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RESTRUCTURING AGREEMENT
Among
The Cypress Group L.L.C.,
TPG Partners II, L.P.,
Nazem, Inc.
And
Genesis Health Ventures, Inc.
Dated as of
October 8, 1999
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RESTRUCTURING AGREEMENT
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RESTRUCTURING AGREEMENT, dated as of October 8, 1999 (this
"Agreement"), among The Cypress Group L.L.C., a Delaware limited liability
company ("Cypress"), TPG Partners II, L.P., a Delaware limited partnership
("TPG"), Nazem, Inc., a Delaware corporation ("Nazem" and, together with Cypress
and TPG, the "Sponsors"), and Genesis Health Ventures, Inc., a Pennsylvania
corporation ("Genesis").
W I T N E S S E T H:
WHEREAS, the parties hereto, directly or through affiliates, own all
of the issued and outstanding capital stock of Genesis ElderCare Corp., a
Delaware corporation ("Parent");
WHEREAS, the parties hereto and Parent are parties to a Stockholders
Agreement, dated October 9, 1997 (the "Stockholders Agreement");
WHEREAS, the parties hereto are parties to a Put/Call Agreement, dated
October 9, 1997 (the "Put/Call Agreement");
WHEREAS, pursuant to a Letter of Intent, dated August 2, 1999, the
Sponsors and Genesis have agreed to restructure their investment in Parent; and
WHEREAS, the parties hereto desire to enter into this Agreement for
the purpose of setting forth certain agreements regarding rights and obligations
of the parties.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions as hereinafter set forth, the parties hereto do hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. Capitalized terms used herein and
not otherwise defined herein shall have the following meanings:
"Affiliate" of any Person means any other Person that directly or
indirectly controls, is controlled by, or is under common control with, such
Person.
"Agreement" shall have the meaning set forth in the preamble to this
Agreement.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in the City of New York are authorized or required
by law to close.
"Capital Stock" means any and all shares, interests, participations,
rights in or other equivalents (however designated and whether voting or
non-voting) or corporate stock, and any and all rights (other than any evidence
of indebtedness), warrants or options exchangeable for or convertible into such
corporate stock.
"Change in Control" shall be deemed to occur at any time that (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act),
in a single transaction or through a series of related transactions, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of more than 50% of the total Voting Stock of
Genesis; (ii) Genesis consolidates or merges with or into another corporation or
conveys, transfers or leases all or substantially all of its assets to any
Person, or any corporation consolidates or merges with or into Genesis, in any
such event pursuant to a transaction in which the outstanding Voting Stock of
Genesis is changed into or exchanged for cash, securities or other property,
other than any such transaction where (A) the outstanding Voting Stock of
Genesis is changed into or exchanged for (x) Voting Stock of the surviving
corporation which is not Redeemable Capital Stock or (y) cash, securities or
other property in an amount which, if there is Public Debt outstanding at the
time of such transaction, could be paid under the terms of such Public Debt and
(B) the holders of the Voting Stock of Genesis immediately prior to such
transaction own, directly or indirectly, not less than 50% of the Voting Stock
of the surviving corporation immediately after such transaction; (iii) during
any period of two consecutive years, individuals who at the beginning of such
period constituted the board of directors of Genesis (together with any new
directors whose election by such board of directors or whose nomination for
election by the stockholders of Genesis was approved by a vote of at least
662/3% of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
board of directors of Genesis then in office; or (iv) Genesis is liquidated or
dissolved or adopts a plan of liquidation.
"Closing" means the closing of the transactions contemplated by this
Agreement.
"Company Indemnified Person" shall have the meaning set forth in
Section 12.1(b).
"Custody Agreement and Power of Attorney" shall have the meaning set
forth in Section 11.1(d) of this Agreement.
"Cypress" shall have the meaning set forth in the preamble to this
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder, as the same may be amended from time to
time.
"GAAP" means generally accepted accounting principles, as in effect in
the United States of America on the date hereof and applied on a basis
consistent with the manner in
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which such principles were applied in the preparation of the historical
financial statements of Genesis.
"Genesis" shall have the meaning set forth in the preamble to this
Agreement.
"Genesis Common Stock" means the common stock, par value $.02 per
share, of Genesis and shall also include (i) capital stock of Genesis of any
other class (regardless of how denominated) issued to the holders of shares of
Genesis Common Stock upon any reclassification thereof in which the shares of
Genesis Common Stock are converted into a new class of capital stock and (ii)
shares of common stock of any successor or acquiring corporation received by or
distributed to the holders of Genesis Common Stock.
"Genesis Credit Agreement" means the Fourth Amended and Restated
Credit Agreement, dated August 20, 1999, by and among Genesis and certain of its
subsidiaries as borrowers, Mellon Bank, N.A. as issuer of letters of credit,
Mellon Bank, N.A. as administrative agent, Citicorp USA, Inc. as syndication
agent, First Union National Bank, as documentation agent, Bank of America, N.A.,
as syndication agent and certain other financial institutions identified therein
as lenders together with any agreements executed in connection with a
refinancing of any indebtedness under the Genesis Credit Agreement in each case
as the same may be amended, restated, modified and/or supplemented from time to
time.
"Genesis Non-Voting Common Stock" means the non-voting common stock,
par value $.02 per share, of Genesis to be created pursuant to Section 9.8 and
shall also include (i) capital stock of Genesis of any other class (regardless
of how denominated) issued to the holders of shares of Genesis Non-Voting Common
Stock upon any reclassification thereof in which the shares of Genesis
Non-Voting Common Stock are converted into a new class of capital stock and (ii)
shares of common stock of any successor or acquiring corporation received by or
distributed to the holders of Genesis Non-Voting Common Stock.
"Genesis Rights Agreement" shall have the meaning set forth in
Section 6.9.
"Healthcare Related Business" means a business, the majority of whose
revenues result from healthcare, long-term care or managed care related
businesses or facilities, including businesses which provide insurance relating
to the costs of healthcare, long-term care or managed care services.
"Holder" means any Person who owns Registrable Securities.
"Losses" shall have the meaning set forth in Section 12.1(a).
"Material Adverse Effect" means any change or effect that, either
individually or in the aggregate with all other changes or effects, is
materially adverse to the business, operations, assets, liabilities (including
contingent liabilities), financial condition or results of operations of Genesis
and its subsidiaries taken as a whole.
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"Multicare" means The Multicare Companies, Inc., a wholly owned
subsidiary of Parent.
"Multicare Credit Agreement" means the Credit Agreement, dated October
9, 1997, among Multicare, certain of its subsidiaries, Mellon as administrative
agent, and certain other agents and lenders referred to therein as previously
amended, together with any agreements that refinance any of the indebtedness
under the Multicare Credit Agreement, in each case as the same may be amended,
restated, modified and/or supplemented from time to time.
"Parent" shall have the meaning set forth in the recitals to this
Agreement.
"Person" means any individual, corporation, partnership, joint
venture, trust, business, unincorporated organization or other entity.
"Pre-emptive Right Notice" shall have the meaning specified in
Section 5.4(b).
"Public Debt" means obligations evidenced by bonds, notes, debentures
or other similar instruments issued in an underwritten public offering
registered under the Securities Act, in an offering pursuant to Rule 144A under
the Securities Act or in an exchange offer registered on Form S-4 under the
Securities Act.
"Redeemable Capital Stock" means, with respect to any Person, any
Capital Stock of such Person that, either by its terms, by the terms of any
security into which it is convertible or exchangeable or otherwise, is, or upon
the happening of an event or passage of time would be, required to be redeemed
prior to the last stated maturity of the principal of any Public Debt of such
Person outstanding at the time of issuance of such Capital Stock or is
redeemable at the option of the holder thereof at any time prior to any such
stated maturity, or is convertible into or exchangeable for debt securities at
any time prior to any such stated maturity at the option of the holder thereof.
"Registrable Securities" means (i) the Genesis Common Stock and
Warrants issued pursuant to Section 3.1, (ii) the Genesis Common Stock issued
upon exercise of the Warrants, (iii) the Series H Preferred Stock (whenever
issued), (iv) Series I Preferred Stock (whenever issued), (v) the Genesis Common
Stock issued upon conversion of the Series H Preferred Stock, (vi) the Genesis
Non-Voting Common Stock issued upon conversion of the Series I Preferred Stock
and (vii) any securities issued or distributed in respect of such Genesis Common
Stock, Genesis Non-Voting Common Stock, Warrants, Series H Preferred Stock or
Series I Preferred Stock by way of transfer, substitution, stock dividend or
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation, liquidation or other reorganization or otherwise. As to
any particular Registrable Securities, once issued such securities shall cease
to be Registrable Securities when (w) 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, (x) they shall have been distributed to the public
pursuant to Rule 144 (or any successor provision) under the Securities Act, (y)
they shall have been otherwise transferred, new certificates for them not
bearing a legend restricting further transfer shall have been delivered by
Genesis and subsequent
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disposition of them shall not require registration or qualification of them
under the Securities Act or any state securities or blue sky law then in force
or (z) they shall have ceased to be outstanding.
"Registration Expenses" means any and all expenses incident to
performance of or compliance with Sections 11.1, 11.2 and 11.3 of this
Agreement, including, without limitation, (i) all SEC and securities exchange or
National Association of Securities Dealers, Inc. registration and filing fees,
(ii) all fees and expenses of complying with securities or blue sky laws
(including fees and disbursements of counsel for the underwriters in connection
with blue sky qualifications of the Registrable Securities), (iii) all printing,
messenger and delivery expenses, (iv) all fees and expenses incurred in
connection with the listing of the Registrable Securities on any securities
exchange pursuant to Section 4.3(h), (v) the fees and disbursements of counsel
for Genesis and of its independent public accountants, including the expenses of
any special audits and/or "cold comfort" letters required by or incident to such
performance and compliance, (vi) the reasonable fees and disbursements of one
counsel, other than Genesis' counsel, selected by the holders of a majority of
the Registrable Securities being registered to represent all holders of the
Registrable Securities being registered in connection with each such
registration (it being understood that any such holder may, at its own expense,
retain separate counsel to represent it in connection with such registration),
(vii) any fees and disbursements of underwriters customarily paid by the issuers
or sellers of securities, and the reasonable fees and expenses of any special
experts retained in connection with the requested registration. Notwithstanding
anything to the contrary, Registration Expenses shall not include underwriting
discounts, commissions and transfer taxes, if any, relating to sales of
Registrable Securities.
"SEC" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act or the Exchange Act.
"SEC Filings" shall have the meaning set forth in Section 6.7(a).
"Securities Act" means the Securities Act of 1933, and the rules and
regulations promulgated thereunder, as the same may be amended from time to
time.
"Sponsors" shall have the meaning set forth in the preamble to this
Agreement.
"Sponsor Affiliate" means any investment fund or investment vehicle
under common control with a Sponsor.
"Sponsor Indemnified Person" shall have the meaning set forth in
Section 12.1(a).
"Stockholders Agreement" shall have the meaning set forth in the
recitals to this
Agreement.
"Third Party Claim" have the meaning set forth in Section 12.2.
"TPG" shall have the meaning set forth in the preamble to this
Agreement.
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"Transaction Securities" shall have the meaning set forth in
Section 6.3.
"Transaction Voting Securities" shall have the meaning set forth in
Section 5.3(a).
"Voting Stock" means stock of the class or classes pursuant to which
the holders thereof have the general voting power under ordinary circumstances
to elect at least a majority of the board of directors, managers or trustees of
a corporation (irrespective of whether or not at the time stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency).
"Warrants" means the collective reference to the warrants with the
terms and conditions set forth in the Warrant Certificate attached as Exhibit D
to this Agreement to be purchased and sold pursuant to Section 3.1.
ARTICLE II
AMENDMENT OF PUT/CALL AGREEMENT
Section 2.1 Modification of Put/Call Agreement. At the Closing, and
upon the terms and subject to the conditions set forth in this Agreement,
Cypress, TPG and Genesis and each of the Sponsor Affiliates parties to the
Put/Call Agreement shall enter into an Amended and Restated Put/Call Agreement
in the form of Exhibit A to this Agreement, which, among other things, shall
result in the termination of the put option under the Put/Call Agreement.
Section 2.2 Issuance of Preferred Securities. In consideration for the
termination of the put option under the Put/Call Agreement, at the Closing, upon
the terms and subject to the conditions set forth in this Agreement, Genesis
shall (a) issue to one or more Sponsor Affiliates designated by Cypress 12,185
shares of Genesis' Series H Senior Convertible Participating Cumulative
Preferred Stock with the relative rights, preferences and limitations set forth
in Exhibit B to this Agreement (the "Series H Preferred Stock") and 8,815
shares of Genesis' Series I Senior Convertible Exchangeable Participating
Cumulative Preferred Stock with the relative rights, preferences and limitations
set forth in Exhibit C to this Agreement (the "Series I Preferred Stock"), (b)
issue to TPG or one or more Sponsor Affiliates designated by TPG 11,575 shares
of Series H Preferred Stock and 8,375 shares of Series I Preferred Stock and
(c) issue to one or more Sponsor Affiliates designated by Nazem 609 shares of
Series H Preferred Stock and 441 shares of Series I Preferred Stock.
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ARTICLE III
PURCHASE AND SALE OF GENESIS COMMON STOCK
AND WARRANTS TO PURCHASE GENESIS COMMON STOCK
Section 3.1 Agreement to Purchase and Sell; Purchase Price. (a) At
the Closing, and upon the terms and subject to the conditions set forth in this
Agreement, Genesis shall sell to one or more Sponsor Affiliates designated by
Cypress, and Cypress shall cause such Sponsor Affiliates to purchase from
Genesis, (i) 6.25 million shares of Genesis Common Stock and (ii) Warrants to
purchase 1 million shares of Genesis Common Stock. The aggregate purchase price
for the securities to be purchased and sold pursuant to this Section 3.1(a)
shall be $25 million, payable in immediately available funds.
(b) At the Closing, and upon the terms and subject to the conditions
set forth in this Agreement, Genesis shall sell to TPG and/or one or more
Sponsor Affiliates designated by TPG, and TPG shall, and/or shall cause such
Sponsor Affiliates, as applicable, to purchase from Genesis, 6.25 million shares
of Genesis Common Stock and Warrants to purchase 1 million shares of Genesis
Common Stock. The aggregate purchase price for the securities to be purchased
and sold pursuant to this Section 3.1(b) shall be $25 million, payable in
immediately available funds.
ARTICLE IV
CLOSING
Section 4.1 Closing. (a) The Closing shall take place shall take
place as soon as practicable after satisfaction or waiver of the conditions set
forth herein at the offices of Xxxxxxx Xxxxxxx and Xxxxxxxx, 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx.
Section 4.2 Closing Obligations. (a) At the Closing, Genesis shall
deliver:
(i) to the Sponsor Affiliates designated by Cypress, to TPG
and/or the Sponsor Affiliates designated by TPG and to the Sponsor
Affiliates designated by Nazem, as applicable, certificates
representing the shares of the Series H Preferred Stock and the Series
I Preferred Stock being purchased and sold pursuant to Section 2.2 of
this Agreement;
(ii) to the Sponsor Affiliates designated by Cypress and to
TPG and/or the Sponsor Affiliates designated by TPG, as applicable,
certificates representing the Genesis Common Stock and the Warrants
substantially in the form of Exhibit D to this Agreement being
purchased and sold pursuant to Section 3.1 of this Agreement;
(iii) the opinion of Blank Rome Xxxxxxx & XxXxxxxx LLP
described in Section 8.2(b) of this Agreement;
(iv) the officer's certificate described in Section 8.2(j) of
this Agreement;
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(v) the Amended and Restated Put/Call Agreement as
contemplated by Section 2.1, authorized, executed and delivered by
Genesis;
(vi) the Amended and Restated Stockholders Agreement as
contemplated by Section 5.2, authorized, executed and delivered by
Genesis; and
(vii) to Cypress and TPG immediately available funds in
reimbursement in accordance with Section 9.10 of their expenses
incurred prior to the Closing.
(b) At the Closing, Cypress shall deliver:
(i) or shall cause the applicable Sponsor Affiliates to
deliver, to Genesis the purchase price for the Genesis Common Stock
and Warrants being purchased and sold pursuant to Section 3.1(a) of
this Agreement;
(ii) the certificate of an authorized person of Cypress
described in Section 8.3(d) of this Agreement;
(iii) the Amended and Restated Put/Call Agreement as
contemplated by Section 2.1, authorized, executed and delivered by
Cypress and its applicable Sponsor Affiliates;
(iv) the Amended and Restated Stockholders Agreement as
contemplated by Section 5.2, and the proxy related thereto, each
authorized, executed and delivered by Cypress and its applicable
Sponsor Affiliates; and
(v) the Irrevocable Proxy or Proxies which it is required to
grant or caused to be granted pursuant to Section 5.3 of this
Agreement.
(c) At the Closing, TPG shall deliver:
(i) or shall cause the applicable Sponsor Affiliates to
deliver, to Genesis the purchase price for the Genesis Common Stock
and Warrants being purchased and sold pursuant to Section 3.1(b) of
this Agreement;
(ii) the certificate of an authorized person of TPG described
in Section 8.3(d) of this Agreement;
(iii) the Amended and Restated Put/Call Agreement as
contemplated by Section 2.1, authorized, executed and delivered by TPG
and its applicable Sponsor Affiliates;
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(iv) the Amended and Restated Stockholders Agreement as
contemplated by Section 5.2, and the proxy related thereto, each
authorized, executed and delivered by TPG and its applicable Sponsor
Affiliates; and
(v) the Irrevocable Proxy or Proxies which it is required to
grant or caused to be granted pursuant to Section 5.3 of this
Agreement.
