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REGISTRATION RIGHTS AGREEMENT
between
NATIONAL HEALTHCARE L.P.
and
THE 1818 FUND II, L.P.
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Dated as of October 15, 1997
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TABLE OF CONTENTS
Page
1. Background.......................................................1
2. Registration Under Securities Act, etc...........................1
2.1 Registration on Request.....................................1
2.2 Incidental Registration.....................................3
2.3 Shelf Registration.........................................5
2.4 Registration Procedures.....................................6
2.5 Underwritten Offerings......................................9
2.6 Preparation; Reasonable Investigation......................10
2.7 Limitations, Conditions and Qualifications to
Obligations under Registration Covenants..................11
2.8 Holdback Agreement.........................................11
2.9 Indemnification............................................11
3. Definitions.....................................................15
4. Rule 144 and Rule 144A..........................................17
5. Amendments and Waivers..........................................18
6. Nominees for Beneficial Owners..................................18
7. Notices.........................................................18
8. Assignment......................................................19
9. Calculation of Percentage Interests in Registrable Securities...19
10. No Inconsistent Agreements......................................19
11. Certain Distributions...........................................19
12. Remedies........................................................20
13. Severability....................................................20
14. Entire Agreement................................................20
15. Headings........................................................20
16. Governing Law...................................................20
17. Counterparts....................................................20
REGISTRATION RIGHTS AGREEMENT, dated as of October 15, 1997, between
NATIONAL HEALTHCARE L.P., a Delaware limited partnership, and THE 1818 FUND II,
L.P., a Delaware limited partnership (the "Purchaser").
1. BACKGROUND. Pursuant to a Note Purchase Agreement, dated as of
October 15, 1997, between the Company and the Purchaser (the "Purchase
Agreement"), the Purchaser has agreed to purchase from the Company, and the
Company has agreed to issue to the Purchaser, (x) $20,000,000 in principal
amount of its 5.75% Subordinated Convertible Notes due June 30, 2004 (the
"Notes"), and (y) subject to the terms and provisions of the Purchase Agreement,
up to an additional $10,000,000 in principal amount of its 5.75% Subordinated
Convertible Notes due June 30, 2004 (the "Additional Notes"). Capitalized terms
used herein but not otherwise defined shall have the meanings given them in
Section 3.
2. REGISTRATION UNDER SECURITIES ACT, ETC.
2.1 REGISTRATION ON REQUEST.
(a) REQUEST. At any time, or from time to time, on
or after January 5, 1998, upon the written request of one or more holders (the
"Initiating Holders") of Registrable Securities representing not less than 20%
of the Registrable Securities that the Company effect the registration under the
Securities Act of all or part of such Initiating Holders' Registrable
Securities, which notice shall contain a non-binding estimate of the number of
such Initiating Holders' Registrable Securities to be registered, the Company
will promptly give written notice of such requested registration to all
registered holders of Registrable Securities, and thereupon the Company will use
its best efforts to effect, at the earliest possible date, the registration
under the Securities Act, including by means of a shelf registration on Form S-3
(or any successor form) pursuant to Rule 415 under the Securities Act if so
requested in such request (but only if the Company is then eligible to use such
a shelf registration and if Form S-3 (or such successor form) is then available
to the Company), of
(i) the Registrable Securities which the Company
has been so requested to register by such Initiating Holders, and
(ii) all other Registrable Securities which the
Company has been requested to register by the holders thereof (such holders
together with the Initiating Holders hereinafter are referred to as the "Selling
Holders") by written request given to the Company within 30 days after the
giving of such written notice by the Company, which notice shall contain a
non-binding estimate of the number of such holders' Registrable Securities to be
registered, all to the extent requisite to permit the disposition of the
Registrable Securities so to be registered.
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(b) REGISTRATION STATEMENT FORM. Registrations under
this Section 2.1 shall be on such appropriate registration form of the
Commission as shall be reasonably selected by the Company.
(c) EFFECTIVE REGISTRATION STATEMENT. A registration
requested pursuant to this Section 2.1 shall not be deemed to have been effected
(i) unless a registration statement with respect thereto has become effective
and remained effective in compliance with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities covered by such
registration statement until such time as all of such Registrable Securities
have been disposed of in accordance with the intended methods of disposition by
the seller or sellers thereof set forth in such registration statement;
PROVIDED, that, except with respect to any registration statement filed pursuant
to Rule 415 under the Securities Act, such period need not exceed 135 days
whether or not such securities have been disposed of, (ii) if after it has
become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or court for any reason not attributable to the Selling Holders and has
not thereafter become effective, or (iii) if the conditions to closing specified
in the underwriting agreement, if any, entered into in connection with such
registration are not satisfied or waived, other than by reason of a failure on
the part of the Selling Holders.
