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Exhibit 4.12
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REGISTRATION RIGHTS AGREEMENT
Dated as of August 13, 1997
relating to up to
$115,000,000 in Aggregate Principal Amount
of 5-3/4% Convertible Senior Subordinated
Debentures due 2004
by and between
NCS HealthCare, Inc.
and
Smith Barney Inc.,
William Blair & Company L.L.C.,
Montgomery Securities
and
McDonald & Company Securities, Inc.
as Initial Purchasers
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This Registration Rights Agreement (the "Agreement") is made and
entered into as of August 13, 1997, by and between NCS HealthCare, Inc., a
Delaware corporation (the "Company") and Smith Barney Inc., William Blair &
Company L.L.C., Montgomery Securities and McDonald & Company Securities, Inc.
(the "Initial Purchasers"), who will purchase up to $115,000,000 in aggregate
principal amount of 5-3/4% Convertible Subordinated Debentures due 2004 (the
"Debentures") of the Company (including up to an additional $15,000,000
aggregate principal that may be purchased by the Initial Purchasers pursuant to
their over-allotment option) pursuant to the Purchase Agreement dated August 7,
1997 (the "Purchase Agreement"), between the Company and the Initial Purchasers.
In order to induce the Initial Purchasers to enter into the Purchase Agreement,
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
obligations of the Initial Purchasers set forth in the Purchase Agreement. All
defined terms used but not defined herein shall have the meanings ascribed to
them in the Indenture (as defined herein).
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall
have the following meanings:
Act: The Securities Act of 1933, as amended.
Closing Date: The date on which all the Debentures are first sold by
the Company to the Initial Purchasers pursuant to the Purchase Agreement.
Commission: The Securities and Exchange Commission.
Common Stock: The Class A Common Stock, par value $.O1 per share, of
the Company.
Damages Payment Date: With respect to the Debentures or the Common
Stock, as applicable, each Interest Payment Date as defined in the Indenture.
Effectiveness Target Dale: As defined in Section 4.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Holders: As defined in Section 2(b) hereof.
Indenture: The Indenture, to be dated as of August 13, 1997, among
the Company and National City Bank, as trustee (the "Trustee"), pursuant to
which the Debentures are to be issued, as such Indenture is amended or
supplemented from time to time in accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture.
NASD: National Association of Securities Dealers, Inc.
Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
Preliminary Prospectus: As defined in Section 3(g).
Prospectus: The prospectus included in the Shelf Registration
Statement, as amended or supplemented by any Prospectus Supplement with respect
to the terms of the offering of any portion of the Transfer Restricted
Securities (as defined herein) covered by the Shelf Registration Statement and
by all other amendments and supplements to the prospectus, including
post-effective amendments, and all material which may be incorporated by
reference into such prospectus.
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Prospectus Supplement: As defined in Section 5(b).
Record Holder: (i) With respect to any Damages Payment Date relating
to the Debentures, each Person who is registered on the books of the Registrar
as the holder of Debentures on the record date with respect to the Interest
Payment Date on which such Damages Payment Date shall occur and (ii) with
respect to any Damages Payment Date relating to the Common Stock, each Person
who is a holder of record of such Common Stock fifteen days prior to the Damages
Payment Date.
Registration Expenses: As defined in Section 6(a).
Shelf Registration Statement: As defined in Section 3(a) hereof.
TIA: The Trust Indenture Act of 1939, as amended (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Debenture and share of Common
Stock of the Company issuable upon conversion of a Debenture, until each such
Debenture or share (i) has been effectively registered under the Securities Act
and disposed of in accordance with the Shelf Registration Statement covering it,
(ii) is distributed to the public pursuant to Rule 144 or (iii) may be sold or
transferred pursuant to Rule 144(k) (or any similar provisions then in force)
under the Securities Act or otherwise. "Transfer Restricted Securities" shall be
deemed to include the guarantees of the Company's obligations under the
Indenture and the Debentures by certain subsidiaries of the Company pursuant to
that certain Guarantee Agreement dated as of August 13, 1997.
Underwriter: Any underwriter, placement agent, selling broker.
dealer manager, qualified independent underwriter or similar securities industry
professional.
Underwritten Registration or Underwritten Offering: An offering in
which securities of the Company are sold to an Underwriter or with the
assistance of such Underwriter for reoffering to the public on a firm commitment
or best efforts basis.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed to
be a holder of Transfer Restricted Securities (each, a "Holder") whenever such
Person owns Transfer Restricted Securities.
