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As filed with the Securities and Exchange Commission on March 4, 1998
Registration No. 333-_________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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NCS HealthCare, Inc.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
34-1816187
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(I.R.S. Employer Identification No.)
3201 Enterprise Parkway, Suite 220, Beachwood, Ohio 44122,
telephone (216) 514-3350
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(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
Copy to:
Jon H. Outcalt Thomas F. McKee, Esq.
NCS HealthCare, Inc. Calfee, Halter & Griswold LLP
3201 Enterprise Parkway, Suite 220 400 McDonald Investment Center
Beachwood, Ohio 44122 800 Superior Avenue
(216) 514-3350 Cleveland, Ohio 44114
(216) 622-8200
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of the Registration Statement and after
compliance with applicable state and federal laws.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.[ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for he same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Title of each class of securities Amount to be Proposed maximum Proposed maximum Amount of
to be registered registered aggregate price per unit aggregate offering price(1) registration fee
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Class A Common Stock, $.01 par
value............................. 1,506,037 $28.6562 $43,157,298 $12,732
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<FN>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), using the average of the bid and asked price of
the Class A Common Stock of the Registrant as reported on the Nasdaq
National Market System on February 24, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SECTION 8(a), MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED MARCH 4, 1998
PROSPECTUS
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NCS HEALTHCARE, INC.
1,506,037 Shares
CLASS A COMMON STOCK
($.01 par value)
This Prospectus relates to the offering for resale of 1,506,037 shares
of Class A Common Stock, par value $.01 per share (the "Class A Common Stock"),
of NCS HealthCare, Inc., a Delaware corporation ("NCS" or the "Company"). All of
the Class A Common Stock being registered may be offered and sold from time to
time by certain selling stockholders named herein (the "Selling Stockholders")
of the Company. See "Selling Stockholders" and "Manner of Offering." The Company
will not receive any proceeds from the sale of the Class A Common Stock by the
Selling Stockholders.
The Company's Class A Common Stock is traded on the Nasdaq National
Market System under the symbol "NCSS." On March 3, 1998, the last reported
sale price for the Class A Common Stock was $29.750 per share.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus (including the
material incorporated herein by reference) and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or by any other person deemed to be an underwriter. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy the shares covered by this Prospectus by anyone in any state in which such
offer or solicitation is not authorized or in which the person making such offer
or solicitation is not qualified to do so to anyone to whom it is unlawful to
make such offer or solicitation. Neither the delivery of this Prospectus nor any
sale made hereunder shall under any circumstances create an implication that
there has been no change in the affairs of the Company since the date hereof.
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The date of this Prospectus is March __, 1998
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THE COMPANY
The Company has its principal executive offices at 3201 Enterprise
Parkway, Suite 220, Beachwood, Ohio 44122, and its telephone number is (216)
514-3350. As used in this Prospectus, "NCS" and the "Company" shall refer to NCS
HealthCare, Inc. and its consolidated subsidiaries, unless the context indicates
otherwise.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission") which may be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549. Such reports, proxy statements and
other information filed by the Company are also available for inspection and
copying at the Commission's Regional Offices located at: Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and at Seven
World Trade Center, 13th Floor, New York, New York 10048-1102. Such material may
also be accessed electronically by means of the Commission's home page on the
Internet at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company will provide, without charge, to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any and all of the information that has been incorporated by reference in
this Prospectus (not including exhibits to the information that is incorporated
by reference unless such exhibits are specifically incorporated by reference
into the information that the Prospectus incorporates). Such request should be
directed to Kristen H. Schulz, Director of Investor Relations, NCS HealthCare,
Inc., 3201 Enterprise Parkway, Suite 220, Beachwood, Ohio 44122, telephone (216)
514-3350.
The Company hereby incorporates the following documents by reference in
this Prospectus: (a) the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1997; (b) the Company's Quarterly Reports on Form 10-Q for
the periods ended September 30, 1997 and December 31, 1997; (c) the Company's
Current Reports on Form 8-K dated January 6, 1998 and January 30, 1998; and (d)
the Company's Form 8-A Registration Statement.
All documents subsequently filed pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act prior to the termination of this offering shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents.
SELLING STOCKHOLDERS
The shares of Class A Common Stock covered by this Prospectus are being
offered and sold by the stockholders of the Company listed below. Any shares of
Class B Common Stock, par value $.01 per share (the "Class B Common Stock"),
that were issued to any of the Selling Stockholders will be converted on a
share-for-share basis into Class A Common Stock prior to or upon transfer and
are therefore being registered as Class A Common Stock. Except with respect to
the shares of Class A Common Stock offered by Richard L. Osborne, the Company
issued such Class A Common Stock and Class B Common Stock to the Selling
Stockholders in connection with the acquisition, by the Company or certain of
its wholly-owned subsidiaries, of stock or assets of various institutional
pharmacies located in the United States. Certain of the Selling Stockholders
have entered into employment agreements and noncompetition agreements with the
Company and/or certain of its wholly-owned subsidiaries.