(d) UNDERWRITTEN OFFERINGS. Notwithstanding
anything to the contrary herein, if the Initiating Holders so elect, a
registration pursuant to this Section 2.1 shall be in the form of an
underwritten offering and the underwriter or underwriters of each underwritten
offering of the Registrable Securities so to be registered shall be selected by
the Selling Holders of more than 50% of each class of Registrable Securities to
be included in such registration and shall be reasonably acceptable to the
Company.
(e) PRIORITY IN REQUESTED REGISTRATION. If the
managing underwriter of any underwritten offering shall advise the Company in
writing (and the Company shall so advise each Selling Holder of Registrable
Securities requesting registration of such advice) that, in its opinion, the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering within a price range acceptable to the
Selling Holders of 66-2/3% of the Registrable Securities requested to be
included in such registration, the Company, except as provided in the following
sentence, will exclude from such registration, to the extent necessary to reduce
the number of securities to be sold in such offering to the number that the
underwriter advises can be so sold in such price range, (i) first, securities
other than Registrable Securities and (ii) second, Registrable Securities
requested to be included in such registration, pro rata among the Selling
Holders requesting such registration on the basis of the estimated gross
proceeds from the sale thereof. If the total number of Registrable Securities
requested to be included in such registration cannot be included as provided in
the preceding sentence, holders
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of Registrable Securities requesting registration thereof pursuant to Section
2.1, representing not less than 15% of the Registrable Securities with respect
to which registration has been requested and constituting not less than 50% of
the Initiating Holders, shall have the right to withdraw the request for
registration by giving written notice to the Company within 20 days after
receipt of such notice by the Company and, in the event of such withdrawal, the
Company shall have the right to terminate such registration, but in all events
such request shall not be counted for purposes of the requests for registration
to which holders of Registrable Securities are entitled pursuant to Section 2.1
hereof.
(f) LIMITATIONS ON REGISTRATION ON REQUEST.
Notwithstanding anything in this Section 2.1 to the contrary, in no event will
the Company be required to (i) effect, in the aggregate, more than three
registrations pursuant to this Section 2.1 or (ii) effect a registration
pursuant to this Section 2.1 (A) within the twelve-month period occurring
immediately subsequent to the effectiveness (within the meaning of Section
2.1(c)) of a registration statement filed pursuant to this Section 2.1 or (B)
within the six-month period occurring immediately subsequent to the
effectiveness of a registration statement (other than on Form S-4 or any
successor or similar form) with respect to the offering by the Company to the
general public of its securities for its own account; or (iii) effect a
registration pursuant to this Section 2.1 if the aggregate offering price of
securities included in the registration statement is less than $5 million.
(g) EXPENSES. The Company will pay all Registration
Expenses in connection with any registrations requested pursuant to this Section
2.1.
(h) LISTING. The Company shall list the Registrable
Securities subject to Section 2.1 on the ASE or the NASDAQ or another national
securities exchange or automated quotation system and shall provide for
redesignation of the securities to be offered into denominations suitable for
public trading upon the request of any Selling Holders.
2.2 INCIDENTAL REGISTRATION.
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If the
Company at any time proposes to register any of its Units or other equity
interests, if any, under the Securities Act by registration on any form other
than Forms S-4 or S-8, or any successor or similar form and other than pursuant
to Sections 2.1 and 2.3 hereof, whether or not for sale for its own account, it
will each such time give prompt written notice to all registered holders of
Registrable Securities of its intention to do so and of such holders' rights
under this Section 2.2. Upon the written request of any such holder (a
"Requesting Holder") made as promptly as practicable and in any event within 30
days after the receipt of any such notice (10 days if the Company states in such
written notice or gives telephonic or telecopied notice to all registered
holders of Registrable Securities, with written confirmation to follow promptly
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thereafter, stating that (i) such registration will be on Form S-3 and (ii) such
shorter period of time is required because of a planned filing date) (which
request shall specify the Registrable Securities intended to be disposed of by
such Requesting Holder), the Company will use its best efforts to effect the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by the Requesting Holders thereof;
PROVIDED, that prior to the effective date of the registration statement filed
in connection with such registration, immediately upon notification to the
Company from the managing underwriter of the price at which such securities are
to be sold, the Company shall so advise each Requesting Holder of such price,
and if such price is below the price which any Requesting Holder shall have
indicated to be acceptable to such Requesting Holder, such Requesting Holder
shall then have the right to withdraw its request to have its Registrable
Securities included in such registration statement; PROVIDED, FURTHER, that if,
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to each Requesting
Holder of Registrable Securities and (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from any obligation of
the Company to pay the Registration Expenses in connection therewith), without
prejudice, however, to the rights of any holder or holders of Registrable
Securities entitled to do so to cause such registration to be effected as a
registration under Section 2.1, and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable Securities,
for the same period as the delay in registering such other securities. Except as
provided in Section 2.1(f)(ii)(B), no registration effected under this Section
2.2 shall relieve the Company of its obligation to effect any registration upon
request under Section 2.1.
