EXHIBIT 4.5
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EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
SCHEIN PHARMACEUTICAL, INC.
and
SOCIETE GENERALE SECURITIES CORPORATION
Dated as of December 24, 1997
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TABLE OF CONTENTS
Page
1. Securities Subject to This Agreement................................. 1
(a) Definitions.................................................... 1
(b) Registrable Securities......................................... 2
2. Registered Exchange Offer............................................ 2
3. Shelf Registration................................................... 4
4. Restrictions on Public Sale by a Holder of Registrable Securities.... 6
(a) Restrictions on Public Sale by the Company and Others.......... 6
5. Registration Procedures.............................................. 7
6. Registration Expenses................................................ 12
7. Indemnification; Contribution........................................ 13
(a) Indemnification by the Company................................. 13
(b) Indemnification by Holder of Registrable Securities............ 14
(c) Conduct of Indemnification Proceedings......................... 15
(d) Contribution................................................... 17
8. Additional Interest Under Certain Circumstances; Remedies............ 19
9. Participation in Underwritten Registrations.......................... 20
10. Rule 144............................................................. 21
11. Miscellaneous........................................................ 21
(a) No Inconsistent Agreements..................................... 21
(b) Remedies....................................................... 21
(c) Amendments and Waivers......................................... 22
(d) Notices........................................................ 22
(e) Successors and Assigns......................................... 23
(f) Headings....................................................... 23
(g) Governing Law.................................................. 23
(h) Severability................................................... 23
(i) Entire Agreement............................................... 23
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EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
This Exchange and Registration Rights Agreement (the "Agreement")
dated as of December 24, 1997, is made and entered into by Schein
Pharmaceutical, Inc., a Delaware corporation (together with its successors and
assigns, the "Company"), for the benefit of the holders of up to $100,000,000 in
principal amount of the Company's Senior Floating Rate Notes Due 2004 (the
"Notes"). Holders of the Notes, once issued, whether they are original holders
of the Notes or transferees of such original holders, are herein referred to
collectively as the "Holders" and individually as a "Holder." To induce Societe
Generale Securities Corporation, as initial purchaser of the Notes (the "Initial
Purchaser"), to enter into a Purchase Agreement with the Company in connection
with the issuance of the Notes, the Company has agreed to provide, as set forth
in this Agreement, registration rights with respect to the Notes. Capitalized
terms used herein without definition shall have the meanings set forth in the
Indenture dated as of December 24, 1997 (the "Indenture") among the Company, the
guarantors party thereto and The Bank of New York, as trustee (the "Trustee").
1. Securities Subject to This Agreement
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(a) Definitions.
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"Broker-Dealer" means a broker or dealer registered under the Exchange
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Act.
"Issue Date" means the date of issuance of the Notes.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended,
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or any successor statute.
"Holder" means a holder of a Registrable Security.
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"Registrable Securities" means the Notes.
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"Securities Act" means the Securities Act of 1933, as amended, or any
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successor statute.
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"Selling Holder" means a Holder who is selling Registrable Securities
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pursuant to a registration statement.
"Underwriter" means a securities dealer that purchases any Registrable
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Securities as principal and not as part of such dealer's market-making
activities.
(b) Registrable Securities. Any Registrable Security will cease to be
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a Registrable Security when (i) a registration statement covering such
Registrable Security has been declared effective by the Securities and Exchange
Commission (the "Commission") and it has been disposed of pursuant to such
effective registration statement or (ii) it is sold under circumstances in which
all of the applicable conditions of Rule 144 (or any similar provisions then in
force) under the Securities Act are met.