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The following table shows, as to each Selling Stockholder, the number
of shares owned by each Selling Stockholder prior to this offering and the
number of shares of Class A Common Stock being registered hereby. The table
below has been prepared on the basis of information furnished to the Company by
or on behalf of the Selling Securityholders. Any or all of the shares of Class A
Common Stock listed below may be offered for sale by the Selling Securityholders
from time to time.
Shares Owned Number of
Prior Shares
Name to Offering to be Registered
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Cathy L. Pease ............................................... 13,186 13,186 (1)
Aldo A. Palombo, Jr. ......................................... 18,392 8,641 (2)
Daniel Palombo ............................................... 18,392 8,641 (2)
Stephen G. Scott ............................................. 2,106 1,920 (2)
Michael C. Federici .......................................... 116,533 116,533 (3)
K. Elizabeth Haggerty ........................................ 44,820 44,820 (3)
Laura M. Linder .............................................. 17,928 17,928 (3)
Lyle L. Vandenberg ........................................... 134,187 134,187 (4)
Mark A. Kobin ................................................ 72,254 72,254 (4)
Patricia L. Rickard .......................................... 3,292 3,292 (5)
Employee Equity Administration, Inc. ......................... 8,050 8,050 (6)
RCC Facility, Inc. ........................................... 1,050 1,050 (6)
Shoreline South Intermediate Care, Inc. ...................... 18,900 18,900 (6)
Adam Cavan ................................................... 3,500 3,500 (6)
The VMI Irrevocable Trust for Kids, c/o Robert Easterday,
Trustee ...................................................... 3,500 3,500 (6)
Joseph E. DeLucia ............................................ 234,670 234,670 (7)
Renee E. Havriliak ........................................... 13,804 13,804 (7)
Michele L. Klem .............................................. 13,804 13,804 (7)
Allyson L. DeLucia ........................................... 13,804 13,804 (7)
Herbert O. Bobo .............................................. 7,999 7,999 (8)
William E. Cash, Jr. ......................................... 74,990 74,990 (8)
JoDee Creighton .............................................. 600 600 (8)
Keith B. Enterkin ............................................ 1,000 1,000 (8)
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Shares Owned Number of
Prior Shares
Name to Offering to be Registered
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Jack H. Fainberg ............................................. 5,999 5,999 (8)
Gary R. Frost ................................................ 5,999 5,999 (8)
John W. Looney ............................................... 1,200 1,200 (8)
Norwest Equity Partners V, a Minnesota Limited
Partnership .................................................. 95,639 95,639 (8)
Luis Pla ..................................................... 600 600 (8)
C. David Rhoton .............................................. 23,997 23,997 (8)
Jonathan S. Sherwin .......................................... 71,690 71,690 (8)
Bryan L. Tarman .............................................. 1,000 1,000 (8)
Michael W. Wessenberg ........................................ 1,999 1,999 (8)
Weston Presidio Offshore Capital C.V. ........................ 95,639 95,639 (8)
S & C Partnership ............................................ 7,299 7,299 (8)
David Brown .................................................. 4,299 4,299 (8)
Kern Pharmacies, Inc. ........................................ 268,000 268,000 (9)
Richard L. Osborne ........................................... 136,347 (10) 105,604
<FN>
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(1) This amount represents shares of Class A Common Stock issued by the
Company in connection with the agreement and plan of reorganization by
and among RX Express Pharmacy Services, Inc., NCS HealthCare of
Vermont, Inc. and Cathy L. Pease.
(2) This amount represents shares of Class A Common Stock issued by the
Company pursuant to earn-out provisions relating to the acquisition of
the capital stock of Advanced Rx Services, Inc. In connection with the
acquisition, Advanced Rx Services, Inc., entered into separate
employment agreements with each of Aldo A. Palombo, Daniel Palombo and
Stephen G. Scott for periods ending June 30, 2000, June 30, 2000 and
June 30, 1999, respectively.
(3) This amount represents the shares of Class A Common Stock underlying
the shares of Class B Common Stock issued by the Company in connection
with the merger agreement by and among Michael C. Federici, Laura M.
Linder, K. Elizabeth Haggerty, HLF Adult Home Pharmacy Corp., HLF
Acquisition Corp. and the Company. In connection with the merger, HLF
Adult Home Pharmacy Corp. entered into separate employment agreements,
each for a period of five years, with Mr. Federici, Ms. Linder and Ms.
Haggerty, respectively. Mr. Federici will serve as Executive Director
of HLF Adult Home Pharmacy Corp.
(4) This amount represents the shares of Class A Common Stock underlying
the shares of Class B Common Stock issued by the Company in connection
with the merger agreement entered into by and among Lyle L. Vandenberg,
Mark A. Kobin, Look Drug Stores, Inc., Look Acquisition Corp. and the
Company. In connection with the merger, Look Drug Stores, Inc. entered
into separate employment agreements, each for a period of three years,
with Messrs. Kobin and Vandenberg, respectively. Mr. Kobin will serve
as Executive Director of Look Drug Stores, Inc.
