrants or distributed (directly or indirectly) to the USH
Investor or any of their respective Affiliates, and (ii) any Capital Stock of
the Company or any Subsidiary of the Company issued or issuable with respect to
the securities referred to in clause (i) above by way of dividend, distribution,
split or combination of securities, or any recapitalization, merger,
consolidation or other reorganization. As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when they
have been (a) sold or distributed pursuant to a Public Offering, (b) disposed of
pursuant to Rule 144 or when all of the Registrable Securities owned by the USH
Investor and its Affiliates may be disposed of pursuant to Rule 144(b)(1)

 

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without compliance with the current public information requirements of such
rule, or subject to any volume, manner of sale or timing restrictions or
conditions, or (c) repurchased by the Company or a Subsidiary of the Company.
For purposes of this Agreement, a Person shall be deemed to be a holder of
Registrable Securities, and the Registrable Securities shall be deemed to be in
existence, whenever such Person has the right to acquire, directly or
indirectly, such Registrable Securities (upon conversion or exercise in
connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected, and such Person shall be entitled
to exercise the rights of a holder of Registrable Securities hereunder.

“Registration Deadline” has the meaning set forth in Section 2(b)(ii).

“Registration Expenses” has the meaning set forth in Section 6(a).

“Registration Statement” has the meaning set forth in Section 4(a).

“Restriction Termination Date” has the meaning set forth in Section 2(a)(ii).

“Rule 144”, “Rule 158”, “Rule 405”, “Rule 415” and “Rule 462” mean, in each
case, such rule promulgated under the Securities Act (or any successor
provision) by the SEC, as the same shall be amended from time to time, or any
successor rule then in force.

“SEC” means the United States Securities and Exchange Commission.

“SEC Restrictions” has the meaning set forth in Section 2(a)(ii).

“Securities Act” means the Securities Act of 1933, as amended from time to time,
or any successor federal law then in force, together with all rules and
regulations promulgated thereunder.

“Shelf Registration” has the meaning set forth in Section 3(c).

“Short-Form Registrations” has the meaning set forth in Section 3(a).

“Subsidiary” means, with respect to the Company, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by the Company or one or more of the other
Subsidiaries of the Company or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the limited liability company, partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
the Company or one or more Subsidiaries of the Company or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control the managing director or general partner
of such limited liability company, partnership, association or other business
entity.

 

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“Violation” has the meaning set forth in Section 7(a).

“Warrants” has the meaning set forth in the recitals.

“WKSI” means a “well-known seasoned issuer” as defined under Rule 405.

“USH Investor” has the meaning set forth in the recitals.

Section 2. Initial Shelf Registration; Liquidated Damages.

(a) Initial Shelf Registration.

(i) Subject to the terms and conditions of this Agreement, the Company agrees to
use its best efforts to prepare and file with the SEC, as soon as reasonably
practicable, but in no event later than June 15, 2011 (the “Filing Deadline”), a
registration statement (together with the prospectus, amendments and supplements
to such registration statement or prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement, the
“Initial Shelf Registration”) covering the resale of all of the Registrable
Securities that are owned by the USH Investor or its Affiliates for an offering
to be made on a continuous basis; provided, however, that the USH Investor shall
not be named as an “underwriter” in the Initial Shelf Registration without the
USH Investor’s prior written consent. Subject to the terms of this Agreement,
the Company shall use its best efforts to cause such Initial Shelf Registration
to be declared effective under the Securities Act as promptly as possible after
the filing thereof, but in any event prior to July 31, 2011, and shall use its
best efforts to keep such Initial Shelf Registration continuously effective
under the Securities Act during the period (the “Effectiveness Period”) ending
on the earlier of (i) the date on which all Registrable Securities included in
such registration have been sold or distributed pursuant to the Initial Shelf
Registration, or (ii) the date as of which no Registrable Securities are
outstanding. The Initial Shelf Registration Statement may be used by the USH
Investor and/or Affiliates from time to time to complete one or more
underwritten offerings as contemplated by this Agreement.

(ii) If at any time the SEC takes the position that the offering of some or all
of the Registrable Securities in a Initial Shelf Registration is not eligible to
be made on a delayed or continuous basis under the provisions of Rule 415 under
the Securities Act or requires the USH Investor to be named as an “underwriter”,
the Company shall use its best efforts to persuade the SEC that the offering
contemplated by the Initial Shelf Registration is a valid secondary offering and
not an offering “by or on behalf of the issuer” as defined in Rule 415 and that
the USH Investor is not an “underwriter”. The USH Investor shall have the right
to participate or have their counsel participate in any meetings or discussions
with the SEC regarding the SEC’s position and to comment or have their counsel
comment on any written submission made to the SEC with respect thereto. No such
written submission shall be made to the SEC to which the USH

 

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Investor’s counsel reasonably objects. In the event that, despite the Company’s
best efforts and compliance with the terms of this Section 2(a)(ii), the SEC
refuses to alter its position, the Company shall (i) remove from the Initial
Shelf Registration such portion of the Registrable Securities (the “Cut Back
Shares”) and/or (ii) agree to such restrictions and limitations on the
registration and resale of the Registrable Securities as the SEC may require to
assure the Company’s compliance with the requirements of Rule 415 (collectively,
the “SEC Restrictions”); provided, however, that the Company shall not agree to
name the USH Investor as an “underwriter” in such Initial Shelf Registration
without the prior written consent of the USH Investor. The Company shall use it
best efforts to allocate any cut-back imposed on the USH Investor pursuant to
this Section 2(a)(ii) among the USH Investor and the PIPE Investors on a pro
rata basis. No liquidated damages under Section 2(b) shall accrue as to any Cut
Back Shares until such date as the Company is able to effect the registration of
such Cut Back Shares in accordance with any SEC Restrictions (such date, the
“Restriction Termination Date” of such Cut Back Shares). From and after the
Restriction Termination Date applicable to any Cut Back Shares, all of the
provisions of this Section 2(a) (including the liquidated damages provisions)
shall again be applicable to such Cut Back Shares; provided, however, that
(i) the filing deadline for the Initial Shelf Registration including such Cut
Back Shares shall be the later of June 15, 2011 and ten (10) Business Days after
such Restriction Termination Date, and (ii) the date by which the Company is
required to obtain effectiveness with respect to such Cut Back Shares under
Section 2(b) shall be the later of July 15, 2011 (or within 16 days thereafter,
to the extent such extension is required a result of the SEC processing
responses to SEC comments made regarding the filed Registration Statement) and
the 90th day immediately after the Restriction Termination Date.

