EXECUTION COPY
WARRANT REGISTRATION RIGHTS AGREEMENT
THIS WARRANT REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of May 10, 2001, by HARBORSIDE
HEALTHCARE CORPORATION, a Delaware corporation (the "Company"), for the benefit of the Holders (as defined below).
R E C I T A L S
This Agreement is entered into in connection with a financial restructuring which contemplates,
among other things, (I) the exchange offer (the "Exchange Offer") pursuant to the Offering Memorandum and Consent
Solicitation Statement dated April 6, 2001 (as it may be amended from time to time, the "Offer to Exchange") of
the Company, whereby the Company has offered to exchange (A) (0) 0.0000000 new 12% Senior Subordinated Discount
Notes due 2007 (the "New Notes"), each having a principal amount at maturity equal to $1,000, (2) $88.2353 in
cash and (0) 00.00000000 warrants (each a "Series A Warrant" and collectively, the "Series A Warrants"), each
Series A Warrant initially entitling the holder thereof to purchase one share of Class A Common Stock (as defined
herein) of the Company, for each $1,000 principal amount at maturity of its outstanding 11% Senior Subordinated
Discount Notes due 2008 (the "Old Notes") and (B) 10.73247518 Series A Warrants for each $1,000 liquidation
preference of outstanding shares of its 13-1/2% Exchangeable Preferred Stock (to be redesignated and reclassified
as the "Redeemable Preferred Stock" and referred to herein as the "Old Preferred Stock") and (II) the sale of
warrants (each an "Series B Warrant" and collectively, the "Series B Warrants", and together with the Series A
Warrants, the "Warrants"), each Series B Warrant initially entitling the holder thereof to purchase one share of
Class A Common Stock of the Company, and 13% Convertible Exchangeable Preferred Stock of the Company (the "New
Preferred Stock") to Investcorp S.A. and/or one of more of its affiliates or designees ("Investcorp") in exchange
for $15,000,000 in cash (subject to reduction on a pro rata basis at the election of Investcorp if less than all
Old Notes are tendered and exchanged in the Exchange Offer) as provided for in the Series B Warrant and
Convertible Exchangeable Preferred Stock Subscription Agreement dated May 10, 2001 between the Company and
certain purchasers named therein. In order to induce the holders of Old Notes and Old Preferred Stock to tender
their Old Notes and shares of Old Preferred Stock in the Exchange Offer and to induce Investcorp to purchase
Series B Warrants and the New Preferred Stock, the Company has agreed to provide the registration rights relating
to the Warrants set forth in this Agreement for the benefit of such holders and any subsequent holder or holders
of the Warrants and Warrant Shares (as defined below).
A G R E E M E N T
The Parties hereby agree as follows:
SECTION 1. Definitions.
As used in this Agreement, the following terms shall have the following meanings:
"Affiliate" shall have the meaning ascribed to such term in Rule 144 under the Securities Act.
"Capital Stock" means, with respect to any Person, any and all shares, interests,
participations, rights in or other equivalents (however designated and whether voting or non-voting) of such
Person's capital stock, whether outstanding on the Issue Date or issued after the Issue Date, and any and all
rights (other than any evidence of indebtedness), warrants or options exchangeable for or convertible into such
capital stock.
"Charter" means the Restated Certificate of Incorporation, as amended, of the Company on the
Issue Date, as such Charter may thereafter from time to time be amended in accordance with applicable law and
such Charter.
"Class A Common Stock" means the Class A Common Stock of the Company, par value $0.01 per share.
"Commission" means the U.S. Securities and Exchange Commission and any successor federal agency
having similar powers.
"Common Stock" means all shares of Capital Stock of the Company, whether or not denominated as
"common stock," which are entitled to share ratably in the ordinary dividends of the Company or share ratably in
the proceeds of any liquidation of the Company after the payment of all preferential claims, and shall include,
without limitation, the Class A Common Stock, Class B Common Stock, Class C Common Stock, Class D Common Stock
and the No-Class Common Stock of the Company authorized on the Issue Date.
"Holders," as of any date of determination, means the holders of record of Registrable
Securities other than any Persons to whom Registrable Securities have been transferred who are not Permitted
Assignees under Section 3(b) hereof.
