Exhibit 4.2
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT dated as of December 22, 2004 (the
"Agreement") is entered into by and among (i) Spheris Inc., a Delaware
Corporation (the "Company"), (ii) the guarantors listed in Schedule 1 hereto
(the "Guarantors") and (iii) X.X. Xxxxxx Securities Inc. ("JPMorgan") and UBS
Securities LLC (the "Initial Purchasers").
The Company, the Guarantors and the Initial Purchasers are parties to the
Purchase Agreement dated December 17, 2004 (the "Purchase Agreement"), which
provides for the sale by the Company to the Initial Purchasers of $125,000,000
aggregate principal amount of the Company's 11 % Senior Subordinated Notes due
2012 (the "Securities") which will be guaranteed on an unsecured senior
subordinated basis by each of the Guarantors. As an inducement to the Initial
Purchasers to enter into the Purchase Agreement, the Company and the Guarantors
have agreed to provide to the Initial Purchasers and their direct and indirect
transferees the registration rights set forth in this Agreement. The execution
and delivery of this Agreement is a condition to the closing under the Purchase
Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the following meanings:
"Business Day" shall mean any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to remain closed.
"Closing Date" shall mean the Closing Date as defined in the Purchase
Agreement.
"Company" shall have the meaning set forth in the preamble and shall also
include all of the Company's successors.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"Exchange Dates" shall have the meaning set forth in Section 2(a)(ii)
hereof.
"Exchange Offer" shall mean the exchange offer by the Company and the
Guarantors of Exchange Securities for Registrable Securities pursuant to Section
2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the
Securities Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another appropriate
form) and all amendments and
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supplements to such registration statement, in each case, including the
Prospectus contained therein, all exhibits thereto and any document incorporated
by reference therein.
"Exchange Securities" shall mean senior subordinated notes issued by the
Company and guaranteed by the Guarantors under the Indenture containing terms
identical to the Securities (except that the Exchange Securities will not be
subject to restrictions on transfer or to any increase in annual interest rate
for failure to comply with this Agreement) and to be offered to Holders of
Securities in exchange for Securities pursuant to the Exchange Offer.
"Guarantors" shall have the meaning set forth in the preamble and shall
also include any Guarantor's successors.
"Holders" shall mean the Initial Purchasers, for so long as they own any
Registrable Securities, and each of their successors, assigns and direct and
indirect transferees who become owners of Registrable Securities under the
Indenture; provided that for purposes of Sections 4 and 5 of this Agreement, the
term "Holders" shall include Participating Broker-Dealers.
"Indenture" shall mean the Indenture relating to the Securities dated as of
December 22, 2004 among the Company, the Guarantors and The Bank of New York, as
trustee, and as the same may be amended from time to time in accordance with the
terms thereof.
"Initial Purchasers" shall have the meaning set forth in the preamble.
"Inspector" shall have the meaning set forth in Section 3(a)(xiii) hereof.
"JPMorgan" shall have the meaning set forth in the preamble.
"Majority Holders" shall mean the Holders of a majority of the aggregate
principal amount of outstanding Registrable Securities; provided that whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities owned directly or
indirectly by the Company or any of its affiliates shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage or amount; and provided, further, that if the Company shall
issue any additional Securities under the Indenture prior to consummation of the
Exchange Offer or, if applicable, the effectiveness of any Shelf Registration
Statement, such additional Securities and the Registrable Securities to which
this Agreement relates shall be treated together as one class for purposes of
determining whether the consent or approval of Holders of a specified percentage
of Registrable Securities has been obtained.
"Participating Broker-Dealers" shall have the meaning set forth in Section
4(a) hereof.
"Person" shall mean an individual, partnership, limited liability company,
corporation, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement,
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and by all other amendments and supplements to such prospectus, and in each case
including any document incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the preamble.
"Registrable Securities" shall mean the Securities; provided that the
Securities shall cease to be Registrable Securities (i) when a Registration
Statement with respect to such Securities has been declared effective under the
Securities Act and such Securities have been exchanged or disposed of pursuant
to such Registration Statement, (ii) when such Securities are eligible to be
sold pursuant to Rule 144(k) (or any similar provision then in force, but not
Rule 144A) under the Securities Act or (iii) when such Securities cease to be
outstanding.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company and the Guarantors with this
Agreement, including without limitation (i) all SEC stock exchange or National
Association of Securities Dealers, Inc. registration and filing fees, (ii) all
fees and expenses incurred in connection with compliance with state securities
or blue sky laws (including reasonable fees and disbursements of counsel for any
Underwriters or Holders in connection with blue sky qualification of any
Exchange Securities or Registrable Securities), (iii) all expenses of any
Persons in preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus and any amendments or
supplements thereto, any underwriting agreements, securities sales agreements or
other similar agreements and any other documents relating to the performance of
and compliance with this Agreement, (iv) all rating agency fees, (v) all fees
and disbursements relating to the qualification of the Indenture under
applicable securities laws, (vi) the fees and disbursements of the Trustee and
its counsel, (vii) the fees and disbursements of counsel for the Company and the
Guarantors and, in the case of a Shelf Registration Statement, the fees and
disbursements of one counsel for the Holders (which counsel shall be selected by
the Majority Holders and which counsel may also be counsel for the Initial
Purchasers) and (viii) the fees and disbursements of the independent public
accountants of the Company and the Guarantors, including the expenses of any
special audits or "comfort" letters required by or incident to the performance
of and compliance with this Agreement, but excluding fees and expenses of
counsel to the Underwriters (other than fees and expenses set forth in clause
(ii) above) or the Holders and underwriting discounts and commissions, brokerage
commissions and transfer taxes, if any, relating to the sale or disposition of
Registrable Securities by a Holder.