(b) PRIORITY IN INCIDENTAL REGISTRATIONS. If the
managing underwriter of any underwritten offering shall inform the Company by
letter of its opinion that the number or type of Registrable Securities
requested to be included in such registration would materially adversely affect
such offering (including a material adverse affect on the marketing of the
securities to be sold by that Company or an opinion that the number of
securities requested to be included in such registration exceeds the number
which can be sold in or during the time of the offering), and the Company has so
advised the Requesting Holders in writing, then the Company will include in such
registration, to the extent of the number and type which the Company is so
advised can be sold in (or during the time of) such offering, FIRST, all
securities proposed by the Company to be sold for its own account, and SECOND,
such Registrable Securities requested to be included in such registration
pursuant to this Agreement, pro rata among such Requesting Holders on the basis
of the estimated proceeds from the sale thereof.
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(c) EXPENSES. The Company will pay all Registration
Expenses in connection with any registration effected pursuant to this Section
2.2.
2.3 SHELF REGISTRATION.
(a) FILING AND EFFECTIVENESS OF SHELF REGISTRATION.
Within 18 months after the date hereof, if the Company is then eligible to use
Form S-3 (or such successor form) the Company shall file an "evergreen" shelf
registration statement solely with respect to the Registrable Securities and
pursuant to Rule 415 under the Securities Act (the "SHELF REGISTRATION") on Form
S-3 (or any successor form). The Company shall use its best efforts to have the
Shelf Registration declared effective as soon as practicable after such filing,
and shall use its best efforts to keep the Shelf Registration effective and
updated, from the date such Shelf Registration is declared effective until such
time as all of the Registrable Securities shall cease to be Registrable
Securities. Notwithstanding the foregoing, if the Company makes a good faith
determination that a filing of the Shelf Registration or the sale of any
Registrable Securities under an effective Shelf Registration would interfere
with any material financing or material investment transaction, business
combination or material acquisition then under consideration, and the Company
provides notice (the "SHELF NOTICE") to the holders containing a general
statement of the reasons for such determination (which shall be kept
confidential by such holders), (x) if there is not an effective Shelf
Registration, the Company may postpone the filing of the Shelf Registration for
the period indicated in the Shelf Notice (which shall be kept confidential by
such holders), which period shall in no event exceed 90 days, or (y) if the
Shelf Registration shall have already been declared effective, the holders of
Registrable Securities shall, upon request by the Company, not effect any sales
of Registrable Securities for the period requested by the Company in the Shelf
Notice (which shall be kept confidential by such holders); PROVIDED, that the
Company may only request that the holders of Registrable Securities not effect
any sales of Registrable Securities under an effective Shelf Registration for an
aggregate of 120 days in any 365 day period. Notwithstanding anything to the
contrary herein, so long as a Shelf Registration is effective and until such
time as all of the Registrable Securities shall cease to be Registrable
Securities, holders of Registration Securities shall have no rights under
Section 2.1 hereof, but shall continue to have all rights under Section 2.2
hereof.
(b) SUPPLEMENTS AND AMENDMENTS; EXPENSES. The
Company shall supplement or amend, if necessary, the Shelf Registration, as
required by the instructions applicable to such registration form or by the
Securities Act or as reasonably required by the holders of (or any underwriter
for) more than 50% of the Registrable Securities and the Company shall furnish
to the holders of the Registrable Securities to which the Shelf Registration
relates copies of any such supplement or amendment prior to its being used
and/or filed with the Commission. The Company shall pay all Registration
Expenses in connection with the Shelf Registration, whether or not it becomes
effective, and whether all, none or some of the Registrable
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Securities are sold pursuant to the Shelf Registration. In no event shall the
Shelf Registration include securities other than Registrable Securities, unless
the holders of more than 662/3% of the Registrable Securities consent to such
inclusion.
(c) EFFECTIVE SHELF REGISTRATION STATEMENT. A Shelf
Registration pursuant to this Section 2.3 shall not be deemed to have been
effected (i) unless a Shelf Registration has become effective and remained
effective in compliance with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities and until such time as all of
such Registrable Securities have been disposed of under the Shelf Registration
or (ii) if after it has become effective, the Shelf Registration is interfered
with by any stop order, injunction or other order or requirement of the
Commission or other governmental agency or court and has not thereafter become
effective.
2.4 REGISTRATION PROCEDURES. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Sections 2.1, 2.2 and 2.3,
the Company will, as expeditiously as possible:
(i) prepare and (within 90 days after the end of the
period within which requests for registration may be given to the Company
or in any event as soon thereafter as practicable) file with the
Commission the requisite registration statement to effect such
registration and thereafter use its best efforts to cause such
registration statement to become effective; PROVIDED, HOWEVER, that the
Company may discontinue any registration of its securities which are not
Registrable Securities (and, under the circumstances specified in Sections
2.1 and 2.2(a), its securities which are Registrable Securities) at any
time prior to the effective date of the registration statement relating
thereto;
(ii) prepare and file with the Commission 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 and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable
Securities covered by such registration statement until such time as all
of such Registrable Securities have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof set
forth in such registration statement; PROVIDED, that, except with respect
to any such registration statement filed pursuant to Rule 415 under the
Securities Act, such period need not exceed 135 days whether or not such
securities have been disposed of;
(iii) furnish to each seller of Registrable Securities
covered by such registration statement, such number of conformed copies of
such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of
the
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prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity
with the requirements of the Securities Act, and such other documents, as
such seller may reasonably request;
(iv) use its best efforts (x) to register or qualify
all Registrable Securities and other securities covered by such
registration statement as the sellers of Registrable Securities covered by
such registration statement shall reasonably request, under such other
securities or blue sky laws of such States of the United States of America
where an exemption is not available, (y) to keep such registration or
qualification in effect for so long as such registration statement remains
in effect and (z) to take any other action which may be reasonably
necessary or advisable to enable such sellers to consummate the
disposition in such jurisdictions of the securities to be sold by such
sellers, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not but for the requirements of this
subdivision (iv) be obligated to be so qualified or to consent to general
service of process in any such jurisdiction;
(v) use its best efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other federal or state governmental agencies or
authorities as may be necessary in the opinion of counsel to the Company
and counsel to the seller or sellers of Registrable Securities to enable
the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(vi) use its best efforts to obtain and furnish at
the effective date of such registration statement to each seller of
Registrable Securities, and each such seller's underwriters, if any, a
signed counterpart of
(x) an opinion of counsel for the
Company, dated the later of the effective date of such registration
statement or, if applicable, the date of the closing under the
underwriting agreement, and
(y) a "comfort" letter signed by the
independent public accountants who have certified the Company's
financial statements included or incorporated by reference in such
registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' comfort letter, with respect to events subsequent to the date
of
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such financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' comfort letters delivered to the
underwriters in underwritten public offerings of securities and, in the
case of the accountants' comfort letter, such other financial matters,
and, in the case of the legal opinion, such other legal matters, as the
sellers of the Registrable Securities covered by such registration
statement, or the underwriters, may reasonably request;
(vii) notify each seller of Registrable Securities
covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act,
upon discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, in the light of the circumstances under
which they were made, and at the request of any such seller promptly
prepare and furnish to it a reasonable number of copies of a supplement to
or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus
shall not include an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under
which they were made;
(viii) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and, if required,
make available to its security holders, as soon as reasonably practicable,
an earnings statement covering the period of at least twelve months, but
not more than eighteen months, beginning with the first full calendar
month after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder;
(ix) provide and cause to be maintained a transfer
agent and registrar (which, in each case, may be the Company) for all
Registrable Securities covered by such registration statement from and
after a date not later than the effective date of such registration; and
(x) use its best efforts to list all Registrable
Securities covered by such registration statement on the ASE or the NASDAQ
or any national securities exchange on which Registrable Securities of the
same class covered by such registration statement are then listed and, if
no such Registrable Securities are so listed, on any national securities
exchange on which the Units are then listed.
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The Company may require each seller of Registrable Securities as to which any
registration is being effected to promptly furnish the Company such information
and fill out such questionnaires regarding such seller and the distribution of
such securities as the Company may from time to time reasonably request in
writing; PROVIDED, THAT any such information or questionnaires shall be given or
made by a seller of Registrable Securities without representation or warranty of
any kind whatsoever except representations with respect to the identity of such
seller, such seller's Registrable Securities and such seller's intended method
of distribution or any other representations required by applicable law.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in subdivision (vii) of this
Section 2.4, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vii) of this
Section 2.4 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
2.5 UNDERWRITTEN OFFERINGS.
(a) REQUESTED UNDERWRITTEN OFFERINGS. If requested
by the underwriters for any underwritten offering by holders of Registrable
Securities pursuant to a registration requested under Section 2.1, the Company
will use all reasonable efforts to enter into an underwriting agreement with
such underwriters for such offering, such agreement to be reasonably
satisfactory in substance and form to each such holder and the underwriters and
to contain such representations and warranties by the Company and such other
terms as are generally prevailing in agreements of that type, including, without
limitation, indemnities to the effect and to the extent provided in Section 2.8.
The holders of the Registrable Securities proposed to be sold by such
underwriters will reasonably cooperate with the Company in the negotiation of
the underwriting agreement. Such holders of Registrable Securities to be sold by
such underwriters shall be parties to such underwriting agreement and may, at
their option, require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit of
such underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable Securities. No
holder of Registrable Securities shall be required to make any representations
or warranties to or agreements with the Company other than representations,
warranties or agreements regarding such holder, such holder's Registrable
Securities and such holder's intended method of distribution or any other
representations required by applicable law.