(b) Liquidated Damages. If: (i) the Initial Shelf Registration is not filed on
or prior to Filing Deadline, (ii) the Company fails to have the Initial Shelf
Registration declared effective under the Securities Act prior to July 31, 2011
(the “Registration Deadline”), or (iii) after a Initial Shelf Registration is
declared effective, such Initial Shelf Registration ceases for any reason to
remain continuously effective as to all Registrable Securities included in such
Initial Shelf Registration, or the holders of such Registrable Securities are
otherwise not permitted to utilize the prospectus therein to resell such
Registrable Securities (other than during an Allowable Grace Period (as defined
below)), or (iv) a Grace Period (as defined below) exceeds the Allowable Grace
Period (any such failure or breach being referred to as an “Event,” and for
purposes of clause (i) and (ii), the date on which such Event occurs, or for
purposes of clause (iii) the date on which such Initial Shelf Registration
ceases to be effective, or the holders of such Registrable Securities are
otherwise not permitted to utilize the prospectus therein to resell such
Registrable Securities (other than during an Allowable Grace Period), or for
purposes of clause (iv) the date on which the Allowable Grace Period is
exceeded, being referred to as “Event Date”), then, in addition to any other
rights the holders of such Registrable Securities may have hereunder or under
applicable law, on each such Event Date and on each monthly anniversary of each
such Event Date (for the avoidance of doubt, if an Event is cured prior to a
monthly anniversary of an Event Date, the Company shall be responsible for
paying to the holders of Registrable Securities their pro rata portion of the
liquidated damages for that portion of the monthly anniversary period during
which such Event is not cured) until the applicable Event is cured, the Company
shall pay to each holder of Registrable Securities their pro rata

 

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portion of $900,000 in cash, for any month when the Event remains uncured, as
partial liquidated damages and not as a penalty. Notwithstanding the foregoing,
(A) no liquidated damages shall accrue after the date as of which all of the
Registrable Securities included in such registration are able to be sold by the
USH Investor and its Affiliates and all other holders of Registrable Securities
pursuant to Rule 144(b)(1) without compliance with the current public
information requirements of such rule, and (B) no liquidated damages shall
accrue during any period during which the Company has advised the holders of
Registrable Securities to suspend the use of any prospectus, provided such
period does not exceed the Allowable Grace Period. If the Company fails to pay
any partial liquidated damages pursuant to this Section in full within seven
calendar days after the date payable, the Company will pay interest thereon at a
rate of 12% per annum (or such lesser maximum amount that is permitted to be
paid by applicable law) to the holders, accruing daily from the date such
partial liquidated damages are due until such amounts, plus all such interest
thereon, are paid in full. The partial liquidated damages pursuant to the terms
hereof shall apply on a daily pro rata basis for any portion of a month prior to
the cure of an Event. Notwithstanding the foregoing, an “Event” shall not
include a Initial Shelf Registration not remaining effective if the Company has
advised the holders of Registrable Securities to suspend the use of any
prospectus pursuant to Section 2(c), provided such period does not exceed the
Allowable Grace Period. In addition, an “Event” with respect to the USH Investor
shall not include an Event that occurs as a result of a Initial Shelf
Registration not being filed, not being declared effective, or not remaining
effective as a result of the USH Investor failing to timely provide the Company
with information requested by the Company and necessary to complete the Initial
Shelf Registration in accordance with the requirements of the Securities Act,
and then the liquidated damages shall not be accrued or payable to the USH
Investor who has not provided such information.

(c) Grace Periods. Notwithstanding anything to the contrary herein, at any time
after any Registration Statement (as defined below) has been declared effective
by the SEC, the Company may delay the disclosure of material non-public
information concerning the Company if the disclosure of such information at the
time is not, in the good faith judgment of the Company, in the best interests of
the Company (a “Grace Period”); provided, however, the Company shall promptly
(i) notify the holders of Registrable Securities in writing (including via
facsimile or other electronic transmission) of the existence of material
non-public information giving rise to a Grace Period (provided that the Company
shall not disclose the content of such material non-public information to the
holders) or the need to file a supplement or post-effective amendment, as
applicable, and the date on which such Grace Period will begin, and (ii) notify
the holders of Registrable Securities in writing (including via facsimile or
other electronic transmission) of the date on which the Grace Period ends;
provided, further, that no single Grace Period shall exceed thirty
(30) consecutive days, and during any three hundred sixty-five (365) day period,
the aggregate of all Grace Periods shall not exceed an aggregate of sixty
(60) days (each Grace Period complying with this provision being an “Allowable
Grace Period”). For purposes of determining the length of a Grace Period, the
Grace Period shall be deemed to begin on and include the date the holders
receive the notice referred to in clause (i) above and shall end on and include
the later of the date the holders receive the notice referred to in clause
(ii) above and the date referred to in such notice; provided, however, that no
Grace Period shall be longer than an Allowable Grace Period.

 

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(d) Public Disclosure. The Company shall, and shall provide the USH Investor
with a written confirmation of the same, upon (x) the earliest to occur of
(i) the announcement of the closing of the proposed $200 million senior secured
note offering announced by the Company on a press release dated March 1, 2011
(the “Note Offering”), which announcement must be made no later than one
Business Day after the closing of the Note Offering, (ii) the termination or
abandonment of the Note Offering, (iii) the refinancing of the Credit and
Guaranty Agreement, dated November 17, 2010, as amended by that certain Amended
and Restated Amendment No. 1 to Credit Agreement dated as of January 6, 2011 and
as amended by that certain Amendment No. 2 to Credit Agreement dated as of
March 2, 2011, by and among the Company, certain of the Company’s subsidiaries,
U.S. Healthcare I and U.S. Healthcare II and (iv) March 31, 2011 (the “First
Disclosure Date”), (y) the earlier of (i) the Registration Deadline or (ii) the
time the Initial Registration Statement is declared effective by the SEC as
contemplated by Section 2(a)(i) of this Agreement (the “Second Disclosure Date”)
and (z) any time following the First Disclosure Date and for so long as the USH
Investor or any of its Affiliates continues to own any Warrants, within three
Business Days of being requested by the USH Investor (a “Subsequent Disclosure
Date”, and each of the First Disclosure Date, the Second Disclosure Date and a
Subsequent Disclosure Date, a “Disclosure Date”), publicly disclose in a Current
Report on Form 8-K or such other periodic report required or permitted to be
filed under the Exchange Act with the SEC all of the previously publicly
undisclosed confidential information provided to the USH Investor or its
Affiliates by the Company that in the Company’s reasonable judgment, after
consultation with its outside counsel, constitutes material non-public
information (such disclosure made on the First Disclosure Date, the “First
Disclosure”, such disclosure made on the Second Disclosure Date, the “Second
Disclosure” and such disclosure made on a Subsequent Disclosure Date, a
“Subsequent Disclosure”, and each of the First Disclosure, the Second Disclosure
and a Subsequent Disclosure, a “Disclosure”). Any such request for a Subsequent
Disclosure by the USH Investor shall be in writing and shall contain a
representation by the USH Investor that it has a good faith belief that such
disclosure is required in order for the USH Investor to engage in any type of
transaction that relates, directly or indirectly, to the Company’s Capital
Stock, or other securities related thereto, when such three Business Day period
expires. The Company shall provide the USH Investor with a copy of each
Disclosure at least two Business Days prior to its release. If the USH Investor
has not delivered a Potential Supplemental Disclosure Notice (as defined below)
with respect to a Disclosure prior to its release, the USH Investor shall not
have the right to make a USH Investor Disclosure (as defined below) with respect
to such Disclosure. If the USH Investor believes the Company may have failed to
make a Disclosure on or before the applicable Disclosure Date, fails to include
in any Disclosure, or draft Disclosure provided to the USH Investor prior to its
release, all of the material non-public information previously provided to the
USH Investor, the USH Investor may provide the Company with a written notice
setting forth the material non-public information which the Company has failed
to disclose or include in such draft disclosure (a “Potential Supplemental
Disclosure Notice”). The Company may, within two Business Days of receiving a
Potential Supplemental Disclosure Notice, provide the USH Investor with a
written certification that, based on the reasonable advice of its outside
counsel, the Company has determined that all or part of the information
specified in the Potential Supplemental Disclosure Notice is not material and
therefore the USH Investor is not in possession of material non-public
information received from the Company. The Company shall be obligated to
publicly disclose all of the information in the Potential Supplemental
Disclosure Notice which it has failed to so certify is

