1
EXHIBIT 4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of January 3, 1997, by and among CAPSTONE PHARMACY SERVICES,
INC., a Delaware corporation (the "Company"), and the parties named on Schedule
1 attached hereto (each a "Holder" and, collectively, the "Holders").
RECITALS
The Holders propose to acquire an aggregate of 2,708,804 shares (the
"Shares") of the Company's common stock, par value $.01 per share (the "Common
Stock"), in connection with a Merger Agreement dated of even date herewith
pursuant to which the Company acquired by merger certain companies of which
Holders were shareholders (the "Merger Agreement").
The Company has agreed to file a Registration Statement (the "Current
Registration") including the Shares by January 31, 1997, and to take all
appropriate action to cause such Registration Statement to be declared effective
by March 31, 1997.
In order to induce Holders to enter the Merger Agreement and accept the
Shares as a portion of the merger consideration, the Company has agreed to
provide the registration rights set forth in this Agreement.
1. Piggyback Registrations.
(a) Right to Piggyback. If, at any time after the Effective Date and
prior to the earlier of (x) January 3, 1999, and (y) the date upon which the
Holders become eligible to sell shares pursuant to Rule 144 ("Rule 144")
promulgated under the Exchange Act of 1933 (such date being herein referred to
as the "Rights Termination Date") (i) an effective registration statement is not
in place to allow Holders to sell Shares held by them, (ii) the Company proposes
to register any of its securities under the Securities Act of 1933, as amended
(the "Securities Act"), and (iii) the registration form to be used may be used
for the registration of Shares (a "Piggyback Registration" and the rights to
such registration "Piggyback Registration Rights"), the Company will give prompt
written notice (in any event at least 30 days in advance) to all Holders of its
intention to effect such a registration and will include in such registration
all Shares with respect to which the Company has received written requests for
inclusion therein within 15 days after the receipt of the Company's notice.
(b) Piggyback Expenses. The expenses incurred in connection with such
registration by the Holders will be paid by the Company in all Piggyback
Registrations.
2
(c) Priority on Primary Registrations. If a Piggyback Registration is,
in whole or in part, an underwritten primary registration on behalf of the
Company, and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number of piggyback shares which can be sold in such
offering, the Company will include in such registration (i) first, the shares of
Common Stock the Company proposes to sell, (ii) second, the shares of Common
Stock proposed to be sold by holders thereof who have registration rights
pursuant to the Registration Rights Agreement dated December 16, 1994, as
amended, or the Registration Rights Agreement dated May 22, 1995, as amended or
the Registration Rights Agreement dated April 16, 1996 or the Registration
Rights Agreement dated July 31, 1996 (such holders hereinafter referred to as
the "Existing Holders"), and (iii) third, other shares of Common Stock requested
to be included in such registration.
(d) Priority on Secondary Registration.
(i) If the Holders exercise their Piggyback Registration Rights in
connection with a registration statement filed in response to the exercise of
Demand Registration Rights (as defined below) and the managing underwriters
advise the Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering, the Company will include in such registration (i) first,
to the shares, of Common Stock for which Demand Registration Rights are
exercised, (ii) second, the shares of Common Stock requested to be included by
the Existing Holders, and (iii) third, other securities requested to be included
in such registration.
(ii) If the Existing Holders exercise their Piggyback Registration
Rights in connection with a registration statement filed in response to the
exercise of Demand Registration Rights by the Holders, and the managing
underwriters advise the Company in writing that, in their opinion, the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering, the Company will, subject to the rights of
the Existing Holders under paragraph 2(c) hereof, include in such registration
statement (i) first, the shares of Common Stock requested to be included by the
Existing Holders, and (ii) second, the other securities, requested to be
included in such registration, that in the opinion of such underwriter can be
sold, pro rata among the holders of such shares on the basis of the number of
shares requested to be included by such holders.
2. Demand Registration.
(a) Registration. If at any time after the Effective Date and prior to
the Rights Termination Date an effective registration statement is not in place
to allow Holders to sell Shares held by them and such Shares have previously not
registered pursuant to Section 1 then the Holders of not less than one-half of
the Shares may request one
2
3
registration under the Securities Act of all or part of their Registrable
Securities on Form S-1 under the Securities Act or any other permitted
registration form ("Demand Registration" and the right to such registration
"Demand Registration Rights") for which the Company will pay all Registration
Expenses (as defined Section 5 below). A registration will not count as a Demand
Registration until it has become effective.
(b) Priority on Demand Registrations. If, at any time after March 31,
1997 and prior to the Rights Termination Date, the Company receives a request by
the Holders for a Demand Registration, within five days after the receipt
thereof the Company will (i) give written notice of such request to all Holders
and Existing Holders previously not registered and (ii) include in such Demand
Registration all shares of Common Stock with respect to which the Company has
received written requests for inclusion therein within 15 days after the receipt
of the Company's notice. If the managing underwriter of any Demand Registration
advises the Company in writing that in its opinion the number of Shares and
other securities requested to be included exceeds the number of Shares and other
securities which can be sold in such offering, the Company will include in such
registration (i) first, the shares of Common Stock requested to be included by
the Existing Holders, and (ii) second, the number of Shares requested to be
included that in the opinion of such underwriter can be sold, pro rata among the
respective Holders on the basis of their relative shares of Shares requested to
be included. Any persons other than Holders who participate in the Demand
Registration must pay their share of the Registration Expenses as provided in
Section 5.
(c) Priority on Demand Registrations with respect to Existing Holders.
If, during the period after the Company has received a request by the Holders
for a Demand Registration and 15 days after the Holders and Existing Holders
have received the Company's notice described in the first sentence of Section
2(b) above, the Company receives a request by the Existing Holders for a demand
registration, then the Holders agree that the Company may file a registration
statement in response to the request by the Existing Holders in lieu of filing a
registration statement in response to the request by the Holders. The Holders
will have Piggyback Registration Rights in connection with such demand
registration in accordance with Section 1(d)(i) hereof and such registration
shall not count as Holders' Demand Registration.
(d) Selection of Underwriters. The Company will have the right to
decide if a Demand Registration shall be underwritten and to select the
investment banker(s) and manager(s) to manage or administer any offering
pursuant to a Demand Registration. Notwithstanding the foregoing, the Company's
unwillingness or inability to select such banker or manager shall not limit the
Company's obligation to proceed with a requested Demand Registration.
3
4
(e) In the event that all of the Shares requested to be included in a
registration pursuant to a Demand Registration are not included therein by
operation of Section 2(b) then such registration shall not count as Holders'
Demand Registration.
3. Current Registration. (a) The provisions of Sections 4, 5,6, 7 and 8 hereof
will apply to the Current Registration.
(b) The parties hereby agree that in the event the Current Registration
has not been declared effective by the Securities and Exchange Commission by
March 31, 1997 (the "Target Date") the Holders may be harmed by not being able
to sell shares until the date the Current Registration is actually declared
effective (the "Actual Date"), to the extent that the price on the Actual Date
is less than the price on the Target Date. Therefore, Company agrees to pay as
additional Merger Consideration (as defined in the related Merger Agreements
dated of even date herewith) and as liquidated damages an amount per share for
the total number of Shares equal to: (a) the closing bid price per share for the
common stock as quoted on the Nasdaq Stock Market on the Target Date, less (b)
the closing bid price per share for the common stock as quoted on the Nasdaq
Stock Market on the Actual Date, less $.50 (fifty cents) per share (the amount
per share in item (b) being referred to as the "Target Price" and the amount
calculated pursuant to items (a) and (b) being referred to herein as the "Per
Share Price Reconciliation"). The Per Share Price Reconciliation shall be
payable as follows:
(i) For Shares sold by the underwriters pursuant to the Current
Registration, the Company shall pay the Per Share Price
Reconciliation for such Shares immediately upon the Actual
Date (or the sale date, if later), first, by paying all or a
portion of the underwriting discount with respect to such
shares and then, if necessary, by paying any additional cash
to the Holders; and
(ii) For Shares sold otherwise, the Company shall pay the Per Share
Price Reconciliation for such Shares immediately upon the date
of such sale in cash to the Holders.
Notwithstanding the foregoing, if at any time after the Actual Date (when an
effective registration statement is in place with respect to the Shares or
Holders are eligible to sell shares pursuant to Rule 144) the closing bid price
per share for the common stock as quoted on the Nasdaq Stock Market is above the
Target Price for any three (3) trading days in any period of five (5)
consecutive trading days, then the Per Share Price Reconciliation for any Shares
still held by Holders shall be canceled, and Company shall be relieved of any
further obligation with respect thereto.
4. Registration Procedures. Whenever the Holders have requested that any Shares
be registered pursuant to the Agreement, the Company will use its best efforts
to
4
5
effect the registration and the sale of such Shares in accordance with the
intended method of disposition thereof, and pursuant thereto the Company will as
expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission (the
"SEC") a registration statement with respect to such Shares and use its best
efforts to cause such registration statement to become effective (provided that
before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company may furnish to a single law firm selected by
the Holders of a majority of the Shares covered by such registration statement
copies of all such documents proposed to be filed, which documents would be
subject to the reasonable review of such counsel which review would be limited
to information concerning the Holders and their plans of distribution and other
issues reasonably related to the Holders as Selling Shareholders);
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective for a period of
not less than six months and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the Holders thereof set forth in such registration statement;
(c) furnish to each Holder of Shares such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus)
and such other documents as such Holder may reasonably request in order to
facilitate the disposition of the Shares owned by such Holder;
(d) use its best efforts to register or qualify such Shares under such
other securities or blue sky laws of such jurisdiction as any Holder reasonably
requests and do any and all other acts and things which may be reasonably
necessary or advisable to enable such Holder to consummate the disposition in
such jurisdictions of the Shares owned by such Holder (provided that the Company
will not be required to (i) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this subparagraph,
(ii) subject itself to taxation in any such jurisdiction or (iii) consent to
general service of process in any such jurisdiction);
(e) notify each Holder of such Shares, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material fact or omits
any fact necessary to make the statements therein not misleading, and, at the
request of any such Holder, the Company will prepare a supplement or amendment
to such prospectus so that, as
5
6
thereafter delivered to the purchasers of such Shares, such prospectus will not
contain an untrue statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading.
(f) cause all such Shares to be listed on each securities exchange on
which similar securities issued by the Company are then listed;
(g) provide a transfer agent and registrar for all such Shares not
later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Shares being sold or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Shares
(including, without limitation, effecting a stock split or a combination of
shares);
(i) make available for inspection by any seller of Shares, any
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement; and
(j) obtain a comfort letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by comfort letters as the holders of a majority of the Shares being sold
reasonably request (provided that such Shares constitute at least 10% of the
securities covered by such registration statement).
5. Registration Expenses and Holdback Agreement.
(a) All expenses incident to the Company's performance under this
Agreement, including without limitation all registration and filing fees, fees
and expenses of compliance with securities or blue sky laws, printing expenses,
messenger and delivery expenses, and fees and disbursements of counsel for the
Company and all independent certified public accountants, underwriters
(excluding discounts and commissions, which are the responsibility of the
seller) and other persons retained by the Company (all such expenses being
herein called "Registration Expenses"), will be borne as provided in this
Agreement, except that the Company will, in any event, pay 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 or quarterly review, the expense of any liability insurance and the
6
7
expenses and fees for listing the securities to be registered on each securities
exchange on which similar securities issued by the Company are then listed.
(b) Each Holder agrees not to effect any public sale or distribution of
equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and the 120 day period beginning on the effective date of any underwritten
Piggyback Registration or any underwritten Demand Registration in which Shares
are included (except as part of such underwritten registration), unless the
underwriters managing the registered public offering otherwise agree.
6. Indemnification.
(a) The Company agrees to indemnify, to the extent permitted by law,
each Holder, its officers, directors and employees and each person who controls
such holder (within the meaning of the Securities Act) against all losses,
claims, damages, liabilities and expenses caused by any untrue or alleged untrue
statement of material fact contained in any registration statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are caused by or contained in any information furnished in writing to the
Company by such Holder expressly for use therein or by such Holder's failure to
deliver a copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished such Holder with a
sufficient number of copies of the same. In connection with an underwritten
offering, the Company will indemnify such underwriters, their officers,
directors and employees and each person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the Holders. Notwithstanding the foregoing, to
the extent that the provisions on indemnification and contribution contained in
any such underwriting agreement are in conflict with the foregoing provisions,
the provisions in the underwriting agreement shall control.
(b) In connection with any registration statement in which a Holder is
participating, each such Holder will furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in
connection with any such registration statement or prospectus and, to the extent
permitted by law, will indemnify the Company, its directors, officers and
employees and each person who controls the Company (within the meaning of the
Securities Act) against any loss, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of material fact contained
in the registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that
7
8
such untrue statement or omission is contained in any information or affidavit
so furnished in writing by such holder expressly for use herein.
(c) Any person entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense, is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
7. Participation in Underwritten Registrations. No person may participate in any
registration hereunder which includes an underwritten offering unless such
person (i) agrees to sell such person's securities on the basis provided in any
underwriting arrangements approved by the person entitled hereunder to approve
such arrangements and (ii) completes and executes all questionnaires, power of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
8. Miscellaneous.
(a) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of holders of at least
two-thirds of the Shares.
(b) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether or not any express assignment has been made, the provisions of this
Agreement which are for the benefit of purchasers or Holders of are also for the
benefit of, and enforceable by, any subsequent Holder, provided that the Company
is given written notice at the time of or within a reasonable time after said
assignment, stating the name and address of the assignee or holder and
identifying the securities with respect to which such registration rights are
being assigned, and provided further, that the assignee or Holder of such rights
assumes the obligations of such Holder under this Agreement.
8
9
(c) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be effective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
(d) Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, any one of which need not contain the signature of more
than one party, but all such counterparts taken together will constitute one and
the same Agreement.
(e) Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
(f) Governing Law. The construction, validity and interpretation of
this Agreement and the exhibits and schedules hereto will be governed by the
internal law, and not the law of conflicts, of the State of Delaware.
(g) Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally or
mailed by certified or registered mail, return receipt requested and postage
prepaid, to the recipient. Such notices, demands and other communications will
be sent to each other Holder at the address provided by such Holder and to
Company at the address indicated below:
Capstone Pharmacy Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: R. ▇▇▇▇ ▇▇▇▇▇▇▇, President
With a copy mailed to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ & Manner, P.C.
1800 First American Center
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ Manner, Esq.
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
IN WITNESS WHEREOF, the Company has executed this Agreement as of
January 3, 1997.
9
10
CAPSTONE PHARMACY SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Its: Chief Financial Officer
11
Schedule 1
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. and ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ and the ▇▇▇▇▇ ▇. and ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
Revocable Trust of 1992.
11