SECTION 3. SHELF REGISTRATION
(a) Subject to the provisions of Section 5 hereof, the Company shall
cause to be filed with the Commission on or prior to 30 days after the Closing
Date, a shelf registration statement pursuant to Rule 415 under the Act (as may
then be amended) (the "Shelf Registration Statement") on Form S-i or Form S-3,
if the use of such form is then available and as determined by the Company, to
cover resales of Transfer Restricted Securities by the Holders thereof who
satisfy certain conditions relating to the provision of information in
connection with the Shelf Registration Statement. In order for their Transfer
Restricted Securities to be included in the Shelf Registration Statement, the
Holders of such Transfer Restricted Securities shall have provided the
representations required pursuant to Section 3(g) hereof. The Company shall use
its reasonable best efforts to cause such Shelf Registration Statement to be
declared effective by the Commission on or prior to 90 days after the Closing
Date. The Company shall use its reasonable best efforts to keep such Shelf
Registration Statement continuously effective for a period ending two years from
the Closing Date or such shorter period that will terminate when each of the
Transfer Restricted Securities covered by the Shelf Registration Statement shall
cease to be a Transfer Restricted
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Security. The Company further agrees to use its reasonable best efforts to
prevent the happening of any event that would cause the Shelf Registration
Statement to contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or to be not effective and usable for resale of the
Transfer Restricted Securities during the period that such Shelf Registration
Statement is required to be effective and usable.
Upon the occurrence of any event that would cause the Shelf
Registration Statement (i) to contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading or (ii) to be not effective and usable for
resale of Transfer Restricted Securities during the period that such Shelf
Registration Statement is required to be effective and usable, the Company shall
as promptly as practicable file an amendment to the Shelf Registration
Statement, in the case of clause (i), correcting any such misstatement or
omission, and in the case of either clause (i) or (ii), use its best efforts to
cause such amendment to be declared effective and such Shelf Registration
Statement to become usable as soon as practicable thereafter.
Notwithstanding anything to the contrary in this Section 3, subject
to compliance with Sections 4 and 5(0), if applicable, the Company may prohibit
offers and sales of Transfer Restricted Securities pursuant to the Shelf
Registration Statement at any time if (A) (i) it is in possession of material
non-public information, (ii) the Board of Directors of the Company determines
(based on advice of counsel) that such prohibition is necessary in order to
avoid a requirement to disclose such material non-public information and (iii)
the Board of Directors of the Company determines in good faith that disclosure
of such material non-public information would not be in the best interests of
the Company and its shareholders or (B) the Company has made a public
announcement relating to an acquisition or business combination transaction
including the Company and/or one or more of its subsidiaries (i) that is
material to the Company and its subsidiaries taken as a whole and (ii) the Board
of Directors of the Company determines in good faith that offers and sales of
Transfer Restricted Securities pursuant to the Shelf Registration Statement
prior to the consummation of such transaction (or such earlier date as the Board
of Directors shall determine) is not in the best interests of the Company and
its shareholders (the period during which any such prohibition of offers and
sales of Transfer Restricted Securities pursuant to the Shelf Registration
Statement is in effect pursuant to clause (A) or (B) of this subparagraph (a) is
referred to herein as a "Suspension Period"). A Suspension Period shall commence
on and include the date on which the Company provides written notice to Holders
of Transfer Restricted Securities covered by the Shelf Registration Statement
that offers and sales of Transfer Restricted Securities cannot be made
thereunder in accordance with this Section 3 and shall end on the date on which
each Holder of Transfer Restricted Securities covered by the Shelf Registration
Statement either receives copies of a Prospectus Supplement contemplated by
Section 5(0) or is advised in writing by the Company that offers and sales of
Transfer Restricted Securities pursuant to the Shelf Registration Statement and
use of the Prospectus may be resumed.
(b) None of the Company nor any of its security holders (other than
the Holders of Transfer Restricted Securities in such capacity) shall have the
right to include any of the Company's securities in the Shelf Registration
Statement. None of the holders of Transfer Restricted Securities shall have the
right to include any Transfer Restricted Securities in any other Registration
Statement filed by the Company in connection with any sale of securities by the
Company for its own account or on behalf of any other holders of the Company's
securities.
(c) If the Holders of a majority of the outstanding Transfer
Restricted Securities so elect (with holders of Common Stock constituting
Transfer Restricted Securities being deemed to be Holders of the aggregate
principal amount of Debentures converted into such Common Stock for purposes of
such calculation), an offering of Transfer Restricted Securities pursuant to the
Shelf Registration Statement may be effected in the form of an Underwritten
Offering. The Holders of the Transfer Restricted Securities to be registered
shall pay all underwriting discounts and commissions of such Underwriters.
(d) If any of the Transfer Restricted Securities covered by the
Shelf Registration Statement are to be sold in an Underwritten Offering, the
Underwriter(s) that will administer the offering will be selected by the Holders
of a majority of the outstanding Transfer Restricted Securities (with holders of
Common Stock constituting Transfer Restricted Securities being deemed to be
Holders of the aggregate
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principal amount of Debentures converted into such Common Stock for purposes
of such calculation); provided, however, that such Underwriter(s) shall be
reasonably satisfactory to the Company.