2. Registered Exchange Offer.
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(a) The Company shall prepare and, on or prior to 45 days after the
Issue Date, file with the Commission a registration statement on an appropriate
form under the Securities Act with respect to a proposed offer (the "Registered
Exchange Offer") to the Holders of the Notes to issue and deliver to such
Holders, in exchange for the Notes, a like principal amount of debt securities
of the Company identical in all material respects to the Notes (the "Exchange
Notes") and shall use commercially reasonable efforts to cause such registration
statement to become effective under the Securities Act as soon as practical
after filing and in any event within the earlier of (i) 90 days after the Issue
Date or (ii) 30 days after the consummation of the initial public offering of
the Company's common stock, par value $.01 per share (the "Common Stock"). Upon
the effectiveness of that registration statement, the Company shall commence the
Registered Exchange Offer and shall cause the same to remain open for such
period of time, and to be conducted in accordance with such
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procedures as may be required by the applicable provisions of the Exchange Act,
and in any event for not less than 30 days after the date notice of the
Registered Exchange Offer is mailed to the Holders of the Notes. However, the
Registered Exchange Offer shall be consummated in any event on or prior to the
150th day following the Issue Date. It shall be the objective of such
Registered Exchange Offer to enable each Holder electing to exchange Notes for
Exchange Notes (assuming that such Holder is not an Affiliate of the Company,
acquires the Exchange Notes in the ordinary course of such Holder's business and
has no arrangements with any person to participate in the distribution of the
Exchange Notes) to trade such Exchange Notes from and after their receipt
without any limitations or restrictions under the Securities Act or the Exchange
Act and without material restrictions under the securities laws of a substantial
proportion of the several states of the United States.
(b) The Company shall indicate in a "Plan of Distribution" section
contained in the final prospectus constituting a part of the registration
statement relating to the Registered Exchange Offer that any Broker-Dealer who
holds Notes that were acquired for its own account as a result of market-making
activities or other trading activities (other than Notes acquired directly from
the Company), may exchange such Notes for Exchange Notes pursuant to the
Registered Exchange Offer. However, such Broker-Dealer may be deemed an
"underwriter" within the meaning of the Exchange Act and, therefore, must
deliver a prospectus meeting the requirements of the Exchange Act in connection
with any resales of the Exchange Notes received by it in the Registered Exchange
Offer, which prospectus delivery requirement may be satisfied by the delivery by
such Broker-Dealer of the final prospectus contained in the registration
statement relating to the Registered Exchange Offer. Such "Plan of
Distribution" section also shall state that the delivery by a Broker-Dealer of
the
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final prospectus relating to the Registered Exchange Offer in connection with
resales of Exchange Notes shall not be deemed an admission by such Broker-Dealer
that it is an "underwriter" within the meaning of the Exchange Act, and shall
contain all other information with respect to the resales of the Exchange Notes
by Broker-Dealers that the Commission may require in connection therewith, but
such "Plan of Distribution" shall not name any such Broker-Dealer or disclose
the amount of Exchange Notes held by any such Broker-Dealer except to the extent
required by the Commission as a result of a change in law, rule, regulation or
policy after the date of this Agreement.
(c) In connection with such Registered Exchange Offer and the offer
and sale of Exchange Notes by Broker-Dealers as contemplated above, the Company
shall take such other and further action, including making appropriate filings
under state securities laws and delivering such number of final prospectuses
relating to the Registered Exchange Offer as any Broker-Dealer proposing to
deliver the same in connection with its resales of Exchange Notes may reasonably
request, as may be necessary to realize the foregoing objectives. The Company
shall cause the registration statement relating to the Registered Exchange Offer
to remain continuously effective for a period of at least 20 Business Days (or
longer if required by applicable law) from the date on which such registration
statement is first declared effective, and shall supplement or amend the
prospectus contained therein to the extent necessary to permit such prospectus
(as supplemented or amended) to be delivered by Broker-Dealers in connection
with their resales of Exchange Notes as aforesaid.