(d) At the Closing, Nazem shall deliver:
(i) the certificate of an authorized person of Nazem described
in Section 8.3(d) of this Agreement;
(ii) the Amended and Restated Put/Call Agreement as
contemplated by Section 2.1, authorized, executed and delivered by
Nazem and its applicable Sponsor Affiliates;
(iii) the Amended and Restated Stockholders Agreement as
contemplated by Section 5.2, and the proxy related thereto, each
authorized, executed and delivered by Nazem and its applicable Sponsor
Affiliates; and
(iv) the Irrevocable Proxy or Proxies which it is required to
grant or caused to be granted pursuant to Section 5.3 of this
Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Additional Voting Right. For so long as Cypress or TPG or
Sponsor Affiliates affiliated with Cypress or TPG have the right to designate
directors on the board of directors of Genesis pursuant to the terms of the
Series H Preferred Stock, Genesis shall not (i) without the consent of two of
the directors so designated, enter into any transaction or series of
transactions which would constitute a Change in Control or engage in any
transaction pursuant to Rule 13e-3 under the Exchange Act or (ii) without the
unanimous consent of the members of the litigation committee of Genesis' board
of directors settle any action at law or suit in equity disclosed in any public
filing made by Genesis with the U.S. Securities and Exchange Commission or any
claim or demand made by a third party arising out of or related to the facts or
circumstances underlying any such action or suit.
Section 5.2 Stockholders Agreement. At the Closing, and upon the terms
and subject to the conditions set forth in this Agreement, Cypress, TPG and
Genesis and each of the Sponsor Affiliates party to the Stockholders Agreement
shall enter into an Amended and Restated Stockholders Agreement in the form of
Exhibit E to this Agreement (with such changes, additions or other modifications
thereto as the lenders under the Genesis Credit Agreement (or an agent acting on
behalf of such lenders) shall reasonably require).
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Section 5.3 Irrevocable Proxy. (a) Each Sponsor owning Series H
Preferred Stock, Genesis Common Stock issued upon conversion of Series H
Preferred Stock, Genesis Common Stock issued pursuant to Section 3.1 of this
Agreement or Genesis Common Stock issued upon exercise of Warrants
(collectively, the "Transaction Voting Securities") or any securities issued or
distributed in respect of Transaction Voting Securities shall, and each Sponsor
shall cause each Sponsor Affiliate affiliated with such Sponsor owning
Transaction Voting Securities or any securities issued or distributed in respect
of Transaction Voting Securities to, grant to Genesis an irrevocable proxy and
power of attorney substantially in the form of Exhibit F hereto.
(b) Prior to each vote of securityholders of Genesis in which the
holders of Genesis Common Stock are entitled to vote generally, each Sponsor
owning Transaction Voting Securities on the applicable record date shall, and
each Sponsor shall cause each Sponsor Affiliate affiliated with such Sponsor
owning Transaction Voting Securities on the applicable record date to, deliver
to Genesis no more than 10 days after the record date a true and correct
certificate setting forth the number and type of Transaction Voting Securities
owned by such person on the applicable record date. Not later than the later of
10 days prior to such vote or 10 days after the notice from the Sponsors,
Genesis shall provide notice with reasonable detail supporting its calculation
to each Sponsor and Sponsor Affiliate owning Transaction Voting Securities on
the applicable record date of the number and type of securities owned by such
Person on the applicable record date that Genesis is entitled to vote pursuant
to the irrevocable proxy and power of attorney.
Section 5.4 Pre-emptive Rights. (a) Cypress and TPG and the Sponsor
Affiliates affiliated with Cypress and TPG shall each have a pro rata right,
based on the number of shares of Genesis common stock held by them and the
number of shares of Genesis common stock issuable upon exercise or conversion of
other securities held by them, to participate in purchases of shares of Capital
Stock of Genesis and securities exchangeable, convertible or exercisable for
shares of Capital Stock of Genesis sold by Genesis; provided, that Cypress and
TPG and the Sponsor Affiliates affiliated with Cypress and TPG shall not have
such right in connection with (i) sales of securities in underwritten public
offerings, (ii) sales of warrants offered in connection with sales of debt
securities pursuant to Rule 144A under the Securities Act, (iii) the issuance of
securities solely in exchange for assets or all of the stock of another Person
(whether by merger, exchange or otherwise), (iv) issuances and sales of
securities to employees and directors pursuant to benefit plans and (v)
issuances and sales of securities in connection with joint ventures or other
strategic relationships relating to a Healthcare Related Business; provided,
however, that in the case of clause (v), the securities issued in connection
with any joint venture or strategic relationship or any series of related joint
ventures or strategic relationships do not represent more than 5% of the total
voting power of Genesis.
(b) Genesis shall give Cypress and TPG written notice (the
"Pre-emptive Right Notice") of any sale of securities to which the pre-emptive
rights established pursuant to Section 5.4(a) shall apply which notice shall
contain the terms and preferences of the securities being offered and the terms
upon which such securities are being offered, and each Person with pre-emptive
rights pursuant to Section 5.4(a) shall have the right, exercisable by written
notice to Genesis within ten Business Days from receipt of the Pre-emptive Right
Notice to purchase such
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securities in accordance with Section 5.4(a). Each Person electing to purchase
additional securities pursuant to Section 5.4(a) shall purchase such securities
on the terms specified in the Pre-Emptive Right Notice. The closing of the
purchase and sale of any such securities shall not take place earlier than
twenty Business Days from the date of the Pre-Emptive Right Notice.
Section 5.5 Standstill Obligations. (a) Effective as of the Closing,
each Sponsor agrees that, other than pursuant to or as contemplated by this
Agreement or the terms of the Transaction Securities and pursuant to stock
splits, stock dividends or other distributions or offerings made available to
holders of securities of Genesis generally, it shall not, and it shall cause its
Affiliates not to, without the prior written consent of Genesis, directly or
indirectly, alone or as part of a "group" (as defined in Section 13(d)(3) of the
Exchange Act), acquire any shares of Voting Stock of Genesis or securities
convertible into or exchangeable for any shares of Voting Stock of Genesis.
(b) The restrictions contained in Section 5.5(a) shall terminate if:
(i) the board of directors of Genesis approves a transaction with any "person"
(as that term is used in Sections 13(d) and 14(d) of the Exchange Act) and such
transaction would result in such person beneficially owning securities
representing more than 35% of the total voting power of Genesis or all or
substantially all of its assets; (ii) any person (other than Genesis in the case
of an exchange offer) shall have commenced a tender or exchange offer for voting
securities of Genesis or securities exchangeable, convertible or exercisable for
voting securities of Genesis where all such voting securities represent more
than 35% of the total voting power of Genesis; or (iii) none of Cypress, TPG and
Sponsor Affiliates affiliated with Cypress or TPG have the right to designate
directors on the board of directors of Genesis pursuant to the terms of the
Series H Preferred Stock.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF GENESIS
Genesis represents and warrants to the Sponsors as follows:
Section 6.1 Organization and Good Standing. Genesis is a corporation
duly incorporated, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and has all corporate powers required to carry on
its business as now conducted. Genesis is duly qualified to transact business as
a foreign corporation and is in good standing in each jurisdiction in which the
character of the properties owned or leased by it or the nature of its business
makes such qualification necessary, except where the failure to be so qualified
or in good standing would not, individually or in the aggregate, have a Material
Adverse Effect.
Section 6.2 Capitalization. (a) As of the date hereof, the authorized
Capital Stock of Genesis consists solely of 60,000,000 shares of common stock
and 5,000,000 of preferred stock. As of September 30, 1999, there were
36,145,678 shares of Genesis common stock and 590,253
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shares of Genesis preferred stock (all of which were shares of Genesis' Series G
Cumulative Convertible Preferred Stock, each share of which is entitled to 13.44
votes per share) outstanding. Each share of Capital Stock of Genesis that is
issued and outstanding has been duly authorized and validly issued and is fully
paid and nonassessable, and the issuance thereof was not subject to any
pre-emptive or other similar rights or made in violation of any applicable law.
(b) Except as set forth on Schedule 6.2(b), there are no outstanding
options, warrants, agreements, conversion rights, exchange rights, pre-emptive
rights or other rights (whether contingent or not) to subscribe for, purchase or
acquire any issued or unissued shares of Capital Stock of Genesis or any
subsidiary of Genesis and there are no restrictions upon, or contracts or
understandings of Genesis or any Affiliate of Genesis with respect to, the
voting, issuance or transfer of any shares of Capital Stock of Genesis or any
subsidiary of Genesis.
Section 6.3 Issuance of Securities. The (i) shares of Series H
Preferred Stock issuable pursuant to Section 2.2 of this Agreement, (ii) shares
of Series I Preferred Stock issuable pursuant to Section 2.2 of this Agreement,
(iii) shares of Series H Preferred Stock issuable upon exchange of the Series I
Preferred Stock pursuant to the terms of the Series I Preferred Stock, (iv)
shares of Series I Preferred Stock issuable in the payment of dividends on the
Series H Preferred Stock pursuant to the terms of the Series H Preferred Stock,
(v) shares of Genesis Common Stock issuable upon conversion of the Series H
Preferred Stock pursuant to the terms of the Series H Preferred Stock, (vi)
shares of Genesis Non-Voting Common Stock issuable upon conversion of the Series
I Preferred Stock pursuant to the terms of the Series I Preferred Stock, (vii)
shares of Genesis Common Stock issuable pursuant to Section 3.1 of this
Agreement, (viii) Warrants issuable pursuant to Section 3.1 of this Agreement
and (ix) shares of Genesis Common Stock issuable upon exercise of the Warrants
(collectively, the "Transaction Securities"), in each case have been duly
authorized and when issued and delivered in accordance with the terms of this
Agreement and, to the extent applicable, the terms of the Series H Preferred
Stock, the Series I Preferred Stock and the Warrants, will be validly issued and
outstanding, fully paid and nonassessable free and clear of all liens, claims
and restrictions other than those created by the recipient, with no personal
liability attached to the ownership thereof; and the holders of the outstanding
Capital Stock of Genesis are not entitled to any pre-emptive or other rights to
subscribe for such shares.
12
Section 6.4 Authority. The execution, delivery and performance of
this Agreement and the performance of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Genesis
and, except for the requisite shareholder approvals contemplated by Section 9.3,
no other proceedings on the part of Genesis are necessary to authorize and
approve this Agreement or any of the transactions contemplated hereby including,
without limitation, the amendment of Genesis' articles of incorporation as
contemplated by Section 9.8. This Agreement has been duly executed and delivered
by Genesis and constitutes the legal, valid and binding obligation of Genesis,
enforceable against Genesis in accordance with the terms hereof, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights generally and by
general principles of equity and indemnification may be limited under federal
and state securities laws.
Section 6.5 No Conflicts. Except as set forth in Schedule 6.6, (i) the
execution and delivery by Genesis of this Agreement, the Amended and Restated
Put/Call Agreement and the Amended and Restated Stockholders Agreement, (ii) the
issuance of the Transaction Securities as contemplated hereby and, to the extent
applicable, by the terms of the Series H Preferred Stock, the Series I Preferred
Stock and the Warrants and (iii) the performance by Genesis of, and the
consummation of the transactions contemplated by, this Agreement, the Amended
and Restated Put/Call Agreement and the Amended and Restated Stockholders
Agreement, do not and will not result in the creation of any lien on, or
security interest in, any of the assets of Genesis or any of its subsidiaries or
violate, conflict with or constitute a breach of, or a default under, or give
rise to any right of termination, cancellation or acceleration under, (x) any
material agreement, indenture or instrument to which Genesis or any of its
subsidiaries is a party or which is binding on Genesis or any of its
subsidiaries, (y) the terms of the articles of incorporation or bylaws of
Genesis or (z) any law or any order or regulation applicable to Genesis of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over Genesis, except for any lien or security interest or, in the
case of clauses (x) and (z), any violation, conflict, breach, termination,
cancellation or acceleration that would not, individually or in the aggregate,
have a Material Adverse Effect.
Section 6.6 Required Filings; Consents and Approvals. Except as set
forth in Schedule 6.6, no consent, approval or authorization of, or filing,
registration or qualification with, any court, governmental, administrative or
judicial authority or regulatory body or any Person (i) is required on the part
of Genesis for the execution, delivery and performance of this Agreement and the
transactions contemplated hereby, other than those which have been duly obtained
or made or will be required in connection with Article XI of this Agreement
(which will be timely obtained or made) or (ii) is required on the part of the
Sponsors in connection with the disposition of their stock in Parent in one or
more transactions.
Section 6.7 SEC Filings; Financial Statements. (a) Genesis has timely
filed all reports, registration statements and other filings, together with any
amendments or supplements required to be made with respect thereto, that it has
been required to file with the SEC under the Securities Act or the Exchange Act
(all such reports, registration statements and other filings, as
13
amended or supplemented and including all documents incorporated by reference
therein, filed since January 1, 1998, are referred to herein as the "SEC
Filings"). As of the respective dates of their filing with the SEC, the SEC
Filings complied in all material respects with the applicable provisions of
Securities Act and the Exchange Act and did not contain any 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, in the light of the circumstances
under which they were made, not misleading.
(b) Each of the historical financial statements of Genesis (including
any related notes or schedules) included in the SEC Filings was prepared in
accordance with GAAP (except as may be disclosed therein) and complied in all
material respects with the rules and regulations of the SEC. Such financial
statements fairly present the consolidated financial position of Genesis and its
subsidiaries as of the dates presented and the results of operations, cash flows
and changes in stockholders' equity for the periods presented (subject, in the
case of unaudited interim financial statements, to normal year-end audit
adjustments on a basis comparable with past periods).
Section 6.8 Listing of Genesis Common Stock. The shares of Genesis
Common Stock and Genesis Non-Voting Common Stock which constitute Transaction
Securities on the date of the issuance thereof, will be listed and eligible for
trading on the principal United States securities exchange on which the Genesis
Common Stock is then traded or on the NASDAQ National Market System, as the case
may be.
Section 6.9 Rights Plan. The Board of Directors of Genesis has
amended the Rights Agreement, dated as of April 20, 1995 (the "Genesis Rights
Agreement"), between Genesis and Mellon Securities Trust Company, as Rights
Agent, to exclude the Sponsors and the Sponsor Affiliates from the definition of
"Acquiring Person" (as such term is defined in the Genesis Rights Agreement).
Neither the execution and delivery of this Agreement nor the transactions
contemplated by this Agreement, including, without limitation, the receipt of
the Transaction Securities by Sponsors or the Sponsor Affiliates and the
issuance of Transaction Securities by Genesis, shall cause any rights under the
Genesis Rights Agreement or any other rights plan (poison pill) of Genesis or
any of its subsidiaries or its or their successors to issue or become
exercisable or result in any other adverse consequence under the Genesis Rights
Agreement or any other rights plan of Genesis to Sponsors or the Sponsor
Affiliates owning Transaction Securities.
Section 6.10 Inapplicability of Antitakeover Statutes or Provisions.
No state takeover statute or similar statute or regulation applies, purports to
apply or will, following the occurrence of any event contemplated hereby or
otherwise, apply to the transactions contemplated by this Agreement, including,
without limitation, the receipt of Transaction Securities by Sponsors or the
Sponsor Affiliates and the issuance of Transaction Securities by Genesis, and,
except as provided in this Agreement, no provision of the articles of
incorporation, bylaws or other governing documents of Genesis will, following
the occurrence of any event contemplated hereby or otherwise, restrict or impair
the ability of Sponsors or the Sponsor Affiliates or any subsequent transferee
to vote or otherwise exercise the rights of a stockholder
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with respect to Transaction Securities or otherwise obtain the benefits of this
Agreement. At least seventy-five percent (75%) of the entire Board of Directors
of Genesis has approved this Agreement and the transactions contemplated hereby,
and no vote of shareholders is required pursuant to the provisions of Article 10
of Genesis' articles of incorporation in connection with the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby.
Section 6.11 Compliance With Securities Law. Based, in part, on the
representations and warranties of the Sponsors contained in Section 7.5, the
offer and sale of the Transaction Securities are exempt from the registration
and prospectus delivery requirements of the Securities Act. Neither Genesis nor
anyone acting on Genesis' behalf has offered or sold or will offer or sell any
securities, or has taken or will take any other action, which would subject the
transactions contemplated hereby to the registration provisions of the
Securities Act.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE SPONSORS
Each of the Sponsors severally, and not jointly, represents and
warrants to Genesis as follows:
Section 7.1 Organization and Good Standing. Such Sponsor and each
Sponsor Affiliate affiliated with such Sponsor is duly formed, validly existing
and in good standing under the laws of the jurisdiction of its formation and has
all powers required to carry on its business as now conducted.
Section 7.2 Authority. The execution, delivery and performance of this
Agreement has been duly authorized by all necessary action on the part of such
Sponsor and the Sponsor Affiliates affiliated with such Sponsor. This Agreement
has been duly executed and delivered by such Sponsor and the Sponsor Affiliates
affiliated with such Sponsor and constitutes the legal, valid and binding
obligation of such Sponsor and the Sponsor Affiliates affiliated with such
Sponsor, enforceable against such Sponsor and the Sponsor Affiliates affiliated
with such Sponsor in accordance with the terms hereof, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general principles of
equity and indemnification may be limited under federal and state securities
laws.
Section 7.3 No Conflicts. (i) The execution and delivery by such
Sponsor and the Sponsor Affiliates affiliated with such Sponsor of this
Agreement, the Amended and Restated Put/Call Agreement and the Amended and
Restated Stockholders Agreement and (ii) the performance by such Sponsor and the
Sponsor Affiliates affiliated with such Sponsor of, and the consummation of the
transactions contemplated by, this Agreement, the Amended and Restated Put/Call
Agreement and the Amended and Restated Stockholders Agreement, do not and will
not result in the creation of any lien on, or security interest in, any of the
assets of such Sponsor or any Sponsor Affiliates affiliated with such Sponsor or
violate, conflict with or constitute a breach of, or a default under, or give
rise to any right of termination, cancellation or acceleration under, (x) any
material agreement, indenture or instrument to which such Sponsor or any Sponsor
Affiliates affiliated with such Sponsor is a party or which is binding on such
Sponsor or any Sponsor Affiliates affiliated with such Sponsor or, (y) the terms
of the constituent documents of such Sponsor or any Sponsor Affiliates
affiliated with such Sponsor or (z) any law or any order or regulation
applicable to such Sponsor or any Sponsor Affiliates affiliated with such
Sponsor or
15
of any court, regulatory body, administrative agency or governmental body having
jurisdiction over such Sponsor or any Sponsor Affiliates affiliated with such
Sponsor, except for any lien or security interest or, in the case of clauses (x)
and (z), any violation, conflict, breach, termination, cancellation or
acceleration that would not, individually or in the aggregate, have a material
adverse effect on such Sponsor or any Sponsor Affiliates affiliated with such
Sponsor.