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(5) This amount represents shares of Class A Common Stock issued by the
Company in connection with the acquisition of the assets of
New England Pharmacy, Inc.
(6) This amount represents shares of Class A Common Stock issued by the
Company in connection with the agreement entered into by and among VMI
Software, Inc., Robert Easterday, Trustee of the VMI Irrevocable Trust
for Kids, Shoreline South Intermediate Care, Inc., RCC Facility Inc.,
Employee Equity Administration, Inc., Adam Cavan, Jack Easterday and
the Company.
(7) This amount represents the shares of Class A Common Stock underlying
the shares of Class B Common Stock issued by the Company in connection
with the acquisition of the capital stock of Cheshire Long Term
Pharmacy, Inc. In connection with the acquisition, Cheshire Long Term
Care Pharmacy, Inc. entered into separate employment agreements, each
for a period of three years, with Joseph E. DeLucia, Renee E.
Havriliak and Michele L. Klem, respectively.
(8) This amount represents shares of Class A Common Stock issued by the
Company in connection with the merger agreement by and among the
Company, NCS Acquisition Sub, Inc., PharmaSource Group, Inc. and all
the stockholders of PharmaSource Group, Inc. In connection with the
merger, PharmaSource Group, Inc. entered into separate employment
agreements, each for a period of three years, with William E. Cash,
Jr., C. David Rhoton and Michael Wessenberg.
(9) This amount represents shares of Class A Common Stock issued by the
Company in connection with the asset purchase agreement by and among
Clark Gustafson and Pamela Gustafson, Kern Pharmacies, Inc., NCS
HealthCare, Inc. and Kern Acquisition Corp.
(10) This amount includes 101,403 shares of Class B Common Stock and
options, exercisable within 60 days of the date of this Prospectus, to
purchase 30,743 shares of Class B Common Stock. Each share of Class B
Common Stock is convertible at any time into one share of Class A
Common Stock. Mr. Osborne has been a Director of the Company since
1986.
MANNER OF OFFERING
The price and manner of sale of the Class A Common Stock offered
hereunder are in the sole discretion of the Selling Stockholders. Sales of the
Class A Common Stock covered by this Prospectus may be made by the Selling
Stockholders, or, subject to applicable law, by pledgees, donees, transferees
or other successors in interest, in the over-the-counter market or otherwise at
prices and at terms then prevailing or at prices related to the then-current
market price or at prices and at terms determined in privately negotiated
transactions. The Class A Common Stock may be sold through any of several
methods, including by any one or more of the following: (a) a block trade in
which the broker or dealers so engaged will attempt to sell the shares as
agent, but may position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this
Prospectus; (c) ordinary brokerage transactions and transactions in which
brokers solicit purchasers; and (d) privately negotiated transactions. In
effecting sales, brokers or dealers will receive commissions or discounts from
the Selling Stockholders in amounts to be negotiated immediately prior to sale.
Such brokers or dealers may be deemed to be "underwriters" within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"), in connection
with such sales. In addition, any shares of Class A Common Stock covered by
this Prospectus which qualify for sale pursuant to Rule 144 may be sold under
Rule 144 rather than pursuant to this Prospectus.
The Company has advised the Selling Stockholders of their obligations
under the Exchange Act, and Regulation M promulgated thereunder, to avoid market
manipulation of the Class A Common Stock until the offering pursuant to this
Prospectus by all Selling Stockholders has been completed.
The Company also has advised the Selling Stockholders of their
obligations under the Securities Act to deliver copies of this Prospectus to any
purchaser of their Class A Common Stock.
DESCRIPTION OF CAPITAL STOCK
The Company's Certificate of Incorporation (the "Certificate")
authorizes capital stock consisting of 50 million shares of Class A Common
Stock, 20 million shares of Class B Common Stock and one million shares of
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Preferred Stock, par value $.01 per share (the "Preferred Stock"). The Company
is incorporated under the General Corporation Law of the State of Delaware (the
"Delaware GCL").
COMMON STOCK
At March 4, 1998, there were 12,879,068 shares of Class A Common
Stock and 6,644,900 shares of Class B Common Stock issued and outstanding and
options to purchase 392,274 shares of Class A Common Stock and options to
purchase 164,557 shares of Class B Common Stock. In addition, at such date,
there were an aggregate of 700,000 shares of Class A Common Stock reserved for
issuance under the Company's 1996 Long Term Incentive Plan.