"Issue Date" means May 10, 2001, the date of the consummation of the Exchange Offer.
"Person" means an individual, limited or general partnership, joint venture, limited liability
company, corporation, trust, unincorporated organization or other entity or a government or any department or
agency thereof.
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"Prospectus" means the Prospectus included in any Registration Statement (including, without
limitation, any Prospectus subject to completion and a Prospectus that includes any information previously
omitted from a Prospectus filed as part of an effective Registration Statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of all or any portion of the Registrable Securities covered by such Registration
Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and
all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
"Registrable Securities," as of any date of determination, means (a) the Warrants, (b) any
Warrant Shares issued upon exercise of the Warrants, (c) any shares of Capital Stock of the Company issued upon
conversion of any of the foregoing pursuant to the Charter, and (d) any shares of Capital Stock issued on account
of any of the foregoing in connection with any stock split or stock dividend or any capital reorganization or
restructuring effected after the Issue Date. Notwithstanding the foregoing, any particular Registrable
Securities shall cease to be such when (i) such securities have been disposed of in accordance with an effective
Registration Statement with respect to the sale of such securities or distributed to the public pursuant to
Section 4(1) of the Securities Act or (ii) they shall have ceased to be outstanding; provided that clause (i)
shall not apply during the period that a Shelf Registration is required to be effective under the second proviso
of Section 2(b)(ii).
"Registration Expenses" means all expenses incident to the Company's performance of or
compliance with its obligations hereunder including, without limitation, all Commission and any stock exchange
registration, listing, filing or NASD fees, all fees and expenses of complying with securities or "blue sky" laws
(including reasonable fees and disbursements of counsel for the underwriters in connection with blue sky
qualifications), all messenger and delivery expenses, all printing expenses, the fees and disbursements of
counsel for the Company and of its independent public accountants, including the expenses of any special audits
or "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 (including reasonable fees and disbursements of
counsel for the underwriters) and the reasonable fees and expenses of any special experts retained in connection
with the requested registration, and the reasonable fees and disbursements of one counsel for the Sellers (which
counsel shall be selected by the holders of a majority in interest of the Registrable Securities included in such
registration), but excluding underwriting discounts and commissions and fees and disbursements of any additional
counsel employed by any Seller.
"Registration Statement" means any Registration Statement of the Company, including but not
limited to a shelf Registration Statement, that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits, and all material incorporated by reference or
deemed to be incorporated by reference in such Registration Statement.
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"Securities Act" means the Securities Act of 1933, as amended.
"Seller" means any Holder whose Registrable Securities are included in any registration
pursuant to Section 2(a) or (b) of this Agreement.
"Warrant Shares" means the shares of Class A Common Stock and other securities, if any,
issuable upon exercise of Warrants from time to time and any shares issuable upon the conversion or exchange of
such shares of Class A Common Stock or other securities.
Certain other terms are defined elsewhere in this Agreement.
SECTION 2. Registration Rights.
(a) Piggyback Registration Rights.
If the Company proposes to effect a public offering (including an initial public offering) and
in connection therewith proposes to file a registration statement (excluding any registration statement on
Form S-8 or S-4 or comparable successor forms or a registration statement relating to a dividend reinvestment
plan), then the Company shall give written notice of such proposed offering and filing to each Holder, before the
anticipated filing date of such registration statement, and such notice shall offer each Holder the opportunity
to include in such registration statement the Registrable Securities then owned (or issuable upon exercise of
Warrants then owned) by such Holder, as such Holder may request in writing within 15 days after receipt of the
Company's notice (which request shall specify the number and kind of Registrable Securities to be included in
such registration statement and the intended method of disposition) (a "Piggyback Registration").
(b) Shelf Registration.