(e) Each Holder whose Transfer Restricted Securities are covered by
a Shelf Registration Statement filed pursuant to this Section 3 agrees, upon the
request of the Underwriter(s) in any Underwritten Offering, not to effect any
sale or distribution of securities of the Company of the same class as the
securities included in such Shelf Registration Statement, for a period of up to
90 days beginning on the date any such Underwritten Offering made pursuant to
such Shelf Registration Statement commences, to the extent timely notified in
writing by such Underwriter(s).
(f) The Company agrees not to effect any public or private offer,
sale or distribution of Securities of the same quality and nature as the
Transfer Restricted Securities to be registered in an Underwritten Offering
during the 90-day period beginning on the date any such Underwritten Offering
made pursuant to the Shelf Registration Statement commences, to the extent
timely notified in writing by the Underwriter(s) (except as part of such
registration, if permitted, or pursuant to registrations on Forms SA or S-8 or
any successor form to such Forms), unless the Underwriter(s) shall consent in
writing to a shorter period of time.
(g) No Holder of Transfer Restricted Securities may include any of
its Transfer Restricted Securities in any Shelf Registration Statement pursuant
to this Agreement unless such Holder furnishes to the Company in writing, within
10 business days after receipt of a request therefor, such information as the
Company may reasonably request for use in connection with any Shelf Registration
Statement or Prospectus or preliminary Prospectus (a "Preliminary Prospectus")
included therein.
SECTION 4. LIQUIDATED DAMAGES
(a) If (i) the Shelf Registration Statement is not filed with the
Commission on or prior to 30 days after the Closing Date, (ii) the Shelf
Registration Statement has not been declared effective by the Commission within
90 days after the Closing Date (the "Effectiveness Target Date"), or (iii) the
Shelf Registration Statement is filed and declared effective but shall
thereafter cease to be effective (without being succeeded immediately by an
additional registration statement filed and declared effective) or useable for
resale for a period of time (including any Suspension Period) which shall exceed
60 days in the aggregate in any 12-month period during the period beginning on
the Closing Date and ending on or prior to the second anniversary of the Closing
Date (each such event referred to in clauses (i) through (iii), a "Registration
Default"), the Company will pay liquidated damages to each Holder of Transfer
Restricted Securities who has complied with such Holder's obligations under this
Agreement. The amount of liquidated damages payable during any period during
which a Registration Default shall have occurred and be continuing is that
amount which is equal to one-quarter of one percent (25 basis points) per annum
per $1,000 principal amount of Debentures or $2.50 per annum per 30.581 shares
of Common Stock (subject to adjustment in the event of stock splits, stock
recombinations, stock dividends and the like) constituting Transfer Restricted
Securities for the first 90-days during which a Registration Default has
occurred and is continuing and 50 basis points per annum per $1,000 principal
amount of Debentures or $5.00 per annum per 30.581 shares (subject to adjustment
as set forth above) of Common Stock constituting Transfer Restricted Securities
for all additional days during which a Registration Default has occurred and is
continuing. The Company shall notify the Trustee and the Initial Purchasers
within three business days after each and every date on which a Registration
Default occurs. All accrued liquidated damages shall be paid to Record Holders
by wire transfer of immediately available funds or by federal funds check by the
Company on each Damages Payment Date. Following the cure of all Registration
Defaults, liquidated damages will cease to accrue with respect to such
Registration Default.
All of the Company's obligations in respect of the payment of
liquidated damages set forth in the preceding paragraph which are outstanding
with respect to any Transfer Restricted Security at the time such security
ceases to be a Transfer Restricted Security shall survive until such time as all
such liquidated damages with respect to such security shall have been paid in
full.
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The parties hereto agree that the liquidated damages provided in
this Section 4 constitute a reasonable estimate of the damages that will be
incurred by Holders of Transfer Restricted Securities by reason of the failure
of the Shelf Registration Statement to be filed, declared effective or to remain
effective, as the case may be.
SECTION 5. REGISTRATION PROCEDURES
In connection with the Shelf Registration Statement, the Company
will use its best efforts to effect such registration to permit the sale of the
Transfer Restricted Securities being sold in accordance with the intended method
or methods of distribution or disposition thereof, and pursuant thereto the
Company will as expeditiously as possible after the Closing Date:
(a) on or prior to the date 30 days after the Closing Date, prepare
and file with the Commission a Shelf Registration Statement relating to the
registration on Form S-I or Form S-3, if the use of such form is then available
and as determined by the Company, for the sale of the Transfer Restricted
Securities in accordance with the intended method or methods of distribution
thereof and shall include all financial statements required to be included or
incorporated by reference therein; cooperate and assist in any filings required
to be made with the NASD and use its reasonable best efforts to cause such Shelf
Registration Statement to become effective and approved by such governmental
agencies or authorities as may be necessary to enable the selling Holders to
consummate the disposition of such Transfer Restricted Securities; provided,
however, that before filing a Shelf Registration Statement or any Prospectus, or
any amendments or supplements thereto, the Company will furnish to the Initial
Purchasers, the Holders and the Underwriter(s), if any, copies of all such
documents proposed to be filed (except that the Company shall not be required to
furnish any exhibits to such documents, including those incorporated by
reference, unless so requested by an Initial Purchaser, Holder or Underwriter in
writing), and the Company will not file any Shelf Registration Statement or
amendment thereto or any Prospectus or any supplement thereto to which (i) the
Initial Purchasers or the Underwriter(s), if any, shall reasonably object or
(ii) if there are no Underwriters, the Initial Purchasers or the Holders of a
majority of the outstanding Transfer Restricted Securities shall reasonably
object (with holders of Common Stock constituting Transfer Restricted Securities
being deemed to be Holders of the aggregate principal amount of Debentures
converted into such Common Stock for purposes of such calculation), in each such
case within five business days after the receipt thereof. An Initial Purchaser,
Holder or Underwriter, if any, shall be deemed to have reasonably objected to
such filing if the Shelf Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be filed contains any untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading which
misstatement or omission is specifically identified to the Company in writing
within such five business days;
(b) prepare and file with the Commission such amendments and
post-effective amendments to the Shelf Registration Statement as may be
necessary to keep the Shelf Registration Statement effective for the applicable
period set forth in Section 3(a) hereof; cause the Prospectus to be supplemented
by any required supplement thereto (a "Prospectus Supplement"), and as so
supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully
with the applicable provisions of Rules 424 and 430A under the Act in a timely
manner; and comply with the provisions of the Act with respect to the
disposition of all securities covered by such Shelf Registration Statement
during the applicable period in accordance with the intended method or methods
of distribution by the sellers thereof set forth in such Shelf Registration
Statement, Prospectus or Prospectus Supplement;
(c) if requested by the Holders of Transfer Restricted Securities,
or if the Transfer Restricted Securities are being sold in an Underwritten
Offering, the Underwriter(s) of such Underwritten Offering, promptly incorporate
m the Prospectus, any Prospectus Supplement or post-effective amendment to the
Shelf Registration Statement such information as the Underwriters and/or the
Holders of Transfer Restricted Securities being sold agree should be included
therein relating to the plan of distribution of the Transfer Restricted
Securities, including, without limitation, information with respect to the
principal amount of Debentures and/or the number of shares of Common Stock being
sold to such Underwriter(s), the purchase price being paid therefor and any
other terms with respect to the offering of the Transfer Restricted Securities
to be sold in such offering; and make all required filings of such Prospectus,
Prospectus
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Supplement or post-effective amendment as soon as practicable after die Company
is notified of the matters to be incorporated in such Prospectus, Prospectus
Supplement or post-effective amendment;
(d) advise the Initial Purchasers, the Underwriter(s), if any, and
selling Holders promptly and, if requested by such Persons, to confirm such
advice in writing, (i) when the Prospectus or any Prospectus Supplement or
post-effective amendment to the Shelf Registration Statement has been filed,
and, with respect to the Shelf Registration Statement or any post-effective
amendment thereto, when the same has become effective, (ii) of any request by
the Commission for amendments to the Shelf Registration Statement or amendments
or supplements to the Prospectus or for additional information relating thereto,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Shelf Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, (iv) if at any
time the representations and warranties of the Company contemplated by paragraph
(l)(i) below cease to be true and correct, and (v) of the existence of any fact
and the happening of any event that makes any statement of a material fact made
in the Shelf Registration Statement, the Prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the Shelf Registration
Statement or the Prospectus in order to make the statements therein not
misleading. If at any time the Commission shall issue any stop order suspending
the effectiveness of the Shelf Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Transfer Restricted
Securities under state securities or Blue Sky laws, the Company shall use their
reasonable best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
(e) furnish to each Initial Purchaser, each Holder and each of the
Underwriter(s), if any, without charge, at least one copy of the Shelf
Registration Statement, as first filed with the Commission, and of each
amendment thereto (excluding documents incorporated by reference therein and
exhibits thereto unless requested by such Initial Purchaser, Holder or
Underwriter);
(f) deliver to each Initial Purchaser, each selling Holder and each
of the Underwriter(s), if any, without charge, as many copies of any Preliminary
Prospectus and the Prospectus and any amendments or supplements thereto as such
Persons may reasonably request; the Company consents to the use of any
Preliminary Prospectus and the Prospectus and any amendments or supplements
thereto by each of the selling Holders and each of the Underwriter(s), if any,
in connection with the public offering and the sale of the Transfer Restricted
Securities covered by any Preliminary Prospectus and the Prospectus or any
amendments or supplements thereto;
(g) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders, the Underwriter(s), if any, and their
respective counsel in connection with the registration and qualification of the
Transfer Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders or Underwriter(s) may request and do any
and all other acts or things necessary or advisable to enable the disposition in
such jurisdiction of the Transfer Restricted Securities covered by the Shelf
Registration Statement; provided, however, that the Company shall not be