The Class A Common Stock and Class B Common Stock are identical in all
material respects except that (i) shares of the Class B Common Stock entitle the
holders thereof to ten votes per share on all matters, and shares of the Class A
Common Stock entitle the holders thereof to one vote per share on all matters
and (ii) the shares of Class B Common Stock are subject to certain restrictions
on transfer. The shares of Class B Common Stock are not transferable except in
certain very limited instances to family members, trusts, other holders of Class
B Common Stock, charitable organizations and entities controlled by such persons
(collectively, "Permitted Transferees"). These restrictions on transfer may be
removed by the Board of Directors if the Board determines that the restrictions
may have a material adverse effect on the liquidity, marketability or market
value of the outstanding shares of Class A Common Stock.
The Class B Common Stock is fully convertible at any time into shares
of Class A Common Stock on a share-for-share basis and will automatically be
converted into shares of Class A Common Stock upon any purported transfer to
non-Permitted Transferees. Once a share of Class B Common Stock has been
converted into a share of Class A Common Stock, such share of Class A Common
Stock cannot thereafter be re-converted into Class B Common Stock. Because the
Class B Common Stock will at all times be convertible into Class A Common Stock
on a share-for-share basis, holders of Class B Common Stock will be able to sell
the equity interest represented by their Class B Common Stock to persons who are
not Permitted Transferees by converting such shares into Class A Common Stock.
As is the case with Preferred Stock and additional Class A Common Stock,
additional Class B Common Stock can be issued at the discretion of the Board of
Directors.
Except as set forth below (and as provided by law and in the Company's
Certificate now in effect), all matters submitted to a vote of the Company's
stockholders will be voted on by holders of Class A Common Stock and Class B
Common Stock voting together as a single class. Holders of outstanding shares of
Class A Common Stock and Class B Common Stock, respectively, vote separately as
a class with respect to amendments to the Certificate that would increase the
authorized number of shares of Class B Common Stock, or that would make other
amendments to the Certificate (other than increases in the number of authorized
shares of Class A Common Stock) that alter or change the designations or powers
or the preferences, qualifications, limitations, restrictions or the relative or
special rights of either the Class A Common Stock or the Class B Common Stock so
as to affect them adversely.
No cash dividend may be declared or paid on the Class B Common Stock
unless an equal or greater dividend is simultaneously declared or paid on the
Class A Common Stock. Otherwise, subject to the rights of holders of Preferred
Stock, if any, the Class A Common Stock and the Class B Common Stock rank
equally and have equal rights per share with respect to all dividends and
distributions, including distributions upon liquidation of the Company and
consideration to be received upon a merger or consolidation of the Company or a
sale of all or substantially all of the Company's assets. In the case of stock
dividends or stock splits, however, only shares of Class A Common Stock can be
distributed in respect of outstanding Class A Common Stock and only shares of
Class B Common Stock can be distributed in respect of outstanding Class B Common
Stock.
Neither shares of Class A Common Stock nor shares of Class B Common
Stock can be split, divided or combined unless all outstanding shares of the
other class are correspondingly split, divided or combined.
Because of the restrictions on transfer of the Class B Common Stock,
over time shares of Class B Common Stock having ten votes will (unless the
Directors determine to remove such restrictions) be converted into shares of
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Class A Common Stock having one vote, as holders convert their Class B Common
Stock into Class A Common Stock in order to sell their shares. Accordingly, the
remaining holders of Class B Common Stock who continue to hold their Class B
Common Stock will realize over time an increase in their relative voting power
in the Company. The Directors and executive officers of the Company and their
affiliates collectively own approximately 64.0% of the total voting power of
the Company. A substantial portion of this group's stock ownership consists of
Class B Common Stock. If those individuals continue to hold their Class B Common
Stock for the foreseeable future, the degree of control of the Company by these
Directors and executive officers and their affiliates, and their percentage of
the total voting power of the Company, will increase over time.
Holders of Class A Common Stock and Class B Common Stock do not have
any preemptive rights or rights to subscribe for additional securities of the
Company and are not subject to any further calls or assessments by the Company.
There are no redemption or sinking fund provisions applicable to the Class A
Common Stock or the Class B Common Stock. The shares of Class A Common Stock are
not convertible into any other series or class of the Company's securities.
Subject to the preferences applicable to the Preferred Stock, if any,
outstanding at the time, holders of shares of Class A Common Stock and Class B
Common Stock are entitled to dividends, if, when and as declared by the Board of
Directors, from funds legally available therefor and are entitled, in the event
of liquidation, to share ratably in all assets remaining after payment of
liabilities and Preferred Stock preferences, if any. See "Preferred Stock."
PREFERRED STOCK
The Company's Board of Directors is authorized, without further action
by the stockholders, to issue, from time to time, not in excess of one million
shares of Preferred Stock in one or more classes or series, and to fix or alter
the designations, powers and preferences, and relative, participating, optional
or other rights, if any, and qualifications, limitations or restrictions
thereof, including, without limitation, dividend rights (and whether dividends
are cumulative), conversion rights, if any, voting rights (including the number
of votes, if any, per share), rights and terms of redemption (including sinking
fund provisions, if any), redemption price and liquidation preferences of any
unissued shares or wholly unissued series of Preferred Stock, and the number of
shares constituting any such class or series and the designation thereof, and to
increase or decrease the number of shares of any such class or series subsequent
to the issuance of shares of such class or series, but not below the amount then
outstanding. Currently, there are no shares of Preferred Stock outstanding, and
the Company has no present intention to issue any Preferred Stock.