Section 7.4 Required Filings; Consents and Approvals. Except as set
forth on Schedule 7.4, except as may be required on the part of the Sponsors by
any court, governmental, administrative or judicial authority or regulatory body
in connection with any the acquisition of the Transaction Securities and except
as may be required on the part of the Sponsors in connection with the
disposition of their stock in Parent in one or more transactions, no consent,
approval or authorization of, or filing, registration or qualification with, any
court, governmental, administrative or judicial authority or regulatory body or
any Person is required on the part of such Sponsor for the execution, delivery
and performance of this Agreement and the transactions contemplated hereby,
other than those which have been duly obtained or made.
Section 7.5 Purchase for Investment. Such Sponsor and/or, if
applicable, the Sponsor Affiliates affiliated with such Sponsor, are acquiring
the Transaction Securities for investment and not with a view to, or for sale in
connection with, any distribution thereof. Such Sponsor and/or, if applicable,
the Sponsor Affiliates affiliated with such Sponsor (either alone or together
with its advisors) have sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks of its
investment in the Transaction Securities and is capable of bearing the economic
risks of such investment.
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1 Conditions to Obligation of Each Party to Effect the
Transactions. The respective obligations of each party to consummate the Closing
shall be subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other governmental authority of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of the
Closing contemplated shall be in effect.
(b) Required Filings and Consents. Each of the parties shall have
obtained all necessary governmental, administrative, regulatory, shareholder and
third party consents and approvals in connection with the execution, delivery
and performance of this Agreement and the transactions contemplated hereby
(other than the consents contemplated in Section 8.2 (i) of this Agreement), and
such consents and approvals shall be in full force and effect. The waiting
period (and any extension thereof) applicable to the transactions contemplated
hereby under the
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Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx") shall have
been terminated or shall have expired.
Section 8.2 Conditions to Obligation of the Sponsors to Effect the
Transactions. The respective obligations of the Sponsors to consummate the
Closing shall be subject to the satisfaction at or prior to the Closing of the
following conditions:
(a) Listing of Genesis Common Stock. The Genesis Common Stock to be
issued at the Closing shall be listed and eligible for trading on a principal
United States securities exchange on which the Genesis Common Stock is then
traded or on the NASDAQ National Market System as the case may be.
(b) Opinion of Counsel. Genesis shall have delivered to the Sponsors
an opinion from Blank Rome Xxxxxxx & XxXxxxxx LLP, reasonably satisfactory to
the Sponsors, with respect to the matters addressed in Sections 6.1, 6.2, 6.3,
6.4, 6.5, 6.6, 6.9, 6.10 and 6.11. In rendering such opinion, such counsel may
rely on the opinion of Genesis' corporate counsel to the extent consistent with
past practice.
(c) Representations and Warranties. The representations and warranties
of Genesis contained herein shall be true and correct in all material respects
as of the date hereof and at, and as of, the Closing, with the same force and
effect as though made at, and as of, the Closing, except that, to the extent any
representation or warranty is made as of a specified date, it need be true only
as of such date (it being understood that, for purposes of determining the truth
and correctness of Genesis' representations and warranties, all Material Adverse
Effect and materiality qualifiers contained in such representations and
warranties shall be disregarded).
(d) Proceedings and Documents. All corporate proceedings on the part
of Genesis in connection with the transactions contemplated hereby and all
documents and instruments incident to the transactions contemplated hereby shall
be reasonably satisfactory to counsel for the Sponsors, and such counsel shall
have received all such counterpart originals or certified or other copies of
such documents as they may reasonably request.
(e) Certificates of Designation; Amendment to Articles of
Incorporation. The Certificates of Designation for the Series H Preferred Stock
and the Series I Preferred Stock substantially in the forms attached hereto as
Exhibits B and C, respectively, and the amendment to Genesis' articles of
incorporation as contemplated by Section 9.8 shall have been filed in accordance
with the laws of the Commonwealth of Pennsylvania.
(f) No Change of Control. No Change in Control shall have occurred.
(g) No Material Breach. Genesis shall have performed in all material
respects all of its obligations and covenants contained in this Agreement to be
performed by it at or prior to the Closing.
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(h) No Material Adverse Change. There shall not have occurred any
event, circumstance, condition, fact or other matter which has had a Material
Adverse Effect.
(i) Regulatory Consents. The Sponsors shall have obtained all
necessary governmental, administrative and regulatory consents and approvals,
and made all governmental, administrative and regulatory filings required to be
made at or prior to the Closing, in connection with the Sponsors' disposition of
their stock in Parent in one or more transactions satisfactory to the Sponsors.
(j) Officer's Certificate. The Sponsors shall have received a
certificate signed by an authorized officer of Genesis certifying as to the
fulfillment of the conditions set forth in Sections 8.2(a), (c), (e), (g), (h)
and (k).
(k) Other Agreements. Genesis shall have entered into each of the
Amended and Restated Put/Call Agreement and the Amended and Restated
Stockholders Agreement.
(l) Certificates. The Sponsors shall have received certificates
representing the Transaction Securities to be acquired by them at the Closing
pursuant to Sections 2.2 and 3.1.
(m) Expenses. Concurrently with the Closing, Genesis shall reimburse
Cypress and TPG in accordance with Section 9.10 for their expenses incurred
prior to the Closing.
Section 8.3 Conditions to Obligation of Genesis to Effect the
Transactions. The obligation of Genesis to consummate the Closing shall be
subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) Representations and Warranties. The representations and warranties
of each Sponsor contained herein shall be true and correct in all material
respects as of the date hereof and at, and as of, the Closing, with the same
force and effect as though made at, and as of, the Closing, except that, to the
extent any representation or warranty is made as of a specified date, it need be
true only as of such date (it being understood that, for purposes of determining
the truth and correctness of each Sponsor's representations and warranties, all
materiality qualifiers contained in such representations and warranties shall be
disregarded).
(b) Opinion of Counsel. Each of Cypress and TPG shall have delivered
to Genesis an opinion from its counsel, reasonably satisfactory to Genesis, with
respect to the matters addressed in Sections 7.2 and 7.3(y); provided, that such
counsel need not express any opinion concerning any law other than the law of
the State of New York, the federal law of the United States, the Delaware
General Corporation Law and the Delaware Uniform Limited Partnership Law, and,
provided, further, that such counsel need not express any opinion concerning any
matter of health care or insurance law or regulation.
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(c) No Material Breach. Each Sponsor shall have performed in all
material respects all of its obligations and covenants contained in this
Agreement to be performed by it at or prior to the Closing.
(d) Officer's Certificate. Genesis shall have received from each
Sponsor a certificate signed by an authorized person of such Sponsor certifying
as to the fulfillment of the conditions set forth in Sections 8.3(a), (c) and
(e).
(e) Other Agreements. Each of Cypress and TPG shall have entered into
each of the Amended and Restated Put/Call Agreement and the Amended and Restated
Stockholders Agreement.
(f) Purchase Price. Genesis shall have received the purchase price for
the Genesis Common Stock and the Warrants being purchased and sold at the
Closing pursuant to Section 3.1.
ARTICLE IX
COVENANTS OF GENESIS
Genesis covenants and agrees as follows for the benefit of each
Sponsor:
Section 9.1 Further Assurances. (a) Subject to the terms and
conditions hereof, Genesis shall use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable or reasonably requested by Cypress or TPG to
consummate and make effective, as promptly as practicable, the transactions
contemplated by this Agreement. In this regard, Genesis shall use its reasonable
best efforts to cause all of the obligations imposed upon it in this Agreement
to be duly complied with and to cause all conditions precedent to the
obligations of the parties to be satisfied.
(b) Genesis shall prepare, file and deliver, as applicable, all
applications and other notices and documents required in connection with, and
use its reasonable best efforts to obtain promptly and comply with any
conditions contained in all governmental, administrative, regulatory,
shareholder and third party consents and approvals required to be obtained by it
in connection with, the transactions contemplated by this Agreement, including,
without limitation, any filings under the HSR Act. Genesis shall use its
reasonable best efforts to cooperate with the Sponsors in connection with their
similar activities.
Section 9.2 Operation of Business; Certain Negative Covenants. From
the date hereof until the Closing, except as contemplated by this Agreement or
unless each of Cypress and TPG gives its prior written consent, Genesis shall
operate its business only in the normal course, consistent with past practice
and in compliance with applicable laws. From the
19
date hereof until the Closing, unless each of Cypress and TPG gives its prior
written consent, Genesis shall not:
(a) enter into any transaction or series of transactions which would
constitute a Change in Control or engage in any transaction pursuant to Rule
13e-3 under the Exchange Act;
(b) issue, reissue, sell, pledge, encumber or otherwise dispose of,
reclassify, combine, split or subdivide any of its Capital Stock, or authorize
any of the foregoing, other than pursuant to commitments outstanding on the date
hereof or pursuant to employee benefit plans existing on the date hereof;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
Capital Stock of Genesis; or
(d) amend, modify, supplement or otherwise change any of the terms of
Genesis' articles of incorporation or bylaws.
Section 9.3 Stockholder Vote The Company shall (unless previously
adopted) present proposals, in accordance with all applicable laws and
regulations, to its stockholders at a special meeting held as promptly as
practicable after the date hereof, including, without limitation, proposals
seeking the approval of the amendment of Genesis' articles of incorporation as
contemplated by Section 9.8 and any approvals required by the New York Stock
Exchange, Inc. The members of the board of directors of Genesis shall, to the
extent consistent with their fiduciary duties, recommend approval of such
proposals. In connection with the foregoing, Genesis shall use its reasonable
best efforts to file and have cleared by the SEC, and will thereafter mail to
its stockholders as promptly as practicable, all proxy materials which are
necessary or advisable.
Section 9.4 No Acts or Omissions. Genesis shall not enter into any
agreement, take any action or fail to take any action that would materially
impair its ability to perform its obligations under this Agreement or cause any
condition to any parties' obligation hereunder to consummate the Closing to be
incapable of being satisfied.
Section 9.5 Notice to Sponsors. Genesis shall promptly advise the
Sponsors of any change, development or condition that may materially impair
Genesis' ability to consummate the Closing or cause any condition to any
parties' obligation hereunder to consummate the Closing to be incapable of being
satisfied.
Section 9.6 Public Announcements. Unless required by law, regulation
or legal or judicial process or the rules of any securities exchange or over the
counter market, prior to the Closing, neither Genesis nor any Person on Genesis'
behalf shall make any news release or other public disclosure regarding this
Agreement or the transactions contemplated hereby without the consent of Cypress
and TPG, which consent shall not be unreasonably withheld. If any such news
release or public disclosure shall be required by law, regulation or legal or
judicial process
20
or the rules of any securities exchange or over the counter market and, in any
event, prior to any such news release or public disclosure following the
Closing, Genesis shall give Cypress and TPG notice thereof and consult with
Cypress and TPG with respect thereto.
Section 9.7 Reservation of Securities. For so long as any of the
Series H Preferred Stock or any Warrants are outstanding, Genesis shall reserve
and keep available, free from pre-emptive rights, (i) a sufficient number of
shares of Genesis Common Stock to satisfy its conversion obligation under the
terms of the Series H Preferred Stock and its obligation to issue shares of
Genesis Common upon exercise of Warrants and (ii) a sufficient number of shares
of the Series I Preferred Stock to enable Genesis to declare and pay dividends
on the Series H Preferred Stock in shares of Series I Preferred Stock, in
accordance with the terms of the Series H Preferred Stock. For so long as any of
the Series I Preferred Stock is outstanding, Genesis shall reserve and keep
available, free from pre-emptive rights, a sufficient number of shares of
Genesis Non-Voting Common Stock to satisfy its conversion obligation under the
terms of the Series I Preferred Stock and a sufficient number of shares of
Series H Preferred Stock to enable Genesis to exchange the Series I Preferred
Stock therefor in accordance with the terms of the Series I Preferred Stock.
Section 9.8 Certificates of Designations; Amendment to Articles. Prior
to the Closing, Genesis shall (i) file a certificate of designations for each of
the Series H Preferred Stock and the Series I Preferred Stock substantially in
the forms of Exhibits B and C hereto, respectively, in accordance with the laws
of the Commonwealth of Pennsylvania and (ii) file an amendment to Genesis'
articles of incorporation in form and substance reasonably satisfactory to
Cypress and TPG effecting such changes to Genesis' articles of incorporation as
may be necessary or advisable in connection with the transactions contemplated
by this Agreement, including, without limitation, (y) creating the Genesis
Non-Voting Common Stock (which shall have rights, preferences and limitations
which are identical in all respects to the Genesis Common Stock except that the
Genesis Non-Voting Common Stock shall not have the right to vote other than any
right to vote provided by law) and (z) providing for a sufficient number of
authorized shares of Genesis Common Stock and Genesis Non-Voting Common Stock
for issuance as contemplated by this Agreement, the Warrants, the Series H
Preferred Stock and the Series I Preferred Stock.
Section 9.9 Disclosure. Subject to reasonable confidentiality
provisions, Genesis shall promptly furnish Cypress and TPG with all financial
and other information concerning Genesis and related matters, and access to
personnel of Genesis, which Cypress and TPG may reasonably request.
Section 9.10 Fees and Expenses. If the Closing shall occur, Genesis
shall promptly reimburse Cypress and TPG for their expenses incurred in
connection with the negotiation, execution, delivery and performance of this
Agreement and the transactions contemplated hereby (including the fees and
expenses of their professional advisors) up to a maximum aggregate amount of
$1,000,000.
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Section 9.11 No Amendment. Except as specifically contemplated
hereby, Genesis shall not amend, modify, supplement or otherwise change any of
the terms of its articles of incorporation, bylaws, shareholder rights agreement
or other constituent document in a manner that would be adverse to Sponsors
(other than an amendment, modification or supplement or other change which would
affect Sponsors the same as other shareholders of Genesis).
Section 9.12 Tax Treatment of Preferred Stock. Genesis (i) intends
that the Series H Preferred Stock and the Series I Preferred Stock will be
treated as stock that is other than "preferred stock" within the meaning of
Treasury regulation section 1.305-5(a) and (ii) shall prepare any and all
returns, reports and other statements (including, in each case, any schedule or
attachment thereto, or any amendment thereof) relating to United States federal
income taxation in a manner consistent with such treatment.
Section 9.13 Appointment of Sponsor Directors. Prior to the Closing,
the Board of Directors of Genesis shall take all actions necessary to appoint to
the Board of Directors of Genesis the number of directors to be nominated by TPG
and Cypress Merchant Banking Partners L.P. in accordance with Section 8 of the
Certificate of Designations of the Series H Preferred Stock, such appointments
to be effective from and after the Closing until the next annual meeting of
shareholders of Genesis.
ARTICLE X
COVENANTS OF THE SPONSORS
Each of the Sponsors severally, and not jointly, covenants and agrees
as follows:
Section 10.1 Further Assurances. (a) Subject to the terms and
conditions hereof, such Sponsor shall use its reasonable best efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable or reasonably requested by Genesis to consummate
and make effective, as promptly as practicable, the transactions contemplated by
this Agreement. In this regard, such Sponsor shall use its reasonable best
efforts to cause all of the obligations imposed upon it in this Agreement to be
duly complied with and to cause all conditions precedent to the obligations of
the parties to be satisfied.
(b) Such Sponsor shall prepare, file and deliver, as applicable, all
applications and other notices and documents required in connection with, and
use its reasonable best efforts to obtain promptly and comply with any
conditions contained in all governmental, administrative, regulatory,
shareholder and third party consents and approvals required to be obtained by it
in connection with, the transactions contemplated by this Agreement, including,
without limitation, any filings under the HSR Act. Such Sponsor shall use its
reasonable best efforts to cooperate with Genesis in connection with its similar
activities.
22
Section 10.2 No Acts or Omissions. Such Sponsor shall not enter into
any agreement or take any action that would materially impair its ability to
perform its obligations under this Agreement or cause any condition to any
parties' obligation hereunder to consummate the Closing to be incapable of being
satisfied.
Section 10.3 Public Announcements. Unless required by law, regulation
or legal or judicial process, prior to the Closing, neither such Sponsor nor any
Person on such Sponsor's behalf shall make any news release or other public
disclosure regarding this Agreement or the transactions contemplated hereby
without the consent of Genesis, which consent shall not be unreasonably
withheld. If any such news release or public disclosure shall be required by
law, regulation or legal or judicial process or the rules of any securities
exchange or over the counter market and, in any event, prior to any such news
release or public disclosure following the Closing, such Sponsor shall give
Genesis notice thereof and consult with Genesis with respect thereto.
Section 10.4 Restriction on Sales. For so long as the standstill
obligations set forth in Section 5.5 of this Agreement are in effect, such
Sponsor shall not sell Transaction Securities which are voting securities or
Warrants to (a) any person in a transaction or a series of transactions where
such voting securities, together with any other voting securities known by such
Sponsor to have been sold to such person by any other Sponsor, represent more
than 15% of Genesis's total voting power or (b) to any "competitor" of Genesis,
except, in any case, in an underwritten public offering, in an underwritten
offering effected pursuant to Rule 144A (or any successor provision) under the
Securities Act or in a transaction approved by Genesis's board of directors.
Such Sponsor shall give notice to Genesis of any transfer of such securities,
including the name of the transferee and whether it believes the transferee and
the selling Sponsor are a "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act).
For purposes of this Section 10.4, "competitor" shall mean any person
which derives more than $500 million in revenues from the operation of long-term
care facilities and/or institutional pharmacy sales; provided, that any person
which derives more than $200 million in revenues from the operation of long-term
care facilities and/or institutional pharmacy sales solely within one or two
markets in which Genesis then operates (as most recently reported by Genesis in
its filings with the SEC) shall be a "competitor".