3. Shelf Registration. If, (i) because of any change in law or in
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currently prevailing interpretations of the Commission's staff, the Company is
not permitted to effect a Registered Exchange Offer or (ii) the Initial
Purchaser, as a Holder, (A) is not eligible to
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participate in the Registered Exchange Offer or (B) participates in the
Registered Exchange Offer and does not receive freely transferable Exchange
Notes in exchange for tendered Notes, in either case as contemplated by Section
2 hereof, the following provisions shall apply:
(a) The Company shall promptly file with the Commission and thereafter
shall use commercially reasonable efforts to cause to be declared effective, on
or prior to the latter of (i) 120 days after the Issue Date or (ii) 45 days
after the publication of the change of law or interpretation, a registration
statement on an appropriate form under the Securities Act relating to the offer
and sale of the Notes by the Holders thereof from time to time in accordance
with the methods of distribution set forth in such registration statement and
Rule 415 under the Securities Act (the "Shelf Registration Statement").
(b) The Company agrees to use commercially reasonable efforts to keep
the Shelf Registration Statement continuously effective in order to permit the
prospectus included therein to be usable by the Holders of the Notes for a
period of three years from the Issue Date or such shorter period that will
terminate when all the Notes covered by the Shelf Registration Statement have
been sold; provided that the Company shall be deemed not to have used
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commercially reasonable efforts to keep the Shelf Registration Statement
effective during the requisite period if it voluntarily takes any action that
would result in Holders of Notes covered thereby not being able to offer and
sell such Notes during that period, unless (i) such action is required by
applicable law, rule, regulation or policy, or (ii) in the judgement of the
Board of Directors of the Company, there is a reasonable likelihood that the
failure to take such voluntary action would adversely affect any existing or
prospective material business situation, transaction, or negotiation or
otherwise materially and adversely
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affect the Company and the taking of such voluntary action does not cause any
such registration statement not to be effective, or delay the filing of any
registration statement, for more than 90 days. Any such period during which the
Company fails to keep the registration statement effective and usable for offers
and sales of Notes is referred to as a "Suspension Period." A Suspension Period
shall commence on and include the date that the Company gives notice that the
registration statement is no longer effective or the prospectus included therein
is no longer usable for offers and sales of Notes and shall end on the date when
each Selling Holder either receives the copies of the supplemented or amended
prospectus contemplated by Section 5(b) hereof or is advised in writing by the
Company that use of the prospectus may be resumed. If one or more Suspension
Periods occur, the three-year time period referenced above shall be extended by
the number of days included in each such Suspension Period.
4. Restrictions on Public Sale by a Holder of Registrable
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Securities. Each Holder whose securities are included in a registration
statement hereunder agrees not to effect any public sale or distribution of the
issue being registered or a similar security of the Company or any securities
convertible into or exchangeable or exercisable for such securities, including a
sale pursuant to Rule 144 under the Securities Act, during the 14 days prior to,
and during the 90-day period beginning on, the effective date of such
registration statement (except as part of such registration), if and to the
extent requested by the Company in the case of a non-underwritten public
offering or if and to the extent requested by the managing Underwriter or
Underwriters in the case of an underwritten public offering.
(a) Restrictions on Public Sale by the Company and Others. The
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Company and its Affiliates agree (i) not to effect any public sale or
distribution of any securities similar
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to the Registrable Securities (except as part of such registration statement),
during the 14 days prior to, and during the 90-day period beginning on, the
effective date of any such registration statement filed pursuant to Section 2 or
3 hereof and (ii) that any agreement entered into after the date of the
Agreement pursuant to which the Company issues or agrees to issue any privately
placed securities similar to the Registrable Securities shall contain a
provision under which holders of such securities agree not to effect any public
sale or distribution of any such securities during the periods described in (i)
above, in each case including a sale pursuant to Rule 144 under the Securities
Act (except as part of any such registration, if permitted).