TWO-TIER BUSINESS COMBINATION PROVISION
The Certificate contains a provision designed to help assure that
stockholders of the Company receive equitable treatment, beyond that presently
provided by the applicable state law, in the event of certain Business
Combinations (as defined) between the Company and another corporation or entity.
Delaware law generally requires the affirmative vote of the holders of at least
a majority of the outstanding shares entitled to vote to approve a merger,
consolidation or disposition of all or substantially all of the Company's
assets. The Certificate raises the affirmative vote required to approve such a
business combination to at least 66-2/3% of the total voting power of the
Company's outstanding shares of Class A Common Stock and Class B Common Stock,
unless a Fair Price (as described herein) is paid to each of the stockholders of
the Company.
The Board of Directors is concerned about the partial or "two-step"
tender offer technique of accomplishing corporate takeovers. The first step in
this technique is a tender offer made by another corporation or entity seeking
control at a price that often substantially exceeds the market value of the
target corporation's stock. After acquiring a controlling number of shares, the
entity will then effectuate the second step: a business combination with the
target corporation designed to eliminate the then remaining stockholders'
interest in the corporation. The terms of the second step business combination
may not reflect arms-length bargaining and therefore may not assure proper
treatment of the stockholders remaining after the tender offer.
The Board of Directors intends to prevent persons who might acquire a
controlling interest in the Company from imposing a business combination on
minority stockholders unless such controlling persons are able and willing to
deal fairly with minority stockholders by paying them a fair price for their
interest in the Company. The
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Board recognizes that this fair price requirement might have the effect of
discouraging unilateral tender offers and other takeover proposals to acquire
control of the Company, as well as unsolicited acquisitions of the Company's
outstanding shares.
The Certificate requires, in addition to any required vote by the then
outstanding Preferred Stock, the vote of not less than 66-2/3% of the then
outstanding shares of the Company's Class A Common Stock and Class B Common
Stock to approve any Business Combination of the Company with any Related Person
(as defined) unless certain conditions have been met. In addition, the 66-2/3%
vote must include the affirmative vote of 51% of the outstanding shares of Class
A Common Stock and Class B Common Stock held by stockholders other than the
Related Person. Accordingly, the actual vote required to approve the Business
Combination may be greater than 66-2/3%, depending upon the number of shares
controlled by the Related Person. A Related Person is defined to include any
person or entity which is, directly or indirectly, the beneficial owner of
shares of Class A Common Stock representing 5% or more of the total voting power
of the Company, including any affiliate or associate of such person or entity.
The term Business Combination is defined to include virtually any transaction
between the Company and a Related Person, including a merger, consolidation or
sale of assets.
The 66-2/3% requirement and the 51% requirement are not applicable,
however (and, therefore, the proposed Business Combination could be approved by
a simple majority of the stockholders unless otherwise required by Delaware
law), if the Related Person pays a Fair Price (as defined) to the Company's
stockholders in the transaction or if a majority of the Board of Directors
approves the transaction. Under the terms of the Certificate, the Fair Price
must be a least equal to the greatest of (i) the highest price paid or agreed to
be paid by the Related Person to purchase any shares of the Company's common
equity securities, (ii) the highest market price of the common equity securities
during the 24-month period prior to the taking of such vote, or (iii) the per
share book value of the Class A Common Stock at the end of the calendar quarter
immediately preceding the taking of such vote. In addition, the Fair Price
consideration to be received by the Company's stockholders must be of the same
form and kind as the most favorable form and kind of consideration paid by the
Related Person in acquiring any of its shares of common equity securities of the
Company.
The Certificate provides that the above provisions regarding two-tier
business combinations may not be amended, altered, changed or repealed except by
the affirmative vote of at least 66-2/3% of the shares of the common equity
securities entitled to vote at a meeting of the stockholders called for the
consideration of such amendment, alteration, change or repeal, and at least 51%
of the outstanding shares entitled to vote thereon held by stockholders who are
not Related Persons, unless such proposal shall have been proposed by a majority
of the Board of Directors.