ARTICLE XI
REGISTRATION RIGHTS
Section 11.1 Incidental Registration. (a) Right to Include Registrable
Securities. Each time Genesis proposes to register securities under the
Securities Act (other than a registration on Form S-4 or S-8, or any successor
or other forms promulgated for similar purposes), whether or not for sale for
its own account, pursuant to a registration statement on which it is permissible
to register Registrable Securities for sale to the public under the Securities
23
Act, it will give prompt written notice to all Holders of its intention to do so
and the Holders' rights under this Section 11.1(a). Upon the written request of
any Holder made within 15 days after the receipt of any such notice (which
request shall specify the Registrable Securities intended to be disposed of by
such Holder), Genesis will use its best efforts to effect the registration under
the Securities Act of all Registrable Securities which Genesis has been so
requested to register by the Holders thereof; provided, that (i) 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, Genesis shall determine for any reason not to proceed
with the proposed registration, Genesis may, at its election, give written
notice of such determination to each Holder and thereupon shall be relieved of
its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses in
connection therewith), and (ii) if such registration involves an underwritten
offering by Genesis (underwritten, at least in part, by Persons who are not
Affiliates of Genesis), all Holders requesting to have Registrable Securities
included in Genesis' registration must sell their Registrable Securities to such
underwriters who shall have been selected by Genesis on the same terms and
conditions as apply to Genesis, with such differences, including any with
respect to indemnification and contribution, as may be customary or appropriate
in combined primary and secondary offerings and such other differences as may be
customary or appropriate in light of the fact that Genesis and such Holders may
be selling different securities. If a proposed registration pursuant to this
Section 11.1(a) involves such an underwritten public offering, any Holder making
a request under this Section 11.1(a) in connection with such registration may
elect in writing, prior to the effective date of the registration statement
filed in connection with such registration, to withdraw such request and not to
have such securities registered in connection with such registration.
(b) Expenses. Genesis will pay all Registration Expenses in connection
with each registration of Registrable Securities requested pursuant to Section
11.1(a), regardless of whether such registration statement becomes effective.
(c) Priority in Incidental Registrations. If a registration pursuant
to this Section 11.1 involves an underwritten offering by Genesis (as described
in Section 11.1(a)(ii)) and the managing underwriter with respect to such
offering advises Genesis in writing that, in its opinion, the number of
securities (including all Registrable Securities) which Genesis, the Holders and
any other persons intend to include in such registration exceeds the largest
number of securities which can be sold in such offering without having an
adverse effect on the offering of securities as contemplated by Genesis
(including the price at which Genesis proposes to sell such securities), then
Genesis will include in such registration (i) first, all the securities Genesis
proposes to sell for its own account and (ii) second, (A) the number of shares
of Registrable Securities which the Holders have requested to be included in
such registration and (B) the number of shares of securities as to which the
holders thereof have , as the date of this Agreement, the right to include in
such registration and which the holders thereof have requested to be included in
such registration, in each case which, in the opinion of such managing
underwriter, can be sold without having the adverse effect referred to above. If
the number of shares of Registrable Securities which the Holders have requested
to be included in such registration and the number of shares of such other
securities which the holders thereof have requested to be included in such
registration are accordingly reduced, such reduced number of Registrable
Securities and such other securities shall be allocated pro rata among the
holders thereof on the basis of the relative number of shares of Registrable
Securities or such other securities then held by each such holder; provided,
that any shares thereby allocated to any such holder that exceed such holder's
request will be reallocated among the remaining requesting holders in like
manner.
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(d) Custody Agreement and Power of Attorney. Upon Genesis' request,
any Holder will execute and deliver a custody agreement and power of attorney in
form and substance reasonably satisfactory to Genesis with respect to the shares
of Registrable Securities to be registered pursuant to this Section 11.1 (a
"Custody Agreement and Power of Attorney"). The Custody Agreement and Power of
Attorney will provide, among other things, that the Holder will deliver to and
deposit in custody with the custodian and attorney-in-fact named therein a
certificate or certificates representing such Registrable Securities (duly
endorsed in blank by the registered owner or owners thereof or accompanied by
duly executed stock powers in blank) and irrevocably appoint said custodian and
attorney-in-fact as the Holder's agent and attorney-in-fact with full power and
authority to act under the Custody Agreement and Power of Attorney on the
Holder's behalf with respect to the matters specified therein.
(e) Other Agreements. Each Holder shall execute such other agreements
as Genesis may reasonably request to further accomplish the purposes of this
Section 11.1.
Section 11.2 Registration on Request. (a) Request by Holders. Upon the
written request of Cypress or TPG or the written request of any Holder or
Holders of outstanding Registrable Securities which, together with the shares of
Genesis Common Stock and the Genesis Non-Voting Common Stock issuable upon
exercise or conversion of such Registrable Securities, constitute more than 50%
of the shares of Genesis Common Stock and Genesis Non-Voting Common Stock that
are then Registrable Securities and the shares of Genesis Common Stock and
Genesis Non-Voting Common Stock then issuable upon exercise or conversion of
Registrable Securities, requesting that Genesis effect the registration under
the Securities Act of all or part of such Holder's or Holders' Registrable
Securities (which Registrable Securities requested to be registered have a
proposed aggregate public offering price as of the date of such request of not
less than $25 million or which constitute all or such Holder's or Holders'
Registrable Securities), and specifying the intended method of disposition
thereof, Genesis will promptly give written notice of such requested
registration to all other Holders, and thereupon will, as expeditiously as
possible, use its best efforts to effect the registration under the Securities
Act of:
(i) the Registrable Securities which Genesis has been so
requested to register by such Holders or Holder; and
(ii) all other Registrable Securities which Genesis has been
requested to register by any other Holder thereof by written request
given to Genesis within 30 days after the giving of such written
notice by Genesis (which request shall specify the intended method of
disposition of such Registrable Securities),
so as to permit the disposition (in accordance with the Holders' intended method
thereof) of the Registrable Securities so to be registered; provided, that
Genesis shall not be obligated to file a registration statement relating to any
registration request under this Section 11.2(a) (i) within a period of six
months after the effective date of any other registration statement relating to
(A) any registration request under this Section 11.2(a) or (B) any registration
of Registrable
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Securities effected under Section 11.1, (ii) if five registration statements
relating to registration requests under this Section 11.2(a) have previously
been filed and declared effective by the SEC or (iii) with respect to any
Registrable Securities other than Common Stock or Non-Voting Common Stock,
within 270 days after the Closing.
(b) Expenses. Genesis will pay all Registration Expenses in connection
with the five registrations of Registrable Securities pursuant to this Section
11.2 upon the written request of any of the Holders.
(c) Effective Registration Statement. A registration requested
pursuant to this Section 11.2 will not be deemed to have been effected unless it
has become effective; provided, that if, within the period ending on the earlier
to occur of (i) 180 days after the applicable registration statement has become
effective, or (ii) the date on which the distribution of the Registrable
Securities covered thereby has been completed, the offering of Registrable
Securities pursuant to such registration is interfered with by any stop order,
injunction or other order or requirement of the SEC or other governmental agency
or court, such registration will be deemed not to have been effected.
(d) Shelf Registration. If Genesis is eligible to file a registration
statement on Form S-3 (or any equivalent successor form), then the Person or
Persons entitled to make a request for registration pursuant to Section 11.2(c)
may elect to require that the registration then requested be effected using a
shelf registration under Rule 415 of the Securities Act. Genesis will use its
reasonable best efforts to cause any registration pursuant to this Section 11.2
effected as a shelf registration under Rule 415 of the Securities Act to remain
effective for a period ending on the earlier of (i) two years after the
effective date of the registration statement plus such additional period of time
as Genesis or any Holder may be required under the Securities Act to deliver a
prospectus in connection with any sale of Registrable Securities pursuant to
such registration, and (ii) the date on which all Registrable Securities covered
by such registration statement have been sold.
(e) Selection of Underwriters. If a requested registration pursuant to
this Section 11.2 involves an underwritten offering, the Person or Persons
requesting registration shall have the right to select the investment banker or
bankers and managers to administer the offering; provided, however, that such
investment banker or bankers and managers shall be reasonably satisfactory to
Genesis.
(f) Priority in Requested Registrations. If a requested registration
pursuant to this Section 11.2 involves an underwritten offering and the managing
underwriter advises Genesis in writing that, in its opinion, the number of
securities requested to be included in such registration (including securities
of Genesis which are not Registrable Securities) exceeds the largest number of
securities which can be sold in such offering, Genesis will include in such
registration only the Registrable Securities requested to be included in such
registration. In the event that the number of Registrable Securities requested
to be included in such registration exceeds the number which, in the opinion of
such managing underwriter, can be sold, the number
26
of such Registrable Securities to be included in such registration shall be
allocated pro rata (in the case of securities other than common stock of
Genesis, based on the number of shares of common stock then issuable upon
exercise or conversion thereof) among all requesting Holders on the basis of the
relative number of shares of Registrable Securities (in the case of securities
other than common stock of Genesis, based on the number of shares of common
stock then issuable upon exercise or conversion thereof) then held by each such
Holder; provided, that any securities thereby allocated to any such Holder that
exceed such Holder's request shall be reallocated among the remaining requesting
Holders in like manner. In the event that the number of Registrable Securities
requested to be included in such registration is less than the number which, in
the opinion of the managing underwriter, can be sold, Genesis may include in
such registration the securities Genesis or other Persons propose to sell up to
the number of securities that, in the opinion of the managing underwriter, can
be sold.
Section 11.3 Registration Procedures. If and whenever Genesis is
required to use its best efforts to effect or cause the registration of any
Registrable Securities under the Securities Act as provided in this Agreement,
Genesis will, as expeditiously as possible:
(a) prepare and, if the registration is pursuant to notice
given under Section 11.2(a), in any event within 45 days after the
giving of notice pursuant to Section 11.2(a), file with the SEC a
registration statement with respect to such Registrable Securities on
any form for which Genesis then qualifies or which counsel for Genesis
shall deem appropriate, and which form shall be available for the sale
of the Registrable Securities in accordance with the intended methods
of distribution thereof, and use its best efforts to cause such
registration statement to become and remain effective; provided,
however, that Genesis may discontinue any registration of its
securities which is being effected pursuant to Section 11.2 at any
time prior to the effective date of the registration statement
relating thereto;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period of 180 days (or, in the case of a
shelf registration pursuant to Rule 415 under the Securities Act, two
years plus such additional period of time as Genesis or any Holder may
be required under the Securities Act to deliver a prospectus in
connection with any sale of Registrable Securities pursuant to such
registration) or such lesser period of time as Genesis or any Holder
may be required under the Securities Act to deliver a prospectus in
connection with any sale of Registrable Securities, and to comply with
the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement during such
period in accordance with the intended methods of disposition by the
Holder or Holders thereof set forth in such registration statement;
provided, that before filing a registration statement or prospectus,
or any amendments or supplements thereto, Genesis will furnish to the
Holders and their counsel copies of all documents proposed to be
filed, which documents will be subject to the review of such counsel
and will not be filed if such counsel reasonably objects;
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(c) furnish to each Holder of such Registrable Securities such
number of copies of such registration statement and of each amendment
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 summary
prospectus and prospectus supplement, as applicable), in conformity
with the requirements of the Securities Act, and such other documents
as such Holder may reasonably request in order to facilitate the
disposition of the Registrable Securities by such Holder;
(d) use its best efforts to register or qualify such
Registrable Securities covered by such registration statement under
such other securities or blue sky laws of such jurisdictions as each
Holder shall reasonably request, and do any and all other acts and
things which may be reasonably necessary or advisable to enable such
Holder to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such Holder, except that Genesis shall
not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction where, but for
the requirements of this Section 11.3(d), it would not be obligated to
be so qualified, to subject itself to taxation in any such
jurisdiction, or to consent to general service of process in any such
jurisdiction;
(e) use its best efforts to cause such Registrable Securities
covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the Holder or Holders thereof to consummate the
disposition of such Registrable Securities;
(f) notify each Holder of any such Registrable Securities
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act
within the appropriate period mentioned in Section 11.3(b), of
Genesis' becoming aware that the prospectus included in such
registration statement, as then in effect, includes an untrue
statement of a material fact or omits 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, and at the request of any such Holder, prepare and furnish
to such Holder a reasonable number of copies of an amended or
supplemental 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 necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(g) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable (but not more than
eighteen months) after the effective date of the registration
statement, an earnings statement which shall satisfy the provisions of
Section 11(a) of the Securities Act and the rules and regulations
promulgated thereunder;
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(h) (A) use its best efforts to cause all such Registrable
Securities which are shares of Genesis Common Stock or Genesis
Non-Voting Common Stock to be listed on any securities exchange on
which the Genesis Common Stock is then listed, if such Registrable
Securities are not already so listed and if such listing is then
permitted under the rules of such exchange and (B) provide a transfer
agent and registrar for such Registrable Securities covered by such
registration statement no later than the effective date of such
registration statement;
(i) enter into such customary agreements (including an
underwriting agreement in customary form) and take such other actions
as sellers of Registrable Securities (on a converted or exercised
basis, as applicable, in the case of Series H Preferred Stock, Series
I Preferred Stock and Warrants) constituting a majority of the shares
of Registrable Securities (on a converted or exercised basis, as
applicable, in the case of Series H Preferred Stock, Series I
Preferred Stock and Warrants) being registered or the underwriters, if
any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities, including making
appropriate members of senior management of Genesis available for
customary participation in a "road show" presentation to potential
investors;
(j) obtain a "cold comfort" letter or letters from Genesis'
independent public accountants in customary form and covering matters
of the type customarily covered by "cold comfort" letters as Sellers
of Registrable Securities (on a converted or exercised basis, as
applicable, in the case of Series H Preferred Stock, Series I
Preferred Stock and Warrants) constituting a majority of the shares of
Registrable Securities (on a converted or exercised basis, as
applicable, in the case of Series H Preferred Stock, Series I
Preferred Stock and Warrants) being registered or issuable upon
exercise or conversion of Registrable Securities being registered
shall reasonably request (provided that Registrable Securities
constitute at least 25% of the securities covered by such registration
statement); and
(k) make available for inspection by representatives of the
Holders of the Registrable Securities covered by such registration
statement, by any underwriter participating in any disposition to be
effected pursuant to such registration statement and by any attorney,
accountant or other agent retained by such Holders or any such
underwriter, all pertinent financial and other records, pertinent
corporate documents and properties of Genesis, and cause all of
Genesis' officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement.
Genesis may require each Holder of Registrable Securities as to which
any registration is being effected to furnish Genesis with such information
regarding such Holder and pertinent to the disclosure requirements relating to
the registration and the distribution of such securities as Genesis may from
time to time reasonably request in writing.
29
Each Holder of Registrable Securities, upon receipt of any notice from
Genesis of the happening of any event of the kind described in Section 11.3(f),
shall forthwith discontinue disposition of Registrable Securities pursuant to
the registration statement covering such Registrable Securities until such
Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 11.3(f), and, if so directed by Genesis, such Holder
shall deliver to Genesis (at Genesis' expense) all copies, other than permanent
file copies then in such Holder's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event Genesis shall give any such notice, the period mentioned in Section
11.3(b) shall be extended by the number of days during the period from the date
of the giving of such notice pursuant to Section 11.3(f) and through the date
when each seller of Registrable Securities covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus contemplated by Section 11.3(f).
Section 11.4 Indemnification. (a) Indemnification by Genesis. In the
event of any registration of any securities of Genesis under the Securities Act
pursuant to Section 11.1 or 11.2, Genesis hereby indemnifies and agrees to hold
harmless, to the extent permitted by law, each Holder of Registrable Securities
covered by such registration statement, each affiliate of such Holder and their
respective directors and officers or general and limited partners (and the
directors, officers, affiliates and controlling Persons thereof), each other
Person who participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such Holder or any such
underwriter within the meaning of the Securities Act (collectively, the
"Indemnified Parties"), against any and all losses, claims, damages or
liabilities, joint or several, and expenses to which such Indemnified Party may
become subject under the Securities Act, common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof, whether or not such Indemnified Party is a party thereto) arise
out of or are based upon (a) 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, final or
summary prospectus contained therein, or any amendment or supplement thereto, or
(b) any omission or alleged omission to state therein a material fact necessary
to make the statements made, in the light of the circumstances under which they
were made, not misleading, and Genesis will reimburse such Indemnified Party for
any legal or other expenses reasonably incurred by it in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided, that Genesis shall not be liable to any Indemnified Party
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 any untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, in any such preliminary, final or
summary prospectus, or any amendment or supplement thereto in reliance upon and
in conformity with written information with respect to such Indemnified Party
furnished to Genesis by such Indemnified Party for use in the preparation
thereof; and provided, further, that Genesis will 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, under the indemnity agreement in this Section
11.4(a) with respect to any preliminary prospectus or the final prospectus or
the final prospectus as amended or supplemented, as the case may be, to the
30
extent that any such loss, claim, damage or liability of such underwriter or
controlling Person results from the fact that such underwriter sold Registrable
Securities to a person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the final prospectus (including any
documents incorporated by reference therein) or of the final prospectus as then
amended or supplemented (including any documents incorporated by reference
therein), whichever is most recent, if Genesis has previously furnished copies
thereof to such underwriter. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such Holder or
any Indemnified Party and shall survive the transfer of such securities by such
Holder.
(b) Indemnification by the Holders and Underwriters. Genesis may
require, as a condition to including any Registrable Securities in any
registration statement filed in accordance with Section 11.1 or 11.2 herein,
that Genesis shall have received an undertaking reasonably satisfactory to it
from the Holder of such Registrable Securities or any underwriter to indemnify
and hold harmless (in the same manner and to the same extent as set forth in
Section 11.4(a)) Genesis, all other prospective Holders or any underwriter, as
the case may be, and any of their respective affiliates, directors, officers and
controlling Persons, with respect to any statement in or omission or alleged
omission from such registration statement, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement, if such statement
or omission or alleged omission was made in reliance upon and in conformity with
written information with respect to such Holder or underwriter furnished to
Genesis by such Holder or underwriter expressly for use in the preparation of
such registration statement, preliminary, final or summary prospectus or
amendment or supplement, or a document incorporated by reference into any of the
foregoing. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of Genesis or any of the Holders, or any
of their respective affiliates, directors, officers or controlling Persons and
shall survive the transfer of such securities by such Holder.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 11.4, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to the latter of the commencement of such action; provided, that the failure of
the indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under Sections 11.4(a) or 11.4(b), except
to the extent that the indemnifying party is actually prejudiced by such failure
to give notice. In case any such action is brought against an indemnified party,
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party will be entitled to participate in and to assume
the defense thereof, jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation.