required (i) to register or qualify as a foreign corporation where it is not now
so qualified or (ii) to take any action that would subject it to the service of
process in suits, other than as to matters and transactions relating to the
Shelf Registration Statement, in any jurisdiction where it is not now so
subject;
(h) cooperate with the selling Holders and the Underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legends; and enable such Transfer Restricted Securities to be in
such denominations and registered in such names as the Holders or the
Underwriter(s), if any, may request at least two business days prior to any sale
of Transfer Restricted Securities;
(i) use its best efforts to cause the Transfer Restricted Securities
covered by the Shelf Registration Statement to be registered with or approved by
such other United States federal or state governmental agencies or authorities
as may be necessary to enable the seller or sellers thereof or the
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Underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (g) above;
(j) if any fact or event contemplated by clause (d)(v) above shall
exist or have occurred, prepare a post-effective amendment or supplement to the
Shelf Registration Statement or related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Securities, the Prospectus
will not contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;
(k) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of the Shelf Registration Statement and
provide the Trustee under the Indenture and/or the transfer agent for the Common
Stock with certificates for the Transfer Restricted Securities which are in a
form eligible for deposit with the Depository Trust Company;
(l) enter into such agreements (including an underwriting agreement)
and take all such other actions in connection therewith as may reasonably be
required in order to expedite or facilitate the disposition of the Transfer
Restricted Securities pursuant to the Shelf Registration Agreement, m connection
with an Underwritten Registration, and (i) make such representations and
warranties to the Holders and the Underwriter(s), in form, substance and scope
as they may reasonably request and as are customarily made by issuers to
Underwriters in primary Underwritten Offerings and covering matters including,
but not limited to, those set forth in the Purchase Agreement; (ii) obtain
opinions of counsel for the Company and updates thereof in customary form and
covering matters reasonably requested by the Underwriter(s) of the type
customarily covered in legal opinions to Underwriters in connection with primary
Underwritten Offerings addressed to each selling Holder and the Underwriter
requesting the same and covering the matters as may be reasonably requested by
such Holders and Underwriters; (iii) obtain "cold comfort" letters and updates
thereof from the Company's independent certified public accountants addressed to
the selling Holders of Transfer Restricted Securities and the Underwriters
requesting the same, such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters to Underwriters in
connection with primary Underwritten Offerings; (iv) set forth in full or
incorporate by reference in the underwriting agreement the indemnification
provisions and procedures of Section 7 hereof with respect to all parties to be
indemnified pursuant to said Section; and (v) deliver such documents and
certificates as may be reasonably requested by the Holders of the Transfer
Restricted Securities being sold or the Underwriter(s) of such Underwritten
Offering to evidence compliance with clause (i) above and with any customary
conditions contained in the underwriting agreement entered into by the Company
pursuant to this clause (1). The above shall be done at or prior to each closing
under such underwriting agreement, as and to the extent required thereunder;
(m) make available at reasonable times and in a reasonable manner
for inspection by a representative of the Holders of the Transfer Restricted
Securities, any Underwriter participating in any disposition pursuant to such
Shelf Registration Statement, and any attorney or accountant retained by such
selling Holders or any of the Underwriters, all financial and other records,
pertinent corporate documents and properties of the Company and cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such Holder, Underwriter, attorney or accountant in connection
with such Shelf Registration Statement prior to its effectiveness, provided,
however, that such representatives, attorneys or accountants shall agree to keep
confidential (which agreement shall be confirmed in writing in advance to the
Company if the Company shall so request) all information, records or documents
made available to such persons which are not otherwise available to the general
public unless disclosure of such records. information or documents is required
by court or administrative order (of which the Company shall have been given
prior notice and an opportunity to defend) after the exhaustion of all appeals
therefrom, and to use such information obtained pursuant to this provision only
in connection with the transaction for which such information was obtained, and
not for any other purpose;
(n) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make generally available
to its security holders, as soon as practicable, a consolidated earnings
statement, which consolidated earnings statement shall satisfy the provisions of
Section
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11(a) of the Act, for the twelve-month period (i) commencing at the end of any
fiscal quarter in which Transfer Restricted Securities are sold to Underwriters
in a firm commitment or best efforts Underwritten Offering or (ii) if not sold
to Underwriters in such an offering, beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of the Shelf
Registration Statement;
(o) cause the Indenture and, if necessary, the Guarantee Agreement,
to be qualified under the TIA, and, in connection therewith, cooperate with the
Trustee and the Holders to effect such changes to the Indenture and, if
necessary, the Guarantee Agreement, as may be required for such Indenture and,
if necessary, the Guarantee Agreement to be so qualified in accordance with the
terms of the TIA; and execute and use its best efforts to cause the Trustee to
execute, all documents as may be required to effect such changes and all other
forms and documents required to be filed with the Commission to enable such
Indenture and, if necessary, the Guarantee Agreement, to be so qualified in a
timely manner;
(p) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Shelf Registration Statement at the
earliest possible moment;
(q) cause all Transfer Restricted Securities covered by the Shelf
Registration Statement to be listed on each securities exchange or quotation
system on which similar securities issued by the Company are then listed if
requested by the Holders of a majority of the outstanding Transfer Restricted
Securities (with holders of Common Stock constituting Transfer Restricted
Securities being deemed to be Holders of the aggregate principal amount of
Debentures converted into such Common Stock for purposes of such calculation) or
the Underwriters, if any; and cause the Debentures covered by the Shelf
Registration Statement to be rated with the appropriate rating agencies, if so
requested by the Holders of a majority in aggregate principal amount of such
Debentures or the Underwriters; and
(r) cooperate and assist in any filings required to be made with the
NASD and in the performance of any due diligence investigation by any
Underwriter (including any "qualified independent Underwriter" that is required
to be retained in accordance with the rules and regulations of the NASD).