5. Registration Procedures.
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In connection with any Registered Exchange Offer or Shelf Registration
Statement, the Company shall use commercially reasonable efforts to:
(a) prepare and file with the Commission a registration statement on
any form for which the Company then qualifies or which counsel for the Company
shall deem appropriate and which form shall be available for the sale of the
Exchange Notes or Registrable Securities, as the case may be, to be registered
thereunder in accordance with the intended method of distribution thereof, and
use commercially reasonable efforts to cause such filed registration statement
to become effective and qualify an indenture relating to the Notes or the
Exchange Notes, as the case may be, substantially in the form contemplated by
the offering memorandum used in connection with the placement of the Notes;
provided (i) that before filing a registration statement or prospectus or any
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amendments or supplements thereto, the Company will furnish to one counsel
selected by the Holders who hold, or will hold, as the case may be, a majority
in principal amount of the Registrable Securities to be covered by such
registration statement or exchanged pursuant to the Registered Exchange Offer,
as the
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case may be, copies of all such documents proposed to be filed,
which documents will be subject to the review of such counsel, and (ii) that
after the filing of the registration statement, the Company will promptly notify
each Holder of any stop order issued or threatened by the Commission and take
all reasonable actions required to prevent the entry of such stop order or to
remove it if entered;
(b) furnish to each Holder, prior to filing the registration
statement, if requested, copies of such registration statement as proposed to be
filed, and thereafter furnish to such Holder such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto), the prospectus included in such registration
statement (including each preliminary prospectus) and such other documents as
such Holder may reasonably request in connection with the Registered Exchange
Offer or in order to facilitate the disposition of the Registrable Securities
owned by such Holder, as the case may be;
(c) use commercially reasonable efforts to register or qualify such
Exchange Notes or Registrable Securities, as the case may be, under such other
securities or blue sky laws of such jurisdictions in the United States as may be
required in connection with the Registered Exchange Offer or as any Selling
Holder or managing Underwriter reasonably (in light of the intended plan of
distribution) requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Selling Holder or managing
Underwriter to consummate the disposition of the Registrable Securities owned by
such Selling Holder in such jurisdictions, provided that the Company will not be
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required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required
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to qualify but for this paragraph (c), (ii) subject itself to taxation in any
such jurisdiction or (iii) consent to general service of process in any such
jurisdiction;
(d) use commercially reasonable efforts to cause such Exchange Notes
or Registrable Securities, as the case may be, to be registered with or approved
by such other governmental agencies or authorities as may be necessary by virtue
of the business and operations of the Company or its Subsidiaries in connection
with the Registered Exchange Offer or to enable the Selling Holder or Selling
Holders thereof to consummate the disposition of such Registrable Securities;
(e) notify each Holder of such Registrable Securities that is named as
a Selling Holder in any registration statement filed pursuant to this Agreement,
at any time when a prospectus relating thereto is required to be delivered under
the Securities Act, of the occurrence of an event requiring the preparation of a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances in which they were made, not misleading and
promptly make available to each such Holder any such supplement or amendment;
(f) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of such Registrable
Securities;
(g) make available for inspection, during normal business hours and on
reasonable prior notice, by any Selling Holder of such Registrable Securities,
any Underwriter participating in any disposition pursuant to such registration
statement and any attorney,
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accountant or other professional retained by any such Selling Holder or
Underwriter (collectively, the "Inspectors") all financial and other records,
pertinent corporate documents and properties of the Company and its Subsidiaries
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Company's and the
Subsidiaries' officers, directors and employees to supply all information
reasonably requested to any such Inspectors in connection with such due
diligence. The Company may require the Inspector to agree that Records which
the Company determines, in good faith, to be confidential and any Records which
it notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission of a material fact in such registration
statement or (ii) the release of such Records is ordered pursuant to a subpoena
or other order from a court of competent jurisdiction. Each Selling Holder of
such Registrable Securities agrees, and shall cause the Inspectors to agree,
that information obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it for any purpose whatsoever, other than
the exercise of its due diligence responsibility. Without limiting the
generality of the preceding sentence, each Selling Holder of such Registrable
Securities agrees, and shall cause the Inspectors to agree, that information
obtained by it as a result of such inspections shall not be used by it as the
basis for any market transactions in the securities of the Company or its
Affiliates unless and until such information is made generally available to the
public. Each Selling Holder of such Registrable Securities further agrees, and
shall cause the Inspectors to agree, that it will, upon learning that disclosure
of such Records is sought in a court of competent jurisdiction, give notice to
the Company and
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allow the Company, at its expense, to undertake appropriate action to prevent
disclosure of the Records deemed confidential;
(h) in the event such sale is pursuant to an underwritten offering,
use commercially reasonable efforts to obtain a comfort letter or comfort
letters from the Company's independent public accountants in customary form and
covering matters of the type customarily covered by comfort letters as the
managing Underwriter reasonably requests;
(i) use commercially reasonable efforts to obtain an opinion or
opinions from counsel for the Company, in customary form; and
(j) otherwise use commercially reasonable efforts to comply with all
applicable rules and regulations of the Commission.