 

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not material (the “Supplemental Material Information”). If the Company fails to
publicly disclose the Supplemental Material Information on or before the later
of (i) the applicable Disclosure Date and (ii) two Business Days after receiving
the Potential Supplemental Disclosure Notice, then, without limitation on any
other rights available to the USH Investor, the Company agrees that the USH
Investor is authorized to make the Supplemental Material Information or any
portion thereof available to the public generally (a “USH Investor Disclosure”).
The USH Investor shall not have any liability to the Company, its subsidiaries,
or any of its or their respective officers, directors, employees, stockholders
or agents for any such disclosure. Notwithstanding the foregoing, solely after
the First Disclosure Date, no disclosure of confidential information by the
Company contemplated by this Section 2(d) shall be required (i) during a Grace
Period or (ii) if the USH Investor has accepted material non-public information
for review after the First Disclosure Date in accordance with clause (i) of the
last paragraph of Section 9(a), if such disclosure would cause the Company to
breach any material confidentiality obligation or the terms of any other
material contract or agreement of the Company; provided, however, that the
Company shall use commercially reasonable efforts to amend or eliminate such
confidentially obligations or contract or agreement terms that prevent such
disclosure.

(e) Lock Up Agreement. During the period commencing on the date of this
Agreement and continuing until the time the Initial Registration Statement is
declared effective by the SEC as contemplated pursuant to Section 2(a)(i) of
this Agreement, the Company shall not: (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock,
(ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise or (iii) permit any registration statement filed with the SEC relating
to the offering of the PIPE Securities or any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock held
by the PIPE Investors (or any of their transferees) to be declared effective by
the SEC. Notwithstanding the foregoing, clauses (i) and (ii) of the immediately
preceding sentence shall not apply to any Excluded Shares (as defined in the
Warrants).

Section 3. Registrations.

(a) Requests for Registration. Subject to the terms and conditions of this
Agreement, at any time, the holders of 25% or more of the Registrable Securities
may request registration under the Securities Act of all or any portion of their
Registrable Securities on Form S-1 or any similar long-form registration
(“Long-Form Registrations”), and the holders of 5% or more of the Registrable
Securities may request registration under the Securities Act of all or any
portion of their Registrable Securities on Form S-3 (including pursuant to Rule
415) or any similar short-form registration (“Short-Form Registrations”) if
available. All registrations requested pursuant to this Section 3(a) are
referred to herein as “Demand Registrations”. Each request for a Demand
Registration shall specify the approximate number of Registrable Securities
requested to be registered and the intended method of distribution. Within ten
days

 

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after the filing of the registration statement relating to the Demand
Registration, the Company shall give written notice of the Demand Registration
to all other holders of Registrable Securities and, subject to the terms of
Section 2(d), shall include in such Demand Registration (and in all related
registrations and qualifications under state blue sky laws and in any related
underwriting) all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 15 days after the receipt
of the Company’s notice.

(b) Long-Form Registrations. The holders of Registrable Securities shall be
entitled to request up to three Long-Form Registrations in which the Company
shall pay all Registration Expenses (as defined in Section 6(a)), whether or not
any such registration is consummated.

(c) Short-Form Registrations. In addition to the Long-Form Registrations
provided pursuant to Section 3(b), the holders of Registrable Securities shall
be entitled to request an unlimited number of Short-Form Registrations in which
the Company shall pay all Registration Expenses. Demand Registrations shall be
Short-Form Registrations whenever the Company is permitted to use any applicable
short form and if the managing underwriters (if any) agree to the use of a
Short-Form Registration. The Company shall make Short-Form Registrations
available for the sale of Registrable Securities. If the holders of the
Registrable Securities request that a Short-Form Registration be filed pursuant
to Rule 415 (a “Shelf Registration”), the Company shall use best efforts to
cause the Shelf Registration to be declared effective under the Securities Act
as soon as practicable after filing, and once effective, the Company shall use
best efforts to cause the Shelf Registration to remain effective for a period
ending on the earlier of (i) the date on which all Registrable Securities
included in such registration have been sold or distributed pursuant to the
Shelf Registration or (ii) the date as of which all of the Registrable
Securities included in such registration are able to be sold within a 90-day
period in compliance with Rule 144. If for any reason the Company ceases to be a
WKSI or becomes ineligible to utilize Form S-3, the Company shall prepare and
file with the SEC a registration statement or registration statements on such
form that is available for the sale of Registrable Securities.

(d) Priority on Registration Statements. The Company shall not include in any
Registration Statement filed pursuant Section 2 or this Section 3 any securities
which are not Registrable Securities without the prior written consent of a
majority of the holders of the Registrable Securities. If a Registration
Statement is an underwritten offering and the managing underwriters advise the
Company in writing that in their opinion the number of Registrable Securities
and, if permitted hereunder, other securities requested to be included in such
offering exceeds the number of Registrable Securities and other securities, if
any, which can be sold therein without adversely affecting the marketability,
proposed offering price, timing or method of distribution of the offering, the
Company shall include in such registration prior to the inclusion of any
securities which are not Registrable Securities the number of Registrable
Securities requested to be included which, in the opinion of such underwriters,
can be sold, without any such adverse effect, pro rata among the respective
holders thereof on the basis of the amount of Registrable Securities owned by
each such holder.