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(b) INCIDENTAL UNDERWRITTEN OFFERINGS. If the
Company proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any
Requesting Holder of Registrable Securities, use its best efforts to arrange for
such underwriters to include all the Registrable Securities to be offered and
sold by such Requesting Holder among the securities of the Company to be
distributed by such underwriters, subject to the provisions of Section 2.2(b).
The holders of Registrable Securities shall be parties to the underwriting
agreement between the Company and such underwriters and may, at their option,
require that any or all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable Securities. The
underwriters may require such holders of Registrable Securities to agree in such
underwriting agreement to sell to such underwriters the Registerable Securities
to be offered, in which event the holders may only participate pursuant to such
agreement. Any such Requesting Holder of Registrable Securities shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or agreements
regarding the identity of such Requesting Holder, such Requesting Holder's
Registrable Securities and such Requesting Holder's intended method of
distribution or any other representations required by applicable law.
2.6 PREPARATION; REASONABLE INVESTIGATION. In connection with
the preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, their underwriters, if
any, and their respective counsel and accountants the opportunity to participate
in the preparation of such registration statement, each prospectus included
therein or filed with the Commission, and each amendment thereof or supplement
thereto, and will give each of them such reasonable access to its books and
records and such opportunities to discuss the business of the Company with its
officers and the independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of such holders' and such
underwriters' respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act.
2.7 LIMITATIONS, CONDITIONS AND QUALIFICATIONS TO OBLIGATIONS
UNDER REGISTRATION COVENANTS. The Company shall be entitled to postpone for a
reasonable period of time (but not exceeding 90 days) the filing of any
registration statement otherwise required to be prepared and filed by it
pursuant to Section 2.1 if the Company determines, in its reasonable judgment,
that such registration and offering would interfere with any financing,
acquisition, corporate reorganization or other material transaction involving
the Company or any of its affiliates and promptly
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gives the holders of Registrable Securities requesting registration thereof
pursuant to Section 2.1 written notice of such determination, containing a
general statement of the reasons for such postponement and an approximation of
the anticipated delay (which shall be kept confidential by such holders). If the
Company shall so postpone the filing of a registration statement, holders of
Registrable Securities requesting registration thereof pursuant to Section 2.1,
representing not less than 15% of the Registrable Securities with respect to
which registration has been requested and constituting not less than 50% of the
Initiating Holders, shall have the right to withdraw the request for
registration by giving written notice to the Company within 30 days after
receipt of the notice of postponement and, in the event of such withdrawal, the
Company shall have the right to terminate such registration, but in all events
such request shall not be counted for purposes of the requests for registration
to which holders of Registrable Securities are entitled pursuant to Section 2.1
hereof.
2.8 HOLDBACK AGREEMENT. To the extent not inconsistent with
applicable law, each holder of Registrable Securities agrees, if so requested by
the relevant underwriters, by acquisition of such Registrable Securities not to
effect any public sale or distribution of any Registrable Securities, including
a sale pursuant to Rule 144 under the Securities Act (or any similar provision
then in force), for a period of up to 180 days after any underwritten
registration pursuant to Section 2.1 or 2.2 hereof has become effective, except
as part of such underwritten registration, whether or not such holder
participates in such registration.
2.9 INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company
will, and hereby does, indemnify and hold harmless, in the case of any
registration statement filed pursuant to Section 2.1, 2.2 or 2.3, each seller of
any Registrable Securities covered by such registration statement and each other
Person who participates as an underwriter in the offering or sale of such
securities and their respective directors, officers, partners, agents and
affiliates, and each other Person, if any, who controls such seller or any such
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such seller or
underwriter or any such director, officer, partner, agent, affiliate or
controlling person may become subject under the Securities Act or otherwise,
including, without limitation, the fees and expenses of legal counsel, insofar
as such losses, claims, damages or liabilities (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not misleading,
and the Company will reimburse such seller or underwriter and each such
12
director, officer, partner, agent, affiliate and controlling Person for any
legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; PROVIDED, HOWEVER, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such seller or underwriter, as the case may be, specifically stating that it is
for use in the preparation thereof; and PROVIDED, FURTHER, that the Company
shall not be liable to any Person who participates as an underwriter in the
offering or sale of Registrable Securities or any other Person, if any, who
controls such underwriter within the meaning of the Securities Act, in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such Person's failure to
send or give a copy of the final prospectus, as the same may be then
supplemented or amended, to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in such final prospectus. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such seller or any such director, officer, partner, agent,
affiliate or controlling person and shall survive the transfer of such
securities by such seller.
(b) INDEMNIFICATION BY THE SELLERS. As a condition to
including any Registrable Securities in any registration statement, the Company
shall have received an undertaking satisfactory to it from the prospective
seller of such Registrable Securities, to indemnify and hold harmless (in the
same manner and to the same extent as set forth in Section 2.9(a)) the Company,
and each director of the Company, each officer and director of the Company and
each other Person, if any, who participates as an underwriter in the offering or
sale of such securities and their respective directors, officers, partners,
agents and affiliates and each other Person, if any, who controls the Company or
any such underwriter within the meaning of the Securities Act, with respect to
any statement or alleged statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company by such seller specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement; PROVIDED, HOWEVER, that
the liability of such indemnifying party under this Section 2.9(b) shall be
limited to the amount of proceeds received by such indemnifying party in the
offering giving rise to such liability. Such indemnity shall remain in full
force and effect, regardless of any
13
investigation made by or on behalf of the Company or any such director, officer
or controlling person and shall survive the transfer of such securities by such
seller.
(c) NOTICES OF CLAIMS, ETC. Each indemnified party will,
promptly after the receipt of notice of the commencement of any action,
investigation, claim or other proceeding against such indemnified party in
respect of which indemnity may be sought from an indemnifying party under
Section 2.9(a) or (b), notify the indemnifying party of the commencement
thereof. The omission of any indemnified party so to notify the indemnifying
party of any such action shall not relieve the indemnifying party from any
liability which it may have to such indemnified party (i) other than pursuant to
this Section 2.9 or (ii) under this Section 2.9 unless, and only to the extent
that, such omission results in the indemnifying party's forfeiture of
substantive rights or defenses. In case any such action, claim or other
proceeding shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to assume the defense thereof at its own expense, with counsel
reasonably satisfactory to such indemnified party; PROVIDED, HOWEVER, that any
indemnified party may, at its own expense, retain separate counsel to
participate in such defense. Notwithstanding the foregoing, in any action, claim
or proceeding in which an indemnifying party and an indemnified party is, or is
reasonably likely to become, a party, such indemnified party shall have the
right to employ separate counsel at the indemnifying party's expense and to
control its own defense of such action, claim or proceeding if, in the
reasonable opinion of counsel to such indemnified party, a conflict or potential
conflict exists between such indemnifying party and such indemnified party that
would make separate representation advisable; PROVIDED, HOWEVER, that in no
event shall any indemnifying party be required to pay fees and expenses under
this Section 2.9 for more than one firm of attorneys in any jurisdiction in any
one legal action or group of related legal actions. No indemnifying party shall
be liable for any settlement of any action or proceeding effected without its
written consent, which consent shall not be unreasonably withheld. No
indemnifying party shall, without the consent of the indemnified party, which
consent shall not be unreasonably withheld, consent to entry of any judgment or
enter into any settlement (x) which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation, or (y) which
requires action other than the payment of money by the indemnifying party.
(d) CONTRIBUTION. If the indemnification provided for in
this Section 2.9 shall for any reason be held by a court to be unavailable to an
indemnified party under Section 2.9(a) or (b) hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under Section 2.9(a) or (b), the indemnified party
and the indemnifying party under Section 2.9(a) or (b) shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the same), (i) in
such proportion as is appropriate to
14
reflect the relative fault of the Company and the prospective sellers of
Registrable Securities covered by the registration statement which resulted in
such loss, claim, damage or liability, or action or proceeding in respect
thereof, with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action or proceeding in respect thereof, as
well as any other relevant equitable considerations or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as shall be appropriate to reflect the relative benefits received by
the Company and such prospective sellers from the offering of the securities
covered by such registration statement, PROVIDED, that for purposes of this
clause (ii), the relative benefits received by the prospective sellers shall be
deemed not to exceed the amount of proceeds received by such prospective
sellers. 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. Such prospective
sellers' obligations to contribute as provided in this Section 2.9(d) are
several in proportion to the relative value of their respective Registrable
Securities covered by such registration statement and not joint. In addition, no
Person shall be obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such Person's consent, which
consent shall not be unreasonably withheld.
(e) OTHER INDEMNIFICATION. Indemnification and
contribution similar to that specified in the preceding subdivisions of this
Section 2.9 (with appropriate modifications) shall be given by the Company and
each seller of Registrable Securities with respect to any required registration
or other qualification of securities under any federal or state law or
regulation of any governmental authority other than the Securities Act.
(f) INDEMNIFICATION PAYMENTS. The indemnification
and contribution required by this Section 2.9 shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred.
3. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"ASE" means the American Stock Exchange, Inc.
"COMMISSION" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"COMPANY" means National HealthCare L.P., a Delaware limited
partnership and any permitted successors and assigns; PROVIDED that upon the
occurrence of the Special Reorganization the term "Company" shall refer to NHC
and any permitted successors and assigns.
15
"CONVERSION UNITS" means Units issued or issuable upon conversion of
the NHC Notes.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time. Reference
to a particular section of the Securities Exchange Act of 1934, as amended,
shall include a reference to the comparable section, if any, of any such similar
Federal statute.
"INITIATING HOLDER" is defined in Section 2.1.
"NASDAQ" means the National Market System of NASDAQ Stock
Market.
"NHC" means National HealthCare Corporation, a Delaware corporation,
and any permitted successors and assigns, NHC being one of two entities to be
formed upon the restructuring of the Company in the Special Reorganization.
"NHC NOTES" means the Notes and, upon the issuance and sale of the
Additional Notes in accordance with the terms and provisions of the Purchase
Agreement, the Additional Notes.
"NHR" means National Health Realty, Inc., a Maryland corporation,
and one of two entities to be formed upon the restructuring of the Company in
the Special Reorganization, NHR being formed to hold substantially all of the
Company's real estate assets and certain related indebtedness.
"PERSON" means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind.
"REGISTRABLE SECURITIES" means any Conversion Units and any Related
Registrable Securities and as to any particular Registrable Securities, once
issued such securities shall cease to be Registrable Securities when (a) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (b) they shall have
been sold as permitted by Rule 144 (or any successor provision) under the
Securities Act, (c) they shall have been otherwise transferred, new certificates
for them not bearing a legend restricting further transfer shall have been
delivered by the Company and subsequent public distribution of them shall not
require registration of them under the Securities Act, (d) Rule 144(k) (or any
successor provision) under the Securities Act is available with respect to their
transfer or (e) they shall have ceased to be outstanding. All references to
percentages of Registrable Securities shall be calculated pursuant to Section
10.
16
"REGISTRATION EXPENSES" means all expenses incident to the Company's
performance of or compliance with Section 2, including, without limitation, all
registration and filing fees, all fees of the ASE, other national securities
exchanges or the National Association of Securities Dealers, Inc., all fees and
expenses of complying with securities or blue sky laws, all word processing,
duplicating and printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of "cold comfort" letters required by or
incident to such performance and compliance, any fees and disbursements of
underwriters customarily paid by issuers or sellers of securities (excluding any
underwriting discounts or commissions with respect to the Registrable
Securities, fees and expenses of counsel of the sellers of Registrable
Securities and all reasonable fees and expenses incurred by the Company relating
to a "roadshow" in connection with the registration of Registrable Securities in
an underwritten offering pursuant to Section 2.1 hereof); PROVIDED, HOWEVER,
that, for purposes of Section 2.2(c), Registration Expenses shall not include
any registration or filing fees or any listing fees of the ASE, other national
securities exchange or the National Association of Securities Dealers, Inc. with
respect to any Registrable Securities solely to the extent the Company
previously paid such fees with respect to such Registrable Securities pursuant
to a registration deemed to have been effected under Section 2.1 or 2.3;
PROVIDED, FURTHER, that in the event the Company shall, in accordance with
Section 2.2(a) or Section 2.7, not register any securities with respect to which
it had given written notice of its intention to so register to holders of
Registrable Securities, notwithstanding anything to the contrary in the
foregoing, all of the costs incurred by Requesting Holders in connection with
such registration shall be deemed Registration Expenses.
"RELATED REGISTRABLE SECURITIES" means with respect to any
Conversion Units, any securities of the Company issued or issuable with respect
to any Conversion Units by way of a dividend or stock split or other
distribution on the Conversion Units or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise.
"REQUESTING HOLDER" is defined in Section 2.2.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act of 1933, as amended, shall include a
reference to the comparable section, if any, of any such similar Federal
statute.
"SELLING HOLDER" is defined in Section 2.1.
"SPECIAL REORGANIZATION" means the conversion of the Company into
NHC and NHR.
17
"UNITS" means the limited partnership units of the Company or the
securities of a Person which are issued in respect of, or in exchange for, the
limited partnership units of the Company if such Person is the successor to the
business or assets of the Company as the result of a merger, consolidation,
combination, reclassification, recapitalization or otherwise (including, without
limitation, any shares of capital stock of NHC issued in connection with the
conversion of the Company from a limited partnership to a corporation in
connection with the Special Reorganization); PROVIDED, that, except as otherwise
provided in the NHC Notes, Units will not include any capital stock representing
interests of NHR distributed to holders of Units in connection with the Special
Reorganization.
4. RULE 144 AND RULE 144A. The Company shall take all actions
reasonably necessary to enable holders of Registrable Securities to sell such
securities without registration under the Securities Act within the limitation
of the provisions of (a) Rule 144 under the Securities Act, as such Rule may be
amended from time to time, (b) Rule 144A under the Securities Act, as such Rule
may be amended from time to time, if applicable or (c) any similar rules or
regulations hereafter adopted by the Commission, including, without limiting the
generality of the foregoing, filing on a timely basis all reports required to,
be filed by the Exchange Act. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement as to
whether it has complied with such requirements.