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If the indemnified party has been advised by counsel that having common counsel
would result in a conflict of interest between the interests of such indemnified
and indemnifying parties, then such indemnified party may employ separate
counsel reasonably acceptable to the indemnifying party to represent or defend
such indemnified party in such action, it being understood, however, that the
indemnifying party shall not be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all such indemnified
parties (and not more than one separate firm of local counsel at any time for
all such indemnified parties) in such action. No indemnifying party will consent
to entry of any judgment or enter into any settlement 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 of such claim or
litigation.
(d) Other Indemnification. Indemnification similar to that specified
in this Section 11.4 (with appropriate modifications) shall be given by Genesis
and each Holder of Registrable Securities with respect to any required
registration or other qualification of securities under any federal or state law
or regulation or governmental authority other than the Securities Act.
(e) Contribution. If recovery is not available under the foregoing
indemnification provisions of this Section 11 for any reason other than as
expressly specified therein, the parties entitled to indemnification by the
terms thereof shall be entitled to contribution to liabilities and expenses
except to the extent that contribution is not permitted under Section 11(f) of
the Securities Act. In determining the amount of contribution to which the
respective parties are entitled, there shall be considered the relative benefits
received by each party from the offering of the Registrable Securities (taking
into account the portion of the proceeds realized by each), the parties'
relative knowledge and access to information concerning the matter with respect
to which the claim was asserted, the opportunity to correct and prevent any
misstatement or omission and any other equitable considerations appropriate
under the circumstances. The amount paid or payable by a party under this
Section 11.4 as a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with any investigation
or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 11.4 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
(f) Non-Exclusivity. The obligations of the parties under this Section
11 shall be in addition to any liability which any party may otherwise have to
any other party.
(g) Rule 144. Genesis covenants that it will timely file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations
32
adopted by the SEC thereunder (or, if Genesis is not required to file such
reports, it will, upon the request of any Holder of Registrable Securities, make
publicly available such information), and it will take such further action as
any Holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (i) Rule 144 or Rule 144A under the Securities Act, as
such Rules may be amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any Holder of
Registrable Securities, Genesis will deliver to such Holder a written statement
as to whether it has complied with such requirements.
ARTICLE XII
INDEMNIFICATION
Section 12.1 (a) Genesis shall indemnify and hold harmless each
Sponsor and its respective Affiliates, officers, directors, members, employees,
advisors and agents (each, a "Sponsor Indemnified Person") from and against any
and all losses, claims, damages, liabilities, costs, expenses, actions, suits,
proceedings, interest, penalties and fines (including, without limitation, costs
of collection, attorneys' fees and expenses and costs of defense, investigation
and ongoing monitoring), whether or not involving a third party claim
(collectively, "Losses") to which such Sponsor Indemnified Person may become
subject or incur, directly or indirectly, based upon, arising out of or in
connection with a breach of any representation, warranty, agreement or covenant
of Genesis contained in this Agreement or in the officer's certificate delivered
pursuant to Section 8.2(j) of this Agreement; provided, however, that the
aggregate liability of Genesis to indemnify and hold harmless the Sponsor
Indemnified Persons in respect of breaches of the representations and warranties
set forth in Section 6.7 of this Agreement and the covenants set forth in
Sections 9.1, 9.4, 9.5, 9.6 and 9.10 of this Agreement shall be limited to $50
million.
(b) Each Sponsor shall indemnify and hold harmless Genesis and its
Affiliates, officers, directors, employees, advisors and agents (each, a
"Company Indemnified Person") from and against any and all Losses to which such
Company Indemnified Person may become subject or incur, directly or indirectly,
based upon, arising out of or in connection with a breach of any representation,
warranty, agreement or covenant of such Sponsor contained in this Agreement or
in the officer's certificate delivered pursuant to Section 8.3(d) of this
Agreement; provided, however, that the aggregate liability of such Sponsor to
indemnify and hold harmless the Company Indemnified Persons in respect of
breaches of the covenants set forth in Sections 10.1, 10.2 and 10.3 of this
Agreement shall be limited to $50 million.
(c) Genesis shall indemnify, and advance expenses to, the directors
designated by Cypress, TPG or by Sponsor Affiliates to serve on Genesis' board
of directors pursuant to the terms of the Series H Preferred Stock to the
fullest extent permitted by law. Genesis shall provide and maintain in effect
policies of directors' and officers' liability insurance for such directors,
which policies shall contain terms and conditions which are not less
advantageous than
33
those policies maintained by Genesis at the date hereof and having the maximum
available coverage under the current policies of directors' and officers'
liability insurance.
(d) Genesis shall indemnify and hold harmless each Sponsor Indemnified
Person from and against any Losses to which such Sponsor Indemnified Person may
become subject or incur, directly or indirectly, based upon, arising out of or
in connection with the execution, delivery or performance of this Agreement or
the transactions contemplated hereby, including, without limitation, any claim
arising out of the actual or alleged breach by Genesis of any contract or other
agreement with any Person as a consequence of this Agreement or the transactions
contemplated hereby or any action, whether pending or threatened, asserting the
invalidity of the transactions contemplated hereby or otherwise challenging this
Agreement or the transactions contemplated hereby; provided, that Genesis shall
have no obligation under this Section 12.1(d) to indemnify or hold harmless any
Sponsor Indemnified Person in respect of Losses resulting from (i) losses in
value of the Transaction Securities, (ii) claims by the limited partners in the
Sponsor Affiliates or (iii) the tax consequences to the Sponsor Indemnified
Persons of their participation in the transactions contemplated hereby.
Section 12.2 Procedure for Indemnification. If any Person to be
indemnified under this Article XII has suffered or incurred any Losses with
respect to which indemnification is to be sought hereunder, the indemnified
party shall so notify the party from whom indemnification is sought promptly in
writing describing such Losses, the amount or estimated amount thereof, if known
or reasonably capable of estimation, and the method of computation of such
Losses. If a claim or demand by a third party is made against an indemnified
party or any action at law or suit in equity is instituted against an
indemnified party by a third party (each claim, demand, action or suit by a
third party, a "Third Party Claim"), and if an indemnified party intends to seek
indemnity with respect thereto under this Article XII, such indemnified party
shall promptly notify the indemnifying party in writing of such Third Party
Claim setting forth such Third Party Claim in reasonable detail and tender to
the indemnifying party the defense of such Third Party Claim. The failure of the
indemnified party to give the indemnifying party prompt notice, to provide
notice in the form required or tender the defense of a Third Party Claim as
provided herein shall not relieve the indemnifying party of any of its
obligations under this Article XII, except to the extent that the indemnifying
party is materially prejudiced by such failure. For 30 days after receipt of
such notice the indemnifying party shall have the right but not the obligation
to undertake the conduct and control, through counsel of its own choosing and at
its own expense, of the settlement or defense of any Third Party Claim, and the
indemnified party shall cooperate with the indemnifying party in connection
therewith; provided, that if the indemnifying party elects to undertake the
conduct and control of such settlement or defense, then the indemnified party
may participate in such settlement or defense through counsel chosen by such
indemnified party provided that the fees and expenses of such counsel shall be
borne by such indemnified party; provided, further, that pending the
indemnifying party's decision whether to exercise its right to undertake the
conduct and control of the settlement or defense of any Third Party Claim, the
indemnified party shall undertake, conduct and control the settlement or defense
thereof, through counsel of its own choosing. So long as the indemnifying party
is reasonably contesting any such claim in good faith, the indemnified party
shall not pay or settle
34
any such Third Party Claim. Notwithstanding the foregoing, the indemnified party
shall have the right to pay or settle any such Third Party Claim; provided, that
in such event it shall waive any right to indemnity therefor by the indemnifying
party. If the indemnifying party does not notify the indemnified party within 30
days after the receipt of the indemnified party's notice of a claim of indemnity
hereunder in connection with a Third Party Claim that it elects to undertake the
settlement or defense thereof, the indemnified party shall have the right to
conduct and control the defense thereof and to contest, settle or compromise the
Third Party Claim but shall not thereby waive any right to indemnity therefor
pursuant to this Agreement. The indemnifying party shall not, except with the
consent of the indemnified party, enter into any settlement or consent to entry
of any judgment unless: (i) such settlement or judgment includes as an
unconditional term thereof the giving by the person or persons asserting such
claim to all indemnified parties an unconditional release from all liability
with respect to such claim and (ii) the relief provided in connection with such
settlement or judgment effected by the indemnifying party is satisfied entirely
by the indemnifying party.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Notices. (a) Except as provided in Section 13.1(b), all
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given when delivered in person or by telecopier (with a
confirmed receipt thereof), and on the next business day when sent by overnight
courier service, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(i) if to Cypress, to:
The Cypress Group L.L.C.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopier: 000-000-0000
35
(ii) if to TPG, to:
TPG Partners II, L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx
Telecopier: 000-000-0000
with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxx, Esq.
Telecopier: 212-225-3999
(iii) if to Genesis, to:
Genesis Health Ventures, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxxx, XX 00000
Attention: Xxx X. Xxxxxxxxx, Esq.
Telecopier: 000-000-0000
with a copy to:
Blank Rome Xxxxxxx & XxXxxxxx LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Telecopier: 215-569-5555
iv) if to Nazem, to:
Nazem, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx
Telecopier: 000-000-0000
36
with a copy to:
Bartoma Corporation, X.X.
Xxxxxxxxx 00
Xxxxx 00
Xxxxxxx, Xxxxxxxxxxx Antilles
Attention: Xxxxxxx Xxxxxxx
Telecopier: 0000-000-00-00
(b) All notices and other communications to be given to any other
Person hereunder shall be in writing and shall be deemed to have been duly given
when delivered in person, on the next Business Day when sent by overnight
courier service and on the third Business Day when sent registered or certified
mail, return receipt requested, postage prepaid to such Person at its last known
address appearing on the books of Genesis maintained for such purpose.
Section 13.2 Severability. In the event any provision hereof is held
void or unenforceable by any court, then such provision shall be severable and
shall not affect the remaining provisions hereof.
Section 13.3 Entire Agreement. This Agreement (including the exhibits,
documents or instruments referred to herein) embody the entire agreement and
understanding of the parties hereto in respect of the subject matter hereof and
thereof and supersede all prior agreements and understandings, both written and
oral, among the parties, or between any of them, with respect to the subject
matter hereof and thereof.
Section 13.4 Amendment and Modification. This Agreement may be
amended, modified or supplemented only by a written agreement signed by each of
Cypress, TPG and Genesis; provided, however, that neither Cypress nor TPG shall
enter into any amendment of this Agreement that would be materially more adverse
to the rights hereunder of Nazem and its Affiliate than it would be to the
rights of Cypress and TPG and their respective Sponsor Affiliates; and,
provided, further, that Nazem shall have received prior written notice of any
amendment hereto, including a draft of the proposed form of the amendment a
reasonable amount of time under the circumstances prior to the execution
thereof, and a copy of any executed amendment promptly following the execution
thereof. Any failure by a party hereto to comply with any obligation, agreement
or condition herein may be expressly waived in writing by Cypress, TPG and
Genesis, but such waiver or failure to insist upon strict compliance with such
obligation, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any such subsequent or other failure.
Section 13.5 Termination. (a) This Agreement may be terminated and the
transactions contemplated hereby abandoned by Genesis, Cypress and TPG by mutual
agreement at any time prior to the Closing.
37
(b) This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at the option of Genesis, on the one hand, and Cypress
and TPG, on the other hand, on March 31, 2000, if the Closing has not, through
no fault of the terminating Person or Persons, occurred by such date.
(c) In the event that this Agreement is terminated and the
transactions contemplated hereby are abandoned as provided above, no party shall
have any liability hereunder except for the obligations set forth in Sections
9.6, 10.3, 13.1, 13.4, 13.6, 13.8, 13.9, 13.10 and 13.11, the provisions of
which shall survive any termination of this Agreement and abandonment of the
transactions contemplated hereby; provided, that nothing herein shall relieve
any party from liability for any breach of any representation, warranty,
agreement or covenant set forth in this Agreement prior to such termination.
Except as specifically provided herein, the provisions of this Agreement shall
survive the Closing.
Section 13.6 Assignment; Binding on Transferees. The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto, their respective successors and assigns and, to the extent set forth
herein, any other Person which is a Holder. Cypress and TPG may assign any of
their rights and obligations hereunder to any of their respective Sponsor
Affiliates; provided, that in connection with any such assignment of liabilities
by Cypress, Cypress Merchant Banking Partners L.P. shall remain liable for such
liabilities, and no such assignment shall release TPG from any liability for its
obligations hereunder . Neither Genesis nor Nazem may assign any of its rights
or obligations hereunder to any Person without the written consent of Cypress
and TPG, acting jointly. Notwithstanding the foregoing, Genesis may assign its
rights hereunder pursuant to any security or pledge agreement entered into with
its Senior Leaders.
Section 13.7 Legend. Each certificate representing shares of
Transaction Securities shall bear the following legend (until such time as
subsequent transfers thereof are no longer restricted in accordance with the
Securities Act, at which time Genesis shall, upon request and at its expense,
issue a replacement certificate not bearing a legend):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE NOT REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE
SECURITIES LAWS OF ANY STATE, AND NO SALE, ASSIGNMENT, TRANSFER,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND IN COMPLIANCE WITH
ALL APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS OR (B) IF THE
COMPANY HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL WHICH SHALL BE
REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH SALE,
ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS
NOT IN VIOLATION OF THE ACT OR APPLICABLE STATE SECURITIES LAWS.
38
Section 13.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD
TO THE CHOICE OF LAW PRINCIPLES THEREOF.
Section 13.9 Headings. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 13.10 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 13.11 Submission to Jurisdiction; Waivers. Each of the parties
hereto agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such party at its
address set forth in Section 13.1 of this Agreement or at such other address of
which such party shall have given notice pursuant thereto; and (iii) agrees that
nothing herein shall affect the right to effect service of process in any other
manner permitted by law or shall limit the right to xxx in any other
jurisdiction.
[The next page is numbered S-1.]
39
Section 13.12 WAIVERS OF JURY TRIAL. EACH PARTY HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on
the date first above written.
THE CYPRESS GROUP L.L.C.
By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Vice Chairman
TPG PARTNERS II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By: /s/ Xxxxxxxx Xxxxxx
----------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Partner
NAZEM, INC.
By: /s/ Xxxx Xxxxx
----------------------------------
Name: Xxxx Xxxxx
GENESIS HEALTH VENTURES, INC.
By: /s/ Xxx X. Xxxxxxxxx
-------------------------------
Name: Xxx X. Xxxxxxxxx
Title: Vice President,
Chairman's Office
and Secretary
S-1
The foregoing provisions of this Agreement applicable to Sponsor
Affiliates shall be binding upon and inure to the benefit of the undersigned.
Affiliates of The Cypress Group, L.L.C.
CYPRESS MERCHANT BANKING
PARTNERS, L.P.
By: Cypress Associates L.P.
By: The Cypress Group L.L.C.
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Vice Chairman
CYPRESS OFFSHORE PARTNERS, L.P.
By: Cypress Associates L.P.
By: The Cypress Group L.L.C.
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Vice Chairman
Affiliates of TPG PARTNERS II, L.P.
TPG PARALLEL II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By: /s/ Xxxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Partner
TPG INVESTORS II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By: /s/ Xxxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Partner
TPG MC COINVESTMENT, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By: /s/ Xxxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Partner
Affiliate of Nazem
GENESIS ELDERCARE PORTFOLIO K. LP
By Healthworth Associates I, L.L.C.
By: /s/ Xxxx Xxxxx
----------------------------------
Name: Xxxx Xxxxx
S-2
EXHIBIT B
GENESIS HEALTH VENTURES, INC.
CERTIFICATE OF DESIGNATION OF SERIES H SENIOR
CONVERTIBLE PARTICIPATING CUMULATIVE PREFERRED STOCK
Genesis Health Ventures, Inc. (hereinafter referred to as the "Company"), a
corporation organized and existing under the Pennsylvania Business Corporation
Law of 1988, as amended (the "Pennsylvania Law"), in accordance with the
provisions thereof, does HEREBY CERTIFY:
That, pursuant to authority expressly granted to and vested in the Board of
Directors of the Company (the "Board of Directors") by the provisions of Article
6 of the Amended and Restated Articles of Incorporation of the Company (the
"Articles") and the provisions of Sections 1521 and 1522 of the Pennsylvania
Law, the Board of Directors hereby creates a series of the Company's previously
authorized preferred stock, par value $.01 per share (the "Preferred Stock"),
and determines the designation and number of shares which constitute such series
and the relative rights, preferences and limitations of such series as follows:
SERIES H SENIOR CONVERTIBLE
PARTICIPATING CUMULATIVE PREFERRED STOCK
Section 1. Designation and Amount.
The shares of such series shall be designated as "Series H Senior
Convertible Participating Cumulative Preferred Stock" (the "Series H Preferred
Stock"), and the number of shares constituting the Series H Preferred Stock
shall be [_______]; provided, that the number of shares constituting the Series
H Preferred Stock shall be increased from time to time as necessary for the
issuance of additional shares of Series H Preferred Stock upon exchange of the
Company's Series I Senior Convertible Exchangeable Participating Cumulative
Preferred Stock (the "Series I Preferred Stock") in accordance with the terms
thereof. Capitalized terms used without previous definition herein are defined
in Section 10 hereof.
Section 2. Rank.
The Series H Preferred Stock shall, with respect to dividend rights and
rights on liquidation, winding-up and dissolution, rank senior to all classes of
common stock of the Company, each series of preferred stock of the Company
outstanding on the Issue Date and each other class of Capital Stock and series
of preferred stock of the Company hereafter created which does not expressly
provide that it ranks senior to or on a parity with the Series H Preferred Stock
as to dividend rights and rights on liquidation, winding-up and dissolution
(collectively, the "Junior Securities"). The Series H Preferred Stock shall,
with respect to dividend rights and rights on liquidation, winding-up and
dissolution, rank on a parity with the Series I Preferred Stock and each other
series of preferred stock of the Company hereafter created which expressly
provides that it ranks on a parity with the Series H Preferred Stock as to
dividend rights and rights on liquidation, winding-up and dissolution
(collectively, the "Parity Securities"); provided, that any such securities not
issued in accordance with Section 4(c) hereof shall be deemed to be Junior
Securities. The Series H Preferred Stock shall, with respect to dividend rights
and rights on liquidation, winding-up and dissolution, rank junior to each
series of preferred stock of the Company hereafter created which expressly
provides that it ranks senior to the Series H Preferred Stock as to dividend
rights and rights on liquidation, winding-up and dissolution (collectively, the
"Senior Securities"); provided, that any such securities not issued in
accordance with Section 4(c) hereof shall be deemed to be Junior Securities.