(e) Selection of Underwriters. The holders of a majority of the Registrable
Securities included in an underwritten offering shall have the right to select
the investment banker(s) and manager(s) to administer the offering and the
Company shall pay all reasonable expenses in connection therewith.

 

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(f) Other Registration Rights. The parties to this Agreement acknowledge that
the Company is party to a Settlement Agreement, dated as of November 15, 2010
(the “Settlement Agreement”), by among the Company, The Office of Inspector
General of the United States Department of Health and Human Services, Sarah
Weltscheff and Marc Hermelin. Pursuant to the Settlement Agreement, the Company
has agreed, among other things, to register under the Securities Act certain
shares of the Class A Common Stock and Class B Common Stock of the Company
beneficially owned by Ms. Weltscheff and Mr. Hermelin. The parties acknowledge
and agree that the Company shall be entitled to register such shares pursuant to
a registration statement filed under the Securities Act and take such other
actions necessary to fulfill its obligations under the Settlement Agreement.
During any period in which any amount remains unpaid under that certain Credit
and Guaranty Agreement, dated as of November 17, 2010, by and among the Company,
as borrower and certain of its subsidiaries, as guarantors, the lenders party
thereto from time to time and U.S. Healthcare I, as administrative agent and
collateral agent (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), the Company shall not grant to any Persons the
right to request the Company or any Subsidiary to register any Class A Common
Stock or Class B Common Stock of the Company, or any securities convertible or
exchangeable into or exercisable for such securities, without the prior written
consent of a majority of the holders of the Registrable Securities, except in
respect of the Settlement Agreement. Following the repayment of all amounts
under the Credit Agreement, the Company shall not grant to any Persons the right
to request the Company or any Subsidiary to register any Class A Common Stock or
Class B Common Stock of the Company, or any securities convertible or
exchangeable into or exercisable for such securities, that are superior to or
materially interfere with the intended plan of distribution of the holders of
the Registrable Securities, except in respect of the Settlement Agreement.
Furthermore, the Company shall cause the Registrable Securities to be registered
under the Securities Act no later than the date of registration of the shares of
the Class A Common Stock and Class B Common Stock of the Company to be
registered in accordance with the Settlement Agreement.

Section 4. Piggyback Registrations.

(a) Right to Piggyback. Whenever the Company proposes to register any of its
securities under the Securities Act (other than (i) pursuant to a Demand
Registration or (ii) in connection with registrations on Form S-4 or S-8
promulgated by the SEC or any successor or similar forms) and the registration
form to be used may be used for the registration of Registrable Securities (a
“Piggyback Registration”, and together with the Initial Shelf Registration, the
Demand Registration, the Shelf Registration, and any other registration of the
Company’s securities under the Securities Act contemplated hereunder, each a
“Registration Statement” ), the Company shall give prompt written notice to all
holders of Registrable Securities of its intention to effect such Piggyback
Registration and, subject to the terms of Section 4(c) and Section 4(d), shall
include in such Piggyback Registration (and in all related registrations or
qualifications under blue sky laws and in any related underwriting) all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within 20 days after delivery of the Company’s
notice.

 

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(b) Piggyback Expenses. The Registration Expenses of the holders of Registrable
Securities shall be paid by the Company in all Piggyback Registrations, whether
or not any such registration became effective.

(c) Priority on Primary Registrations. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering without adversely affecting the
marketability, proposed offering price, timing or method of distribution of the
offering, the Company shall include in such registration (i) first, the
securities the Company proposes to sell, (ii) second, the Registrable Securities
requested to be included in such registration which, in the opinion of the
underwriters, can be sold without any such adverse effect, pro rata among the
holders of such Registrable Securities on the basis of the number of shares
owned by each such holder, and (iii) third, other securities requested to be
included in such registration which, in the opinion of the underwriters, can be
sold without any such adverse effect.

(d) Priority on Secondary Registrations. If a Piggyback Registration is an
underwritten secondary registration on behalf of holders of the Company’s
securities, and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting the marketability, proposed offering price, timing or method
of distribution of the offering, the Company shall include in such registration
(i) first, the securities requested to be included therein by the holders
requesting such registration and the Registrable Securities requested to be
included in such registration which, in the opinion of the underwriters, can be
sold without any such adverse effect, pro rata among the holders of such
securities on the basis of the number of securities owned by each such holder,
and (ii) second, securities proposed to be included by the Company, and
(iii) third, other securities requested to be included in such registration
which, in the opinion of the underwriters, can be sold without any such adverse
effect.

Section 5. Registration Procedures.

(a) Whenever the holders of Registrable Securities have requested that any
Registrable Securities be registered pursuant to this Agreement, the Company
shall effect the registration and the sale of such Registrable Securities in
accordance with the intended method of disposition thereof, and pursuant thereto
the Company shall as promptly as reasonably practicable:

(i) in accordance with the Securities Act and all applicable rules and
regulations promulgated thereunder, prepare and file with the SEC a registration
statement, and all amendments and supplements thereto and related prospectuses,
with respect to such Registrable Securities and use best efforts to cause such
registration statement to become effective (provided that before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company shall furnish to the counsel selected by the holders of the
Registrable Securities covered by such registration statement copies of all such
documents proposed to be filed);

 

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(ii) notify each holder of Registrable Securities of (A) the issuance by the SEC
of any stop order suspending the effectiveness of any registration statement or
the initiation of any proceedings for that purpose, (B) the receipt by the
Company or its counsel of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, and (C) the
effectiveness of each registration statement filed hereunder;

(iii) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period ending the
earlier of (i) the Effectiveness Period, (ii) when all of the securities covered
by such registration statement have been disposed of in accordance with the
intended methods of distribution by the sellers thereof set forth in such
registration statement, and (iii) such date as when all Registrable Securities
covered by the registration statement have been disposed of or may be disposed
of without volume or timing restrictions pursuant to Rule 144 (but not in any
event before the expiration of any longer period required under the Securities
Act or, if such registration statement relates to an underwritten Public
Offering, such longer period as in the opinion of counsel for the underwriters a
prospectus is required by law to be delivered in connection with sale of
Registrable Securities by an underwriter or dealer), and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;

(iv) provide copies to and permit counsel designated by the USH Investor to
review each Registration Statement and all amendments and supplements thereto as
far in advance as reasonably practicable prior to their filing with the SEC and
not file any document to which such counsel reasonably objects;