THE DELAWARE BUSINESS COMBINATION ACT
Section 203 of the Delaware GCL (the "Delaware Business Combination
Act") imposes a three-year moratorium on business combinations between a
Delaware corporation whose stock generally is publicly traded or held of record
by more than 2,000 stockholders and an "interested stockholder" (in general, a
stockholder owning 15% or more of a corporation's outstanding voting stock) or
an affiliate or associate thereof unless (a) prior to an interested stockholder
becoming such, the board of directors of the corporation approved either the
business combination or the transaction resulting in the interested stockholder
becoming such, (b) upon consummation of the transaction resulting in the
interested stockholder becoming such, the interested stockholder owns 85% of the
voting stock outstanding at the time the transaction commenced (excluding, from
the calculation of outstanding shares, shares beneficially owned by directors
who are also officers and certain employee stock plans) or (c) on or after an
interested stockholder becomes such, the business combination is approved by (i)
the board of directors and (ii) holders of at least 66-2/3% of the outstanding
shares (other than those shares beneficially owned by the interested
stockholder) at a meeting of stockholders. The term "business combination" is
defined generally to include mergers or consolidations between a Delaware
corporation and an interested stockholder involving the assets or stock of the
corporation or its majority-owned subsidiaries and transactions that increase an
interested stockholder's percentage ownership of stock.
The Delaware Business Combination Act applies to certain corporations
incorporated in the State of Delaware unless the corporation expressly elects
not to be governed by such legislation and sets forth such election
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in (a) the corporation's original certificate of incorporation, (b) an amendment
to the corporation's by-laws as adopted by the corporation's board of directors
within 90 days of the effective date of such legislation or (c) an amendment to
the corporation's certificate of incorporation or by-laws is approved by (in
addition to any other vote required by law) a majority of the shares entitled to
vote (however, such amendment would not be effective until 12 months after the
date of its adoption and would not apply to any business combination between the
corporation and any person who became an interested stockholder on or prior to
such adoption of such amendment). The Company has not made such an election and,
upon completion of the offering, will be subject to the Delaware Business
Combination Act.
DIRECTOR LIABILITY PROVISIONS
As permitted by the Delaware GCL, the Certificate contains a provision
that eliminates under certain circumstances the personal liability of Directors
(only in their capacities as Directors of the Company) to the Company or its
stockholders for monetary damages for a breach of fiduciary duty as Directors.
The provision in the Certificate does not change a Director's duty of care, but
it does authorize the Company to eliminate monetary liability for certain
violations of the duty, including violations based on grossly negligent business
decisions, which may include decisions relating to attempts to change control of
the Company. The provision does not affect the availability of equitable
remedies for a breach of duty of care, such as an action to enjoin or rescind a
transaction involving a breach of fiduciary duty; however, in certain
circumstances equitable remedies may not be available as a practical matter. The
provision in the Certificate in no way affects a Director's liability under the
federal securities laws. In addition, the Company's By-Laws and indemnity
agreements entered into with the Company's Directors and officers indemnify its
past and current Directors and officers for and provides advancements in respect
of all expense, liability and loss reasonably incurred in connection with any
threatened, pending or completed action, suit or proceeding, either civil,
criminal, administrative or investigative, by reason of the fact that he or she
is or was a Director or officer of the Company, including, in certain
circumstances under the indemnity agreements, for settlements in derivative
actions.
CLASSIFIED BOARD
The Certificate divides the Board of Directors into three classes. The
Directors serve staggered terms of three years, with the members of one class
being elected in any year, as follows: (i) Phyllis K. Wilson and A. Malachi
Mixon III have been designated as Class I Directors and will serve until the
1999 annual meeting; (ii) Boake A. Sells and Kevin B. Shaw have been designated
as Class II Directors and will serve until the 2000 annual meeting; and (iii)
Richard L. Osborne and Jon H. Outcalt have been designated as Class III
Directors and will serve until the 1998 annual meeting; and in each case until
their respective successors are elected and qualified.
A classified Board of Directors may have the effect of making it more
difficult to remove incumbent Directors, providing such Directors with enhanced
ability to retain their positions. A classified Board of Directors may also make
the acquisition of control of the Company by a third party by means of a proxy
contest more difficult. In addition, the classification may make it more
difficult to change the majority of Directors for business reasons unrelated to
a change of control.
The Certificate provides that the above provisions regarding
classification of the Board of Directors may not be amended, altered, changed or
repealed except by the affirmative vote of at least 66% of the shares of Common
Stock entitled to vote at a meeting of the stockholders called for the
consideration of such amendment, alteration, change or repeal, unless such
proposal shall have been proposed by a majority of the Board of Directors.
GENERAL
It is possible that the existence of the ten vote per share Class B
Common Stock, the Company's ability to issue Preferred Stock, the increased
voting requirements with respect to a Business Combination provided for in the
Certificate, the provisions of the Delaware Business Combination Act and the
division of the Board of Directors of the Company into classes as provided in
the Certificate, may discourage other persons from making a tender offer for or
acquisitions of substantial amounts of the Company's Class A Common Stock. This
could have the incidental
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effect of inhibiting changes in management and may also prevent temporary
fluctuations in the market price of the Company's Class A Common Stock that
often result from actual or rumored takeover attempts. In addition, the limited
liability provisions in the Certificate with respect to Directors and officers
may discourage stockholders from bringing a lawsuit against Directors for breach
of their fiduciary duty and may also have the effect of reducing the likelihood
of derivative litigation against Directors and officers, even though such an
action, if successful, might otherwise have benefited the Company and its
stockholders. Furthermore, a stockholder's investment in the Company may be
adversely affected to the extent that cost of settlement and damage awards
against the Company's Directors and executive officers are paid by the Company
pursuant to the indemnification provisions contained in the Company's By-Laws
and indemnity agreements described above.