Section 3. Dividends.
(a) The holders of shares of Series H Preferred Stock shall be entitled to
receive with respect to each share of Series H Preferred Stock, when, as and if
declared by the Board of Directors, out of the assets of the Company legally
available therefor, cumulative preferential dividends for each Dividend Period
calculated based on the then effective Liquidation Preference per share at the
rate per annum equal to the greater of (i) the Common Equivalent Rate with
respect to such Dividend Period and (ii) the Accrual Rate.
(b) Prior to [ ], 2004, dividends (including accrued and unpaid dividends)
shall be payable in shares of Series I Preferred Stock. On and after [ ], 2004,
dividends (including accrued and unpaid dividends) shall be payable in cash;
provided, that such dividends shall be payable in shares of Series I Preferred
Stock to the extent that the terms of the Company's then existing indebtedness
under bank credit facilities or Public Debt prohibits the payments of such
dividends in cash. The number of shares of Series I Preferred Stock to be issued
in circumstances when dividends are paid with shares of Series I Preferred Stock
shall equal the amount of the dividend to be paid in shares of Series I
Preferred Stock divided by the then effective Liquidation Preference per share
of the Series I Preferred Stock, rounded down to the nearest full share after
taking into account all shares of Series H Preferred Stock owned by the holder
thereof. All shares of Series I Preferred Stock issued as a dividend on the
Series H Preferred Stock will thereupon be duly authorized, validly issued,
fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issuance thereof.
(c) Dividends shall be payable in arrears on each March 31, June 30,
September 30 and December 31, unless such day is not a Business Day, in which
event such dividends shall be payable on the next succeeding Business Day (each
such date being hereinafter referred to as a "Dividend Payment Date"),
commencing on the first Dividend Payment Date in respect of a share of Series H
Preferred Stock which is at least seven days after the issuance thereof. For
shares of Series H Preferred Stock issued on _________, 1999 (the "Issue Date"),
the first dividend payment shall be for the period from and including the Issue
Date to but excluding the date of the first Dividend Payment Date, and each
dividend payment thereafter shall be for the period from and including the most
recent Dividend Payment Date to but excluding the first Dividend Payment Date
thereafter. For shares of Series H Preferred Stock issued subsequent to the
Issue Date, the first dividend payment shall be for the period from and
including the date of issuance thereof to but excluding the date of the first
Dividend Payment Date thereafter, and each dividend payment thereafter shall be
for the period from and including the most recent Dividend Payment Date to but
excluding the first Dividend Payment Date thereafter. Each quarterly period
beginning on January 1, April 1, July 1 and October 1 in each year and ending on
and including the day next preceding the first day of the next such quarterly
period shall be a "Dividend Period". The amount of dividends payable for each
full Dividend Period shall be computed by dividing the annual dividend rate by
four. Dividends (or amounts equal to accrued and unpaid dividends) payable on
Series H Preferred Stock for any period less than a full quarterly Dividend
Period will be computed on the basis of a 360-day year of twelve 30-day months
and the actual number of days elapsed in any period less than one month. The
record date for determination of holders of Series H Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon shall be, with
respect to the dividend payable on March 31, June 30, September 30 and December
31 of each year, the preceding March 1, June 1, September 1 and December 1,
respectively, or such other record date as shall be fixed by the Board of
2
Directors which record date shall be no less than 30 and no more than 60
calendar days prior to the date fixed for the payment thereof. Dividends and
distributions shall be payable to holders of record as they shall appear on the
records of the Company on the applicable record date. Dividends on account of
arrears for any particular Dividend Period in which dividends were not paid on
the applicable Dividend Payment Date (including as a result of the rounding down
of the number of shares of Series I Preferred Stock issuable in the payment of
dividends as provided above in Section 3(b)) shall be added to the then
effective Liquidation Preference on the relevant Dividend Payment Date. Any
amounts so added to the then effective Liquidation Preference shall be subject
to reduction as provided below in Section 3(d).
(d) An amount equal to accrued and unpaid dividends for any past Dividend
Period may be declared and paid (in shares of Series I Preferred Stock or in
cash as provided above in Section 3(b)) on any subsequent Dividend Payment Date
to all holders of record on the record date relating to such subsequent Dividend
Payment Date. Each such payment shall automatically reduce the then effective
Liquidation Preference per share by an amount equal to the aggregate amount of
such payment divided by the number of shares of Series H Preferred Stock
outstanding on the record date relating to such subsequent Dividend Payment
Date; provided, however, that the Liquidation Preference shall not be reduced
below $10,000 per share.
(e) Dividends on the Series H Preferred Stock will accrue, whether or not
there are funds legally available for the payment of such dividends and whether
or not such dividends are declared, on a daily basis. Dividends will cease to
accrue in respect of Series H Preferred Stock on the date of the conversion or
redemption thereof.
(f) Dividends paid on the shares of Series H Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding, and any remainder not paid as provided above
shall be added to the Liquidation Preference as provided above in Section 3(c).
(g) As long as any Series H Preferred Stock is outstanding, no dividends or
other distributions (other than dividends or other distributions payable in
shares of, or warrants, rights or options exerciseable for or convertible into
shares of, Junior Securities and cash in lieu of fractional shares of such
Junior Securities in connection with any such dividends) will be paid on any
Junior Securities unless: (i) full cumulative dividends on all outstanding
shares of Parity Securities and Series H Preferred Stock have been paid, or
declared and set aside for payment, for all Dividend Periods terminating on or
prior to the payment date of such dividend or distribution and for the current
Dividend Period; (ii) the Company has paid or set aside all amounts, if any,
then or theretofore required to be paid or set aside for all purchase,
retirement and sinking funds, if any, for any outstanding shares of Parity
Securities; and (iii) the Company is not in default of any of its obligations to
redeem any outstanding shares of Parity Securities or Series H Preferred Stock.
(h) As long as any Series H Preferred Stock is outstanding, no shares of
any Junior Securities may be purchased, redeemed or otherwise acquired by the
Company or any of its subsidiaries (except in connection with a reclassification
or exchange of any Junior Securities through the issuance of shares of, or
warrants, rights or options exerciseable for or convertible into shares of,
other Junior Securities (and cash in lieu of fractional shares of such Junior
Securities in connection therewith) or the purchase, redemption or other
acquisition of any Junior Securities with any shares of, or warrants, rights or
options exerciseable for or convertible into shares of, other Junior Securities
3
(and cash in lieu of fractional shares of such Junior Securities in connection
therewith)), nor may any funds be set aside or made available for any sinking
fund for the purchase or redemption of any Junior Securities.
(i) As long as any Series H Preferred Stock is outstanding, no dividends or
other distributions (other than dividends or other distributions payable in
shares of, or warrants, rights or options exercisable for or convertible into
shares of, Junior Securities and cash in lieu of fractional shares of such
Junior Securities in connection with any such dividends) will be paid on any
Parity Securities unless such dividends or other distributions are declared and
paid pro rata so that the amounts of any such dividends or other distributions
declared and paid per share on outstanding Series H Preferred Stock and each
other share of such Parity Securities will in all cases bear to each other the
same ratio that the then effective Liquidation Preference per share of
outstanding Series H Preferred Stock and the liquidation preference per share of
such other outstanding shares of Parity Securities bear to each other.
(j) As long as any Series H Preferred Stock is outstanding, no shares of
any Parity Securities may be purchased, redeemed or otherwise acquired by the
Company or any of its subsidiaries (except with shares of, or warrants, rights
or options exercisable for or convertible into shares of, Junior Securities and
cash in lieu of fractional shares of such Junior Securities in connection
therewith) unless the Series H Preferred Stock and such Parity Securities are
purchased, redeemed or otherwise acquired pro rata so that the Fair Market Value
of the consideration applied to the purchase, redemption or other acquisition of
each share of Series H Preferred Stock and each other share of such Parity
Securities will in all cases bear to each other the same ratio that the then
effective Liquidation Preference per share of outstanding Series H Preferred
Stock and the liquidation preference per share of such other outstanding shares
of Parity Securities bear to each other.
(k) Subject to the provisions described above, such dividends or other
distributions (payable in cash, property or Junior Securities) as may be
determined from time to time by the Board of Directors may be declared and paid
on the shares of any Junior Securities and/or Parity Securities and from time to
time Junior Securities and/or Parity Securities may be purchased, redeemed or
otherwise acquired by the Company or any of its subsidiaries. In the event of
the declaration and payment of any such dividends or other distributions, the
holders of such Junior Securities and/or Parity Securities, as the case may be,
will be entitled, to the exclusion of holders of any outstanding Series H
Preferred Stock, to share therein according to their respective interests.
Section 4. Voting Rights.
(a) The holders of the Series H Preferred Stock (in addition to their
rights set forth in this Section 4 and otherwise provided by law) shall be
entitled to such number of votes for each share held as equals the number of
shares of Voting Common Stock into which such shares are convertible on the
record date set for determining who is entitled to vote a particular matter and
shall vote together with the holders of the Company's Voting Common Stock (and
any other class or series of Capital Stock, if any, similarly entitled to vote),
as a single class, on all matters to be voted on by holders of the Company's
Voting Common Stock. In addition to such voting rights, holders of the Series H
Preferred Stock shall be entitled to vote as a separate class on matters as to
4
which the Pennsylvania Law requires a separate class vote of the Series H
Preferred Stock and shall have such other voting rights as are set forth in this
Section 4.
(b) If and whenever at any time (i) the Company shall be in default of any
of its obligations to redeem any outstanding shares of Series H Preferred Stock
or (ii) dividends payable in cash on shares of Series H Preferred Stock as
provided in Section 3(b) (i.e., dividends payable on and after [ ], 2004 to the
extent that the terms of the Company's then existing indebtedness under bank
credit facilities or Public Debt do not prohibit the payment of such dividends
in cash) have not been paid in full in cash for four consecutive fiscal
quarters, thereafter and until, in the case of clause (i), the Company shall
have fulfilled its redemption obligations and, in the case of clause (ii), until
all accrued and unpaid dividends payable in cash as provided in Section 3(b)
(i.e., dividends payable on and after [ ], 2004 to the extent that the terms of
the Company's then existing indebtedness under bank credit facilities or Public
Debt do not prohibit the payment of such dividends in cash), whether or not
declared, on the outstanding shares of Series H Preferred Stock shall have been
paid in full in cash or declared and cash set apart for the payment thereof, the
number of directors then constituting the Board of Directors shall be increased
by two and the holders of shares of Series H Preferred Stock and, to the extent
that the Series I Preferred Stock is entitled to participate in the election of
additional directors pursuant to Section 4(b) of the Certificate of Designations
relating to the Series I Preferred Stock, Series I Preferred Stock, voting as a
single class, shall be entitled to elect the two additional directors to serve
on the Board of Directors by majority vote at any annual meeting of stockholders
or special meeting held in place thereof, or at a special meeting of the holders
of the Series H Preferred Stock and Series I Preferred Stock called as
hereinafter provided. The remaining directors of the Company shall be elected by
the classes of stock entitled to vote therefor, voting together, including the
Series H Preferred Stock, at each meeting of shareholders held for the purpose
of electing directors, all in accordance with the terms and procedures set forth
in the Company's Articles and By-Laws. At no time shall the holders of the
Series H Preferred Stock and Series I Preferred Stock be entitled to elect more
than two additional directors pursuant to this Section 4(b) and Section 4(b) of
the Certificate of Designations relating to the Series I Preferred Stock.
Whenever, in the case of clause (i), the Company shall have fulfilled its
redemption obligation and, in the case of clause (ii), all accrued and unpaid
dividends payable in cash as provided in Section 3(b) (i.e., dividends payable
on and after [ ], 2004 to the extent that the terms of the Company's then
existing indebtedness under bank credit facilities or Public Debt do not
prohibit the payment of such dividends in cash), whether or not declared, on the
outstanding shares of Series H Preferred Stock shall have been paid in full in
cash or declared and cash set apart for the payment thereof, then subject to any
right to elect additional directors pursuant to Section 4(b) of the Certificate
of Designations relating to Series I Preferred Stock the right of the holders of
the Series H Preferred Stock and Series I Preferred Stock to elect such
additional directors pursuant to this Section 4(b) shall cease and the term of
office of any person elected as director by the holders of the Series H
Preferred Stock and Series I Preferred Stock shall forthwith terminate and the
number of directors comprising the Board of Directors shall be reduced
accordingly. At any time after voting power to elect a director shall have
become vested and be continuing in the holders of Series H Preferred Stock and
Series I Preferred Stock pursuant to this Section 4(b) or if a vacancy shall
exist in the office of a director elected by the holders of Series H Preferred
Stock and Series I Preferred Stock, a proper officer of the Company may, and
upon the written request of the holders of record of at least twenty-five
percent (25%) of the shares of Series H Preferred Stock and Series I Preferred
Stock then outstanding addressed to the Secretary of the Company shall, call a
special meeting of the holders of Series H Preferred Stock and Series I
5
Preferred Stock, for the purpose of electing the directors which such holders
are entitled to elect. If such meeting shall not be called by a proper officer
of the Company within twenty (20) days after personal service of written request
upon the Secretary of the Company, or within twenty (20) days after mailing the
same within the United States by certified mail, addressed to the Secretary of
the Company at its principal executive offices, then the holders of at least
twenty-five percent (25%) of the outstanding shares of Series H Preferred Stock
and Series I Preferred Stock may designate in writing one of their number to
call such meeting at the expense of the Company, and such meeting may be called
by the person so designated upon the notice required for the annual meeting of
stockholders of the Company and shall be held at the place for holding the
annual meetings of stockholders. Any holder of Series H Preferred Stock or
Series I Preferred Stock so designated shall have, and the Company shall
provide, access to the lists of stockholders to be called pursuant to the
provisions hereof.
(c) So long as any shares of Series H Preferred Stock are outstanding,
subject to the applicable provisions of the Pennsylvania Law, the Company shall
not, without consent of the holders of at least a majority of the number of
shares of Series H Preferred Stock and Series I Preferred Stock at the time
outstanding, voting as a class given in person or by proxy, either in writing or
by vote at a special meeting called for the purpose:
(i) increase the number of shares of authorized Series H Preferred
Stock or Series I Preferred Stock or issue any additional shares of Series
H Preferred Stock or Series I Preferred Stock, other than as contemplated
by the terms of the Series H Preferred Stock or the Series I Preferred
Stock;
(ii) amend or modify the relative rights, preferences and limitations
of the Series H Preferred Stock or Series I Preferred Stock or amend, alter
or repeal any of the provisions of the Company's Articles or By-Laws
(including by merger or similar transaction or otherwise) so as to
eliminate the Series H Preferred Stock or Series I Preferred Stock or
otherwise affect adversely the relative rights, preferences and limitations
of the Series H Preferred Stock or Series I Preferred Stock;
(iii) other than the Series I Preferred Stock and the Series H
Preferred Stock, create, authorize, issue or permit to exist any class of
Capital Stock or series of preferred stock that ranks senior to or on a
parity with the Series H Preferred Stock (other than preferred stock with
an aggregate liquidation preference and accrued and unpaid dividends not
exceeding $75 million at any time outstanding ranking on a parity with the
Series H Preferred Stock with respect to dividend rights and rights on
liquidation, winding-up and dissolution) with respect to dividend rights
and/or rights on liquidation, winding-up or dissolution, or reclassify any
class or series of any Junior Securities into, or authorize any securities
exchangeable for, convertible into or evidencing the right to purchase any
such class or series; or
(iv) enter into any transaction or series of transactions which would
constitute a Change of Control (as defined below) or engage in any
transaction pursuant to Rule 13e-3 under the Securities Exchange Act of
1934, as amended, except in a transaction in which each share of Series H
Preferred Stock is converted into or exchanged for the right to receive
cash consideration in an amount that is at least equal to the greater of
(x) 101% of the then effective Liquidation Preference plus accrued and
unpaid dividends from and including the most recent Dividend Payment Date
6
and (y) the Fair Market Value of the consideration the holder of such share
of Series H Preferred Stock would be entitled to receive in respect of such
share if such holder were to convert such share into the Company's Voting
Common Stock as provided in Section 6 immediately prior to the effective
time of the transaction. For purposes of this clause (iv), a "Change of
Control" shall occur at any time that (i) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934)
(but not including, for purposes of this clause (i), TPG, Cypress and any
investment funds under common control with TPG or Cypress, individually and
in the aggregate), in a single transaction or through a series of related
transactions, is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Securities Exchange Act of 1934), directly or indirectly,
of more than 50% of the total Voting Stock of the Company; (ii) the Company
consolidates or merges with or into another corporation or conveys,
transfers or leases all or substantially all of its assets to any Person,
or any corporation consolidates or mergers with or into the Company, in any
such event pursuant to a transaction in which the outstanding Voting Stock
of the Company is changed into or exchanged for cash, securities not issued
in violation of Section 4(c) or other property, other than any such
transaction where (A) the outstanding Voting Stock of the Company is
changed into or exchanged for (x) Voting Stock of the surviving corporation
which is not Redeemable Capital Stock or (y) cash, securities or other
property in an amount which, if there is Public Debt outstanding at the
time of such transaction, could be paid under the terms of such Public Debt
and (B) the holders of the Voting Stock of the Company immediately prior to
such transaction own, directly or indirectly, not less than 50% of the
Voting Stock of the surviving corporation immediately after such
transaction; (iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of
the Company (together with any new directors whose election by such Board
of Directors or whose nomination for election by the stockholders of the
Company was approved by a vote of at least 662/3% of the directors then
still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of Directors of
the Company then in office; or (iv) the Company is liquidated or dissolved
or adopts a plan of liquidation.
Section 5. Redemption.