"Registration Statement" shall mean any registration statement of the
Company and the Guarantors that covers any of the Exchange Securities or
Registrable Securities pursuant to the provisions of this Agreement and all
amendments and supplements to any such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and any document incorporated by reference
therein.
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities" shall have the meaning set forth in the preamble.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Shelf Effectiveness Period" shall have the meaning set forth in Section
2(b) hereof.
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"Shelf Registration" shall mean a registration effected pursuant to Section
2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration statement
of the Company and the Guarantors that covers all or a portion of the
Registrable Securities (but no other securities unless approved by the Holders
whose Registrable Securities are to be covered by such Shelf Registration
Statement) on an appropriate form under Rule 415 under the Securities Act, or
any similar rule that may be adopted by the SEC, and all amendments and
supplements to such registration statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits thereto
and any document incorporated by reference therein.
"Staff" shall mean the staff of the SEC.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
amended from time to time.
"Trustee" shall mean the trustee with respect to the Securities under the
Indenture.
"Underwriter" shall have the meaning set forth in Section 3 hereof.
"Underwritten Offering" shall mean an offering in which Registrable
Securities are sold to an Underwriter for reoffering to the public.
2. Registration Under the Securities Act. (a) To the extent not prohibited
by any applicable law or applicable interpretations of the Staff, the Company
and the Guarantors shall use their reasonable best efforts to (i) cause to be
filed an Exchange Offer Registration Statement covering an offer to the Holders
to exchange all the Registrable Securities for Exchange Securities and (ii) have
such Registration Statement remain effective until the earlier of 180 days after
the closing of the Exchange Offer and the date on which all Participating
Broker-Dealers and Initial Purchasers have sold all Exchange Securities held by
them. The Company and the Guarantors shall commence the Exchange Offer promptly
after the Exchange Offer Registration Statement is declared effective by the SEC
and use their reasonable best efforts to complete the Exchange Offer not later
than June 22, 2006.
The Company and the Guarantors shall commence the Exchange Offer by mailing
the related Prospectus, appropriate letters of transmittal and other
accompanying documents to each Holder stating, in addition to such other
disclosures as are required by applicable law, substantially the following:
(i) that the Exchange Offer is being made pursuant to this Agreement
and that all Registrable Securities validly tendered and not properly
withdrawn will be accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be a period of
at least 20 Business Days from the date such notice is mailed) (the
"Exchange Dates");
(iii) that any Registrable Security not tendered will remain
outstanding and continue to accrue interest but will not retain any rights
under this Agreement;
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(iv) that any Holder electing to have a Registrable Security exchanged
pursuant to the Exchange Offer will be required to surrender such
Registrable Security, together with the appropriate letters of transmittal,
to the institution and at the address (located in the Borough of Manhattan,
The City of New York) and in the manner specified in the notice, prior to
the close of business on the last Exchange Date; and
(v) that any Holder will be entitled to withdraw its election, not
later than the close of business on the last Exchange Date, by sending to
the institution and at the address (located in the Borough of Manhattan,
The City of New York) specified in the notice, a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Registrable Securities delivered for exchange and a statement
that such Holder is withdrawing its election to have such Securities
exchanged.
As a condition to participating in the Exchange Offer, a Holder will be
required to represent to the Company and the Guarantors that (i) any Exchange
Securities to be received by it will be acquired in the ordinary course of its
business, (ii) at the time of the commencement of the Exchange Offer it has no
arrangement or understanding with any Person to participate in the distribution
(within the meaning of the Securities Act) of the Exchange Securities in
violation of the provisions of the Securities Act, (iii) it is not an
"affiliate" (within the meaning of Rule 405 under the Securities Act) of the
Company or any Guarantor and (iv) if such Holder is a broker-dealer that will
receive Exchange Securities for its own account in exchange for Registrable
Securities that were acquired as a result of market-making or other trading
activities, then such Holder will deliver a Prospectus in connection with any
resale of such Exchange Securities.