TRANSFER AGENT AND REGISTRAR
The Company's Transfer Agent and Registrar for the Class A Common Stock
and Class B Common Stock is National City Bank, Cleveland, Ohio.
VALIDITY OF SHARES
The validity of the Class A Common Stock offered hereby will be passed
upon for the Company by Calfee, Halter & Griswold LLP, Cleveland, Ohio.
EXPERTS
The consolidated financial statements of NCS HealthCare, Inc. and its
subsidiaries appearing in NCS HealthCare, Inc.'s Annual Report on Form 10-K for
the year ended June 30, 1997, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
With respect to the unaudited condensed consolidated interim financial
information for the three-month periods ended September 30, 1997 and December
31, 1997, incorporated by reference in this Prospectus, Ernst & Young LLP has
reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, their separate
reports, included in NCS HealthCare, Inc.'s Quarterly Reports on Form 10-Q for
the periods ended September 30, 1997 and December 31, 1997, and incorporated
herein by reference, state that they do not audit and they did not express an
opinion on that interim financial information. Accordingly, the degree of
reliance on their reports on such information should be restricted considering
the limited nature of the review procedures applied. The independent auditors
are not subject to the liability provisions of Section 11 of the Securities Act
for their reports on the unaudited interim financial information because the
reports are not a "report" or a "part" of the Registration Statement prepared or
certified by the auditors within the meaning of Sections 7 and 11 of the Act.
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS.
Item 14. Other Expenses of Issuance and Distribution.
-------------------------------------------
The following table sets forth the estimated expenses payable by the
Company in connection with the sale and distribution of the Class A Common Stock
registered hereby:
SEC Registration Fee.................................... $12,732
-------
Accounting Fees ........................................ $ 7,500
-------
Fees and Expenses of Counsel............................ $ 7,500
-------
Nasdaq Additional Listing Fee........................... $ 2,000
-------
Miscellaneous........................................... $ 268
-------
Total.......................................... $30,000
=======
Item 15. Indemnification of Directors and Officers.
--------------------------------------
Section 145 of the Delaware GCL sets forth the conditions and
limitations governing the indemnification of officers, directors and other
persons. Section 145 provides that a corporation shall have the power to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or contemplated action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation or was serving at the
request of the corporation in a similar capacity with another corporation or
other entity, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement incurred in connection therewith if he acted in good
faith and in a manner that he reasonably believed to be in the best interests of
the corporation. With respect to a suit by or in the right of the corporation,
indemnity may be provided to the foregoing persons under Section 145 on a basis
similar to that set forth above, except that no indemnity may be provided in
respect of any claim, issue or matter as to which such person has been adjudged
to be liable to the corporation unless and to the extent that the Delaware Court
of Chancery or the court in which such action, suit or proceeding was brought
determines that despite the adjudication of liability, but in view of all the
circumstances of the case, such person is entitled to indemnity for such
expenses as the court deems proper. Moreover, Section 145 provides for mandatory
indemnification of a director, officer, employee or agent of the corporation to
the extent that such person has been successful in defense of any such action,
suit or proceeding and provides that a corporation may pay the expenses of an
officer or director in defending an action, suit or proceeding upon receipt of
an undertaking to repay such amounts if it is ultimately determined that such
person is not entitled to be indemnified. Section 145 establishes provisions for
determining that a given person is entitled to indemnification, and also
provides that the indemnification provided by or granted under Section 145 is
not exclusive of any rights to indemnity or advancement of expenses to which
such person may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
The Company's By-laws provide that the Company shall indemnify, to the
fullest extent permitted by Delaware law, any Director or officer who was or is
a party or is threatened to be made a party to any action, suit or proceeding by
reason of the fact that he or she, or a person of which he or she is the legal
representative, is or was a Director or officer of the Company, or is or was
serving at the request of the Company as a Director, officer, partner, trustee,
employee or agent of another entity, against all expenses, liabilities and
losses (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties or amounts paid in settlement) reasonably incurred by such person in
connection therewith. In addition, provisions of the Company's By-laws provide
for the advancement of expenses, including attorneys' fees, incurred by a
Director or officer of the Company in defending any proceeding for which
indemnification is provided under the By-laws upon receipt of an undertaking to
repay such amounts if it is ultimately determined that he or she is not entitled
to be indemnified by the Company as authorized in the By-laws. In addition, the
By-laws permit the Company to maintain insurance, at its expense, to protect
itself and any of its Directors or officers or individuals serving at the
request of the Company as a Director, officer, partner, trustee,
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employee or agent of another entity, against any expense, liability or loss,
whether or not the Company would have the power to indemnify such person against
such expense, liability or loss under the Delaware GCL.