Notwithstanding any other provision of this Agreement, the Company may
delay the filing of any registration statement for up to 90 days if (i) the
Company would, in the opinion of its counsel, be required to disclose in such
registration statement information not otherwise then required by law to be
publicly disclosed and (ii) in the judgment of the Board of Directors of the
Company, there is a reasonable likelihood that such disclosure, or any other
action to be taken in connection with any registration statement, would
adversely affect any existing or prospective material business situation,
transaction, or negotiation or otherwise materially and adversely affect the
Company.
The Company may require each Selling Holder of Registrable Securities
to promptly furnish in writing to the Company such information regarding the
distribution of the Registrable Securities as it may from time to time
reasonably request and such other information as may be legally required or
reasonably requested in connection with such registration.
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Each Selling Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 5(e)
hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 5(e) hereof, and, if
so directed by the Company, such Selling Holder will deliver to the Company all
copies, other than permanent file copies then in such Selling Holder's
possession, of the most recent prospectus covering such Registrable Securities
at the time of receipt of such notice.
6. Registration Expenses.
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In connection with any registration statement required to be filed
pursuant to Section 2 or 3 hereunder, the Company shall pay the following
registration expenses (the "Registration Expenses"): (i) all registration and
filing fees, (ii) fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of counsel in connection with
blue sky qualifications of the Exchange Notes or Registrable Securities, as the
case may be), (iii) printing expenses, (iv) internal Company expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), (v) the fees and expenses
incurred in connection with any listing of the Exchange Notes or Registrable
Securities, as the case may be, (vi) fees and disbursements of counsel for the
Company and customary fees and expenses for independent certified public
accountants retained by the Company (including the expenses of any comfort
letters or costs associated with the delivery by independent certified public
accountants of a comfort letter or comfort letters requested pursuant to Section
5(h) hereof), (vii) the fees and
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expenses of any special experts retained by the Company in connection with such
registration, and (viii) reasonable fees and expenses of one counsel (who shall
be selected by Holders of a majority of the Registrable Securities and who shall
be reasonably acceptable to the Company) for the Holders incurred in connection
with the registration hereunder. The Company shall not have any obligation to
pay any underwriting fees, discounts or commissions attributable to the sale of
Registrable Securities (including, without limitation, fees and expenses of any
qualified independent Underwriter that may be required under the rules of the
National Association of Securities Dealers), or, except as otherwise provided in
clause (viii) above, any out-of-pocket expenses of the Holders (or any agents
who manage their accounts) or fees and disbursements of any counsel for any
Underwriter in any underwritten offering.