Each Holder as to which any Shelf Registration Statement is being
effected agrees to furnish promptly to the Company all information required to
be disclosed in order to make the information previously furnished to the
Company by such Holder not materially misleading or necessary to cause such
Shelf Registration Statement not to omit a material fact with respect to such
Holder necessary in order to make the statements therein not misleading. Each
Holder agrees that the information furnished by such Holder specifically for
inclusion in any Shelf Registration Statement will not contain any misstatement
of material fact or omit to state a material fact necessary in order to make
such information not misleading.
Each Holder agrees by acquisition of such Transfer Restricted
Securities that, upon receipt of any notice from the Company of the existence of
any fact of the kind described in Section 5(d)(v) hereof, such Holder will
forthwith discontinue disposition of Transfer Restricted Securities until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(j) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings with respect to the
Prospectus. If so directed by the Company, each Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such Transfer
Restricted Securities current at the time of receipt of such notice. In the
event Company shall give any such notice, the time period regarding the
effectiveness of the Shelf Registration Statement set forth in Section 3(a)
hereof shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to Section 5(d)(v)
hereof to and including the date when each selling Holder covered by such Shelf
Registration Statement shall have received the copies of the supplemented or
amended Prospectus contemplated by Section 5(j) hereof or shall have received
the Advice.
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SECTION 6. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or
compliance with this Agreement (the "Registration Expenses") will be borne by
the Company, regardless of whether a Shelf Registration Statement becomes
effective, including without limitation:
(i) all registration and filing fees and expenses (including any
filings made with the NASD);
(ii) fees and expenses of compliance with federal securities or
state blue sky laws;
(iii) expenses of printing (including, without limitation,
expenses of printing or engraving certificates for the Transfer
Restricted Securities in a form eligible for deposit with Depository
Trust Company and of printing the Prospectus and any Preliminary
Prospectus), messenger and delivery services and telephone;
(iv) reasonable fees and disbursements of counsel for the Company
and for the Holders of the Transfer Restricted Securities (subject to
the provisions of Section 6(0) hereof);
(v) fees and disbursements of all independent certified public
accountants of the Company (including the expenses of any special
audit and "cold comfort" letters required by or incidental to the
preparation and filing of a Shelf Registration Statement and
Prospectus and the disposition of Transfer Restricted Securities);
(vi) fees and expenses associated with any NASD filing required
to be made in connection with the Shelf Registration Statement,
including, if applicable, the fees and expenses of any "qualified
independent Underwriter" (and its counsel) that is required to be
retained in accordance with the rules and regulations of the NASD; and
(vii) fees and expenses of listing the Transfer Restricted
Securities on any securities exchange or quotation system in
accordance with Section 5(q) hereof.
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, rating agency fees and the fees and expenses of any Person, including
special experts, retained by the Company. The Holders of Transfer Restricted
Securities shall bear the expense of any broker's commission or Underwriter's
discount or commission.
(b) In connection with the Shelf Registration Statement, the Company
will reimburse the Holders of Transfer Restricted Securities being registered
pursuant to such Shelf Registration Statement for the reasonable fees and
disbursements of not more than one counsel chosen by the Holders of a majority
of the outstanding Transfer Restricted Securities (with holders of Common Stock
constituting Transfer Restricted Securities being deemed to be Holders of the
aggregate principal amount of Debentures converted into such Common Stock for
purposes of such calculation).
Notwithstanding the provisions of this Section 6(0), each Holder of
Transfer Restricted Securities shall pay all Registration Expenses to the extent
required by applicable law.