(i) Commencing 90 days after the occurrence of an initial public offering of common equity securities of the
Company (subject to any lock-up agreement under Section 2(e) that may be in effect), Holders who beneficially own
at least 25% of the total outstanding Registrable Securities (assuming exercise of all Warrants) (the "Demanding
Holders") shall have the right to require the Company to file a Registration Statement which shall provide for an
offering to be made on a continuous basis pursuant to Rule 415 under the Securities Act covering all of the
Registrable Securities (a "Shelf Registration"). Upon receiving such demand, the Company shall give written
notice of such proposed Shelf Registration to each Holder other than the Demanding Holders, before the
anticipated filing date of such Registration Statement, and such notice shall offer each such Holder the
opportunity to include in such Registration Statement the Registrable Securities then owned (or issuable upon
exercise of Warrants then owned) by such Holder, as such Holder may request in writing within 15 days after
receipt of the Company's notice (which request shall specify the number and kind of Registrable Securities to be
included in such Registration Statement and the intended method of disposition). The Shelf Registration shall be
on Form S-1 or another appropriate form permitting registration of such Registrable Securities for resale by such
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Sellers in the manner or manners designated by them. The Company shall not be required to effect more than one
Shelf Registration.
(ii) Effectiveness Period. The Company shall use its reasonable best efforts to keep the Shelf Registration
continuously effective under the Securities Act until the earlier of (A) August 1, 2009 and (B) the first date as
of which all Registrable Securities have been disposed of by the Holders thereof pursuant to such Shelf
Registration or distributed to the public pursuant to Section 4(1) under the Securities Act; provided that such
obligation shall expire before such date if the Company delivers to the Holders a written opinion of counsel to
the Company addressed to the Holders that all Holders (other than Affiliates of the Company and broker-dealers)
of Registrable Securities may offer, sell and dispose of the Registrable Securities without compliance with the
registration and prospectus delivery provisions of the Securities Act; and provided, further, that
notwithstanding the foregoing, any Affiliate of the Company may, with notice to the Company, require the Company
to keep the Shelf Registration continuously effective for resales by such Affiliate for so long as such Affiliate
holds Registrable Securities.
(iii) Shelf Blackout Period. Notwithstanding the foregoing, the Company, upon advising the Holders, may
suspend the use of the Prospectus included in any Shelf Registration in the event that, and for a period of time
(the "Shelf Blackout Period") not to exceed an aggregate of 60 days in any 12-month period, if the Board of
Directors of the Company determines in good faith that (i) required disclosure of information in any related
Registration Statement, Prospectus at such time would have a material adverse effect on the Company's business,
operations or prospects or (ii) a material business transaction that has not yet been publicly disclosed would be
required to be disclosed in a Registration Statement, Prospectus and such disclosure would jeopardize the success
of such transaction; provided, that, upon the termination of such Shelf Blackout Period, the Company promptly
shall advise the Holders that such Shelf Blackout Period has been terminated.
(c) Registration Procedures. If and whenever the Company is required to effect the registration of any
Registrable Securities under the Securities Act as provided in Section 2(a) or (b) hereof, the Company will as
expeditiously as practicable:
(i) (A) prepare and file with the Commission a Registration Statement on the appropriate form which includes
such Registrable Securities, and furnish to each Seller at least 5 business days prior to the filing thereof a
copy of such Registration Statement, and not file any such Registration Statement to which any Seller shall have
reasonably objected on the grounds that such Registration Statement does not comply in all material respects with
the requirements of the Securities Act or of the rules or regulations thereunder, (B) promptly respond to all
comments (including those of the Commission, any underwriter and any Seller) received with respect to such
Registration Statement and make and file all necessary amendments thereto, and (C) thereafter use its reasonable
best efforts to cause such Registration Statement to become effective at the earliest practicable date;
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(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 accurate and
effective and to comply with the provisions of the Securities Act with respect to the disposition of all
Registrable Securities and other securities covered by such Registration Statement until the earlier of (A)
August 1, 2009 and (B) the first date as of which all Registrable Securities have been disposed of by the Holders
thereof pursuant to such Shelf Registration or distributed to the public pursuant to Section 4(1) under the
Securities Act; provided that such obligation shall expire before such date if the Company delivers to the
Holders a written opinion of counsel to the Company addressed to the Holders that all Holders (other than
Affiliates of the Company and broker-dealers) of Registrable Securities may offer, sell and dispose of the
Registrable Securities without compliance with the registration and prospectus delivery provisions of the