7. Indemnification; Contribution.
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(a) Indemnification by the Company. The Company agrees to indemnify
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and hold harmless each Selling Holder of Registrable Securities, its officers
and directors and each person, if any, who controls such Selling Holder within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act from and against any and all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation) arising out of or based
upon any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating to the
Registrable Securities or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of, or are based
upon, any such
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untrue statement or omission or allegation thereof based upon information
furnished in writing to the Company by such Selling Holder or on such Selling
Holder's behalf expressly for use therein; and provided that with respect to any
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untrue statement or omission or alleged untrue statement or omission made in any
preliminary prospectus, the indemnity agreement contained in this paragraph
shall not apply to the extent that any such loss, claim, damage, liability or
expense results from the fact that a current copy of the prospectus was not sent
or given to the person asserting any such loss, claim, damage, liability or
expense at or prior to the written confirmation of the sale of the Registrable
Securities concerned to such person if it is determined that the provision of
such person with a current copy of the prospectus would have cured the defect
giving rise to such loss, claim, damage, liability or expense. The Company also
agrees to indemnify, as applicable, (i) the Broker-Dealers who hold Registrable
Securities acquired for their own accounts pursuant to the Registered Exchange
Offer and their officers, directors and each person who controls such Broker-
Dealers, and (ii) the Underwriters of the Registrable Securities and their
officers, directors and each person who controls such Underwriters, on
substantially the same basis as that of the indemnification of the Selling
Holders provided in this Section 7 if such Broker-Dealers and Underwriters agree
in writing to indemnify and contribute to the Company on substantially the same
basis as the Selling Holders indemnify and contribute to the Company pursuant to
this Section 7.
(b) Indemnification by Holder of Registrable Securities. Each Selling
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Holder whose Registrable Securities are included in a registration pursuant
hereto, shall be deemed to have agreed to indemnify and hold harmless the
Company, its directors and officers and each person, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act from and against any and
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all losses, claims, damages, liabilities and expenses (including reasonable
costs of investigation) arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or prospectus relating to the Registrable Securities or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading; provided that the provisions of this paragraph shall apply only
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insofar as losses, claims, damages, liabilities or expenses arise out of, or are
based upon, any such untrue statement or omission or allegation thereof based
upon information furnished in writing by such Selling Holder or on such Selling
Holder's behalf expressly for use in any registration statement or prospectus
relating to the Registrable Securities, or any amendment or supplement thereto,
or any preliminary prospectus. In case any action or proceeding shall be brought
against the Company, or its directors or officers, or any such controlling
person, in respect of which indemnity may be sought against such Selling Holder,
such Selling Holder shall have the rights and duties given to the Company, and
the Company or its directors or officers or such controlling person shall have
the rights and duties given to such Selling Holder, by the preceding paragraph.
(c) Conduct of Indemnification Proceedings. Promptly after receipt of
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notice of the commencement of any action or proceeding (including any
governmental investigation) brought or asserted against any person entitled to
indemnification under clause (a) or (b) above (an "Indemnified Party") in
respect of which indemnity may be sought from any party who has agreed to
provide such indemnification (an "Indemnifying Party"), if a claim in respect
thereof is to be made against an Indemnifying Party under such clause, the
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Indemnified Party shall notify the Indemnifying Party in writing of the
commencement thereof; provided, that the omission so to notify the Indemnifying
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Party shall not relieve it from any liability which it may have under this
Section 7 except to the extent it has been materially prejudiced by such
omission; provided, further, that the omission so to notify the Indemnifying
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Party shall not relieve it from any liability which it may have to an
Indemnified Party otherwise than under this Section 7. The Indemnifying Party
shall be entitled to assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Party, and shall assume the
payment of all expenses indemnified hereunder. Such Indemnified Party shall have
the right to employ separate counsel in any such action and to participate in
the defense thereof, but the fees and expenses of such separate counsel shall be
at the expense of such Indemnified Party unless (i) the Indemnifying Party has
agreed to pay such fees and expenses or (ii) the named parties to any such
action or proceeding (including any impleaded parties) include both such
Indemnified Party and the Indemnifying Party, and such Indemnified Party shall
have been advised by counsel that there is a conflict of interest on the part of
counsel employed by the Indemnifying Party to represent such Indemnified Party
(in which case, if such Indemnified Party notifies the Indemnifying Party in
writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense of such action or proceeding on behalf of such Indemnified Party; it
being understood, however, that the Indemnifying Party shall not, in connection
with any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations of circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (together with appropriate local
counsel)
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at any time for all such Indemnified Parties, which firm shall be designated in
writing by such Indemnified Parties). The Indemnifying Party shall not be liable
for any settlement of any such action or proceeding effected without its written
consent, which shall not be unreasonably withheld, but if settled with its
written consent, or if there be a final judgment for the plaintiff in any such
action or proceeding, the Indemnifying Party shall indemnify and hold harmless
such Indemnified Parties from and against any loss or liability (to the extent
stated above) by reason of such settlement or judgment.