SECTION 7. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless (i) each of
the Initial Purchasers, (ii) each Holder, (iii) each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) any of the Initial Purchasers or any Holder (any of the persons
referred to in this clause (iii) being hereinafter referred to as a "controlling
person") and (iv) the respective officers, directors, partners, employees,
representatives and agents of any of the Initial Purchasers or any Holder or any
controlling person (any person referred to in clause (i), (ii), (iii) or (iv)
may hereinafter be
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referred to as a "Non-Company Indemnitee"), to the fullest extent lawful, from
and against any and all losses, claims, damages, liabilities and judgments
caused by any untrue statement or alleged untrue statement of a material fact
contained in the Shelf Registration Statement, Prospectus or Preliminary
Prospectus (or any amendments or supplements thereto), including any document
incorporated by reference therein, or caused by 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, with respect to any Non-
Company Indemnitee, insofar as such losses, claims, damages, liabilities or
judgments (I) are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information furnished in writing to the
Company by such Non-Company Indemnitee expressly for use therein or (2) with
respect to any Preliminary Prospectus, result from the fact that such
Non-Company Indemnity sold Transfer Restricted Securities to a person to whom
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of the final Prospectus, as amended or supplemented, if the Company
shall have previously furnished copies thereof to such Non-Company Indemnitee in
accordance with this Agreement and the final Prospectus, as amended or
supplemented, would have corrected such untrue statement or omission.
(b) In case any action shall be brought against any Non-Company
Indemnitee, based upon the Shelf Registration Statement, Prospectus, or
Preliminary Prospectus (or any amendments or supplements thereto), and with
respect to which indemnity may be sought against the Company, such Non-Company
Indemnitee shall promptly notify the Company in writing and the Company shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses; provided, however, that the omission so to notify the
Company shall not relieve the Company from any liability that it may have to any
Non-Company Indemnitee (except to the extent that the Company is materially
prejudiced or otherwise forfeits substantive rights or defenses by reason of
such failure). Such Non-Company Indemnitee shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of counsel shall be paid by such Non-Company Indemnitee,
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the Company, (ii) the Company shall have failed to
assume the defense and employ counsel or (iii) the named parties to any such
action (including any impleaded parties) include both such Non-Company
Indemnitee and the Company and it would be inappropriate for the same counsel to
represent such Non-Company Indemnitee and the Company (in which case the Company
shall not have the right to assume the defense of such action on behalf of such
Non-Company Indemnitee, it being understood, however, that the Company shall
not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
the Non-Company Indemnitees, which firm shall be designated in writing by the
Non-Company Indemnitees and whose fees and expenses reasonably incurred shall be
reimbursed as they are incurred). The Company shall not be liable for any
settlement of any such action effected without the written consent of the
Company, but if settled with the written consent of the Company, the Company
agrees to indemnify and hold harmless any Non-Company Indemnitee from and
against any amounts payable pursuant to such written consent m connection with
such settlement. Notwithstanding the immediately preceding sentence, if in any
case where the fees and expenses of counsel are at the expense of the Company
and a Non-Company Indemnitee shall have requested the Company to reimburse such
Non-Company Indemnitee for such fees and expenses of counsel as incurred, the
Company agrees that it shall be liable for any settlement of any action effected
without its written consent if (i) each settlement is entered into more than 30
business days after the receipt by the Company of the aforesaid request and (ii)
the Company shall have failed to reimburse such Non-Company Indemnitee in
accordance with such request for reimbursement prior to the date of such
settlement. The Company shall not, without the prior written consent of such
Non-Company Indemnitee, effect any settlement of any pending or threatened
proceeding in respect of which such Non-Company Indemnitee is or could have been
a party and indemnity could have been sought hereunder by such Non-Company
Indemnitee, unless such settlement includes an unconditional release of such
Non-Company Indemnitee from all liability on claims that are the subject matter
of such proceeding.
(c) Each Holder of Transfer Restricted Securities agrees to
indemnify and hold harmless (i) the Company, (ii) each of the Initial
Purchasers, (iii) each other Holder, (iv) any person controlling (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company,
any of the Initial Purchasers and each other Holder and (v) the respective
officers, directors, partners,
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employees, representatives and agents of each of the parties referred to in
clauses (i), (ii), (iii) and (iv), to the same extent as the foregoing indemnity
from the Company to each of the Non-Company Indemnitees, but only with respect
to information relating to such Holder that was furnished in writing by such
Holder expressly for use in the Shelf Registration Statement (or any amendment
or supplement thereto). In no event shall the liability of any selling Holder
hereunder be greater in amount than the dollar amount of the proceeds received
by such Holder upon the sales of the Transfer Restricted Securities giving rise
to such indemnification obligation.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to herein, then each 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, claims,
damages, liabilities and judgments in such proportion as is appropriate to
reflect the relative fault of the indemnifying party, on the one hand, and the
indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
fault of the indemnifying party, on the one hand, and the indemnified party, on
the other hand, 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
indemnifying party, on the one hand, or the indemnified party, on the other
hand, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company, each of the Initial Purchasers and each Holder of
Transfer Restricted Securities agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The losses, claims, damages, liabilities or judgments of an indemnified party
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 prior to the indemnifying party's
assumption of the defense thereof or subsequent thereto to the extent permitted
by the second sentence of Section 7(b) hereof. Notwithstanding the provisions of
this Section 7, none of the Holders shall be required to contribute, in the
aggregate, any amount m excess of the amount by which the total amount received
by such Holder with respect to the sale of Transfer Restricted Securities
exceeds the amount of any damages which such 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(1) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute pursuant to this Section 7(d) are several in
proportion to the respective principal amount of Notes held by each of the
Holders hereunder and not joint.