Securities Act; and provided, further, that notwithstanding the foregoing, any Affiliate of the Company may, with
notice to the Company, require the Company to keep the Shelf Registration continuously effective for resales by
such Affiliate for so long as such Affiliate holds Registrable Securities; and will furnish to each such Seller
at least 2 business days prior to the filing thereof a copy of any amendment or supplement to such Registration
Statement or Prospectus and shall not file any such amendment or supplement to which any such Seller shall have
reasonably objected on the grounds that such amendment or supplement does not comply in all material respects
with the requirements of the Securities Act or of the rules or regulations thereunder;
(iii) furnish to each Seller of such Registrable Securities, upon such Seller's request, one signed copy of
such Registration Statement and of each such amendment thereof and supplement thereto (in each case including all
exhibits), such number of copies of the Prospectus included in such Registration Statement (including each
preliminary prospectus and any summary Prospectus), in conformity with the requirements of the Securities Act,
such documents, if any, incorporated by reference in such Registration Statement or Prospectus, and such other
documents as, in each case, such Seller may reasonably request;
(iv) notify each Seller of such Registrable Securities and, if requested, confirm such notice in writing, as
soon as practicable after notice thereof is received by the Company, (A) when such Registration Statement or such
amendment thereof or supplement thereto has been filed or becomes effective and when the Prospectus or any
amendment thereof or supplement thereto has been filed, (B) of any request by the Commission for any amendments
or supplements to the Registration Statement or the Prospectus or for additional information, including copies of
any such request in writing or of any written transcript thereof if requested by a Seller, (C) of the receipt by
the Company of any notification with respect to the suspension of the registration or qualification of the
Registrable Securities for offering or sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose and (D) of any stop order issued, or the receipt of notification by the Company that
any such stop order is threatened to be issued, by the Commission, and use its reasonable best efforts to prevent
the entry of such stop order or to remove it if entered;
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(v) use its reasonable best efforts to register or qualify all Registrable Securities covered by such
Registration Statement under such other securities or "blue sky" laws of such jurisdictions as each Seller shall
reasonably request, to keep such registration or qualification in effect for so long as such Registration
Statement remains in effect, and do any and all other acts and things that may be necessary or advisable to
enable such Seller to consummate the disposition in such jurisdictions of its Registrable Securities covered by
such Registration Statement, 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 (v) be obligated to be so qualified, or to subject itself to taxation in any
such jurisdiction, or to consent to general service of process in any such jurisdiction;
(vi) if such Registration Statement relates to an underwritten offering, obtain and furnish to each Seller a
signed counterpart, addressed to such Seller, of the legal opinions and accountants' comfort letters which are to
be delivered to the underwriters;
(vii) promptly notify each Seller whose Registrable Securities are 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 then existing, and the Company shall promptly prepare a supplement to or an amendment of such
Prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable 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 then existing;
(viii) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the
Commission and under applicable securities or "blue sky" laws and any rules and regulations thereunder;
(ix) promptly make available for inspection by any Seller or underwriter participating in any disposition
pursuant to any Registration Statement, and by any attorney, accountant or other agent or representative retained
by any Seller or underwriter, all financial and other records, pertinent corporate documents and properties of
the Company, as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and
cause the Company's officers, directors and employees to supply all information reasonably requested by any such
Seller, underwriter, attorney, accountant or other agent or representative in connection with such Registration
Statement;
(x) if the Common Stock of the Company is listed on a national securities exchange or quoted on Nasdaq or is
to be so listed or quoted, use its reasonable best efforts to comply with the requirements of such exchange or
Nasdaq to include shares of Registrable Securities covered by such Registration Statement for listing on each
such securities exchange or for quotation on Nasdaq; and
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(xi) the Company shall cooperate with the Sellers and any underwriter to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold under any Registration Statement, in
such denominations and registered in such names as the managing underwriter or underwriters, if any, or such
Sellers may request.
The Company may require each Seller of Registrable Securities as to which any registration is being effected to
furnish the Company such information regarding such Seller and the distribution of such securities as the Company
may from time to time reasonably request in writing and as shall be required by law or by the Commission in
connection with such registration.