Section 102 (b) of the Delaware GCL permits corporations to eliminate
or limit the personal liability of a Director to the corporation or its
stockholders for monetary damages for breach of the Director's duty of care.
Accordingly, the Company's Certificate provides that a Director of the Company
shall not be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a Director, except for liability (i) for
any breach of the Director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith that involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware GCL or (iv) for any transaction from which the Director derived an
improper personal benefit. The Company's Certificate further provides that any
repeal, amendment or other modification of the foregoing provisions will not
affect the liability or alleged liability of any Director of the corporation
then existing with respect to any state of facts then or theretofore existing or
any action, suit or proceeding theretofore or thereafter brought or threatened
based in whole or in part upon any such state of facts.
In addition to the foregoing, the Company has entered into indemnity
agreements with its executive officers and Directors. The indemnity agreements
provide that the indemnitee will be indemnified to the fullest extent permitted
by law against all expenses (including attorneys' fees), judgments, fines,
amounts paid or incurred by them for settlement in any action or proceeding on
account of their service as a Director or officer of the Company or of any
subsidiary of the Company or of any other entity in which they are serving at
the request of the Company.
The agreements bind the Company to provide indemnification to Directors
and officers whether or not the Company maintains Directors and officers
liability insurance coverage and regardless of any future changes in the
By-laws. The protection to be afforded Directors and officers by the agreements
is broader than that provided under the indemnification provisions contained in
the By-laws, in that the agreements expressly provide for the advancement of
expenses and for indemnification with respect to amounts paid in settlements of
derivative actions.
Item 16. Exhibits.
---------
See the Exhibit Index at page E-1 of this Registration Statement.
Item 17. Undertakings.
-------------
(1) The undersigned Registrant hereby undertakes:
(a) To file, during the period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or event
arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
the registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously
disclosed in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(i) and (a)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
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(b) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(2) The undersigned Registrant hereby undertakes that for the purpose
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted for Directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cleveland and the State of Ohio, as of the 4th day
of March, 1998.
NCS HEALTHCARE, INC.
By: /s/ Jon H. Outcalt
-------------------------------------
Jon H. Outcalt
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being a
Director and/or officer of NCS HealthCare, Inc., a Delaware corporation, hereby
constitutes and appoints Jon H. Outcalt, Kevin B. Shaw, Jeffrey R. Steinhilber,
Thomas F. McKee and John J. Jenkins, and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite, necessary or advisable to be done, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on March 4, 1998.
SIGNATURE TITLE
--------- -----
/s/ Jon H. Outcalt Chairman of the Board of Directors
- -------------------------
Jon H. Outcalt
/s/ Kevin B. Shaw President, Chief Executive Officer and Director
- ------------------------- (Principal Executive Officer)
Kevin B. Shaw
/s/ Jeffrey R. Steinhilber Chief Financial Officer
- ------------------------- (Principal Financial and Accounting Officer)
Jeffrey R. Steinhilber
/s/ A. Malachi Mixon III Director
- -------------------------
A. Malachi Mixon III
/s/ Boake A. Sells Director
- -------------------------
Boake A. Sells
II-4
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/s/ Richard L. Osborne Director
- -------------------------
Richard L. Osborne
/s/ Phyllis K. Wilson Director
- -------------------------
Phyllis K. Wilson
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NCS HEALTHCARE, INC.
EXHIBIT INDEX
EXHIBIT DESCRIPTION
NO. -----------
---
4.1 Specimen certificate of the Company's Class A Common Stock. (A)
4.2 Specimen certificate of the Company's Class B Common Stock. (A)
4.3 Form of 5 3/4% Convertible Subordinated Debentures due 2004. (B)
4.4 Indenture, dated August 13, 1997, between the Company and National City
Bank, as Trustee. (B)
5.1 Opinion of Calfee, Halter & Griswold LLP as to the validity of the
shares of Class A Common Stock.
10.1 Form of Guarantee Agreement, dated August 13, 1997, by and among
National City Bank and the subsidiary guarantors. (B)
10.2 Credit Agreement, dated as of August 1, 1997, by and among the Company,
the lending institutions named therein and KeyBank National
Association, as Administrative Agent. (B)
23.1 Consent of Calfee, Halter & Griswold LLP (included in Exhibit 5.1 of
this Registration Statement).
23.2 Consent of Ernst & Young LLP.
24.1 Power of Attorney and related certified resolution.
- -----------------
(A) Incorporated herein by reference to the appropriate exhibit to the Company's
Registration Statement on Form S-1 (Reg. No. 33-80455).
(B) Incorporated herein by reference to the appropriate exhibit to the Company's
Registration Statement on Form S-3, as amended (Reg. No. 333-35551).
E-1