(v) furnish to each seller of Registrable Securities thereunder such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus), each Issuer Free-Writing Prospectus and such other
documents as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;

(vi) register or qualify such Registrable Securities under such other securities
or blue sky laws of such jurisdictions as any seller reasonably requests and do
any and all other acts and things which may be reasonably necessary or advisable
to enable such seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller, except that the Company shall not
for any such purpose be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified, (ii) subject itself to taxation
in any such jurisdiction where it is not then so subject;

 

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(vii) notify each seller of such Registrable Securities (A) promptly after it
receives notice thereof, of the date and time when such registration statement
and each post-effective amendment thereto has become effective or a prospectus
or supplement to any prospectus relating to a registration statement has been
filed and when any registration or qualification has become effective under a
state securities or blue sky law or any exemption thereunder has been obtained,
(B) promptly after receipt thereof, of any request by the SEC for the amendment
or supplementing of such registration statement or prospectus or for additional
information, and (C) 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 contains
an untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of any such seller, the
Company shall prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;

(viii) use best efforts to cause all such Registrable Securities to be listed on
each securities exchange on which similar securities issued by the Company are
then listed and, if not so listed, to be listed on a securities exchange and, if
not then listed on NYSE, to use its best efforts to arrange for at least two
market markers to register as such with respect to such Registrable Securities
with FINRA;

(ix) provide a transfer agent and registrar for all such Registrable Securities
not later than the effective date of such registration statement;

(x) enter into and perform such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
the Registrable Securities being sold or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities (including, without limitation, effecting a stock split, combination
of shares, recapitalization or reorganization);

(xi) subject to execution of customary confidentiality arrangements, make
available for inspection by any seller of Registrable Securities, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate and
business documents and properties of the Company as shall be necessary to enable
them to exercise their due diligence responsibility, and cause the Company’s
officers, directors, employees, agents, representatives and independent
accountants to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement;

(xii) take all reasonable actions to ensure that any Issuer Free-Writing
Prospectus utilized in connection with any Registration Statement hereunder
complies in all material respects with the Securities Act, is filed in
accordance with the Securities Act

 

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to the extent required thereby, is retained in accordance with the Securities
Act to the extent required thereby and, when taken together with the related
prospectus, shall not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;

(xiii) otherwise comply with all applicable rules and regulations of the SEC,
and make available to its security holders, as soon as reasonably practicable,
an earning statement covering the period of at least twelve months beginning
with the first day of the Company’s first full calendar quarter after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158.

(xiv) permit any holder of Registrable Securities which holder, in its sole and
exclusive judgment, might be deemed to be an underwriter or a controlling person
of the Company, to participate in the preparation of such registration or
comparable statement and to allow such holder to provide language for insertion
therein, in form and substance satisfactory to the Company, which in the
judgment of such holder and its counsel should be included;

(xv) in the event of the issuance of any stop order suspending the effectiveness
of a registration statement, or the issuance of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Common Stock included in such registration statement for sale in any
jurisdiction, use best efforts to promptly to obtain the withdrawal of such
order;

(xvi) cause such Registrable Securities covered by such registration statement
to be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the sellers thereof to consummate the
disposition of such Registrable Securities;

(xvii) cooperate with the holders of Registrable Securities covered by the
registration statement and the managing underwriter or agent, if any, to
facilitate the timely preparation and delivery of certificates (not bearing any
restrictive legends) representing securities to be sold under the registration
statement and enable such securities to be in such denominations and registered
in such names as the managing underwriter, or agent, if any, or such holders may
request;

(xviii) cooperate with each holder of Registrable Securities covered by the
registration statement and each underwriter or agent participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with FINRA;

(xix) in connection with any underwritten offering, make available the executive
officers of the Company to participate with the holders of Registrable
Securities and any underwriters in any “road shows” or other selling efforts
that may be reasonably requested by the holders in connection with the methods
of distribution for the Registrable Securities;

 

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(xx) in connection with any underwritten offering, use best efforts to obtain
one or more cold comfort letters from the Company’s independent public
accountants in customary form and covering such matters of the type customarily
covered by cold comfort letters; and

(xxi) in connection with any underwritten offering, use best efforts to provide
a legal opinion of the Company’s outside counsel, dated the effective date of
such registration statement.

(b) The Company shall not undertake any voluntary act intended to cause a
Violation or result in the declaration of a Grace Period. During any Grace
Period, and as may be extended hereunder, the Company shall correct or update
any disclosure causing the Company to provide notice of the Grace Period, and to
file and cause to become effective or terminate the suspension of use or
effectiveness, as the case may be, the subject registration statement. In the
event that the Company shall exercise its right to delay or suspend the filing
or effectiveness of a registration hereunder, the applicable time period during
which the registration statement is to remain effective shall be extended by a
period of time equal to the duration of the Grace Period. The Company may extend
the Grace Period, for an additional consecutive 60 days with the consent of the
holders of a majority of the Registrable Securities registered under the
applicable registration statement, which consent shall not be unreasonably
withheld. If so directed by the Company, all holders of Registrable Securities
registering shares under such registration statement shall (i) not offer to sell
any Registrable Securities pursuant to the registration statement during the
period in which the delay or suspension is in effect after receiving notice of
such delay or suspension and (ii) deliver to the Company (at the Company’s
expense) all copies, other than permanent file copies then in such holders’
possession, of the prospectus relating to such Registrable Securities current at
the time of receipt of such notice.

Section 6. Registration Expenses.

(a) The Company’s Obligation. All expenses incident to the Company’s performance
of or compliance with this Agreement (including, without limitation, all
registration, qualification and filing fees, fees and expenses of compliance
with securities or blue sky laws, printing expenses, messenger and delivery
expenses, fees and disbursements of custodians, and fees and disbursements of
counsel for the Company, reasonable fees and expenses billed at the standard
hourly rates of one counsel to the USH Investor and the USH Investor’s
reasonable expenses in connection with the registration, and all independent
certified public accountants, underwriters and other Persons retained by the
Company) (all such expenses being herein called “Registration Expenses”), shall
be borne by the Company.

(b) Counsel Fees and Disbursements. In connection with each Registration
Statement, the Company shall reimburse the holders of Registrable Securities
included in such registration for the reasonable fees and disbursements of one
counsel chosen by a majority of the

 

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holders of the Registrable Securities requesting such registration for the
purpose of rendering a legal opinion on behalf of such holder in connection with
any underwritten Registration Statement.

Section 7. Indemnification and Contribution.