(a) The Company shall not have the right to redeem the Series H Preferred
Stock prior to the third anniversary of the Issue Date. Thereafter and prior to
the fifth anniversary of the Issue Date, the Company shall have the right to
redeem the Series H Preferred Stock, in whole but not in part, at a redemption
price per share in cash equal to the then effective Liquidation Preference plus
accrued and unpaid dividends for the period from and including the most recent
Dividend Payment Date through and including the date of redemption if the Market
Value of the Company's Voting Common Stock ending on the date of the Redemption
Notice exceeds 135% of the Conversion Price then in effect. On and after the
fifth anniversary of the Issue Date and prior to the twelfth anniversary of the
Issue Date, the Company shall have the right to redeem the Series H Preferred
Stock, in whole but not in part, at the redemption price per share in cash set
forth below (expressed as a percentage of the sum of the then effective
Liquidation Preference plus accrued and unpaid dividends for the period from and
7
including the most recent Dividend Payment Date through and including the date
of redemption), if redeemed during the twelve-month period beginning on the
anniversary of the Issue Date in the years indicated below:
Year Percentage
---- ----------
2004 .................... 103.500%
2005 .................... 102.333
2006 .................... 101.167
2007 and thereafter ..... 100.000
(b) To the extent that the Company shall have funds legally available for
such payment, on the twelfth anniversary of the Issue Date (and to the extent
that the Company does not then have funds legally available, as soon thereafter
as the Company shall have funds legally available), the Company shall redeem all
outstanding shares of the Series H Preferred Stock, if any, at a redemption
price per share in cash equal to the then effective Liquidation Preference plus
accrued and unpaid dividends for the period from and including the most recent
Dividend Payment Date through and including the date of redemption.
(c) A notice of the Company's intent to redeem the Series H Preferred Stock
(the "Redemption Notice") shall be sent by or on behalf of the Company, by first
class mail, postage prepaid, to holders of record at their respective addresses
as they shall appear on the records of the Company, not less than 30 days nor
more than 120 days prior to the date fixed for redemption,
(i) notifying such holders of the election of the Company to redeem
such shares and of the date fixed for redemption;
(ii) stating that the Series H Preferred Stock may be converted until
the close of business on the Business Day prior to the date of redemption
by surrendering to the Company or its transfer agent for the Series H
Preferred Stock the certificate or certificates for the shares to be
converted, accompanied by written notice specifying the number of shares to
be converted, and stating the name and address of the transfer agent for
the Series H Preferred Stock, if any;
(iii) stating the place or places at which the shares called for
redemption shall, upon presentation and surrender of the certificates
evidencing such shares, be redeemed, and the redemption price to be paid
therefor;
(iv) stating that dividends shall cease to accrue on the date of
redemption unless the Company defaults in the payment of the redemption
price; and
(v) stating the name and address of the Redemption Agent.
8
(d) The Company shall appoint one or more Redemption Agents. Following such
appointment and prior to any redemption, the Company shall deliver to the
Redemption Agent irrevocable written instructions authorizing the Redemption
Agent, on behalf and at the expense of the Company, to cause the Redemption
Notice to be duly mailed as soon as practicable after receipt of such
irrevocable instructions and in accordance with the above provisions. All funds
necessary for the redemption shall be deposited with the Redemption Agent in
trust at least two Business Days prior to the date fixed for redemption, for the
pro rata benefit of the holders of the Series H Preferred Stock, so as to be and
continue to be available therefor. Neither failure to mail any such Redemption
Notice, nor any defect in any Redemption Notice to one or more such holders
shall affect the sufficiency of the proceedings for redemption as to other
holders.
(e) If a Redemption Notice shall have been given as hereinbefore provided,
then each holder of Series H Preferred Stock shall be entitled to all relative
rights, preferences and limitations accorded to holders of the Series H
Preferred Stock until and including the date of redemption. Provided that the
Company shall have complied with its obligations pursuant to Sections 5(c) and
5(d), from and after the date of redemption, Series H Preferred Stock shall no
longer be deemed to be outstanding, and all rights of the holders of such shares
shall cease and terminate, except the right of the holders of such shares, upon
surrender of certificates therefor, to receive amounts to be paid hereunder.
(f) The deposit of monies in trust with the Redemption Agent shall be
irrevocable except that the Company shall be entitled to receive from the
Redemption Agent the interest or other earnings, if any, earned on any monies so
deposited in trust, and the holders of the shares redeemed shall have no claim
to such interest or other earnings, and any balance of monies so deposited by
the Company and unclaimed by the holders of the Series H Preferred Stock
entitled thereto at the expiration of two years from the date of redemption
shall be repaid, together with any interest or other earnings thereon, to the
Company, and after any such repayment, the holders of the shares entitled to the
funds so repaid to the Company shall look only to the Company for such payment,
without interest.
Section 6. Conversion Rights.
(a) Subject to and upon compliance with the provisions of this Section 6,
the holder of any share of Series H Preferred Stock shall have the right at such
holder's option to convert such share of Series H Preferred Stock into fully
paid and nonassessable shares of Voting Common Stock, in each case, at the
Conversion Price in effect on the date of conversion. If the Series H Preferred
Stock has been called for redemption, such right of conversion shall terminate
at the close of business on the second Business Day prior to the date fixed for
redemption; provided, that such right of conversion shall be reinstated if and
for so long as the Company shall be in default of its obligations under Section
5(d).
(b) Each share of Series H Preferred Stock shall be converted into a number
of shares of Voting Common Stock determined by dividing (i) the sum of the
Liquidation Preference on the date of conversion plus accrued and unpaid
dividends for the period from and including the most recent Dividend Payment
Date through and including the date of conversion by (ii) the Conversion Price
in effect on the date of conversion.
(c) The holder of any shares of Series H Preferred Stock may exercise the
conversion right specified in Section 6(a) by surrendering to the Company or its
transfer agent for the Series H Preferred Stock the certificate or certificates
for the shares to be converted, accompanied by written notice specifying the
9
number of shares to be converted. Conversion shall be deemed to have been
effected on the date when delivery of notice of an election to convert and
certificates for shares are received by the Company. Subject to the provisions
of Section 6(f)(vii), as promptly as practicable thereafter, the Company shall
issue and deliver to or upon the written order of such holder a certificate or
certificates for the number of full shares of Voting Common Stock to which such
holder is entitled and a check or cash with respect to any fractional interest
in a share of Voting Common Stock, as provided in Section 6(e).
(d) Subject to the provisions of Section 6(f)(vii), the person in whose
name the certificate or certificates for Voting Common Stock are to be issued
shall be deemed to have become a holder of record of such Voting Common Stock
immediately prior to the close of business on the date of conversion. Upon
conversion of only a portion of the number of shares covered by a certificate
representing shares of Series H Preferred Stock surrendered for conversion, the
Company shall issue and deliver to or upon the written order of the holder of
the certificate so surrendered for conversion, at the expense of the Company, a
new certificate covering the number of shares of Series H Preferred Stock
representing the unconverted portion of the certificate so surrendered.
(e) No fractional shares of Voting Common Stock shall be issued upon
conversion of shares of Series H Preferred Stock. If more than one share of
Series H Preferred Stock shall be surrendered for conversion at any one time by
the same holder, the number of full shares of Voting Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Series H Preferred Stock so surrendered. Instead of any fractional
shares of Voting Common Stock that would otherwise be issuable upon conversion
of any shares of Series H Preferred Stock, the Company shall pay a cash
adjustment in respect of such fractional interest in an amount equal to that
fractional interest of a share multiplied by the Market Value of the Voting
Common Stock.
(f) The Conversion Price shall be subject to adjustment from time to time
as follows.
(i) Common Stock Issued at Less Than the Market Value. If the Company
shall issue any Common Stock, other than Excluded Stock or Common Stock issued
in an Excluded Transaction, without consideration or for a consideration per
share less than the Market Value immediately prior to such issuance, the
Conversion Price in effect immediately prior to each such issuance shall
immediately (except as provided below) be reduced to the price determined by
multiplying the Conversion Price in effect immediately prior to such issuance by
a fraction (A) the numerator of which is the sum of (1) the number of shares of
Voting Common Stock and Non-Voting Common Stock outstanding immediately prior to
such issuance and (2) the number of shares of Voting Common Stock and Non-Voting
Common Stock that the aggregate consideration, if any, received by the Company
upon such issuance, would purchase at such Market Value and (B) the denominator
of which is the total number of shares of Voting Common Stock and Non-Voting
Common Stock outstanding immediately after such issuance.
For the purposes of any adjustment of the Conversion Price
pursuant to clause (i), the following provisions shall be applicable.
(A) Cash. In the case of the issuance of Common Stock for cash,
the amount of the consideration received by the Company shall be
deemed to be the amount of the cash proceeds received by the Company
10
for such Common Stock before deducting therefrom any discounts,
commissions, taxes or other expenses allowed, paid or incurred by the
Company for any underwriting or otherwise in connection with the
issuance and sale thereof.
(B) Consideration Other Than Cash. In the case of the issuance of
Common Stock (otherwise than upon the conversion of shares of Capital
Stock or other securities of the Company) for a consideration in whole
or in part other than cash, including securities acquired in exchange
therefor (other than securities by their terms so exchangeable), the
consideration other than cash shall be deemed to be the Fair Market
Value thereof, irrespective of any accounting treatment.
(C) Options and Convertible Securities. In the case of the
issuance of (x) options, warrants or other rights to purchase or
acquire Common Stock (whether or not at the time exercisable) (but any
adjustment pursuant to this provision shall be made only to the extent
any adjustment shall have not been made pursuant to Section
6(f)(iv)(D)), (y) securities by their terms convertible into or
exchangeable for Common Stock (whether or not at the time so
convertible or exchangeable) or (z) options, warrants or rights to
purchase such convertible or exchangeable securities (whether or not
at the time exercisable),
(1) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options, warrants or other rights to
purchase or acquire Common Stock shall be deemed to have been issued
at the time such options, warrants or rights were issued and for a
consideration equal to the consideration (determined in the manner
provided in subclauses (A) and (B) above), if any, received by the
Company upon the issuance of such options, warrants or rights plus the
minimum purchase price provided in such options, warrants or rights
for the shares of Common Stock covered thereby,
(2) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such convertible
or exchangeable securities, or upon the exercise of options, warrants
or other rights to purchase or acquire such convertible or
exchangeable securities and the subsequent conversion or exchange
thereof, shall be deemed to have been issued at the time such
convertible or exchangeable securities were issued or such options,
warrants or rights were issued and for a consideration equal to the
consideration, if any, received by the Company for any such
convertible or exchangeable securities or options, warrants or rights
(excluding any cash received on account of accrued interest or accrued
dividends), plus the additional consideration (determined in the
manner provided in subclauses (A) and (B) above), if any, to be
received by the Company upon the conversion or exchange of such
securities, or upon the exercise of any related options, warrants or
rights to purchase or acquire such convertible or exchangeable
securities and the subsequent conversion or exchange thereof,
11
(3) on any change in the number of shares of Common Stock
deliverable upon exercise of any such options, warrants or rights or
conversion or exchange of such convertible or exchangeable securities
or any change in the consideration to be received by the Company upon
such exercise, conversion or exchange (but excluding any change
resulting solely from the operation of the anti-dilution provisions
thereof if, and only if, such anti-dilution provisions would not
require an adjustment to the exercise price or conversion price
thereof in the event of any change to the Conversion Price pursuant to
the provisions of this Section 6), the Conversion Price as then in
effect shall forthwith be readjusted to such Conversion Price as would
have been obtained had an adjustment been made upon the issuance of
such options, warrants or rights not exercised prior to such change,
or of such convertible or exchangeable securities not converted or
exchanged prior to such change, upon the basis of such change,
(4) on the expiration or cancellation of any such options,
warrants or rights that are unexercised, or the termination of the
right to convert or exchange such convertible or exchangeable
securities, if the Conversion Price shall have been adjusted upon the
issuance thereof, the Conversion Price shall forthwith be readjusted
to such Conversion Price as would have been obtained had an adjustment
been made upon the issuance of such options, warrants, rights or such
convertible or exchangeable securities on the basis of the issuance of
only the number of shares of Common Stock actually issued upon the
exercise of such options, warrants or rights, or upon the conversion
or exchange of such convertible or exchangeable securities and
(5) if the Conversion Price shall have been adjusted upon
the issuance of any such options, warrants, rights or convertible or
exchangeable securities no further adjustment of the Conversion Price
shall be made for the actual issuance of Common Stock upon the
exercise, conversion or exchange thereof.
(ii) Excluded Stock. All shares of Excluded Stock which the Company
has reserved for issuance shall be deemed to be outstanding for all purposes of
computations under Section 6(f)(i).
(iii) Stock Dividends, Subdivisions, Reclassifications or
Combinations. If the Company shall (A) declare a dividend or make a distribution
on its Common Stock in shares of its Common Stock, (B) subdivide, split or
reclassify (by merger, consolidation or otherwise) the outstanding shares of
Common Stock into a greater number of shares, (C) combine or reclassify (by
merger, consolidation or otherwise) the outstanding Common Stock into a smaller
number of shares or (D) issue any shares of its Common Stock in a
reclassification (by merger, consolidation or otherwise), the Conversion Price
in effect at the time of the record date for such dividend or distribution or
the effective date of such subdivision, combination or reclassification shall be
proportionately adjusted so that the holder of any shares of Series H Preferred
Stock surrendered for conversion after such date shall be entitled to receive
the number of shares of Voting Common Stock which such holder would have owned
or been entitled to receive had such Series H Preferred Stock been converted
immediately prior to such date. Successive adjustments in the Conversion Price
shall be made whenever any event specified above shall occur.
12
(iv) Other Distributions. In case the Company shall fix a record date
for the making of a distribution to all holders of shares of its Common Stock
(A) of shares of any class other than its Common Stock or (B) of evidence of
indebtedness of the Company or any subsidiary or (C) of assets or other
property, including but not limited to, securities issued by subsidiaries or
others (excluding regular cash dividends, and dividends or distributions
referred to in Section 6(f)(iii) above), or (D) of options, warrants or other
rights, in each such case the Conversion Price in effect immediately prior
thereto shall be reduced immediately thereafter to the price determined by
dividing (1) an amount equal to the difference resulting from (A) the sum of (i)
the number of shares of Voting Common Stock outstanding on such record date
multiplied by the Conversion Price per share on such record date and (ii) the
number of shares of NonVoting Common Stock outstanding on such record date
multiplied by the Conversion Price (determined in accordance with and pursuant
to the Certificate of Designations of Series I Preferred Stock) per share on
such record date, less (B) the Fair Market Value of such shares or evidences of
indebtedness or assets or rights or warrants to be so distributed, by (2) the
number of shares of Voting Common Stock and Non-Voting Common Stock outstanding
on such record date. Such adjustment shall be made successively whenever such a
record date is fixed. In the event that such distribution is not so made, the
Conversion Price then in effect shall be readjusted, effective as of the date
when the Board of Directors determines not to distribute such shares, evidences
of indebtedness, assets, property, options, rights or warrants, as the case may
be, to the Conversion Price which would then be in effect if such record date
had not been fixed. Rights (including, without limitation, those to be issued
pursuant to, and in accordance with, the Rights Agreement, dated as of April 20,
1995, between the Company and Mellon Securities Trust Company, as Rights Agent)
issued by the Company to all holders of Common Stock entitling the holders
thereof to subscribe for or purchase Equity Securities, which rights (x) are
deemed to be transferred with such shares of Common Stock, (y) are not
exercisable and (z) are also issued in respect of future issuances of Common
Stock, including shares of Common Stock issued upon conversion of the Series H
Preferred Stock, in each case in clauses (x) through (z) until the occurrence of
a specified event or events (a "Trigger Event"), shall for purposes of this
paragraph not be deemed issued until the occurrence of the earliest Trigger
Event.
(v) Consolidation, Merger, Sale, Lease or Conveyance. In case of any
consolidation or merger of the Company with or into another corporation or
entity, or in case of any sale, lease or conveyance to another corporation or
entity of the assets of the Company as an entirety or substantially as an
entirety, each share of Series H Preferred Stock shall after the date of such
consolidation, merger, sale, lease or conveyance be convertible into the number
of shares of stock or other securities or property (including cash) to which the
Voting Common Stock issuable (immediately prior to the time of such
consolidation, merger, sale, lease or conveyance) upon conversion of such share
of Series H Preferred Stock would have been entitled upon such consolidation,
merger, sale, lease or conveyance, and in any such case, if necessary, the
provisions set forth herein with respect to the rights and interests thereafter
of the holders of the shares of Series H Preferred Stock shall be appropriately
adjusted so as to be applicable, as nearly as may reasonably be possible, to any
shares of stock or other securities or property thereafter deliverable on the
conversion of the shares of Series H Preferred Stock.
13
(vi) Rounding of Calculations. All calculations under this
subparagraph (f) shall be made to the nearest cent or to the nearest one ten
thousandth of a share, as the case may be.
(vii) Timing of Issuance of Additional Common Stock Upon Certain
Adjustments. In any case in which the provisions of this subparagraph (f) shall
require that an adjustment shall become effective immediately after a record
date for an event, the Company may defer until the occurrence of such event (A)
issuing to the holder of any share of Series H Preferred Stock converted after
such record date and before the occurrence of such event the additional shares
of Common Stock issuable upon such conversion by reason of the adjustment
required by such event over and above the shares of Common Stock issuable upon
such conversion before giving effect to such adjustment and (B) paying to such
holder any amount of cash in lieu of a fractional share of Common Stock,
provided, that the Company, upon request, shall deliver to such holder a due
xxxx or other appropriate instrument evidencing such holder's right to receive
such additional shares, and such cash, upon the occurrence of the event
requiring such adjustment.
(g) Statement Regarding Adjustments. Whenever the Conversion Price shall be
adjusted, the Company shall forthwith file, at the office of the transfer agent
for the Series H Preferred Stock, if any, and at the principal office of the
Company, a statement showing in detail the facts requiring such adjustment and
the Conversion Price that shall be in effect after such adjustment, and the
Company shall also cause a copy of such statement to be sent by mail, first
class postage prepaid, to each holder of shares of Series H Preferred Stock at
its address appearing on the Company's records.