5. AMENDMENTS AND WAIVERS. This Agreement may be amended with the
consent of the Company 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 shall have obtained the written consent to such amendment, action or
omission to act, of the holder or holders of at least 50% of the Registrable
Securities affected by such amendment, action or omission to act. Each holder of
any Registrable Securities at the time or thereafter outstanding shall be bound
by any consent authorized by this Section 5, whether or not such Registrable
Securities shall have been marked to indicate such consent.
6. NOMINEES FOR BENEFICIAL OWNERS. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the holder of such Registrable Securities for purposes of
any request or other action by any holder or holders of Registrable Securities
pursuant to this Agreement or any determination of any number or percentage of
shares of Registrable Securities held by any holder or holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
7. NOTICES. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be by
18
registered or certified first-class mail, return receipt requested, telecopier,
courier service or personal delivery:
(a) if to the Purchaser, addressed to it in the manner
set forth in the Purchase Agreement, or at such other address as it shall have
furnished to the Company in writing;
(b) if to any other holder of Registrable Securities, at
the address that such holder shall have furnished to the Company in writing, or,
until any such other holder so furnishes to the Company an address, then to and
at the address of the last holder of such Registrable Securities who has
furnished an address to the Company; or
(c) if to the Company, addressed to it in the manner
set forth in the Purchase Agreement, or at such other address as the Company
shall have furnished in the manner set forth herein to each holder of
Registrable Securities at the time outstanding.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; when delivered to a
courier, if delivered by overnight courier service; five business days after
being deposited in the mail, postage prepaid, if mailed; and when receipt is
acknowledged, if telecopied.
8. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and, with respect to the
Company, its respective successors and permitted assigns and, with respect to
the Purchaser, any holder of any Registrable Securities, subject to provisions
respecting the minimum numbers of percentages of shares of Registrable
Securities required in order to be entitled to certain rights, or take certain
actions, contained herein; PROVIDED, HOWEVER, that upon the occurrence of the
Special Reorganization, this Agreement shall be binding upon the inure to the
benefit of NHC and its successors and permitted assigns but not to NHR and its
successors and assigns. This Agreement may not be assigned by the Company,
except to NHC in connection with the Special Reorganization, without the prior
written consent of the holders of a majority in interest of the Registrable
Securities outstanding at the time such consent is requested, other than to a
successor to all or substantially all of the Company's assets, which the parties
hereto agree shall include, without limitation, NHC.
9. CALCULATION OF PERCENTAGE INTERESTS IN REGISTRABLE SECURITIES.
For purposes of this Agreement, all references to a percentage of the
Registrable Securities shall be calculated based upon the number of Registrable
Securities outstanding at the time such calculation is made, assuming the
conversion of all NHC Notes into Units.
19
10. NO INCONSISTENT AGREEMENTS. The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent with the
rights granted to the holders of Registrable Securities in this Agreement.
Without limiting the generality of the foregoing, the Company will not hereafter
enter into any agreement with respect to its securities which grants, or modify
any existing agreement with respect to its securities to grant, to the holder of
its securities in connection with an incidental registration of such securities
higher priority to the rights granted to the holders of Registrable Securities
under Section 2.2(b) of this Agreement.
11. CERTAIN DISTRIBUTIONS. Except in connection with the Special
Reorganization, the Company shall not at any time make a distribution on or with
respect to the Units (including any such distribution made in connection with a
consolidation or merger in which the Company is the resulting or surviving
corporation and the Units are not changed or exchanged) of securities of the
Company or another issuer if holders of Registrable Securities are entitled to
receive such securities in such distribution as holders of Registrable
Securities and any of the securities so distributed are registered under the
Securities Act, unless the securities to be distributed to the holders of
Registrable Securities are also registered under the Securities Act.
12. REMEDIES. Each holder of Registrable Securities, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
13. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
purchaser shall be enforceable to the fullest extent permitted by law.
14. ENTIRE AGREEMENT. This Agreement, together with the Purchase
Agreement (including the exhibits thereto), the NHC Notes, is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement, the Purchase Agreement
(including the exhibits thereto),
20
the NHC Notes and the Letter Agreement supersede all prior agreements and
understandings between the parties with respect to such subject matter.
15. HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
16. GOVERNING LAW. This Agreement has been negotiated, executed and
delivered in the State of New York and shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law.
17. 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 an original and all of which taken together
shall constitute one and the same instrument.
21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their respective officers hereunto duly authorized
as of the date first above written.
NATIONAL HEALTHCARE L.P.
By: NHC, Inc.,
Managing General Partner
By: /s/ Xxxxxxx X. XxXxxxx, Xx.
---------------------------
Name: Xxxxxxx X. XxXxxxx, Xx.
Title:
THE 1818 FUND II, L.P.
By: Xxxxx Brothers Xxxxxxxx & Co.,
General Partner
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------
Name: Xxxxxxxx X. Xxxxxx
Title: General Partner