(a) By the Company. The Company shall indemnify and hold harmless, to the extent
permitted by law, each holder of Registrable Securities, such holder’s officers,
directors employees, agents and representatives, and each Person who controls
such holder (within the meaning of the Securities Act) (the “Indemnified
Parties”) against all losses, claims, actions, damages, liabilities and expenses
(including with respect to actions or proceedings, whether commenced or
threatened, and including attorney fees and expenses) caused by, resulting from,
arising out of, based upon or related to any of the following statements,
omissions or violations (each a “Violation”) by the Company: (i) any untrue or
alleged untrue statement of material fact contained in (A) any registration
statement pursuant to which Registrable Securities are registered, any
prospectus, preliminary prospectus or Issuer Free-Writing Prospectus included in
any such registration statement, or any amendment thereof or supplement thereto
or (B) any application or other document or communication (in this Section 7,
collectively called an “application”) executed by or on behalf of the Company or
based upon written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify any Registrable Securities covered by such
registration under the securities laws thereof, (ii) any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading or (iii) any violation or alleged
violation by the Company of the Securities Act or any other similar federal or
state securities laws or any rule or regulation promulgated thereunder
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance;
provided that the Company will not be liable for losses arising out of written
information provided by a holder for inclusion in the registration statement or
sales of Registrable Securities made during a Grace Period, after notice has
been given by the Company. In addition, the Company will reimburse such
Indemnified Party for any reasonable legal or any other expenses incurred by
them in connection with investigating or defending any such losses.

(b) By Each Security Holder. In connection with any registration statement in
which a holder of Registrable Securities is participating, each such holder
shall furnish to the Company in writing such information and affidavits as the
Company reasonably requests for use in connection with any such registration
statement or prospectus and, to the extent permitted by law, shall indemnify the
Company, its officers, directors, employees, agents and representatives, and
each Person who controls the Company (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses resulting from any
untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus, preliminary prospectus or Issuer
Free-Writing Prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the extent
that such untrue statement or omission is contained in any information or
affidavit so furnished in writing by such holder specifically for inclusion in
such registration statement or prospectus or amendment or supplement thereto;
provided that the obligation to indemnify shall be individual, not joint and
several, for each holder (with no holder being responsible for any misstatements
or omissions of

 

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any other holder) and shall be limited to the amount of proceeds (net of all
expense paid by such holder in connection with any claim relating to this
Section 7 and the amount of any damages such holder has otherwise been required
to pay by reason of such untrue statement or omission) received by such holder
from the sale of securities pursuant to such registration statement giving rise
to such indemnification obligation.

(c) Claim Procedure. Any Person entitled to indemnification hereunder shall
(i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (provided that the failure to give
prompt notice shall impair any Person’s right to indemnification hereunder only
to the extent such failure has prejudiced the indemnifying party) and
(ii) unless in such indemnified party’s judgment a conflict of interest between
such indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld, conditioned or delayed). An indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim. In such instance, the conflicted indemnified parties shall have a right
to retain one separate counsel, chosen by the holders of the Registrable
Securities included in the registration if such holders are indemnified parties,
at the expense of the indemnifying party.

(d) Contribution. If the indemnification provided for in this Section 7 is held
by a court of competent jurisdiction to be unavailable to, or is insufficient to
hold harmless, an indemnified party or is otherwise unenforceable with respect
to any loss, claim, damage, liability or action referred to herein, then the
indemnifying party shall contribute to the amounts paid or payable by such
indemnified party as a result of such loss, claim, damage, liability or action
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other
hand in connection with the statements or omissions which resulted in such loss,
claim, damage, liability or action as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The parties hereto agree that it would not be just or
equitable if the contribution pursuant to this Section 7(d) were to be
determined by pro rata allocation or by any other method of allocation that does
not take into account such equitable considerations. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or expenses referred to herein shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending against any action or claim which is the subject
hereof. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who is not guilty of such fraudulent misrepresentation.

 

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Notwithstanding anything to the contrary, in no event shall the contribution
obligation of a holder of Registrable Securities be greater in amount than the
dollar amount of the proceeds (net of all expenses paid by such holder in
connection with any claim relating to this Section 7 and the amount of any
damages such holder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission) received by it upon
the sale of the Registrable Securities giving rise to such contribution
obligation.

(e) Release. No indemnifying party shall, except with the consent of the
indemnified party, consent to the entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.

(f) Non-exclusive Remedy; Survival. The indemnification and contribution
provided for under this Agreement shall be in addition to any other rights to
indemnification or contribution that any indemnified party may have pursuant to
law or contract and shall remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director or controlling Person of such indemnified party and shall survive the
transfer of Registrable Securities and the termination or expiration of this
Agreement.

Section 8. Underwritten Registrations; Suspended Distributions.

(a) Participation. No Person may participate in any registration hereunder which
is underwritten unless such Person (i) agrees to sell such Person’s securities
on the basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements (including, without
limitation, pursuant to any over-allotment or “green shoe” option requested by
the underwriters; provided that no holder of Registrable Securities shall be
required to sell more than the number of Registrable Securities such holder has
requested to include) and (ii) completes and executes all questionnaires, powers
of attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements; provided that no holder of
Registrable Securities included in any underwritten registration shall be
required to make any representations or warranties to the Company or the
underwriters (other than representations and warranties regarding such holder
and such holder’s intended method of distribution) or to undertake any
indemnification obligations to the Company or the underwriters with respect
thereto that are materially more burdensome than those provided in Section 7.

(b) Suspended Distributions. Each Person that is participating in any
registration under this Agreement, upon receipt of any notice from the Company
of the happening of any event giving rise to a Grace Period, shall immediately
discontinue the disposition of its Registrable Securities pursuant to the
registration statement until such Person’s receipt of the copies of a
supplemented or amended prospectus as contemplated by Section 5(a)(vii). In the
event the Company has given any such notice, the applicable time period set
forth in Section 5(a)(ii) during which a Registration Statement is to remain
effective shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to this Section 8(b) to
and including the date when each seller of Registrable Securities covered by
such registration statement shall have received the copies of the supplemented
or amended prospectus contemplated by Section 5(a)(vii).