(d) Contribution. If the indemnification provided for in this Section
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7 is due in accordance with the terms hereof but is held to be unavailable to
the Indemnified Parties in respect of any losses, claims, damages, liabilities
or judgments referred to herein (collectively, "losses"), then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses (i) as between the Company and the Selling Holders on the one
hand and the Underwriters or Broker-Dealers, as the case may be, on the other,
in such proportion as is appropriate to reflect the relative benefits received
by the Company and the Selling Holders on the one hand and the Underwriters or
Broker-Dealers, as the case may be on the other from the offering of the
Registrable Securities, or if such allocation is not permitted by applicable
law, in such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company and the Selling Holders on
the one hand and of the Underwriters or Broker-Dealers, as the case may be, on
the other in connection with the statements or omissions which resulted in such
losses, as well as any other relevant equitable considerations and (ii) as
between the Company on the one hand and each Selling Holder on the other, in
such proportion as is appropriate to reflect the relative fault of the Company
and
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of each Selling Holder in connection with such statements or omissions, as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Selling Holders on the one hand and the Underwriters or
Broker-Dealers, as the case may be, on the other shall be deemed to be in the
same proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
and the Selling Holders bear to the total underwriting discounts and commissions
received by the Underwriters or Broker-Dealers, as the case may be, in each case
as set forth in the table on the cover page of the prospectus. The relative
fault of the Company and the Selling Holders on the one hand and of the
Underwriters or Broker-Dealers, as the case may be, on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company and the Selling
Holders or by the Underwriters or Broker-Dealers, as the case may be. The
relative fault of the Company on the one hand and of each Selling Holder on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Selling Holders agree that it would not be just
and equitable if contribution pursuant to this Section 7(d) were determined by
pro rata allocation (even if the Underwriters or Broker-Dealers, as the case may
be, were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. The amount paid
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or payable by an Indemnified Party as a result of the losses, claims, damages,
liabilities or judgments referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim and for
which it is entitled to be indemnified hereunder. Notwithstanding the provisions
of this Section 7(d), no Underwriter or Broker-Dealer, as the case may be, shall
be required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Underwriter or Broker-Dealer, as the case may be, has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission, and no Selling Holder shall be required to contribute any
amount in excess of the amount by which the total price at which the Registrable
Securities of such Selling Holder were offered to the public exceeds the amount
of any damages which such Selling Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. 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 was not guilty of such fraudulent misrepresentation.
8. Additional Interest Under Certain Circumstances; Remedies.
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(a) In the event (to the extent applicable) that (i) (A) the
Registered Exchange Offer registration statement is not filed on or prior to the
45th day following the Issue Date, (B) the Registered Exchange Offer
registration statement is not declared effective within the earlier of (x) 90
days after the Issue Date or (y) 30 days after the consummation of the initial
20
public offering of the Company's Common Stock or (C) the Registered Exchange
Offer is not consummated on or prior to the 150th day following the Issue Date
or (ii) a Shelf Registration Statement with respect to the Notes is not promptly
filed pursuant to Section 3(a) hereof or is not declared effective under the
Securities Act on or prior to the later of (x) the 120th day after the Issue
Date and (y) the 45th day after the publication of the change in law or
interpretation referred to in Section 3, the interest rate borne by the Notes
shall be increased by one-half of one percent per annum following, in the case
of clause (i) (A), such 45-day period, or in the case of clause (i)(B), such 90-
or 30-day period, as the case may be, or in the case of clause (i)(C), such 150-
day period, or in the case of clause (ii), such 120- or 45-day period, as
applicable. The aggregate amount of such increase from the original interest
rate pursuant to these provisions will in no event exceed one-half of one
percent per annum. Such increase will cease to be effective on the date of
filing of the Registered Exchange Offer registration statement, effectiveness of
the Registered Exchange Offer registration statement, consummation of the
Registered Exchange Offer or the effectiveness of a Shelf Registration
Statement, as the case may be.