As soon as practicable after the last Exchange Date, the Company and the
Guarantors shall:
(i) accept for exchange Registrable Securities or portions thereof
validly tendered and not properly withdrawn pursuant to the Exchange Offer;
and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities or portions thereof so accepted for
exchange by the Company and issue, and cause the Trustee to promptly
authenticate and deliver to each Holder Exchange Securities equal in
principal amount to the principal amount of the Registrable Securities
surrendered by such Holder.
The Company and the Guarantors shall use their reasonable best efforts to
complete the Exchange Offer as provided above and shall comply with the
applicable requirements of the Securities Act, the Exchange Act and other
applicable laws and regulations in connection with the Exchange Offer. The
Exchange Offer shall not be subject to any conditions, other than that the
Exchange Offer does not violate any applicable law or applicable interpretations
of the Staff.
(b) In the event that (i) the Company and the Guarantors determine that the
Exchange Offer Registration provided for in Section 2(a) above is not available
or may not be completed as soon as practicable after the last Exchange Date
because it would violate any applicable law or applicable interpretations of the
Staff, (ii) the Exchange Offer is not for any other reason completed by June 22,
2006 or (iii) based on the advice of counsel for the Initial Purchasers, an
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Initial Purchaser believes that a Registration Statement is required to be
effective in connection with any offers or sales of Registrable Securities held
by an Initial Purchaser so that the purchaser in any such sale may receive
Securities that are freely tradable under the Securities Act, the Company and
the Guarantors shall use their reasonable best efforts to cause to be filed as
soon as practicable after such determination, date or request, as the case may
be, a Shelf Registration Statement providing for the sale of all the Registrable
Securities by the Holders thereof and to have such Shelf Registration Statement
declared effective by the SEC.
In the event that the Company and the Guarantors are required to file a
Shelf Registration Statement pursuant to clause (iii) of the preceding sentence,
the Company and the Guarantors shall use their reasonable best efforts to file
and have declared effective by the SEC both an Exchange Offer Registration
Statement pursuant to Section 2(a) with respect to all Registrable Securities
and a Shelf Registration Statement (which may be a combined Registration
Statement with the Exchange Offer Registration Statement) with respect to offers
and sales of Registrable Securities held by the Initial Purchasers after
completion of the Exchange Offer.
The Company and the Guarantors agree to use their reasonable best efforts
to keep the Shelf Registration Statement continuously effective (other than
during any period described in Section 3(c) of this Agreement) until the
expiration of the period referred to in Rule 144(k) (or any similar rule then in
force, but not Rule 144A) under the Securities Act with respect to the
Registrable Securities or such shorter period that will terminate when all the
Registrable Securities covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement (the "Shelf Effectiveness
Period"). The Company and the Guarantors further agree to supplement or amend
the Shelf Registration Statement and the related Prospectus if required by the
rules, regulations or instructions applicable to the registration form used by
the Company for such Shelf Registration Statement or by the Securities Act or by
any other rules and regulations thereunder for shelf registration or if
reasonably requested by a Holder of Registrable Securities with respect to
information relating to such Holder, and to use their reasonable best efforts to
cause any such amendment to become effective and such Shelf Registration
Statement and Prospectus to become usable as soon as thereafter practicable. The
Company and the Guarantors agree to furnish to the Holders of Registrable
Securities copies of any such supplement or amendment promptly after its being
used or filed with the SEC.
(c) The Company and the Guarantors shall pay all Registration Expenses in
connection with any registration pursuant to Section 2(a) or Section 2(b)
hereof. Each Holder shall pay all underwriting discounts and commissions,
brokerage commissions and transfer taxes, if any, relating to the sale or
disposition of such Holder's Registrable Securities pursuant to the Shelf
Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to Section 2(a)
hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will
not be deemed to have become effective unless it has been declared effective by
the SEC.
In the event that either the Exchange Offer is not completed or the Shelf
Registration Statement, if required hereby, is not declared effective on or
prior to June 22, 2006, the interest rate on the Registrable Securities will be
increased by 1.00% per annum over the rate otherwise in effect, in each case,
until the Exchange Offer is completed or the Shelf Registration Statement,
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if required hereby, is declared effective by the SEC or the Securities become
freely tradable under the Securities Act.
If the Shelf Registration Statement, if required hereby, has been declared
effective and thereafter either ceases to be effective or the Prospectus
contained therein ceases to be usable at any time during the Shelf Effectiveness
Period, and such failure to remain effective or usable exists for more than 30
days (whether or not consecutive) in any 12-month period, then the interest rate
on the Registrable Securities will be increased by 1.00% per annum over the rate
otherwise in effect commencing on the 31st day in such 12-month period and
ending on such date that the Shelf Registration Statement has again been
declared effective or the Prospectus again becomes usable.
(e) Without limiting the remedies available to the Initial Purchasers and
the Holders, the Company and the Guarantors acknowledge that any failure by the
Company or the Guarantors to comply with their obligations under Section 2(a)
and Section 2(b) hereof may result in material irreparable injury to the Initial
Purchasers or the Holders for which there is no adequate remedy at law, that it
will not be possible to measure damages for such injuries precisely and that, in
the event of any such failure, the Initial Purchasers or any Holder may obtain
such relief as may be required to specifically enforce the Company's and the
Guarantors' obligations under Section 2(a) and Section 2(b) hereof.
3. Registration Procedures. (a) In connection with their obligations
pursuant to Section 2(a) and Section 2(b) hereof, the Company and the Guarantors
shall as expeditiously as possible in accordance with Section 2(a):
(i) prepare and file with the SEC a Registration Statement on the
appropriate form under the Securities Act, which form (x) shall be selected by
the Company and the Guarantors, (y) shall, in the case of a Shelf Registration,
be available for the sale of the Registrable Securities by the selling Holders
thereof and (z) shall comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith; and use their reasonable best efforts
to cause such Registration Statement to become effective and remain effective
for the applicable period in accordance with Section 2 hereof;
(ii) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement effective for the applicable period in accordance with
Section 2 hereof and cause each Prospectus to be supplemented by any required
prospectus supplement and, as so supplemented, to be filed pursuant to Rule 424
under the Securities Act; and keep each Prospectus current during the period
described in Section 4(3) of and Rule 174 under the Securities Act that is
applicable to transactions by brokers or dealers with respect to the Registrable
Securities or Exchange Securities;
(iii) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, to counsel for the Initial Purchasers, to counsel for
such Holders and to each Underwriter of an Underwritten Offering of Registrable
Securities, if any, without charge, as many copies of each Prospectus, including
each preliminary Prospectus, and any amendment or
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supplement thereto, in order to facilitate the sale or other disposition of the
Registrable Securities thereunder; and the Company and the Guarantors consent to
the use of such Prospectus and any amendment or supplement thereto in accordance
with applicable law by each of the selling Holders of Registrable Securities and
any such Underwriters in connection with the offering and sale of the
Registrable Securities covered by and in the manner described in such Prospectus
or any amendment or supplement thereto in accordance with applicable law;
(iv) use their reasonable best efforts to register or qualify the
Registrable Securities under all applicable state securities or blue sky laws of
such jurisdictions as any Holder of Registrable Securities covered by a
Registration Statement shall reasonably request in writing by the time the
applicable Registration Statement is declared effective by the SEC; cooperate
with such Holders in connection with any filings required to be made with the
National Association of Securities Dealers, Inc.; and do any and all other acts
and things that may be reasonably necessary or advisable to enable each Holder
to complete the disposition in each such jurisdiction of the Registrable
Securities owned by such Holder; provided that neither the Company nor any
Guarantor shall be required to (1) qualify as a foreign corporation or other
entity or as a dealer in securities in any such jurisdiction where it would not
otherwise be required to so qualify, (2) file any general consent to service of
process in any such jurisdiction or (3) subject itself to taxation in any such
jurisdiction if it is not so subject;
(v) in the case of a Shelf Registration, notify each Holder of Registrable
Securities, counsel for such Holders and counsel for the Initial Purchasers
promptly and, if requested by any such Holder or counsel, confirm such advice in
writing (1) when a Registration Statement has become effective and when any
post-effective amendment thereto has been filed and becomes effective, (2) of
any request by the SEC or any state securities authority for amendments and
supplements to a Registration Statement and Prospectus or for additional
information after the Registration Statement has become effective, (3) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose, (4) if, between the effective date of a
Registration Statement and the closing of any sale of Registrable Securities
covered thereby, the representations and warranties of the Company or any
Guarantor contained in any underwriting agreement, securities sales agreement or
other similar agreement, if any, relating to an offering of such Registrable
Securities cease to be true and correct in all material respects or if the
Company or any Guarantor receives any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation of any proceeding for such purpose, (5) of the
happening of any event during the period a Shelf Registration Statement is
effective that makes any statement made in such Registration Statement or the
related Prospectus untrue in any material respect or that requires the making of
any changes in such Registration Statement or Prospectus in order to make the
statements therein not misleading and (6) of any determination by the Company or
any Guarantor that a post-effective amendment to a Registration Statement would
be appropriate;
(vi) use their reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the earliest
possible moment and provide immediate notice to each Holder of the withdrawal of
any such order;
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(vii) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without any
documents incorporated therein by reference or exhibits thereto, unless
requested);
(viii) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends and enable such Registrable Securities to be
issued in such denominations and registered in such names (consistent with the
provisions of the Indenture) as the selling Holders may reasonably request at
least one Business Day prior to the closing of any sale of Registrable
Securities;
(ix) in the case of a Shelf Registration, upon the occurrence of any event
contemplated by Section 3(a)(v)(5) hereof, use their reasonable best efforts to
prepare and file with the SEC a supplement or post-effective amendment to a
Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to purchasers of the Registrable Securities, such Prospectus will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and the Company and the Guarantors
shall notify the Holders of Registrable Securities to suspend use of the
Prospectus as promptly as practicable after the occurrence of such an event, and
such Holders hereby agree to suspend use of the Prospectus until the Company and
the Guarantors have amended or supplemented the Prospectus to correct such
misstatement or omission;
(x) a reasonable time prior to the filing of any Registration Statement,
any Prospectus, any amendment to a Registration Statement or amendment or
supplement to a Prospectus or of any document that is to be incorporated by
reference into a Registration Statement or a Prospectus after initial filing of
a Registration Statement, provide copies of such document to the Initial
Purchasers and their counsel (and, in the case of a Shelf Registration
Statement, to the Holders of Registrable Securities and their counsel) and make
such of the representatives of the Company and the Guarantors as shall be
reasonably requested by the Initial Purchasers or their counsel (and, in the
case of a Shelf Registration Statement, the Holders of Registrable Securities or
their counsel) available for discussion of such document; and the Company and
the Guarantors shall not, at any time after initial filing of a Registration
Statement, file any Prospectus, any amendment of or supplement to a Registration
Statement or a Prospectus, or any document that is to be incorporated by
reference into a Registration Statement or a Prospectus, of which the Initial
Purchasers and their counsel (and, in the case of a Shelf Registration
Statement, the Holders of Registrable Securities and their counsel) shall not
have previously been advised and furnished a copy or to which the Initial
Purchasers or their counsel (and, in the case of a Shelf Registration Statement,
the Holders of Registrable Securities or their counsel) shall object;
(xi) obtain a CUSIP number for all Exchange Securities or Registrable
Securities, as the case may be, not later than the effective date of a
Registration Statement, and provide the Trustee with printed certificates for
such Exchange Securities or Registrable Securities, in a form eligible for
deposit with The Depository Trust Company;
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(xii) cause the Indenture to be qualified under the Trust Indenture Act in
connection with the registration of the Exchange Securities or Registrable
Securities, as the case may be; cooperate with the Trustee and the Holders to
effect such changes to the Indenture as may be required for the Indenture to be
so qualified in accordance with the terms of the Trust Indenture Act; and
execute, and use their reasonable 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 SEC to enable the Indenture to be so
qualified in a timely manner;
(xiii) in the case of a Shelf Registration, make available for inspection
by a representative of the Holders of the Registrable Securities (an
"Inspector"), any Underwriter participating in any disposition pursuant to such
Shelf Registration Statement, and attorneys and accountants designated by the
Holders, at reasonable times and in a reasonable manner, all pertinent financial
and other records, documents and properties of the Company and the Guarantors,
and cause the respective officers, directors and employees of the Company and
the Guarantors to supply all information reasonably requested by any such
Inspector, Underwriter, attorney or accountant in connection with a Shelf
Registration Statement; provided that if any such information is identified by
the Company or any Guarantor as being confidential or proprietary, each Person
receiving such information shall take such actions as are reasonably necessary
to protect the confidentiality of such information to the extent such action is
otherwise not inconsistent with, an impairment of or in derogation of the rights
and interests of any Inspector, Holder or Underwriter;
(xiv) in the case of a Shelf Registration, use their reasonable best
efforts to cause all Registrable Securities to be listed on any securities
exchange or any automated quotation system on which similar securities issued or
guaranteed by the Company or any Guarantor are then listed if requested by the
Majority Holders, to the extent such Registrable Securities satisfy applicable
listing requirements;
(xv) if reasonably requested by any Holder of Registrable Securities
covered by a Registration Statement, promptly incorporate in a Prospectus
supplement or post-effective amendment such information with respect to such
Holder as such Holder reasonably requests to be included therein and make all
required filings of such Prospectus supplement or such post-effective amendment
as soon as the Company has received notification of the matters to be
incorporated in such filing; and
(xvi) in the case of a Shelf Registration, enter into such customary
agreements and take all such other actions in connection therewith (including
those requested by the Holders of a majority in principal amount of the
Registrable Securities being sold) in order to expedite or facilitate the
disposition of such Registrable Securities including, but not limited to, an
Underwritten Offering and in such connection, (1) to the extent possible, make
such representations and warranties to the Holders and any Underwriters of such
Registrable Securities with respect to the business of the Company and its
subsidiaries, the Registration Statement, Prospectus and documents incorporated
by reference or deemed incorporated by reference, if any, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when requested, (2) obtain
opinions of counsel to the Company and the Guarantors (which counsel and
opinions, in form, scope and substance, shall be reasonably satisfactory to the
Holders and such Underwriters and
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their respective counsel) addressed to each selling Holder and Underwriter of
Registrable Securities, covering the matters customarily covered in opinions
requested in underwritten offerings, (3) obtain "comfort" letters from the
independent certified public accountants of the Company and the Guarantors (and,
if necessary, any other certified public accountant of any subsidiary of the
Company or any Guarantor, or of any business acquired by the Company or any
Guarantor for which financial statements and financial data are or are required
to be included in the Registration Statement) addressed to each selling Holder
and Underwriter of Registrable Securities, such letters to be in customary form
and covering matters of the type customarily covered in "comfort" letters in
connection with underwritten offerings and (4) deliver such documents and
certificates as may be reasonably requested by the Holders of a majority in
principal amount of the Registrable Securities being sold or the Underwriters,
and which are customarily delivered in underwritten offerings, to evidence the
continued validity of the representations and warranties of the Company and the
Guarantors made pursuant to clause (1) above and to evidence compliance with any
customary conditions contained in an underwriting agreement.
(b) In the case of a Shelf Registration Statement the Company may require
each Holder of Registrable Securities to furnish to the Company such information
regarding such Holder and the proposed disposition by such Holder of such
Registrable Securities as the Company and the Guarantors may from time to time
reasonably request in writing.
(c) In the case of a Shelf Registration Statement, each Holder of
Registrable Securities agrees that, upon receipt of any notice from the Company
and the Guarantors of the happening of any event of the kind described in
Section 3(a)(v)(3) or 3(a)(v)(5) hereof, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to a Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(a)(ix) hereof and, if so directed by the Company and
the Guarantors, such Holder will deliver to the Company and the Guarantors all
copies in its possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Securities that is
current at the time of receipt of such notice.
(d) If the Company and the Guarantors shall give any such notice to suspend
the disposition of Registrable Securities pursuant to a Registration Statement,
the Company and the Guarantors shall extend the period during which the
Registration Statement shall be maintained effective pursuant to this Agreement
by the number of days during the period from and including the date of the
giving of such notice to and including the date when the Holders shall have
received copies of the supplemented or amended Prospectus necessary to resume
such dispositions. The Company and the Guarantors may give any such notice only
twice during any 365-day period and any such suspensions shall not exceed 30
days for each suspension and there shall not be more than two suspensions in
effect during any 365-day period.
(e) The Holders of Registrable Securities covered by a Shelf Registration
Statement who desire to do so may sell such Registrable Securities in an
Underwritten Offering. In any such Underwritten Offering, the investment banker
or investment bankers and manager or managers (the "Underwriters") that will
administer the offering will be selected by the Holders of a majority in
principal amount of the Registrable Securities included in such offering.
12
4. Participation of Broker-Dealers in Exchange Offer. (a) The Staff has
taken the position that any broker-dealer that receives Exchange Securities for
its own account in the Exchange Offer in exchange for Securities that were
acquired by such broker-dealer as a result of market-making or other trading
activities (a "Participating Broker-Dealer") may be deemed to be an
"underwriter" within the meaning of the Securities Act and must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Securities.
The Company and the Guarantors understand that it is the Staff's position
that if the Prospectus contained in the Exchange Offer Registration Statement
includes a plan of distribution containing a statement to the above effect and
the means by which Participating Broker-Dealers may resell the Exchange
Securities, without naming the Participating Broker-Dealers or specifying the
amount of Exchange Securities owned by them, such Prospectus may be delivered by
Participating Broker-Dealers to satisfy their prospectus delivery obligation
under the Securities Act in connection with resales of Exchange Securities for
their own accounts, so long as the Prospectus otherwise meets the requirements
of the Securities Act.
(b) In light of the above, and notwithstanding the other provisions of this
Agreement, the Company and the Guarantors agree to amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement, as would
otherwise be contemplated by Section 3(a)(ix), for a period beginning when
Exchange Securities are first issued in the Exchange Offer and ending on the
earlier of (i) 180 days after the last Exchange Date (as such period may be
extended pursuant to Section 3(d) of this Agreement) and (ii) such time as all
Participating Broker-Dealers have sold all Exchange Securities held by them, if
requested by the Initial Purchasers or by one or more Participating
Broker-Dealers, in order to expedite or facilitate the disposition of any
Exchange Securities by Participating Broker-Dealers consistent with the
positions of the Staff recited in Section 4(a) above. The Company and the
Guarantors further agree that Participating Broker-Dealers shall be authorized
to deliver such Prospectus during such period in connection with the resales
contemplated by this Section 4, except during any period contemplated by Section
3(c) or 3(d).
(c) The Initial Purchasers shall have no liability to the Company, any
Guarantor or any Holder with respect to any request that they may make pursuant
to Section 4(b) above.
5. Indemnification and Contribution. (a) The Company and each Guarantor,
jointly and severally, agree to indemnify and hold harmless each Initial
Purchaser and each Holder, their respective affiliates, directors and officers
and each Person, if any, who controls any Initial Purchaser or any Holder within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages and liabilities
(including, without limitation, legal fees and other expenses incurred in
connection with any suit, action or proceeding or any claim asserted, as such
fees and expenses are incurred), joint or several, that arise out of, or are
based upon, any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or any Prospectus or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities arise out of, or are based upon, any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with any information relating to any Initial
Purchaser or any Holder
13
furnished to the Company in writing through JPMorgan or any selling Holder
expressly for use therein. In connection with any Underwritten Offering
permitted by Section 3, the Company and the Guarantors, jointly and severally,
will also indemnify the Underwriters, if any, selling brokers, dealers and
similar securities industry professionals participating in the distribution,
their respective affiliates and each Person who controls such Persons (within
the meaning of the Securities Act and the Exchange Act) to the same extent as
provided above with respect to the indemnification of the Holders, if requested
in connection with any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to indemnify and hold
harmless the Company, the Guarantors, the Initial Purchasers and the other
selling Holders, their respective affiliates, the directors of the Company and
the Guarantors, each officer of the Company and the Guarantors who signed the
Registration Statement and each Person, if any, who controls the Company, the
Guarantors, any Initial Purchaser and any other selling Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the indemnity set forth in paragraph (a) above, but only with
respect to any losses, claims, damages or liabilities that arise out of, or are
based upon, any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with any information relating
to such Holder furnished to the Company in writing by such Holder expressly for
use in any Registration Statement and any Prospectus.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnification may be sought pursuant to either
paragraph (a) or (b) above, such Person (the "Indemnified Person") shall
promptly notify the Person against whom such indemnification may be sought (the
"Indemnifying Person") in writing; provided that the failure to notify the
Indemnifying Person shall not relieve it from any liability that it may have
under this Section 5 except to the extent that it has been materially prejudiced
(through the forfeiture of substantive rights or defenses) by such failure; and
provided, further, that the failure to notify the Indemnifying Person shall not
relieve it from any liability that it may have to an Indemnified Person
otherwise than under this Section 5. If any such proceeding shall be brought or
asserted against an Indemnified Person and it shall have notified the
Indemnifying Person thereof, the Indemnifying Person shall retain counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified
Person and any others entitled to indemnification pursuant to this Section 5
that the Indemnifying Person may designate in such proceeding and shall pay the
fees and expenses of such counsel related to such proceeding, as incurred. In
any such proceeding, any Indemnified Person shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Person unless (i) the Indemnifying Person and the
Indemnified Person shall have mutually agreed to the contrary; (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person
shall have reasonably concluded that there may be legal defenses available to it
that are different from or in addition to those available to the Indemnifying
Person; or (iv) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
understood and agreed that the Indemnifying Person shall not, in connection with
any proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any
14
local counsel) for all Indemnified Persons, and that all such fees and expenses
shall be reimbursed as they are incurred. Any such separate firm (w) for any
Initial Purchaser, its affiliates, directors and officers and any control
Persons of such Initial Purchaser shall be designated in writing by JPMorgan,
(x) for any Holder, its directors and officers and any control Persons of such
Holder shall be designated in writing by the Majority Holders and (y) in all
other cases shall be designated in writing by the Company. The Indemnifying
Person shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees to indemnify each
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an Indemnified Person shall have requested that an Indemnifying Person reimburse
the Indemnified Person for fees and expenses of counsel as contemplated by this
paragraph, the Indemnifying Person shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by the Indemnifying Person of such
request and (ii) the Indemnifying Person shall not have reimbursed the
Indemnified Person in accordance with such request prior to the date of such
settlement. No Indemnifying Person shall, without the written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnification could have been sought hereunder by such Indemnified
Person, unless such settlement (A) includes an unconditional release of such
Indemnified Person, in form and substance reasonably satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to or any admission of
fault, culpability or a failure to act by or on behalf of any Indemnified
Person.
(d) If the indemnification provided for in paragraphs (a) and (b) above is
unavailable to an Indemnified Person or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Person under such paragraph, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Guarantors from the offering of the Securities and the Exchange
Securities, on the one hand, and by the Holders from receiving Securities or
Exchange Securities registered under the Securities Act, on the other hand, or
(ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) but also the relative fault of the Company
and the Guarantors on the one hand and the Holders on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company and the Guarantors on the one hand and the Holders
on the other shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company and the Guarantors or by the Holders and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) The Company, the Guarantors and the Holders agree that it would not be
just and equitable if contribution pursuant to this Section 5 were determined by
pro rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation
15
that does not take account of the equitable considerations referred to in
paragraph (d) above. The amount paid or payable by an Indemnified Person as a
result of the losses, claims, damages and liabilities referred to in paragraph
(d) above shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses incurred by such Indemnified Person in
connection with any such action or claim. Notwithstanding the provisions of this
Section 5, in no event shall a Holder be required to contribute any amount in
excess of the amount by which the total price at which the Securities or
Exchange Securities sold by such Holder exceeds the amount of any damages that
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(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(f) The remedies provided for in this Section 5 are not exclusive and shall
not limit any rights or remedies that may otherwise be available to any
Indemnified Person at law or in equity.
(g) The indemnity and contribution provisions contained in this Section 5
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
the Initial Purchasers or any Holder, their respective affiliates, or any Person
controlling any Initial Purchaser or any Holder, their respective affiliates, or
by or on behalf of the Company or the Guarantors, their respective affiliates,
or the officers or directors of or any Person controlling the Company or the
Guarantors, (iii) acceptance of any of the Exchange Securities and (iv) any sale
of Registrable Securities pursuant to a Shelf Registration Statement.
6. General.
(a) No Inconsistent Agreements. The Company and the Guarantors represent,
warrant and agree that (i) the rights granted to the Holders hereunder do not in
any way conflict with and are not inconsistent with the rights granted to the
holders of any other outstanding securities issued or guaranteed by the Company
or any Guarantor under any other agreement and (ii) neither the Company nor any
Guarantor has entered into, or on or after the date of this Agreement will enter
into, any agreement that is inconsistent with the rights granted to the Holders
of Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof.
(b) 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 and the Guarantors have obtained the written consent of
Holders of at least a majority in aggregate principal amount of the outstanding
Registrable Securities affected by such amendment, modification, supplement,
waiver or consent; provided that no amendment, modification, supplement, waiver
or consent to any departure from the provisions of Section 5 hereof shall be
effective as against any Holder of Registrable Securities unless consented to in
writing by such Holder. Any amendments, modifications, supplements, waivers or
consents pursuant to this Section 6(b) shall be by a writing executed by each of
the parties hereto.
16
(c) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, telex, telecopier, or any courier guaranteeing overnight delivery (i) if
to a Holder, at the most current address given by such Holder to the Company by
means of a notice given in accordance with the provisions of this Section 6(c),
which address initially is, with respect to the Initial Purchasers, the address
set forth in the Purchase Agreement; (ii) if to the Company and the Guarantors,
initially at the Company's 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 6(c); and (iii) to such other persons at their
respective addresses as provided in the Purchase Agreement and thereafter at
such other address, notice of which is given in accordance with the provisions
of this Section 6(c). 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 is 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, at the address specified in the Indenture.
(d) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Securities
in violation of the terms of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Registrable Securities in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all the terms of this Agreement, and by taking and holding such
Registrable 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. The Initial
Purchasers (in their capacity as Initial Purchasers) shall have no liability or
obligation to the Company or the Guarantors with respect to any failure by a
Holder to comply with, or any breach by any Holder of, any of the obligations of
such Holder under this Agreement.
(e) Third Party Beneficiaries. Each Holder shall be a third party
beneficiary to the agreements made hereunder between the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and
shall have the right to enforce such agreements directly to the extent it deems
such enforcement necessary or advisable to protect its rights or the rights of
other Holders hereunder.
(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, are not a part of this Agreement and shall not limit or
otherwise affect the meaning hereof.
17
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(i) Miscellaneous. This Agreement contains the entire agreement between the
parties relating to the subject matter hereof and supersedes all oral statements
and prior writings with respect thereto. If any term, provision, covenant or
restriction contained in this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable or against public policy, the
remainder of the terms, provisions, covenants and restrictions contained herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated. The Company, the Guarantors and the Initial Purchasers shall
endeavor in good faith negotiations to replace the invalid, void or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, void or unenforceable
provisions.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
SPHERIS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
----------------------------------
Title: Chief Compliance Officer and
General Counsel
---------------------------------
HEALTHSCRIBE, INC.
By /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxx
----------------------------------
Title: President
---------------------------------
HEALTHSCRIBE-SCRIBES ACQUISITION CORP
By /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxx
----------------------------------
Title: President
---------------------------------
SPHERIS OPERATIONS INC.
By /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
----------------------------------
Title: Secretary
---------------------------------
SPHERIS CANADA INC.
By /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
----------------------------------
Title: Secretary
---------------------------------
SPHERIS LEASING LLC
By /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
----------------------------------
Title: Secretary
---------------------------------
EDIX CORPORATION
By /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
----------------------------------
Title: Secretary
---------------------------------
Confirmed and accepted as of the date first above written:
X.X. XXXXXX SECURITIES INC.
For itself and on behalf of the
several Initial Purchasers
By: /s/ Xxxxxx Xxxxx
------------------------------------
Authorized Signatory
Schedule 1
List of Guarantors
NAME JURISDICTION OF INCORPORATION
---- -----------------------------
HealthScribe, Inc. Delaware
HealthScribe-Scribes Acquisition Corp. Delaware
Spheris Operations Inc. Tennessee
Spheris Canada Inc. Tennessee
Spheris Leasing LLC Tennessee
EDiX Corporation Delaware