 

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Section 9. Current Public Information At all times after the earlier of (i) the
Registration Deadline or (ii) the time the Initial Registration Statement is
declared effective by the SEC as contemplated pursuant to Section 2(a)(i) of
this Agreement, the Company shall file all reports required to be filed by it
under the Securities Act and the Exchange Act (including all reports that were
previously required to be filed prior to such time) on or prior to the date that
is required to be so filed under the applicable rules and regulations of the SEC
(which date shall include any additional period provided in Rule 12b-25 under
the Exchange Act for the filing to be deemed timely filed, provided that the
Company makes such filing within the applicable additional period) and shall
take such further action as any holder or holders of Registrable Securities may
reasonably request, all to the extent required to enable such holders to sell
Registrable Securities pursuant to Rule 144. Upon request, the Company shall
deliver to any holder of Registrable Securities a written statement as to
whether it has complied with such requirements. If at any time following the
date on which the Company is required to comply with this Section 9, Company
fails to file a report required by the Exchange Act on or prior to the date that
is required to be so filed under the applicable rules and regulations of the SEC
(a “Reporting Event”), in addition to any other rights the holders of such
Registrable Securities may have hereunder or under applicable law, on each such
Reporting Event and on each monthly anniversary of each such Reporting Event
(for the avoidance of doubt, if a Reporting Event is cured prior to a monthly
anniversary of a Reporting Event, the Company shall be responsible for paying to
the holders of Registrable Securities their pro rata portion of the liquidated
damages for that portion of the monthly anniversary period during which such
Reporting Event is not cured) until the applicable Reporting Event is cured, the
Company shall pay to each holder of Registrable Securities their pro rata
portion of $900,000 in cash, as partial liquidated damages and not as a penalty.
Notwithstanding the foregoing, the amount of any such partial liquidated damages
payable under this Section 9 shall be reduced by the amount of any liquidated
damages payable by the Company pursuant to Section 2(b) hereof. If the Company
fails to pay any partial liquidated damages pursuant to this Section 9 in full
within seven calendar days after the date payable, the Company will pay interest
thereon at a rate of 12% per annum (or such lesser maximum amount that is
permitted to be paid by applicable law) to the holders, accruing daily from the
date such partial liquidated damages are due until such amounts, plus all such
interest thereon, are paid in full. The partial liquidated damages pursuant to
the terms hereof shall apply on a daily pro rata basis for any portion of a
month prior to the cure of a Reporting Event.

(a) Due Diligence Review; Information. Subject to the following paragraph of
this section, the Company shall make available, during normal business hours,
for inspection and review by the USH Investor, advisors to and representatives
of the USH Investor (who may or may not be affiliated with the USH Investor and
who are reasonably acceptable to the Company), all financial and other records,
all 1934 Act Filings and other filings with the SEC, and all other corporate
documents and properties of the Company as may be reasonably necessary for the
purpose of such review, and cause the Company’s officers, directors and
employees, within a reasonable time period, to supply all such information
reasonably requested by the USH Investor or any such representative, advisor or
underwriter in connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries reasonably made or
submitted by any of them), prior to and from time to time after the filing and
effectiveness of the Registration Statement for the sole purpose of enabling the
USH Investor and such representatives, advisors and underwriters and their
respective accountants and attorneys to conduct initial and ongoing due
diligence with respect to the Company and the accuracy of such Registration
Statement.

 

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Anything in the foregoing notwithstanding, after the First Disclosure Date, the
Company shall not disclose material nonpublic information to the USH Investor,
or to advisors to or representatives of the USH Investor, unless prior to
disclosure of such information the Company identifies such information as being
material nonpublic information and provides the USH Investor, such advisors and
representatives with the opportunity to (i) accept such material nonpublic
information for review, (ii) refuse to accept such material nonpublic
information for review or (iii) to direct the Company to deliver any such
material, nonpublic information to a division, affiliate or advisor of the USH
Investor which is segregated from the USH Investor such that its receipt of such
material, nonpublic information does not restrict such USH Investor from trading
in the securities of the Company and any USH Investor, division, affiliate,
advisor or representative, as applicable, wishing to obtain such information
enters into an appropriate confidentiality agreement with the Company with
respect thereto.

Section 10. Subsidiary Public Offering. If, after an initial Public Offering of
the Capital Stock of one of its Subsidiaries, the Company distributes securities
of such Subsidiary to its equity holders, then the rights and obligations of the
Company pursuant to this Agreement shall apply, mutatis mutandis, to securities
of such Subsidiary, and the Company shall cause such Subsidiary to comply with
such Subsidiary’s obligations under this Agreement.

Section 11. Lock-up. For a period of 45 days after the date of the effectiveness
of the Registration Statement the Company will not offer, sell, contract to
sell, pledge or otherwise dispose of, directly or indirectly any additional
shares of its securities or securities convertible into or exchangeable or
exercisable for any shares of its securities, excluding (i) options granted to
employees, directors or consultants under the Company’s stock option plans,
(ii) the conversion or exercise of convertible or exercisable securities
outstanding on the date hereof, (iii) the issuance of shares in connection with
debt financing or similar transactions that are primarily of a non-equity
financing nature and approved by the Company’s Board of Directors,
(iv) securities issued pursuant to acquisitions or strategic transactions
approved by the Company’s Board of Directors, and (v) securities issued in
exchange for outstanding debt.

Section 12. General Provisions.

(a) Amendments and Waivers. Except as otherwise provided herein, the provisions
of this Agreement may be amended, modified or waived only with the prior written
consent of the Company and a majority of the holders of the Registrable
Securities. The failure or delay of any Person to enforce any of the provisions
of this Agreement shall in no way be construed as a waiver of such provisions
and shall not affect the right of such Person thereafter to enforce each and
every provision of this Agreement in accordance with its terms. A waiver or
consent to or of any breach or default by any Person in the performance by that
Person of his, her or its obligations under this Agreement shall not be deemed
to be a consent or waiver to or of any other breach or default in the
performance by that Person of the same or any other obligations of that Person
under this Agreement.

 

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(b) Remedies. The parties to this Agreement shall be entitled to enforce their
rights under this Agreement specifically (without posting a bond or other
security), to recover damages caused by reason of any breach of any provision of
this Agreement and to exercise all other rights existing in their favor. The
parties hereto agree and acknowledge that a breach of this Agreement would cause
irreparable harm and money damages would not be an adequate remedy for any such
breach and that, in addition to any other rights and remedies existing
hereunder, any party shall be entitled to specific performance and/or other
injunctive relief from any court of law or equity of competent jurisdiction
(without posting any bond or other security) in order to enforce or prevent
violation of the provisions of this Agreement.

(c) Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited, invalid,
illegal or unenforceable in any respect under any applicable law or regulation
in any jurisdiction, such prohibition, invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
any other provision of this Agreement in such jurisdiction or in any other
jurisdiction, but this Agreement shall be reformed, construed and enforced in
such jurisdiction as if such prohibited, invalid, illegal or unenforceable
provision had never been contained herein.

(d) Entire Agreement. Except as otherwise provided herein, this Agreement
contains the complete agreement and understanding among the parties hereto with
respect to the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or among the parties hereto,
written or oral, which may have related to the subject matter hereof in any way,
except as may be contained in the Purchase Agreements or the Warrants.