SECTION 8. RULE 144A
The Company hereby agrees with each Holder, for so long as any of
the Debentures or shares of Common Stock that are Transfer Restricted Securities
remain outstanding and during any such period in which the Company is not
subject to Section 13 or 15(d) of the Exchange Act, to make available to any
Initial Purchaser or any beneficial owner of the Debentures or shares of such
Common Stock in connection with any sale thereof and any prospective purchaser
of such Debentures or Common Stock from such Initial Purchaser or beneficial
owner, the information required by Rule 144A(d)(4) under the Act in order to
permit resales of such Transfer Restricted Securities pursuant to Rule 144A.
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SECTION 9. PARTICIPATION IN Underwritten REGISTRATIONS
No Holder may participate in any Underwritten Offering hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements, (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements and (c) furnishes the Company in writing information in accordance
with Section 3(g) and agrees to indemnify and hold harmless the Company, its
directors, its officers who sign the Registration Statement and any person
controlling the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act to the extent contemplated by Section 7(c).
SECTION 10. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
Underwriter(s) that will administer the offering will be selected by the Holders
of the Transfer Restricted Securities included in such offering in the manner
specified in Section 3(c); provided, however, that such Underwriters must be
reasonably satisfactory to the Company.
SECTION 11. MISCELLANEOUS
(a) REMEDIES. Each Holder of Transfer Restricted Securities, in
addition to being entitled to exercise all rights provided herein, and as
provided in the Purchase Agreement and granted by law, including recovery of
damages, will be entitled to specific performance of such Holder's rights under
this Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a 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.
(b) NO INCONSISTENT AGREEMENTS. The Company will not on or after the
date of this Agreement enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders of Transfer
Restricted Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders of Transfer Restricted
Securities hereunder do not in any way conflict with and are not inconsistent
with the rights granted to the holders of the Company's securities under any
other agreements.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, 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
of a majority of the outstanding Transfer Restricted Securities affected by such
amendment, modification, supplement, waiver or departure (with holders of Common
Stock constituting Transfer Restricted Securities being deemed to be Holders of
the aggregate principal amount of Debentures converted into such Common Stock
for purposes of such calculation). Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders of Transfer Restricted Securities whose securities are being
sold pursuant to such Shelf Registration Statement and that does not directly or
indirectly affect the rights of other Holders of Transfer Restricted Securities
shall be valid only with the written consent of Holders of at least 66-2/3% of
the Transfer Restricted Securities being sold, in each case calculated in
accordance with the provisions of Section 3(c).
(d) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder of Transfer Restricted Securities, at the
address set forth on the records of the Registrar under the Indenture,
with a copy to the Registrar; and
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(ii) if to the Company or an Initial Purchaser, initially at its
address set forth in the Purchase Agreement and thereafter at such
other address, notice of which is given in accordance with the
provisions of this Section.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if telecopied; and on
the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in the Indenture.
(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, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder of Transfer Restricted Securities unless
and to the extent such successor or assign acquired Transfer Restricted
Securities from such Holder; and provided further that nothing herein shall be
deemed to permit any assignment, transfer or any disposition of Transfer
Restricted Securities in violation of the terms of the Purchase Agreement. If
any transferee of any Holder shall acquire Transfer Restricted Securities, in
any manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement and by
taking and holding such Transfer Restricted Securities such person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement and such Person shall be entitled to
receive the benefits hereof.
(f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICTS OF LAW RULES THEREOF.
(i) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(j) ENTIRE AGREEMENT. This Agreement together with the other
Operative Documents (as defined in the Purchase 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 forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the securities sold pursuant to the Purchase Agreement. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
NCS HEALTHCARE, INC.
By: /s/ Jeffrey R. Steinhilber
____________________________
Name: Jeffrey R. Steinhilber
Title: Senior Vice President
and Chief Financial Officer
SMITH BARNEY INC.
WILLIAM BLAIR & COMPANY L.L.C.
MONTGOMERY SECURITIES
MCDONALD & COMPANY SECURITIES, INC.
BY: SMITH BARNEY INC.
By: /s/ Ben Lorello
___________________
Name: Ben Lorello
Title: Managing Director
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