(d) Underwriting Agreement. If requested by the underwriters for any underwritten offering of Registrable
Securities on behalf of Sellers pursuant to a registration covered by Section 2(a) or (b) hereof, the Company
will enter into an underwriting agreement with such underwriters for such offering, such agreement to contain
representations and warranties, and covenants and agreements of, by the Company and other terms and provisions
not inconsistent with this Section 2 as are customarily contained in underwriting agreements with respect to
secondary distributions, including, without limitation, indemnities to the effect and to the extent provided in
Section 2(g) hereof, and the Company will cooperate with such Sellers to the end that the conditions precedent to
the obligations of such Sellers under such underwriting agreement shall not include conditions that are not
customary in underwriting agreements with respect to secondary distributions and shall be otherwise satisfactory
to such Sellers. The Sellers on whose behalf shares are to be distributed by such underwriters shall be party to
any such underwriting agreement and the representations and warranties by, and the covenants and 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 Sellers. Such Sellers shall not be required by the Company to make any representations or
warranties to or agreements with the Company or the underwriters other than reasonable representations, warranties
or agreements regarding such Sellers, such Sellers' Registrable Securities and such Sellers' intended method or
methods of disposition and any other representation required by law.
(e) Lock-Up. If and to the extent requested by the managing underwriter in connection with an public
offering of common equity securities of the Company, such Holder shall agree in writing that such Holder will
not, without the consent of the managing underwriter and except for Registrable Securities included in the public
offering, if any: (x) effect any public sale or distribution of any common equity securities of the Company, or
any securities convertible into, or exercisable or exchangeable for, any such common equity securities for the
period requested by the managing underwriter, not to exceed in any event 180 days following effectiveness of the
Registration Statement relating to the initial public offering, or (y) effect any other transfer of any of the
foregoing during such lock-up period unless the transferee agrees in writing to be bound by the terms and
conditions of this Section 2(e).
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(f) Registration Expenses. The Company agrees to pay, in connection with each registration of Registrable
Securities covered by Section 2(a) or (b) hereof, all Registration Expenses. All other expenses not paid or
payable by the Company which are otherwise not attributable to a particular Seller will be the responsibility of
and paid for by all of the Sellers on a pro rata basis.
(g) Indemnification and Contribution.
(i) The Company agrees, to indemnify and hold harmless each Holder of Registrable Securities included in a
Registration Statement covered by Section 2(a) or (b), its directors, officers and other agents and each Person,
if any, who controls such Person or its affiliates within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (each, a "Participant") against any losses, claims, damages or liabilities to
which any Participant or such director, officer, agent or controlling person may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as any such losses, claims, damages or liabilities (or
actions, proceedings or investigations in respect thereof) arise out of or are based upon:
(a) any untrue statement or alleged untrue statement made by the Company contained in any application or any
other document or any amendment or supplement thereto executed by or on behalf of the
Company based upon written information furnished by or on behalf of the Company filed in
any jurisdiction in order to register or qualify the Registrable Securities under the
securities or "blue sky" laws thereof or filed with the Commission or any securities
association or securities exchange (each, an "Application");
(b) any untrue statement or alleged untrue statement of any material fact contained in any Registration
Statement (or any amendment thereto) or Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) or any preliminary
prospectus; or
(c) the omission or alleged omission to state, in any Registration Statement (or any amendment or supplement
thereto) or Prospectus (as amended or supplemented) or any preliminary prospectus or any
Application or any other document or any amendment or supplement thereto, a material fact
required to be stated therein or necessary to make the statements therein not misleading;
and will reimburse, as incurred, the Participant and each such director, officer, agent and controlling person
for any reasonable legal or other reasonable expenses incurred by the Participant or such director, officer,
agent or controlling person in connection with investigating, defending against or appearing as a third-party
witness in connection with any such loss, claim, damage, liability or action; provided, however, (i) the Company
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will not be liable in any such case to the extent that any such loss, claim, damage, or liability arises out of
or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in any
Registration Statement (or any amendment thereto) or Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) or any preliminary prospectus or Application or any
amendment or supplement thereto in reliance upon and in conformity with information relating to any Participant
furnished to the Company by such Participant in writing specifically for use therein, and (ii) the Company shall
not be liable to any Participant under the indemnity agreement in this subsection 2(a) with respect to the
preliminary prospectus to the extent that any such loss, claim, damage, liability or expense of such Participant
results from the fact that such Participant sold Registrable Securities to a person as to whom it shall be
established that there was not sent or given, at or prior to the written confirmation of such sale, a copy of the
Prospectus (or the Prospectus as then amended or supplemented if the Company shall have furnished such
Participant with such amendment or supplement thereto on a timely basis), in any case where such delivery is
required by applicable law and the loss, claim, damage, liability or expense of such Participant results from an
untrue statement or omission of a material fact contained in the preliminary prospectus which was corrected in
the Prospectus (or in the Prospectus as then amended or supplemented if the Company shall have furnished such
Participant with such amendment or supplement thereto on a timely basis). The indemnity provided for in this
Section 2(g)(i) will be in addition to any liability that the Company may otherwise have to the indemnified
parties under any applicable underwriting agreement. The Company shall not, without the prior written consent of
each affected Participant, effect any settlement or compromise of any pending or threatened action, proceeding
or investigation in respect of which such Participant or any of its directors, officers, agents or controlling
persons is or could have been a party, or indemnity could have been sought hereunder by such Participant or any
of its directors, officers, agents or controlling persons, unless such settlement (A) includes an unconditional
written release of such Participant and its affected directors, officers, agents and controlling persons, in form
and substance reasonably satisfactory to such Participant, from all liability on claims that are the subject
matter of such action or proceeding or investigation and (B) does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of such Participant or its directors, officers, agents and
controlling persons.
(ii) Each Participant, severally and not jointly, agrees to indemnify and hold harmless the Company, its
directors, its officers and each person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act against any losses, claims, damages or liabilities to which the
Company or any such director, officer or controlling person may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions, proceedings or
investigations in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in any Registration Statement or Prospectus, any amendment or supplement
thereto, or any preliminary prospectus, or (ii) the omission or the alleged omission to state therein a material
fact necessary to make the statements therein not misleading, in each case to the extent, but only to the extent,
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that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon
and in conformity with written information concerning such Participant, furnished to the Company by the
Participant, specifically for use therein; and subject to the limitation set forth immediately preceding this
clause, will reimburse, as incurred, any reasonable legal or other reasonable expenses incurred by the Company or
any such director, officer or controlling person in connection with investigating or defending against or
appearing as a third party witness in connection with any such loss, claim, damage, liability or action in
respect thereof. The indemnity provided for in this Section 2(g)(ii) will be in addition to any liability that
the Participants may otherwise have to the indemnified parties under any applicable underwriting agreement. Each
Participant shall not, without the prior written consent of the Company, effect any settlement or compromise of
any pending or threatened action, proceeding or investigation in respect of which the Company or any of its
directors, officers, agents or controlling persons is or could have been a party, or indemnity could have been
sought hereunder by the Company or any of its directors, officers, agents or controlling persons, unless such
settlement (A) includes an unconditional written release of the Company and its affected directors, officers,
agents and controlling persons, in form and substance reasonably satisfactory to the Company, from all liability
on claims that are the subject matter of such proceeding and (B) does not include any statement as to an
admission of fault, culpability or failure to act by or on behalf of the Company or its directors, officers,
agents or controlling persons. Notwithstanding the foregoing, no Participant shall be liable under this Section
2(g)(ii) in excess of the total net profit received by such Participant in connection with the sale of its
Registrable Securities giving rise to its liability hereunder, less the aggregate amount of any damages that such
Participant has otherwise been required to pay by reason of the untrue or alleged untrue statements or the
omissions or alleged omissions to state a material fact.
(iii) Promptly after receipt by an indemnified party under this Section 2(g) of notice of the commencement of
any action, proceeding or investigation for which such indemnified party is entitled to indemnification under
this Section 2(g), such indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 2(g), notify the indemnifying party of the commencement thereof in writing;
but the omission to so notify the indemnifying party (a) will not relieve it from any liability under paragraph
(i) or (ii) above unless and to the extent such failure results in the actual forfeiture by the indemnifying
party of substantial rights and defenses and (b) will not, in any event, relieve the indemnifying party from any
other obligations to any indemnified party. In case any such action, proceeding or investigation is brought
against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory
to such indemnified party; provided, however, that if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of interest, (ii) the defendants in
any such action, proceeding or investigation include both the indemnified party and the indemnifying party and
the indemnified party shall have been advised by counsel that there may be one or more legal defenses available
to it and/or other indemnified parties that are different from or additional to those available to the
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indemnifying party, or (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable time after receipt by the
indemnifying party of notice of the institution of such action, proceeding or investigation, then, in each such
case, the indemnifying party shall not have the right to direct the defense of such action, proceeding or
investigation on behalf of such indemnified party or parties and such indemnified party or parties shall have the
right to select separate counsel to defend such action, proceeding or investigation on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified party of its election so to
assume the defense thereof and approval by such indemnified party of counsel appointed to defend such action,
proceeding or investigation, the indemnifying party will not be liable to such indemnified party under this
Section 2(g) for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred
by such indemnified party in connection with the defense thereof, unless (i) the indemnified party shall have
employed separate counsel in accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action, proceeding or investigation the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in addition to local counsel) in any one
action, proceeding or investigation or separate but substantially similar actions, proceedings or investigations
in the same jurisdiction arising out of the same general allegations or circumstances, designated by Participants
who sold a majority in interest of the Registrable Securities sold by all such Participants in the case of
paragraph (i) of this Section 2(g), or the Company in the case of paragraph (ii) of this Section 2(g),
representing the indemnified parties under such paragraph (i) or paragraph (ii), as the case may be, who are
parties to such action, proceeding or investigation or actions, proceedings or investigations) or (ii) the
indemnifying party has authorized in writing the employment of counsel for the indemnified party at the expense
of the indemnifying party. All fees and expenses reimbursed pursuant to this paragraph (iii) shall be reimbursed
as they are incurred. After such notice from the indemnifying party to such indemnified party and (to the extent
permitted hereunder) the assumption of the defense of any action, proceeding or investigation hereunder by such
indemnifying party, the indemnifying party will not be liable for any settlement of any claim or action effected
without its consent (which consent shall not be unreasonably withheld, conditioned or delayed) or for the costs
and expenses thereof.
(iv) In circumstances in which the indemnity agreement provided for in the preceding paragraphs of this
Section 2(g) is unavailable to, or insufficient to hold harmless, an indemnified party in respect of any losses,
claims, damages, liabilities or expense (or actions, proceedings or investigations in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses (or
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actions, proceedings or investigations in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party or parties on the one hand and the indemnified party on the other in
connection with the statements or omissions or alleged statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses (or actions, proceedings or investigations in respect thereof). The
relative fault of the parties 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 on the one hand, or the Participants on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent such statement or omission or
alleged statement or omission, and any other equitable considerations appropriate in the circumstances. The
parties agree that it would not be equitable if the amount of such contribution were determined by pro rata or
per capita allocation or by any other method of allocation that does not take into account the equitable
considerations referred to in the first sentence of this paragraph (iv). Notwithstanding any other provision of
this paragraph (iv), no Participant shall be obligated to make contributions hereunder that in the aggregate
exceed the total net profit received by such Participant in connection with the sale of its Registrable
Securities, less the aggregate amount of any damages that such Participant has otherwise been required to pay by
reason of the untrue or alleged untrue statements or the omissions or alleged omissions to state a material fact,
and 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. For
purposes of this paragraph (iv), each director, officer and agent of a Participant and each person, if any, who
controls a Participant within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
shall have the same rights to contribution as the Participants, and each director of the Company, each officer of
the Company and each person, if any, who controls any Issuer within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, shall have the same rights to contribution as the Company.
(h) Selection of Managing Underwriter. With respect to any Registration Statement covered by Section 2(a)
or (b) hereof, the Company shall select the managing underwriter or underwriters.
(i) Underwriter Cutbacks. Notwithstanding anything in this Agreement to the contrary and in addition to any
other limitations on rights to participate in a Piggyback Registration hereunder, if the managing underwriter of
any public offering thereunder advises the Company in writing (with a copy to the Holders and the Other Rights
Holders) that the total number of common equity which the Company, the Holders, and other Persons whose
contractual rights (now existing or hereafter granted) give them the right to be included in such registration
(the "Other Rights Holders") intend to include in such offering exceeds the maximum amount of common equity that
may be distributed without adversely affecting the price, timing or distribution of the common equity being
offered, then the amount of common equity to be included in such Piggyback Registration and offering for the
account of the Holders and the Other Rights Holders shall be reduced pro rata so that the aggregate amount of
common equity included in such Piggyback Registration and offering for the account of the Holders and the Other
Rights Holders, together with the common equity to be sold for the account of the Company, does not exceed the
amount that such managing underwriter determines in good faith can be sold in such offering without causing such
adverse effect.
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SECTION 3. Miscellaneous.
(a) Notices. Any notices in connection with this Agreement shall be in writing and may be given by (i)
personal delivery, (ii) fax, (iii) certified mail, return receipt requested, postage prepaid, or (iv) a
nationally recognized overnight courier as follows: (x) if to any Holder, at the address of record for such
Holder on the records of the Company (or such other address as such Holder shall furnish the Company in writing
to receive notices hereunder); and (y) if to the Company, to Harborside Healthcare Corporation, Xxx Xxxxxx
Xxxxxx, Xxxxxx, XX 00000, Attn: Xxxxxxx X. Xxxxxxx, with a copy to Xxxxxx, Xxxx & Xxxxxxxx LLP, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx Xxxxxx.
Notices shall be deemed to have been given (A) when actually delivered (including by fax with
confirmation of transmission), (B) the next business day if sent by overnight courier (with proof of delivery),
and (C) on the fifth day after mailing by certified mail.
(b) Priority of Registration Rights. The Company hereby agrees that it will not enter into any agreement
which would adversely affect the priority of the Holders' rights to include their Registrable Securities on a pro
rata basis in a Piggyback Registration in the event of reduction of the number of its Registrable Securities
includable in such Piggyback Registration pursuant to Section 2(i) hereof, and the Company represents that as of
the date hereof it is not a party to any such agreement.
(c) Assignability. This Agreement may not be assigned by any Holder under any circumstances except in
connection with a transfer of Registrable Securities to a Permitted Assignee. As used herein, "Permitted
Assignee" means a Person to whom record ownership of Registrable Securities is transferred by a Holder without
violation or breach of the Charter or any agreement restricting such transfer provided that the transferring
Holder shall give at least 10 days advance notice of such transfer to the Company. This Agreement shall be
binding upon, and inure to the benefit of, the Company and its successors and upon, and to the benefit of, the
successors and Permitted Assignees of the Holders.
(d) Amendment and Waiver. The rights of the Holders and the obligations the Company hereunder are subject
to amendment upon the written consent of the Company and a majority in interest of the Holders. Any
noncompliance of any provision of this Agreement by the Company may be waived by written consent by a majority in
interest of the Holders. Any such amendment or waiver shall be binding upon all Holders.
(e) Governing Law. This Agreement shall be construed both as to validity and performance in accordance
with, and this Agreement and all disputes hereunder shall be governed by, the laws of the State of New York
without regard to principles of conflict of laws that would require the application of any other law. The
Company irrevocably and unconditionally agrees that any legal action, suit or proceeding against it with respect
to any matter under or arising out of or in connection with this Agreement or for recognition or enforcement of
any judgment in any such action, suit or proceeding, may be brought in any federal or state court of competent
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jurisdiction in the Borough of Manhattan of the City of New York, accepts and submits itself to the nonexclusive
jurisdiction of any such court, generally and unconditionally, with respect to any such action, suit or
proceeding and waives any defense of forum non conveniens or based upon venue if such action, suit or proceeding
is brought in accordance with this provision.
(f) Headings; Sections. All headings and captions in this Agreement are for purposes of reference only and
shall not be construed to limit or affect the substance of this Agreement. All references to Section in this
Agreement refer to Sections of this Agreement, unless the context otherwise expressly provides.
(g) Entire Agreement. This Agreement contains, and is intended as, a complete statement of all the terms of
the arrangements provided for herein, and supersedes any previous agreements and understandings with respect to
such arrangements.
(h) Specific Performance. The Company acknowledges and agrees that in the event of any breach of this
Agreement by the Company, the Holders would be irreparably harmed and could not be made whole by monetary
damages. Accordingly, the Company hereby agrees that in addition to any other remedy to which the Holders may be
entitled at law or in equity, the Holders shall be entitled to compel specific performance of this Agreement in
any action instituted in any court of the United States or any state thereof having subject matter jurisdiction
for such action.
(i) Faxed Signature Pages. Faxed signatures shall be valid and binding for all purposes.
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Agreed to as of the date first written above.
HARBORSIDE HEALTHCARE CORPORATION, a Delaware corporation
By:
Name:
Title:
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