(e) Successors and Assigns. Except as otherwise provided herein, this Agreement
shall bind and inure to the benefit and be enforceable by the Company and its
successors and assigns and the holders of Registrable Securities and their
respective successors and permitted assigns (whether so expressed or not). In
addition, whether or not any express assignment has been made, the provisions of
this Agreement which are for the benefit of purchasers or holders of Registrable
Securities are also for the benefit of, and enforceable by, any subsequent
holder of Registrable Securities.

(f) Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be delivered personally, mailed by certified or registered
mail, return receipt requested and postage prepaid, or sent by reputable
overnight courier service (charges prepaid), to the recipient. Such notices,
demands and other communications will be sent to the Company or the USH Investor
specified below:

The Company:

K-V Pharmaceutical Company

One Corporate Woods Drive

Bridgeton, MO 63044

Attn: CEO and President

Fax: 314-646-3785

 

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With a copy to:

Thompson Coburn LLP

One US Bank Plaza

St. Louis, MO 63101

Attention: Thomas A. Litz

Facsimile: 314-552-7000

USH Investors:

U.S. Healthcare I, L.L.C.

c/o Kirkland & Ellis LLP

601 Lexington Avenue

New York, New York 10022

Attn: Leonard Klingbaum, Esq.

Fax: 212-446-6460

U.S. Healthcare II, L.L.C.

c/o Kirkland & Ellis LLP

601 Lexington Avenue

New York, New York 10022

Attn: Leonard Klingbaum, Esq.

Fax: 212-446-6460

or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party. All
such notices, demands or other communications will be deemed to have been given
when actually received or refused by the recipient or when returned to the
sender as undeliverable.

(g) Business Days. If any time period for giving notice or taking action
hereunder expires on a day that is not a Business Day, the time period shall
automatically be extended to the Business Day immediately following such
Saturday, Sunday or legal holiday.

(h) Governing Law. The corporation laws of the State of Delaware shall govern
all issues concerning the relative rights of the Company and its stockholders.
All other questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal law of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York.

(i) MUTUAL WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR
EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE
OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE
RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN
ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

 

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(j) CONSENT TO JURISDICTION AND SERVICE OF PROCESS. EACH OF THE PARTIES
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, FOR THE PURPOSES OF ANY
SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. EACH OF THE PARTIES
HERETO FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT
BY U.S. REGISTERED MAIL TO SUCH PARTY’S RESPECTIVE ADDRESS SET FORTH ABOVE SHALL
BE EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION, SUIT OR PROCEEDING WITH RESPECT
TO ANY MATTERS TO WHICH IT HAS SUBMITTED TO JURISDICTION IN THIS PARAGRAPH. EACH
OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO
THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS
AGREEMENT, ANY RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, AND
HEREBY AND THEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT
TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(k) No Recourse. Notwithstanding anything to the contrary in this Agreement, the
Company and each holder of Registrable Securities agrees and acknowledges that
no recourse under this Agreement or any documents or instruments delivered in
connection with this Agreement, shall be had against any current or future
director, officer, employee, general or limited partner or member of any holder
of Registrable Securities or of any Affiliate or assignee thereof, whether by
the enforcement of any assessment or by any legal or equitable proceeding, or by
virtue of any statute, regulation or other applicable law, it being expressly
agreed and acknowledged that no personal liability whatsoever shall attach to,
be imposed on or otherwise be incurred by any current or future officer, agent
or employee of any holder of Registrable Securities or any current or future
member of any holder of Registrable Securities or any current or future
director, officer, employee, partner or member of any holder of Registrable
Securities or of any Affiliate or assignee thereof, as such for any obligation
of any holder of Registrable Securities under this Agreement or any documents or
instruments delivered in connection with this Agreement for any claim based on,
in respect of or by reason of such obligations or their creation.

 

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(l) Descriptive Headings; Interpretation. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement. The use of the word “including” in this Agreement shall be by way of
example rather than by limitation.

(m) No Strict Construction. The language used in this Agreement shall be deemed
to be the language chosen by the parties hereto to express their mutual intent,
and no rule of strict construction shall be applied against any party.

(n) Counterparts. This Agreement may be executed in multiple counterparts, any
one of which need not contain the signature of more than one party, but all such
counterparts taken together shall constitute one and the same agreement.

(o) Electronic Delivery. This Agreement, the agreements referred to herein, and
each other agreement or instrument entered into in connection herewith or
therewith or contemplated hereby or thereby, and any amendments hereto or
thereto, to the extent executed and delivered by means of a photographic,
photostatic, facsimile or similar reproduction of such signed writing using a
facsimile machine or electronic mail shall be treated in all manner and respects
as an original agreement or instrument and shall be considered to have the same
binding legal effect as if it were the original signed version thereof delivered
in person. At the request of any party hereto or to any such agreement or
instrument, each other party hereto or thereto shall re-execute original forms
thereof and deliver them to all other parties. No party hereto or to any such
agreement or instrument shall raise the use of a facsimile machine or electronic
mail to deliver a signature or the fact that any signature or agreement or
instrument was transmitted or communicated through the use of a facsimile
machine or electronic mail as a defense to the formation or enforceability of a
contract and each such party forever waives any such defense.

(p) Further Assurances. In connection with this Agreement and the transactions
contemplated hereby, each holder of Registrable Securities shall execute and
deliver any additional documents and instruments and perform any additional acts
that may be necessary or appropriate to effectuate and perform the provisions of
this Agreement and the transactions contemplated hereby.

(q) No Inconsistent Agreements. The Company shall not hereafter enter into any
agreement with respect to its securities which is inconsistent with or violates
the rights granted to the holders of Registrable Securities in this Agreement.

*    *    *    *    *

 

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IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated
Registration Rights Agreement as of the date first written above.

 

U.S. Healthcare I, L.L.C. By:  

/s/ Kevin Fusco

  Name:   Kevin Fusco   Title:   Authorized Person U.S. Healthcare II, L.L.C.
By:  

/s/ Kevin Fusco

  Name:   Kevin Fusco   Title:   Authorized Person K-V Pharmaceutical Company
By:  

/s/ Gregory J. Divis

  Name:   Gregory J. Divis   Title:   President and CEO

 

[Second Amended and Restated Registration Rights Agreement]

--------------------------------------------------------------------------------

SCHEDULE OF USH INVESTORS

U.S. Healthcare I, L.L.C.

c/o Kirkland & Ellis LLP

601 Lexington Avenue

New York, New York 10022

Attn: Leonard Klingbaum, Esq.

Fax: 212-446-6460

U.S. Healthcare II, L.L.C.

c/o Kirkland & Ellis LLP

601 Lexington Avenue

New York, New York 10022

Attn: Leonard Klingbaum, Esq.

Fax: 212-446-6460

 

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