EXHIBIT4.5**EXECUTION COPY**REGISTRATION RIGHTS AGREEMENTby and amongNATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.,NEW MOUNTAIN PARTNERS, L.P.,andNEW MOUNTAIN AFFILIATED INVESTORS, L.P.dated as ofMarch 19, 2004
 

 
     REGISTRATION RIGHTS AGREEMENT, dated as of March 19, 2004, by and among National Medical HealthCard Systems, Inc., a Delaware corporation (the “Company”), New Mountain Partners, L.P., a Delawarelimited partnership (“New Mountain”) New Mountain Affiliated Partners, L.P., a Delaware limitedpartnership (together with New Mountain, the “Purchasers”) and such other persons who becomesignatories hereto from time to time as provided for herein.     WHEREAS, pursuant to the Amended and Restated Preferred Stock Purchase Agreement, dated as ofNovember 26, 2003 (the “Purchase Agreement”), by and between the Company and New Mountain, upon theterms and subject to the conditions contained therein, the Company will issue and sell to thePurchasers 6,956,522 shares of Series A Preferred Stock, par value $0.10 per share, of the Company(the “Series A Preferred Stock”);     WHEREAS, to induce New Mountain to execute and deliver the Purchase Agreement and as a condition toNew Mountain consummating the transactions contemplated thereby, the Company has agreed to providethe Purchasers with the rights set forth in this Agreement.     Accordingly, the parties hereto agree as follows:     SECTION 1. Definitions. As used herein, unless the context otherwise requires,the following terms have the following respective meanings:     1.1. “Affiliate” means with respect to any Person, any other Person directly orindirectly controlling or controlled by or under direct or indirect common control with suchspecified Person.     1.2. “Assignee” has the meaning set forth in Section 4.2.     1.3. “Board of Directors” means the board of directors of the Company.     1.4. “Common Stock” means any shares of common stock, par value $0.001per share, of the Company, now or hereafter authorized to be issued, and any and allsecurities of any kind whatsoever of the Company or any successor thereof which may be issued on orafter the date hereof in respect of, in exchange for, or upon conversion of shares of Common Stockpursuant to a merger, consolidation, stock split, reverse split, stock dividend, recapitalizationof the Company or otherwise.     1.5. “Company” shall mean National Medical Health Card Systems, Inc., a Delawarecorporation, and shall include any successor thereto by merger, consolidation, acquisition ofsubstantially all the assets thereof, or otherwise.     1.6. “Convertible Securities” shall mean (i) any options or warrants to purchaseor other rights to acquire Common Stock, (ii) any securities by their terms convertible into orexchangeable for Common Stock, and (iii) any options or warrants to purchase or other rights toacquire any such convertible or exchangeable securities.
 

 
     1.7. “Demand Exercise Notice” has the meaning set forth in Section 2.1(a).     1.8. “Demand Registration” has the meaning set forth in Section 2.1(h).     1.9. “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similarfederal statute, and the rules and regulations of the SEC thereunder, all as the same shall be ineffect at the time. Reference to a particular section of the Exchange Act,shall include a referenceto the comparable section, if any, of any such similar federal statute.     1.10. “Form S-3” means a Form S-3 registration statement under the Securities Act, and anysuccessor or similar form thereto.     1.11. “Holder” means any of the Purchasers and any Assignee.     1.12. “Holder Demand” has the meaning set forth in Section 2.1 (a).     1.13. “indemnified party” means any Person seeking indemnification pursuant to Section 2.6.     1.14. “indemnifying party” means any Person from whom indemnification is sought pursuant toSection 2.6.     1.15. “Indemnitees” has the meaning set forth in Section 2.6(a).     1.16. “Initiating Holder” means the party or parties delivering a Holder Demand as providedfor under Section 2.1 (a).     1.17. “Losses” has the meaning set forth in Section 2.6(a).     1.18. “Majority Participating Holders” means, at any time, Participating Holders holdingmore than 50% of the Registrable Securities proposed to be included in any offering of RegistrableSecurities by such Participating Holders pursuant to Section 2.1 or Section 2.2.     1.19. “NASD” means National Association of Securities Dealers, Inc.     1.20. “Nasdaq” has the meaning set forth in Section 2.3(a)(x).     1.21. “Participating Holders” means any Holder participating in any offering of RegistrableSecurities pursuant to Section 2.1 or Section 2.2.     1.22. “Partner Distribution” has the meaning set forth in Section 2.1 (a).     1.23. “Person” means an individual, a corporation, a partnership, a limited liabilitycompany, a business, an association, a trust, an individual, or any other entity or organization,including a government or political subdivision or an agency or instrumentality thereof.     1.24. “Postponement Period” has the meaning set forth in Section 2.1(j).
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     1.25. “Purchase Agreement” has the meaning set forth in the recitals.     1.26. “Purchasers” has the meaning set forth in the introduction.     1.27. “Registrable Securities” means any of the following when held by a Holder: (i) any shares of Common Stock issued upon the conversion of the Series A Preferred Stock, (ii) any shares of Common Stock acquired by the Holders from the Company after the date hereof, including shares of Common Stock acquired upon exercise or conversion of ConvertibleSecurities that are acquired by the Holders from the Company after the date hereof, and (iii)any shares of the Series A Preferred Stock. For purposes of this Agreement, a Person will bedeemed to a Holder of Registrable Securities whenever such Person has the right to acquire,directly or indirectly, such Registrable Securities (upon conversion, exercise or exchange ofany Convertible Securities but disregarding any restrictions or limitations upon the exerciseof such right), whether or not such acquisition has actually been effected, and such Personshall not be required to convert, exercise or exchange such Convertible Security (or otherwiseacquire such Registrable Security) to participate on any registered offering hereunder untilthe closing of such offering. As to any particular Registrable Securities, such securitiesshall cease to be Registrable Securities when (a) a registration statement with respect to thesale of such securities shall have become effective under the Securities Act and suchsecurities shall have been disposed of in accordance with such registration statement or (b)when such securities shall have been sold pursuant to Rule 144 under the Securities Act orsimilar rule then in effect.     1.28. “Registration Expenses” means all fees and expenses incurred inconnection with the Company’s performance of or compliance with Section 2 hereof, including,without limitation, (i) all registration, filing and applicable SEC fees, NASD fees, nationalsecurities exchange or inter-dealer quotation system fees, and fees and expenses of complying withstate securities or blue sky laws (including fees and disbursements of counsel to the underwritersand the Participating Holders in connection with “blue sky” qualification of the RegistrableSecurities and determination of their eligibility for investment under the laws of the variousjurisdictions), (ii) all printing (including printing certificates for the Registrable Securitiesin a form eligible for deposit with The Depository Trust Company and printing preliminary and finalprospectuses), word processing, duplicating, telephone and facsimile expenses, and messenger anddelivery expenses, (iii) all fees and disbursements of counsel for the Company and of itsindependent public accountants, including the expenses of “cold comfort” letters or any specialaudits required by, or incident to, such registration, (iv) all reasonable fees and expenses of onelaw firm or other counsel selected by the Majority Participating Holders for the benefit of all ofthe Participating Holders, (v) all reasonable fees and expenses of any special experts or otherPersons retained by the Company in connection with any registration, (vi) Securities Act liabilityinsurance or similar insurance if the Company so desires or the underwriters so require inaccordance with then-customary underwriting practices, (vii) all applicable rating agency fees withrespect to the Registrable Securities, (viii) reasonable fees and expenses of a QualifiedIndependent Underwriter (as such term is defined in Schedule E to the By-Laws of the NASD) and itscounsel, (ix) all fees and disbursements of the underwriters (other than underwriting discounts andcommissions but, including reasonable fees and disbursements of one counsel for such underwriters),(x) all transfer taxes, and (xi) all expenses incurred in connection with promotional efforts or“roadshows” (as negotiated by the Company
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with the underwriters); provided, however, that Registration Expenses shallexclude, and the Participating Holders shall pay ratably, underwriting discounts and commissions inrespect of the Registrable Securities being registered for such Participating Holders.     1.29. “SEC” means the Securities and Exchange Commission or any other federal agency at thetime administering the Securities Act.     1.30. “Section 2.2 Sale Amount” has the meaning set forth in Section 2.2(c).     1.31. “Securities Act” means the Securities Act of 1933, as amended, or any similar federalstatute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect atthe time. References to a particular section of the Securities Act shall include a reference to thecomparable section, if any, of any such similar federal statute.     1.32. “Selected Courts” has the meaning set forth in Section 4.4(b).     1.33. “Series A Preferred Stock” has the meaning set forth in the recitals.     SECTION 2. Registration Under Securities Act.     2.1. Registration on Demand.          (a) Demand. At any time or from time to time, a Holder or Holders holding a majorityof Registrable Securities then outstanding may require the Company to effect the registration underthe Securities Act of all or part of their respective Registrable Securities, by delivering awritten request (a “Holder Demand”) therefor to the Company specifying the number of sharesof Registrable Securities to be registered and the intended method of distribution thereof. Aspromptly as practicable, but no later than 10 days after receipt of a Holder Demand, the Companyshall give written notice (the “Demand Exercise Notice”) of the Holder Demand to allHolders of Registrable Securities. Such Holders shall have the option, within 20 days after thereceipt of the Demand Exercise Notice (or, 10 days if, at the request of the Initiating Holder, theCompany states in such written notice or gives telephonic notice to each Holder, with writtenconfirmation to follow promptly thereafter, stating that (i) such registration will be on Form S-3and (ii) such shorter period of time is required because of a planned filing date), to request, inwriting, that the Company include in such registration any Registrable Securities held by suchHolder (which request shall specify the maximum number of Registrable Securities intended to bedisposed of by such Holder). The Company shall as expeditiously as possible use its best efforts toeffect the registration under the Securities Act of the Registrable Securities which the Companyhas been so requested to register by the Initiating Holder and any other Holders which have madesuch written request. The Company shall (i) use its best efforts to effect the registration ofRegistrable Securities for distribution in accordance with the intended method of distribution setforth in a written request delivered by the Majority Participating Holders, which may include, atthe option of such Majority Participating Holders, a distribution to, and resale by, the partnersof such Holder or Holders (a “Partner Distribution”), and (ii) if requested by the MajorityParticipating Holders, obtain acceleration of the effective date of the registration statementrelating to such registration.