(b) Any amounts of additional interest due pursuant to the paragraph
above will be payable in cash, on the same original interest payment dates as
the Notes. The amount of additional interest will be determined by multiplying
the applicable additional interest rate by the principal amount of the affected
Notes of such Holders, multiplied by a fraction, the numerator of which is the
number of days such additional interest rate was applicable during such period
(determined on the basis of the actual number of days elapsed), and the
denominator of which is 360.
9. Participation in Underwritten Registrations.
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21
No person may participate in any underwritten registration hereunder
unless such person (a) agrees to sell such person's securities on the basis
provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and this Agreement.
10. Rule 144.
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To the extent it is otherwise required to do so, the Company covenants
that it will file any reports required to be filed by it under the Securities
Act and the Exchange Act so as to enable Holders to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any Holder, the Company will
deliver to such Holder a written statement as to whether it has complied with
such requirements.
11. Miscellaneous.
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(a) No Inconsistent Agreements. The Company will not hereafter enter
--------------------------
into and is not presently a party to any agreement with respect to its
securities which conflicts with the rights granted to the Holders of Registrable
Securities in this Agreement.
(b) Remedies. Each Holder of Registrable Securities, in addition to
--------
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a
22
breach by it of the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate. Any breach of this Agreement shall not cause a Default or Event of
Default under the Notes.
(c) Amendments and Waivers. Except as otherwise provided herein, the
----------------------
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
unless the Company has obtained the written consent of Holders holding a
majority in principal amount of the Registrable Securities then outstanding
affected by such amendment, modification, supplement, waiver or departure.
(d) Notices. All notices and other communications provided for or
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permitted hereunder shall be in writing and personally delivered or sent by
registered or certified first-class mail or by telecopy:
(i) if to a Holder at its last registered address, and with a
copy to be sent to each additional address, given by such Holder to
the Company or the Trustee, as the case may be, in writing; and
(ii) if to the Company at:
Schein Pharmaceutical, Inc.
100 Campus Drive
Florham Park, NJ 07932
Attention: Chief Financial Officer
Telecopy No.: (973) 593-5580
with a copy to: General Counsel
Telecopy No.: (973) 593-5820
or to such other address as any Holder or the Company may give notice of
pursuant hereto.
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All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; or three Business Days
after being deposited in the mail, postage prepaid, if mailed; or when received,
if telecopied.
(e) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and assigns of each of the parties hereto,
including any person to whom Registrable Securities are transferred.
(f) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the internal laws of the State of New York applicable to
contracts made and to be performed wholly within that State without regard to
the principles thereof regarding conflict of laws.
(h) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the Holders
shall be enforceable to the fullest extent permitted by law.
(i) Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set
24
forth or referred to herein with respect to such subject matter. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
25
IN WITNESS WHEREOF, the undersigned has duly executed this Agreement
for the benefit of the Initial Purchaser and the Holders, as of the date first
above written.
SCHEIN PHARMACEUTICAL, INC.
By: ____________________________________
Name: Dariush Ashrafi
Title: Executive Vice President and
Chief Financial Officer
Acknowledged as of the date first above written:
SOCIETE GENERALE SECURITIES CORPORATION,
as Initial Purchaser
By: ________________________________
Name: David M. Malcolm
Title: Managing Director