(h) Notice to Holders. In the event the Company shall propose to take any
action of the type described in clause (i) (but only if the action of the type
described in clause (i) would result in an adjustment in the Conversion Price),
(iii), (iv) or (v) of Section 6(f), the Company shall give notice to each holder
of shares of Series H Preferred Stock, in the manner set forth in subparagraph
6(g), which notice shall specify the record date, if any, with respect to any
such action and the approximate date on which such action is to take place. Such
notice shall also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action (to the extent such
effect may be known at the date of such notice) on the Conversion Price and the
number, kind or class of shares or other securities or property which shall be
deliverable upon conversion of shares of Series H Preferred Stock. In the case
of any action which would require the fixing of a record date, such notice shall
be given at least ten days prior to the date so fixed, and in case of all other
action, such notice shall be given at least fifteen days prior to the taking of
such proposed action. Failure to give such notice, or any defect therein, shall
not affect the legality or validity of any such action.
(i) Treasury Stock. For the purposes of this paragraph 6, the sale or other
disposition of any Common Stock theretofore held in the Company's treasury shall
be deemed to be an issuance thereof.
(j) Costs. The Company shall pay all documentary, stamp, transfer or other
transactional taxes attributable to the issuance or delivery of shares of Voting
Common Stock upon conversion of any shares of Series H Preferred Stock, provided
that the Company shall not be required to pay any taxes which may be payable in
respect of any transfer involved in the issuance or delivery of any certificate
for such shares in a name other than that of the holder of the shares of Series
H Preferred Stock in respect of which such shares are being issued.
14
(k) Reservation of Shares. The Company shall reserve at all times so long
as any shares of Series H Preferred Stock remain outstanding, free from
preemptive rights, out of its treasury stock (if applicable) or its authorized
but unissued shares, or both, solely for the purpose of effecting the conversion
of the shares of Series H Preferred Stock, sufficient shares of Voting Common
Stock to provide for the conversion of all outstanding shares of Series H
Preferred Stock.
(l) Approvals. If any shares of Voting Common Stock to be reserved for the
purpose of conversion of shares of Series H Preferred Stock require registration
with or approval of any governmental authority under any Federal or state law
before such shares may be validly issued or delivered upon conversion, then the
Company will in good faith and as expeditiously as possible endeavor to secure
such registration or approval, as the case may be. If, and so long as, any
Voting Common Stock into which the shares of Series H Preferred Stock are then
convertible is listed on any national securities exchange, the Company will, if
permitted by the rules of such exchange, list and keep listed on such exchange,
upon official notice of issuance, all shares of such Voting Common Stock
issuable upon conversion.
(m) Valid Issuance. All shares of Voting Common Stock which may be issued
upon conversion of the shares of Series H Preferred Stock will upon issuance by
the Company be duly and validly issued, fully paid and nonassessable, not issued
in violation of any preemptive rights arising under law or contract and free
from all taxes, liens and charges with respect to the issuance thereof, and the
Company shall take no action which will cause a contrary result (including
without limitation, any action which would cause the Conversion Price to be less
than the par value, if any, of the Voting Common Stock).
Section 7. Liquidation Preference.
(a) In the event of the liquidation, winding-up or dissolution of the
business of the Company, whether voluntary or involuntary, the holders of Series
H Preferred Stock then outstanding, after payment or provision for payment of
the debts and other liabilities of the Company and the payment or provision for
payment of any distribution on any shares of the Company having a preference and
a priority over the Series H Preferred Stock on liquidation, and before any
distribution to holders of any shares of the Company that are junior and
subordinate to the Series H Preferred Stock on liquidation, shall be entitled to
be paid out of the assets of the Company available for distribution to its
stockholders in respect of each share of Series H Preferred Stock, the greater
of (i) the then effective Liquidation Preference per share of Series H Preferred
Stock plus accrued and unpaid dividends from and including the most recent
Dividend Payment Date through and including the date of liquidation, winding-up
or dissolution and (ii) the amount that would be payable to the holders of the
Series H Preferred Stock if the shares of Series H Preferred Stock had been
converted into shares of Voting Common Stock immediately prior to such
liquidation, winding-up or dissolution. In the event the assets of the Company
available for distribution to the holders of the Series H Preferred Stock upon
any dissolution, winding-up or liquidation of the Company shall be insufficient
to pay in full the liquidation payments payable to the holders of outstanding
Series H Preferred Stock and of all other Parity Securities, the holders of
Series H Preferred Stock and all other Parity Securities shall share ratably in
15
such distribution of assets in proportion to the amount which would be payable
on such distribution if the amounts to which the holders of outstanding Series H
Preferred Stock and the holders of outstanding shares of such Parity Securities
were paid in full. Except as provided in this Section 7, holders of Series H
Preferred Stock shall not be entitled to any distribution in the event of the
liquidation, winding-up or dissolution of the Company.
(b) For the purposes of this Xxxxxxx 0, xxxx of the following shall be
deemed to be a voluntary or involuntary liquidation, dissolution or winding-up
of the Company:
(i) the sale, lease, transfer or exchange of all or substantially all
of the assets of the Company; or
(ii) the consolidation or merger of the Company with or into one or
more other corporations or entities (whether or not the Company is the
corporation surviving such consolidation or merger).
Section 8. Special Right to Appoint Directors. Beginning on the Issue Date
and continuing for so long as Cypress Merchant Banking Partners L.P. ("Cypress")
and TPG Partners II, L.P. ("TPG") and investment funds under common control with
Cypress or TPG own any combination of voting securities of the Company and
securities convertible into or exercisable for voting securities of the Company
where all such voting securities represent more than 10% of the Company's total
voting power, Cypress and TPG, acting jointly (or in the event that only one of
Cypress and investment funds under common control with Cypress, on the one hand,
and TPG and investment funds under common control with TPG, or the other hand,
shall then own or have the right to acquire voting securities of the Company,
then such Person), shall be entitled pursuant to this Section 8 to designate a
number of directors representing at least 23% of the total number of directors
constituting the full board of directors of the Company; provided, that for so
long as the total number of directors constituting the full board of directors
of the Company is 9 or fewer, Cypress and/or TPG, as the case may be, shall only
be entitled pursuant to this Section 8 to designate two directors on the board
of directors of the Company. For purposes of the calculation in this Section 8,
the Series I Preferred Stock and the securities issuable upon conversion of the
Series I Preferred Stock shall be counted as if they were voting securities.
Each of Cypress and TPG shall have the right to assign its rights under this
Section 8 to investment funds under common control with it.
Each committee of the board of directors of the Company shall include at
least one director designated by Cypress and/or TPG as provided above; provided,
that this requirement shall not apply with respect to the appointment of any
particular designee to a committee in the event that the rules or regulations of
the primary securities exchange or quotation system on which the Company's
Voting Common Stock is then listed or quoted or applicable law prohibits the
appointment of such director to such committee.
The Company and the Board of Directors shall take all actions necessary to
effect such designation to the Board of Directors (including, without
limitation, increasing the size of the Board of Directors and/or removing
directors) and to each committee thereof.
Section 9. Re-issuance. Series H Preferred Stock that has been issued and
reacquired in any manner, including shares purchased, exchanged or converted,
16
shall not be reissued as shares of Series H Preferred Stock and shall (upon
compliance with any applicable provisions of the laws of the Commonwealth of
Pennsylvania) have the status of authorized and unissued shares of the Preferred
Stock undesignated as to series and may be redesignated and reissued as part of
any series of Preferred Stock (including Series H Preferred Stock issued in
accordance with Section 1).
Section 10. Definitions.
For the purposes hereof, the following definitions shall apply:
"Accrual Rate" means 5.00%; provided, that the then effective Accrual Rate
shall increase by 0.50% on [ ] of each year beginning on [ ], 2004 up to a
maximum of 8.50%; provided, further, that if at any time the Company shall be in
default of its obligation to redeem any shares of the Series H Preferred Stock,
the then effective Accrual Rate shall increase by 2.00%.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in the City of New York are authorized or required by law
to close.
"Capital Stock" means any and all shares, interests, participations, rights
in or other equivalents (however designated and whether voting or non-voting) or
corporate stock, and any and all rights (other than any evidence of
indebtedness), warrants or options exchangeable for or convertible into such
corporate stock.
"Common Equivalent Rate" means, with respect to any Dividend Period, the
quotient of (a) the product of (i) all dividends declared during such Dividend
Period with respect to a share of Common Stock, (ii) four and (iii) the number
of shares of Common Stock issuable upon conversion of a share of Series H
Preferred Stock on the last day of such Dividend Period, divided by (b) the
Liquidation Preference of a share of Series H Preferred Stock on the first day
of such Dividend Period.
"Common Stock" means the Voting Common Stock or the Non-Voting Common
Stock.
"Conversion Price" means the price per share of Voting Common Stock used to
determine the number of shares of Voting Common Stock deliverable upon
conversion of a share of the Series H Preferred Stock, which price shall
initially be $8.75 per share, subject to adjustment in accordance with the
provisions of Section 7.
"Equity Securities" of any Person means any and all common stock, preferred
stock, any other class of capital stock and partnership or limited liability
company interests of such Person or any other similar interests of any Person
that is not a corporation, partnership or limited liability company.
"Excluded Stock" means shares of Voting Common Stock issued or reserved for
issuance by the Company (a) as a stock dividend payable in shares of Voting
Common Stock, (b) upon any subdivision or split-up of the outstanding shares of
Voting Common Stock, (c) upon conversion of shares of Series H Preferred Stock
or (d) pursuant to bona fide employee benefit plans, provided, that such shares
are issued for consideration equal to or greater than the fair value thereof on
the date of award.
17
"Excluded Transaction" means (i) an underwritten public offering of Common
Stock and (ii) the issuance of Common Stock solely in exchange for assets or all
of the stock of another Person (whether by merger, exchange or otherwise) in a
transaction in which a nationally recognized investment banking firm has advised
the Company that the transaction is fair and reasonable to the Company from a
financial point of view.
"Fair Market Value" of any securities shall mean the Market Value thereof
and of any consideration other than cash or securities shall mean the amount
which a willing buyer would pay to a willing seller in an arm's length
transaction as determined by an independent investment banking or appraisal firm
experienced in the valuation of such securities or property selected in good
faith by the Board of Directors.
"Liquidation Preference" means, on any date, the sum of $10,000 per share
of Series H Preferred Stock, plus accrued and unpaid dividends added to the
Liquidation Preference in accordance with Section 3(a).
"Market Value," with respect to any security, means the average of the
daily closing prices of such security for the 30 trading day period ending on
the relevant date of determination. The closing price for each day shall be the
last reported sales price regular way or, in case no such reported sale takes
place on such day, the average of the reported closing bid and asked prices
regular way, in either case on the New York Stock Exchange, or, such security is
not listed or admitted to trading on the New York Stock Exchange, on the
American Stock Exchange, or, if such security is not listed or admitted to
trading on the American Stock Exchange, the average of the closing bid and asked
prices of such security in the over-the-counter market as reported on the NASDAQ
system of the National Association of Securities Dealers, Inc. or if such
security is not so quoted, the average of the closing bid and asked price of
such security in the over-the-counter market as furnished by any nationally
recognized New York Stock Exchange member firm selected by the Company for such
purpose. If such security is not so listed, quoted or traded, the closing price
shall mean the amount which a willing buyer would pay to a willing seller in an
arm's length transaction as determined by an independent investment banking or
appraisal firm experienced in the valuation of such securities or property
selected in good faith by the Board of Directors of the issuer of such security.
"Non-Voting Common Stock" means the Company's non-voting common stock, par
value $.02 per share and shall also include (i) capital stock of the Company of
any other class (regardless of how denominated) issued to the holders of shares
of Non-Voting Common Stock upon any reclassification thereof in which the shares
of Non-Voting Common Stock are converted into a new class of capital stock and
(ii) shares of common stock of any successor or acquiring corporation received
by or distributed to the holders of Non-Voting Common Stock.
"Person" shall mean any individual, firm, corporation or other entity, and
shall include any successor (by merger or otherwise) of such entity.
"Public Debt" means obligations evidenced by bonds, notes, debentures or
other similar instruments issued in an underwritten public offering registered
18
under the Securities Act of 1933, in an offering pursuant to Rule 144A under the
Securities Act of 1933 or in an exchange offer registered on Form S-4.
"Redeemable Capital Stock" means, with respect to any Person, any Capital
Stock of such Person that, either by its terms, by the terms of any security
into which it is convertible or exchangeable or otherwise, is, or upon the
happening of an event or passage of time would be, required to be redeemed prior
to the last stated maturity of the principal of any Public Debt of such Person
outstanding at the time of issuance of such Capital Stock or is redeemable at
the option of the holder thereof at any time prior to any such stated maturity,
or is convertible into or exchangeable for debt securities at any time prior to
any such stated maturity at the option of the holder thereof.
"Redemption Agent" means a bank or trust company in good standing,
organized under the laws of the United States of America or any jurisdiction
thereof, having capital, surplus and undivided profits aggregating at least One
Hundred Million Dollars, appointed by the Company to act as agent to redeem the
Series H Preferred Stock.
"Voting Common Stock" means the Company's common stock, par value $.02 per
share and shall also include (i) capital stock of the Company of any other class
(regardless of how denominated) issued to the holders of shares of Voting Common
Stock upon any reclassification thereof in which the shares of Voting Common
Stock are converted into a new class of capital stock and (ii) shares of common
stock of any successor or acquiring corporation received by or distributed to
the holders of Voting Common Stock.
"Voting Stock" means stock of the class or classes pursuant to which the
holders thereof have the general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or trustees of a
corporation (irrespective of whether or not at the time stock of any other class
or classes shall have or might have voting power by reason of the happening of
any contingency). and
That the issuance of [___] shares of Series H Senior Convertible
Participating Cumulative Preferred Stock has been initially authorized by the
Board of Directors of said Company.
19
In Witness Whereof, the Company has caused this Certificate of Designation
to be signed and acknowledged by , and its corporate seal to be hereunto affixed
and attested by , this the day of [ ], 1999.
Genesis Health Ventures, Inc.
By:________________________________
Name:
Title:
[CORPORATE SEAL]
Attest:
By:______________________________
Name:
Title:
20
EXHIBIT F
IRREVOCABLE PROXY
This Irrevocable Proxy is given pursuant to the Restructuring
Agreement, dated as of _______, 1999 (the "Restructuring Agreement"), among The
Cypress Group L.L.C., TPG Partners II, L.P., Nazem, Inc. and Genesis Health
Ventures, Inc. ("Genesis"). All capitalized terms used in this Irrevocable Proxy
without definition shall have the meanings specified in the Restructuring
Agreement.
___________ ("Security Holder") hereby grants to and appoints Genesis
as Security Holder's irrevocable proxy and attorney-in-fact (with full power of
substitution) to vote in the manner specified below in connection with any vote
in which the holders of Genesis Voting Common Stock are entitled to vote
generally, other than a vote relating to an amendment to Genesis' articles of
incorporation to amend, modify or change the terms of any class or series of
preferred stock, the Proxy Securities owned by Security Holder as of the
application record date.
For purposes of this Irrevocable Proxy,
(a) "Proxy Securities" shall mean, as of any date, the number of
Transaction Voting Securities representing a number of votes
equal to the product of (i) the Total Proxy Voting Power as
of such date and (ii) a fraction, the numerator of which
shall be the Security Holder Voting Power as of such date
and the denominator of which shall be the Sponsor Voting
Power as of such date;
(b) "Security Holder Voting Power" shall mean, as of any date,
the number of votes entitled to be cast by Security Holder
as of such date by virtue of its ownership of Transaction
Voting Securities as of such date;
(c) "Sponsor Non-Proxy Voting Power" shall mean, as of any date,
the number of votes equal to the product of (i) the excess
of (A) the Total Voting Power as of such date over (B) the
Sponsor Voting Power as of such date and (ii) 0.5385;
provided, however, that in no event shall the "Sponsor
Non-Proxy Voting Power" determined in accordance with the
foregoing as of any date exceed 35% of the sum of (i) the
excess of (A) the Total Voting Power as of such date over
(B) the Sponsor Voting Power as of such date and (ii) the
Sponsor Non-Proxy Voting Power as so determined;
(d) "Sponsor Voting Power" shall mean, as of any date, the
aggregate number of votes entitled to be cast by the
Sponsors and the Sponsor Affiliates as of such date by
virtue of their ownership of Transaction Voting Securities
as of such date;
2
(e) "Total Proxy Voting Power" shall mean, as of any date, the
number of votes equal to the excess, if any, of (i) the
Sponsor voting Power as of such date over (ii) the Sponsor
Non-Proxy Voting Power as of such date; and
(f) "Total Voting Power" shall mean, as of any date, the total
number of votes entitled to be cast by all holders of voting
securities of Genesis as of such date.
In making the foregoing calculations, each calculation (other than for
Proxy Securities) shall be rounded to four decimal places, and the calculation
of Proxy Securities shall be rounded to the nearest whole number.
Genesis shall cast the votes represented by the Proxy Securities, which
it is entitled to cast hereby, on any matter to be voted upon "for", "against"
or as an abstention in the same proportion as are cast all the voting securities
of Genesis which are actually cast on such matter, excluding only the votes
representing the Total Proxy Voting Power cast pursuant to Irrevocable Proxies
granted by the Sponsors or Sponsor Affiliates pursuant to the Restructuring
Agreement.
Security Holder intends this proxy to be irrevocable and coupled with
an interest.
Security Holder agrees to take or cause to be taken all action and to
do or cause to be done all things necessary or advisable to make this
Irrevocable Proxy effective.
No action taken pursuant to this Irrevocable Proxy shall be nullified
or otherwise affected by any interest that Genesis or any of its affiliates may
have in the matter acted upon, notwithstanding any interest that Security Holder
may have in any such matter. Genesis shall have no fiduciary or other duty to
Security Holder arising out of this Irrevocable Proxy.
3
This Irrevocable Proxy shall be valid and in effect for so long as
Security Holder shall own any Transaction Voting Securities (which may be longer
than three years); provided, that this Irrevocable Proxy shall terminate upon
any termination of the standstill provisions contained in Section 5.5 of the
Restructuring Agreement.
THIS PROXY SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
[Security Holder]
By:
------------------------------------
Name:
Title:
