EXHIBIT 4.6
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WARRANT AND REGISTRATION RIGHTS AGREEMENT
dated as of January 31, 1990
among
NATIONAL MEDICAL ENTERPRISES, INC.
and
THE HILLHAVEN CORPORATION
and
MANUFACTURERS HANOVER TRUST COMPANY OF CALIFORNIA, Warrant Agent
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TABLE OF CONTENTS
Page
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ARTICLE I - WARRANTS............................................ 2
Section 1. Issuance of Warrants; Registration of
New Hillhaven Common Stock; Form of
Warrant Certificates........................... 2
Section 2. Appointment of Warrant Agent................... 2
Section 3. Countersignature and Registration.............. 3
Section 4. Transfer, Split Up, Combination and
Exchange of Warrant Certificates;
Mutilated, Destroyed, Lost or Stolen
Warrant Certificates........................... 3
Section 5. Subsequent Issue of Warrant
Certificates................................... 4
Section 6. Exercise of Warrants; Purchase Price........... 4
Section 7. Cancellation and Destruction of
Warrant Certificates........................... 5
Section 8. Reservation and Availability of Shares
of New Hillhaven Common Stock;
Legending...................................... 6
Section 9. Common Stock Record Date....................... 7
Section 10. Adjustment of Purchase Price or
Number of Shares............................... 7
Section 11. Certification of Adjusted Purchase
Price and Number of Shares Issuable............ 12
Section 12. Consolidation, Merger or Sale of
Assets......................................... 12
Section 13. Fractional Shares.............................. 13
Section 14. Right Of Action................................ 13
Section 15. Agreement Of Warrant Certificate
Holders........................................ 13
Section 16. Concerning the Warrant Agent................... 14
Section 17. Merger or Consolidation Or Change of
Name of Warrant Agent.......................... 14
Section 18. Duties of Warrant Agent........................ 15
Section 19. Change of Warrant Agent........................ 17
Section 20. Issuance of New Warrant Certificates........... 18
Section 21. Notice of Proposed Actions..................... 19
ARTICLE II - REGISTRATION RIGHTS................................ 20
Section 1. Demand Registrations........................... 20
Section 2. Participation Registrations.................... 21
Section 3. Certain Covenants of New Hillhaven ............ 22
Section 4. Expenses....................................... 24
Section 5. Indemnification................................ 25
Section 6. Modification of Certain Registration
Rights......................................... 27
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Page
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ARTICLE III - GENERAL........................................... 28
Section 1. Notices, etc................................... 28
Section 2. Supplements and Amendments..................... 29
Section 3. Successors and Assigns......................... 29
Section 4. Governing Law.................................. 29
Section 5. Assignment..................................... 29
Section 6. Titles and Headings............................ 29
Section 7. Entire Agreement............................... 29
Section 8. Counterparts................................... 30
Exhibit A Form of Warrant Certificate....................A-I
ii
WARRANT AND REGISTRATION RIGHTS AGREEMENT dated as of January 31, 1990
(this "Agreement") among NATIONAL MEDICAL ENTERPRISES, INC., a Nevada
corporation ("NME"), THE HILLHAVEN CORPORATION, a Nevada corporation ("New
Hillhaven"), and MANUFACTURERS HANOVER TRUST COMPANY OF CALIFORNIA, a California
corporation, as Warrant Agent (the "Warrant Agent")
__________________________
WHEREAS, NME and New Hillhaven have entered into a Reorganization and
Distribution Agreement (as amended to the date hereof, the "Distribution
Agreement") providing for a reorganization of certain of the businesses
heretofore conducted by NME's long term care group and a pro rata distribution
to the holders of NME's capital stock, as of the record date established by NME
in connection therewith, of approximately 85% of the outstanding shares of
common stock, par value $0.15 per share ("New Hillhaven Common Stock"), of New
Hillhaven (the "Distribution") on January 31, 1990 (the "Distribution Date")
and, in connection therewith, NME will retain approximately 14.4 million shares,
or approximately 15%, of such stock; and
WHEREAS, in connection with the Distribution, New Hillhaven will issue
to NME warrants (the "Warrants") to purchase shares of New Hillhaven Common
Stock upon the terms and subject to the conditions set forth in this Agreement;
and
WHEREAS, NME and New Hillhaven acknowledge that subsequent to the
Distribution NME may wish to dispose of all or part of the New Hillhaven Common
Stock retained by it or acquired by it pursuant to the exercise of all or part
of the Warrants (such New Hillhaven Common Stock so retained or acquired being
hereinafter referred to as the "Covered Common Stock"); and
WHEREAS, NME and New Hillhaven wish to set forth herein certain
agreements and understandings relating to the terms and conditions of the
issuance and exercise of the Warrants and the registration under the Securities
Act of 1933, as amended (the "Act"), of the Covered Common Stock.
NOW, THEREFORE, in consideration of the mutual covenants made herein
and of the mutual benefits to be derived here from, the parties hereby agree as
follows:
ARTICLE I
WARRANTS
Section 1. Issuance of Warrants; Registration of New Hillhaven Common
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Stock; Form of Warrant Certificates. In partial consideration of the assets to
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be transferred to New Hillhaven pursuant to the Distribution Agreement between
NME and New Hillhaven, New Hillhaven hereby agrees to issue on the date of the
Distribution, to NME or its designees, Warrants to purchase an aggregate of 30
million shares of New Hillhaven Common Stock. New Hillhaven covenants and
agrees that, as long as the Warrants are outstanding, it will use its best
efforts to (i) maintain the listing of the New Hillhaven Common Stock on the
American Stock Exchange ("ASE") and (ii) make publicly available (within the
meaning of Rule 144 promulgated under the Act) the information referred to in
paragraph (c) of such Rule, as from time to time amended.
Certificates evidencing the Warrants (and the forms of election to
purchase shares and of assignment to be printed on the reverse thereof) shall be
substantially in the form set forth in Exhibit A hereto (the "Warrant
Certificates") and may have such letters, numbers or other marks of
identification or designation and such legends, summaries or endorsements
printed, lithographed or engraved thereon as New Hillhaven may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation Of any stock exchange on which the
Warrants may from time to time be listed, or to conform to usage; provided,
however, that no addition to the Warrant Certificates shall substantially change
the nature of or increase the duties, obligations or liabilities of the Warrant
Agent hereunder without the consent of the Warrant Agent. Subject to the
provisions of Section 20, the Warrant Certificates shall be dated as of the date
of issuance thereof by the Warrant Agent, either upon initial issuance or upon
transfer or exchange, and on their face shall entitle the holders thereof to
purchase one share each of New Hillhaven Common Stock at the price per share set
forth therein ("Purchase Price") for each Warrant represented thereby, but the
number of such shares and the Purchase Price per share shall be subject to
adjustments as provided herein.
Section 2. Appointment of Warrant Agent. New Hillhaven hereby
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appoints the Warrant Agent to act as its agent in accordance with the terms and
conditions
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hereinafter set forth, and the Warrant Agent hereby accepts such appointment.
New Hillhaven may from time to time appoint such Co-Warrant Agents as it may
deem necessary or desirable.
Section 3. Countersignature and Registration. The Warrant
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Certificates shall be executed on behalf of New Hillhaven by its Chairman and
Chief Executive Officer, its Vice Chairman and Deputy Chief Executive Officer,
its President, any Executive Vice President or any Senior Vice President, by
manual or facsimile signature, and have affixed thereto a facsimile of New
Hillhaven's seal which shall be attested by the Secretary or any Assistant
Secretary of New Hillhaven by manual or facsimile signature. The Warrant
Certificates shall be manually countersigned by the Warrant Agent and shall not
be valid for any purpose unless so countersigned in case any officer of New
Hillhaven who shall have signed any of the Warrant Certificates shall cease to
be such officer of New Hillhaven before countersignature by the Warrant Agent
and issuance and delivery by New Hillhaven, such Warrant Certificates,
nevertheless, may be countersigned by the Warrant Agent and issued and delivered
with the same force and effect as though the person who signed such Warrant
Certificates had not ceased to be such officer of New Hillhaven; and any Warrant
Certificate may be signed on behalf of New Hillhaven by any person who, at the
actual date of the execution of such Warrant Certificate, shall be a proper
officer of New Hillhaven to sign such Warrant Certificate, although at the date
of the execution of this Warrant Agreement any such person was not such an
officer.
The Warrant Agent will keep or cause to be kept, at its principal
office in San Francisco, books for registration and transfer of the Warrant
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Warrant Certificates, and the date of each of the
Warrant Certificates.
Section 4. Transfer, Split Up, Combination and Exchange of Warrant
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Certificates; Mutilated, Destroyed, Lost or Stolen Warrant Certificates.
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Subject to the provisions of Section 13, any Warrant Certificate, with or
without other Warrant Certificates, may be transferred, split up, combined or
exchanged for another Warrant Certificate or Warrant Certificates, entitling the
registered holder to purchase a like number of shares of New Hillhaven Common
Stock as the Warrant Certificate or Warrant Certificates surrendered then
entitled him to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Warrant Certificate shall make such request in writing
delivered to the Warrant Agent, and shall surrender the Warrant Certificate or
Warrant Certificates to be trans-
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ferred, split up, combine or exchanged at the office of the Warrant Agent
referred to in Section 3. Thereupon (subject to receipt of payment of any sum
referred to in the next sentence) the Warrant Agent shall countersign and
deliver to the person entitled thereto a Warrant Certificate or Warrant
Certificates, as the case may be, as so requested. New Hillhaven or the Warrant
Agent may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Warrant Certificates.
Upon receipt by New Hillhaven and the Warrant Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Warrant Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to New Hillhaven
and the Warrant Agent of all reasonable expenses incidental thereto and upon
surrender and cancellation of the Warrant Certificate if mutilated, Hillhaven
will make and deliver a new Warrant Certificate of like tenor to the Warrant
Agent for delivery to the registered owner in lieu of the Warrant Certificate so
lost, stolen, destroyed or mutilated.
The Warrant Agent shall not be required to transfer any Warrant
Certificate(s) unless in connection therewith there shall have been furnished to
the Warrant Agent by the transferor an opinion of counsel, reasonably
satisfactory to the Warrant Agent, to the effect that no registration of the
Warrants represented by the Warrant Certificate(s) proposed to be transferred is
required under the Act.
Section 5. Subsequent Issue Of Warrant Certificates. Subsequent to
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their original issuance, no Warrant Certificates shall be issued except (a)
Warrant Certificates issued upon any transfer, split up, combination or exchange
of Warrants pursuant to Section 4, (b) Warrant Certificates issued in
replacement of mutilated, destroyed, lost or stolen Warrant Certificates
pursuant to Section 4, (c) Warrant Certificates issued pursuant to Section 6
upon the partial exercise of any Warrant Certificate to evidence the unexercised
portion of such Warrant Certificate or (d) Warrant Certificates issued pursuant
to Section 20.
Section 6. Exercise of Warrants; Purchase Price. (a) The registered
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holder of any Warrant Certificate may exercise the Warrants evidenced thereby in
whole or in part at any time after the date hereof and prior to 5:00 p.m., San
Francisco time, on the tenth anniversary of the Distribution Date, upon
surrender of the Warrant Certificate, with the form of election to purchase on
the Warrant duly executed, to the Warrant Agent at the office of
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the Warrant Agent referred to in Section 3, together with payment of the
Purchase Price for each share of New Hillhaven Common Stock as to which the
Warrants are exercised and an amount equal to any applicable transfer tax.
(b) The Purchase Price for each share Of New Hillhaven Common Stock
pursuant to the exercise of a Warrant shall initially be 125% of the fair market
value of a share of New Hillhaven Common Stock on the Distribution Date. For the
purposes hereof such value shall be the fair market value on the Distribution
Date as determined by the Board of Directors of NME or a committee thereof for
purposes of adjusting the exercise price Of Outstanding NME Options or
convertible securities, as conclusively set forth in a certificate of the
Secretary or an Assistant Secretary of NME delivered to New Hillhaven and the
Warrant Agent as soon as practicable after the Distribution Date. The Purchase
Price shall be subject to adjustment as provided in Section 10 and shall be
payable in lawful money Of the United States of America.
(c) Upon receipt of a Warrant Certificate, with the form of election
to purchase duly executed, accompanied by payment, in cash or by certified or
official bank check payable to the order of New Hillhaven, of the Purchase Price
for the shares to be purchased and an amount equal to any applicable transfer
tax, the Warrant Agent shall thereupon promptly (i) requisition from any
transfer agent for the New Hillhaven Common Stock certificates for the number of
whole shares of New Hillhaven Common Stock to be purchased and New Hillhaven
hereby irrevocably authorizes its transfer agent to comply with all such
requests, (ii) when appropriate, requisition from New Hillhaven the amount of
cash to be paid in lieu of issuance of fractional shares and (iii) promptly
after receipt of such certificates cause the same to be delivered to or upon the
order of the registered holder of such Warrant Certificate, registered in such
name or names as may be designated by such holder, and, when appropriate, after
receipt promptly deliver such cash to or upon the order of the registered holder
of such Warrant Certificate.
(d) In case the registered holder of any Warrant Certificate shall
exercise less than all the Warrants evidenced thereby, a new Warrant Certificate
evidencing Warrants equivalent to the Warrants remaining unexercised shall be
issued by the Warrant Agent to the registered holder of such Warrant Certificate
or to his duly authorized assigns subject to the provisions of Sections 4 and
13.
Section 7. Cancellation and Destruction of Warrant Certificates. All
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Warrant Certificates surrendered for the purpose of exercise, exchange,
substitution or
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transfer shall, if surrendered to New Hillhaven or to any of its agents, be
delivered to the Warrant Agent for cancellation or in cancelled form, or if
surrendered to the Warrant Agent shall be cancelled by it, and no Warrant
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. New Hillhaven shall deliver to the
Warrant Agent for cancellation and retirement, and the Warrant Agent shall so
cancel and retire, any other Warrant Certificate purchased or acquired by New
Hillhaven otherwise than upon the exercise thereof. The Warrant Agent shall
deliver all cancelled Warrant Certificates to New Hillhaven, or shall, at the
written request of New Hillhaven, destroy such cancelled Warrant Certificates,
and in such case shall deliver a certificate of destruction thereof to New
Hillhaven.
Section 8. Reservation and Availability of Shares of New Hillhaven
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Common Stock; Legending. New Hillhaven shall cause to be reserved and kept
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available out of its authorized and unissued shares of New Hillhaven Common
Stock or its authorized and issued shares of New Hillhaven Common Stock held in
its treasury, the number of shares of New Hillhaven Common Stock that will be
sufficient to permit the exercise in full of all outstanding Warrants.
So long as the New Hillhaven Common Stock issuable upon the exercise
of Warrants may be listed on any national securities exchange, New Hillhaven
shall use its best efforts to cause all shares reserved for such issuance to be
listed on such exchange upon official notice of issuance upon such exercise.
New Hillhaven shall also take all such action as may be necessary to
ensure that all shares of New Hillhaven Common Stock delivered upon exercise of
Warrants shall, at the time of delivery of the certificates for such shares
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares.
In addition, New Hillhaven shall pay when due and payable any and all
federal and state transfer taxes and charges which may be payable in respect of
the issuance or delivery of the Warrant Certificates or of any shares of New
Hillhaven Common Stock upon the exercise of Warrants. New Hillhaven shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer involved in the transfer or delivery of Warrant Certificates or the
issuance or delivery of certificates for New Hillhaven Common Stock in a name
other than that of the registered holder of the Warrant Certificate evidencing
Warrants surrendered for exercise or to issue or deliver any
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certificates for shares of New Hillhaven Common Stock upon the exercise of any
Warrants until any such tax shall have been paid (any such tax being payable by
the holder of such Warrant Certificate at the time of surrender) or until it has
been established to New Hillhaven's satisfaction that no such tax is due.
All shares of New Hillhaven Common Stock issuable upon exercise of the
Warrants shall contain a legend, substantially similar to the legend set forth
in the Warrant Certificates, with respect to the transferability of such shares,
until such time as New Hillhaven shall have been advised by its counsel that
such legend is no longer required by law.
Section 9. Common Stock Record Date. Each person in whose name any
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certificate for shares of New Hillhaven Common Stock is issued upon the exercise
of Warrants shall for all purposes be deemed to have become the holder of record
of the New Hillhaven Common Stock represented thereby on, and such certificate
shall be dated, the date upon which the Warrant Certificate evidencing such
Warrants was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if the date of such
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surrender and payment is a date upon which the New Hillhaven Common Stock
transfer books are closed, such person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding business day on which the New Hillhaven Common Stock transfer books
are open. Prior to the exercise of the Warrants evidenced thereby, the holder of
a Warrant Certificate shall not be entitled to any rights of a stockholder of
New Hillhaven as such with respect to shares for which the Warrants shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of New Hillhaven,
except as provided herein.
Section 10. Adjustment of Purchase Price or Number of Shares. The
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Purchase Price, the number of shares of New Hillhaven Common Stock covered by
each Warrant and the number of Warrants outstanding are subject to adjustment
from time to time upon the occurrence of the events enumerated in this Section
10.
(a) In case New Hillhaven shall at any time after the date of this
Agreement (i) declare a dividend on the Hillhaven Common Stock payable in shares
of New Hillhaven Common Stock, (ii) subdivide the outstanding New Hillhaven
Common Stock, (iii) combine the outstanding New Hillhaven Common Stock into a
smaller number of shares, or (iv) issue
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any shares of its capital stock in a reclassification of the New Hillhaven
Common Stock (including any such reclassification in connection with a
consolidation or merger in which New Hillhaven is the continuing corporation
other than a consolidation or merger in respect of which an adjustment is made
pursuant to Section 12), the Purchase Price in effect at the time of the record
date for such dividend or of the effective date of such subdivision, combination
or reclassification, and/or the number and kind of shares of capital stock
issuable on such dates, shall be proportionately adjusted so that the holder of
any Warrant exercised after such time shall be entitled to receive the aggregate
number and kind of shares of capital stock which, if such Warrant had been
exercised immediately prior to such date and at a time when the New Hillhaven
Common Stock transfer books of New Hillhaven were open, he would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. Such adjustment shall be made
successively whenever any event listed above shall occur.
(b) In case New Hillhaven shall fix a record date for the issuance of
rights or warrants to all holders of New Hillhaven Common Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase New Hillhaven Common Stock (or securities convertible
into New Hillhaven Common Stock) at a price per share of New Hillhaven Common
Stock (or having a conversion price per share of New Hillhaven Common Stock, if
a security convertible into New Hillhaven Common Stock) less than the current
market price per share of New Hillhaven Common Stock (as defined in Section
10(d)) on such record date, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, of which the numerator shall be the
number of shares of New Hillhaven Common Stock outstanding on such record date
plus the number of shares of New Hillhaven Common Stock which the aggregate
offering price of the total number of shares of New Hillhaven Common Stock so to
be offered (or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price and of
which the denominator shall be the number of shares of New Hillhaven Common
Stock outstanding on such record date plus the number of additional shares of
New Hillhaven Common Stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible). In
case such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash the value of such consideration shall be as
determined by the Board of Directors of New Hillhaven, whose determination shall
be conclusive, and described in a statement filed with the
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Warrant Agent. Shares of New Hillhaven Common Stock owned by or held for the
account of New Hillhaven shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights or warrants are not so
issued, the Purchase Price shall again be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case New Hillhaven shall fix a record date for the making of a
distribution to all holders of New Hillhaven Common Stock (including any such
distribution made in connection with a consolidation or merger in which New
Hillhaven is the continuing corporation other than a consolidation or merger in
respect of which an adjustment is made pursuant to Section 12) or evidences of
indebtedness or assets (other than cash dividends or cash distributions payable
out of consolidated earnings or earned surplus or dividends payable in New
Hillhaven Common Stock) or subscription rights or warrants (excluding those
referred to in Section 10(b) and any rights issued pursuant to the Rights
Agreement dated as of January 31, 1990 between New Hillhaven and Manufacturers
Hanover Trust Company of California, as Rights Agent (the "Rights Agreement")),
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, of which the numerator shall be the current market price per
share of New Hillhaven Common Stock (as defined in Section 10(d)) on such record
date, less the fair market value (as determined by the Board of Directors of
Hillhaven, whose determination shall be conclusive, and described in a statement
filed with the Warrant Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one share of New Hillhaven Common Stock and of which the
denominator shall be such current market price per share of New Hillhaven Common
Stock. Such adjustment shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d) For the purpose of any computation under Section 10(b) or (c),
the current market price per share of New Hillhaven Common Stock on any date
shall be deemed to be the average of the daily closing prices per share of New
Hillhaven Common Stock for the 30 consecutive trading days as reported on the
ASE Composite Tape commencing 45 days before such date. The closing price for
each day shall be the last sale price regular way or, in case no such, sale
takes place on such day, the average of the closing bid and
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asked prices regular way, in either case as reported on the ASE, or if the New
Hillhaven Common Stock is not reported on the ASE, on the principal national
securities exchange on which the New Hillhaven Common Stock is listed or
admitted to trading, or if the New Hillhaven Common Stock is not listed or
admitted to trading on any national securities exchange, the average of the
highest reported bid and lowest reported asked prices as furnished by the
National Association of Securities Dealers, Inc. through NASDAQ or a similar
organization if NASDAQ is no longer reporting such information. If on any such
date the shares of New Hillhaven Common Stock are not quoted by any such
organization, the fair value of such shares on such date as determined by the
Board of Directors of New Hillhaven shall be used. The term "trading day" shall
mean a day on which the principal national securities exchange on which the
shares of New Hillhaven Common Stock are listed or admitted to trading is open
for the transaction of business or, if the shares of such stock are not listed
or admitted to trading on any national securities exchange, a Monday, Tuesday,
Wednesday, Thursday or Friday on which banking institutions in the State of
California are not authorized or obligated by law or executive order to close.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this Section 10(e)
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are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 10 shall be made
to the nearest cent or to the nearest one-hundredth of a share, as the case may
be.
(f) In the event that at any time, as a result of an adjustment made
pursuant to Section 10(a), the holder of any Warrant thereafter exercised shall
become entitled to receive any shares of capital stock of New Hillhaven other
than shares of New Hillhaven Common Stock, thereafter the number of such other
shares so receivable upon exercise of any Warrant shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the shares of New Hillhaven Common Stock
contained in Section 10(a) through (c), inclusive, and the provisions of
Sections 6, 8, 9 and 13 with respect to the shares of New Hillhaven Common Stock
shall apply on like terms to any such other shares.
(g) All Warrants originally issued by New Hillhaven subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of New Hillhaven
Common Stock purchasable from time to time
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hereunder upon exercise of Warrants, all subject to further adjustment as
provided herein.
(h) Upon each adjustment of the Purchase Price as a result of the
calculations made in Section 10(a), (b) or (c) each Warrant outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the Adjusted Purchase Price, that number of shares
(calculated to the nearest hundredth) obtained by (i) multiplying the number of
shares covered by a Warrant immediately prior to this adjustment of the number
of shares by the Purchase Price in effect immediately prior Co such adjustment
of the Purchase Price and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase Price.
(i) Irrespective of any adjustment or change in the Purchase Price or
the number of shares of New Hillhaven Common Stock issuable upon the exercise of
the Warrants, the Warrant Certificates theretofore and thereafter issued may
continue to express the Purchase Price per share and the number of shares which
were expressed upon the initial Warrant Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the shares of New
Hillhaven Common Stock issuable upon exercise of the Warrants, New Hillhaven
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that New Hillhaven may validly and legally issue fully paid
and nonassessable shares of such New Hillhaven Common Stock at such adjusted
Purchase Price.
(k) In any case in which this Section 10 shall require that an
adjustment in the Purchase Price be made effective as of the record date for a
specified event, New Hillhaven may elect to defer until the occurrence of such
event the issuing to the holder of any Warrant exercised after such record date
the shares of New Hillhaven Common Stock and other capital stock of New
Hillhaven, if any, issuable upon such exercise over and above the shares of New
Hillhaven Common Stock, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however, that New
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Hillhaven shall deliver to such holder a due xxxx or other appropriate
instrument evidencing such holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.
(l) Anything in this Section 10 to the contrary notwithstanding, New
Hillhaven shall be entitled to make such reductions in the Purchase Price, in
addition to those
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adjustments required by this Section 10, as it in its sole discretion shall
determine to be advisable in order that any consolidation or subdivision of the
New Hillhaven Common Stock, issuance wholly for cash of any New Hillhaven Common
Stock at less than the current market price, issuance wholly for cash of New
Hillhaven Common Stock or securities which by their terms are convertible into
or exchangeable for New Hillhaven Common Stock, stock dividend, issuance of
rights, options or warrants referred to hereinabove in this Section 10,
hereinafter made by New Hillhaven to its common stockholders shall not be
taxable to them.
Section 11. Certification of Adjusted Purchase Price and Number of
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Shares Issuable. Whenever the Purchase Price or the number of shares of New
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Hillhaven Common Stock issuable upon the exercise of each Warrant are adjusted
as provided in Xxxxxxx 00, Xxx Xxxxxxxxx shall (a) promptly obtain a certificate
of a firm of independent public accountants, which shall be an accounting firm
which is known as one of the "Big Six" accounting firms and which may be the
regular auditors of New Hillhaven, selected by the Board of Directors, setting
forth the Purchase Price as so adjusted, the number of shares of New Hillhaven
Common Stock issuable upon the exercise of each Warrant as so adjusted and a
brief statement of the facts accounting for such adjustment, (b) promptly file
with the Warrant Agent and with each transfer agent for the New Hillhaven Common
Stock a copy of such certificate and (c) mail a brief summary thereof to each
holder of a Warrant Certificate in accordance with Section 21.
Section 12. Consolidation, Merger or Sale of Assets. If New
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Hillhaven shall at any time Consolidate with or merge into another corporation,
the holder of any Warrants will thereafter receive, upon the exercise thereof in
accordance with the terms of this Agreement, the securities or property to which
the holder of the number of shares of New Hillhaven Common Stock then
deliverable upon the exercise of such Warrants would have been entitled upon
such consolidation or merger and New Hillhaven shall take such steps in connect
ion with such consolidation or merger as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to any securities or property (including cash) thereafter
deliverable upon the exercise of the Warrants; provided, however, that if upon
-------- -------
any such consolidation or merger different holders of New Hillhaven Common Stock
shall be entitled to receive different forms of consideration, the form of such
consideration thereafter deliverable upon the exercise of the Warrants shall be
as determined by the Board of Directors of New Hillhaven as constituted
immediately prior to such consolidation or merger. New Hillhaven or the
successor corporation, as the
12
case may be, shall execute and deliver to the Warrant Agent a supplemental
agreement so providing. A sale or transfer of all or substantially all the
assets of New Hillhaven for a consideration (apart from the assumption of
obligations) consisting primarily of securities shall be deemed a consolidation
or merger for the foregoing purposes. The provisions of this Section 12 shall
similarly apply to successive mergers or consolidations or sales or other
transfers.
Section 13. Fractional Shares.
-----------------
(a) Notwithstanding an adjustment pursuant to Section 10(h) in the
number of shares covered by a Warrant, New Hillhaven shall not be required to
issue fractional shares upon exercise of the Warrants or to distribute
certificates which evidence fractional shares. In lieu of fractional shares,
there shall be paid to the registered holders of Warrant Certificates at the
time such Warrant Certificates are exercised as herein provided an amount in
cash equal to the same fraction of the current market value of a share of New
Hillhaven Common Stock. For purposes of this Section 13(a), the current market
value of a share of New Hillhaven Common Stock shall be the closing price of a
share of New Hillhaven Common Stock (as determined pursuant to the second
sentence of Section 10(d)), for the trading day immediately prior to the date of
such exercise.
(b) The holder of a Warrant, by the acceptance of the Warrant,
expressly waives his right to receive any fractional Warrant or any fractional
share upon exercise of a Warrant.
Section 14. Right of Action. All rights of action in respect of this
---------------
Agreement (except for the rights of action of the Warrant Agent hereunder) are
vested in the respective registered holders of the Warrant Certificates; and any
registered holder of any Warrant Certificate, without the consent of the Warrant
Agent or of the holder of any other Warrant Certificate, may, in his own behalf
and for his own benefit, enforce, and may institute and maintain any suit,
action or proceeding against New Hillhaven to enforce, or otherwise act in
respect of, his right to exercise the Warrants evidenced by such Warrant
Certificate in the manner provided in such Warrant Certificate and in this
Agreement.
Section 15. Agreement of Warrant Certificate Holders. Every holder
----------------------------------------
of a Warrant Certificate by accepting the same consents and agrees with New
Hillhaven and the Warrant Agent and with every other holder of a Warrant
Certificate that:
13
(a) the Warrant Certificates are transferable only on the registry
books of the Warrant Agent if surrendered at the office of the Warrant
Agent referred to in Section 3, duly endorsed or accompanied by a proper
instrument of transfer in accordance with the provisions hereof; and
(b) New Hillhaven and the Warrant Agent may deem and treat the person
in whose name the Warrant Certificate is registered as the absolute owner
thereof and of the Warrants evidenced thereby (notwithstanding any
notations of ownership or writing on the Warrant Certificates made by
anyone other than Hillhaven or the Warrant Agent) for all purposes
whatsoever, and neither New Hillhaven nor the Warrant Agent shall be
affected by any notice to the contrary.
Section 16. Concerning the Warrant Agent. New Hillhaven agrees to
----------------------------
pay to the Warrant Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Warrant Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. New Hillhaven also agrees to indemnify the Warrant Agent for, and to
hold it harmless against, any loss, liability or expense, incurred without
negligence or bad faith on the part of the Warrant Agent, for any action taken,
suffered or omitted by the Warrant Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
against any claim of liability in the premises.
The Warrant Agent shall be protected and shall incur no liability for
or in respect of any action taken; suffered, or omitted by it in connection with
its administration of this Agreement in reliance upon any Warrant Certificate or
certificate for New Hillhaven Common Stock or for other securities of New
Hillhaven, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document reasonably believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper person or
persons.
Section 17. Merger or Consolidation or Change of Name of Warrant
----------------------------------------------------
Agent. Any corporation into which the Warrant Agent or any successor Warrant
-----
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Warrant Agent or any
successor Warrant Agent shall be a party, or any corporation succeeding to the
corporate trust
14
business of the Warrant Agent or any successor Warrant Agent, shall be the
successor to the Warrant Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Warrant Agent under the provisions of Section 19. In case at the time each
successor Warrant Agent shall succeed to the agency created by this Agreement,
any of the Warrant Certificates shall have been countersigned but not delivered,
any such successor Warrant Agent may adopt the countersignature of the
predecessor Warrant Agent and deliver such Warrant Certificates so
countersigned; and in case at that time any of the Warrant Certificates shall
not have been countersigned, any successor Warrant Agent may countersign such
Warrant Certificates either in the name of the Predecessor Warrant Agent or in
the name of the successor Warrant Agent; and in all such cases such Warrant
Certificates shall have the full force provided in the Warrant Certificates and
in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrant Certificates shall have been countersigned but
not delivered, the Warrant Agent may adopt the countersignature under its prior
name and deliver Warrant Certificates so countersigned; and in case at that time
any of the Warrant Certificates shall not have been countersigned, the Warrant
Agent may countersign such Warrant Certificates either in its prior name or in
its changed name; and in all such cases such Warrant Certificates shall have the
full force Provided in the Warrant Certificates and in this Agreement.
Section 18. Duties of Warrant Agent. The Warrant Agent shall have
-----------------------
only the duties and obligations expressly set forth in this Agreement There
shall be no implied duties or obligations of the Warrant Agent. The Warrant
Agent undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which New Hillhaven and the holders of
Warrant Certificates, by their acceptance thereof, shall be bound:
(a) The Warrant Agent may consult with legal counsel (who may be
legal counsel for New Hillhaven), and the opinion of such counsel shall be
full and complete authorization and protection to the Warrant Agent as to
any action taken, suffered or omitted by it in good faith and in accordance
with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Warrant Agent shall deem it necessary or desirable that, any fact or
matter proved or established by New Hillhaven prior to taking
15
or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by
the Chairman and Chief Executive Officer, the Vice Chairman and Deputy
Chief Executive Officer, the President, any Executive Vice President, any
Senior Vice President or the Secretary or any Assistant Secretary of New
Hillhaven and delivered to the Warrant Agent; and such certificate shall be
full authorization to the Warrant Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance upon
such certificate.
(c) The Warrant Agent shall be liable hereunder only for its own
negligence or bad faith.
(d) The Warrant Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Warrant Certificates (except its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and shall be
deemed to have been made by New Hillhaven only.
(e) The Warrant Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Warrant Agent) or in respect
of the validity or execution of any Warrant Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
New Hillhaven of any covenant or condition contained in this Agreement or
in any Warrant Certificate; nor shall it be responsible for the adjustment
of the Purchase Price or the making of any change in the number of shares
of New Hillhaven Common Stock required under the provisions of Section 10
or responsible for the manner, method or amount of any such change or the
ascertaining of the existence of facts that would require any such
adjustment or change (except with respect to the exercise of Warrants
evidenced by Warrant Certificates after actual notice of any adjustment of
the Purchase Price); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of
any shares of New Hillhaven Common Stock to be issued pursuant to this
Agreement or any Warrant Certificate or as to whether any shares of New
Hillhaven Common Stock will, when issued, be validly authorized and issued,
fully paid and nonassessable.
16
(f) New Hillhaven shall perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be
required by the Warrant Agent for the carrying out or performing by the
Warrant Agent of the provisions of this Agreement
(g) The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
the Chairman and Chief Executive Officer, the Vice Chairman and Deputy
Chief Executive Officer, the President, any Executive Vice President, any
Senior Vice President or the Secretary of New Hillhaven, and to apply to
such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered to be taken by it
in good faith in accordance with the instructions of any such officer.
(h) The Warrant Agent and any Shareholder, director, officer or
employee of the Warrant Agent may buy, sell or deal in any of the Warrants
or other securities of New Hillhaven or become Pecuniarily interested in
any transaction in which New Hillhaven may be interested, or contract with
or lend money to New Hillhaven or otherwise act as fully and freely as
though it were not Warrant Agent under this Agreement. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for New
Hillhaven or for any other legal entity.
(i) The Warrant Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents, and the Warrant Agent shall not be
Answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to New Hillhaven resulting
from such neglect or misconduct, provided reasonable care had been
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Warrant Agent to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its
rights unless it shall have been first indemnified therefor to its
satisfaction.
Section 19. Change of Warrant Agent. The Warrant Agent may resign
-----------------------
and be discharged from its duties under this Agreement upon 30 days' notice in
writing mailed to New
17
Hillhaven and to each transfer agent of the New Hillhaven Common Stock by
registered or certified mail, and to the holders of the Warrant Certificates by
first class mail. New Hillhaven may remove the Warrant Agent or any successor
Warrant Agent upon 30 days' notice in writing, mailed to the Warrant Agent or
successor Warrant Agent, as the case may be, and to each transfer agent of the
New Hillhaven Common Stock by registered or certified mail, and to the holders
of the Warrant Certificates by first-class mail. If the Warrant Agent shall
resign or be removed or shall otherwise become incapable of acting, New
Hillhaven shall appoint a successor to the Warrant Agent. If New Hillhaven shall
fail to make such appointment within a period of 30 days after such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Warrant Agent or by the holder of a Warrant
Certificate (who shall, with such notice, submit his Warrant Certificate for
inspection by New Hillhaven), then the registered holder of any Warrant
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Warrant Agent. Any successor Warrant Agent, whether appointed by New
Hillhaven or by such a court, shall be a corporation organized and doing
business under the laws of the United States or of any state thereof, in good
standing, having its principal office in Boston, Massachusetts, Chicago,
Illinois, Los Angeles, California, New York, New York, San Francisco, California
or Seattle, Washington, which is authorized under such laws to exercise
corporate trust powers and is subject to supervision or examination by a federal
or state authority and which has at the time of its appointment as Warrant Agent
a combined capital and surplus of at least $250,000,000. After appointment, the
successor Warrant Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Warrant Agent without
further act or deed; but the predecessor Warrant Agent shall deliver and
transfer to the successor Warrant Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Not later than the effective date of any such
appointment, New Hillhaven shall file notice thereof in writing with the
predecessor Warrant Agent and each transfer agent for New Hillhaven Common
Stock, and mail a notice thereof in writing to the registered holders of the
Warrant Certificates. Failure to give any notice provided for in this Section
19, however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Warrant Agent or the appointment of the
successor Warrant Agent, as the case may be.
Section 20. Issuance of New Warrant Certificates. Notwithstanding any
------------------------------------
of the provisions of this Agreement or of the Warrants to the contrary, New
Hillhaven may, at its
18
option, issue new Warrant Certificates evidencing Warrants in such form as may
be approved by its Board of Directors to reflect any adjustment or change in the
Purchase Price per share and the number or kind or class of shares of stock or
other securities or property purchasable under the several Warrant Certificates
made in accordance with the provisions of this Agreement.
Section 21. Notice of Proposed Actions. In case New Hillhaven shall
--------------------------
propose (a) to pay any dividend payable in stock of any class to the holders of
New Hillhaven Common Stock or to make any other distribution to the holders of
New Hillhaven Common Stock (other than a cash dividend), or (b) to offer to the
holders of New Hillhaven Common Stock rights or warrants to subscribe for or to
purchase any additional shares of New Hillhaven Common Stock or shares of stock
of any class of any other securities, rights or options (other than the rights
contemplated to be distributed to stockholders pursuant to the Rights
Agreement), or (c) to effect any reclassification of New Hillhaven Common Stock
(other than a reclassification involving only the subdivision or combination of
outstanding shares of New Hillhaven Common Stock), or (d) to effect any
consolidation, merger or sale, transfer or other disposition of all or
substantially all of the property, assets or business of New Hillhaven, or (e)
to effect the liquidation, dissolution or winding up of New Hillhaven, then in
each such case New Hillhaven shall give to each holder of a Warrant, in
accordance with Section 1 of Article III of this Agreement, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, disposition,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of New Hillhaven Common Stock, if any such
date is to be fixed. Such notice shall be so given in the case of any action
covered by clause (a) or (b) above at least ten days prior to the record date
for determining holders of New Hillhaven Common Stock for purposes of such
action, and in the case of any other such action, at least ten days prior to the
date of the proposed taking of such action or the date of participation therein
by the holders of New Hillhaven Common Stock, whichever shall be the earlier.
The failure to give notice required by this Section 21 or any defect therein
shall not affect the legality or validity of the action taken by New Hillhaven
or the vote upon any such action.
19
ARTICLE II
REGISTRATION RIGHTS
Section 1. Demand Registrations. (a) At any time from the
--------------------
Distribution Date through the fifteenth anniversary thereof, upon the written
request of NME that New Hillhaven register all or part of the Covered Common
Stock then held by NME or any affiliate of NME (which request shall satisfy the
requirements of paragraph (c) of this Section 1) under the Act, New Hillhaven
shall, subject in all cases to the provisions of paragraph (b) of this Section
1, thereupon cause the Covered Common Stock specified in such request to be so
registered.
(b) New Hillhaven's obligation to register all or part of the Covered
Common Stock pursuant to paragraph (a) of this Section 1 shall in all cases be
subject to the following limitations and qualifications:
(i) New Hillhaven shall not be obligated to file more than one
registration statement during any six-month period, or to file a
registration statement with respect to less than 100,000 shares of Covered
Common Stock, or to file a registration statement at any time if a special
audit of New Hillhaven would be required by the rules and regulations of
the Securities and Exchange Commission (the "Commission") in connection
therewith (for purposes of the preceding sentence, "special audit" shall
mean an audit other than a fiscal year-end audit, requiring an opinion of
New Hillhaven's independent public accountants); and
(ii) New Hillhaven shall be entitled to postpone for a reasonable
period of time not to exceed 90 days the filing of any registration
statement otherwise required to be prepared and filed by it if, at the time
it receives a request for registration, New Hillhaven determines, in its
reasonable judgment, that such registration would materially interfere with
any financing, acquisition, corporate reorganization or other material
transaction then being contemplated by its Board of Directors, involving
New Hillhaven or any of its affiliates (other than NME), and promptly gives
NME written notice of such determination and the reasons therefor. In such
event, NME shall have the right to withdraw the request for registration by
giving written notice to New Hillhaven within 30 days after receipt of the
notice of postponement (and, in the event of such withdrawal, such request
shall be ignored for purposes of determining the number of
20
registrations to which NME is entitled to have New Hillhaven pay all
out-of-pocket expenses pursuant to Section 4(a)).
(c) Any written request of NME made pursuant to paragraph (a) of this
Section 1 shall:
(i) specify the number of shares of Covered Common Stock which
NME or any affiliate of NME intends to offer and sell;
(ii) state the intention of NME or such affiliate to offer such
shares for sale;
(iii) describe the intended method of distribution of such shares;
and
(iv) contain an undertaking on the part of NME to provide all
such information and materials concerning NME or such affiliate and take
all such action as may be required on NME's part to permit New Hillhaven to
comply with all applicable requirements of the Commission and to obtain
acceleration of the effective date of the registration statement.
Section 2. Participation Registrations. (a) If, at any time from the
---------------------------
Distribution Date through the fifteenth anniversary thereof, New Hillhaven shall
propose to register under the Act an offering by New Hillhaven or any
stockholder(s) of New Hillhaven (other than NME) of any New Hillhaven
securities, it shall give written notice of such proposed registration to NME as
promptly as possible and shall, subject in all cases to paragraph (b) of this
Section 2, include in such registration (and offering if so requested by NME)
such number of shares of Covered Common Stock then owned by NME or any affiliate
of NME as NME shall request, within 10 days after the receipt of such notice.
(b) New Hillhaven's obligation to include Covered Common Stock owned by
NME or any affiliate of NME in any offering pursuant to paragraph (a) of this
Section 2 shall in all cases be subject to the following limitations and
qualifications:
(i) New Hillhaven shall not be required to give notice to NME or
include such shares in any such registration if the proposed registration
is (A) a registration of a stock option or compensation plan or of New
Hillhaven securities issued or issuable pursuant to any such plan or (B) a
registration of New Hillhaven securities proposed to be issued in exchange
for securities or assets of, or in connection with a merger or
consolidation with, another corporation;
21
(ii) New Hillhaven may, in its sole discretion and without the
consent of NME, withdraw such registration statement and abandon the
proposed offering in which NME had requested to participate; and
(iii) If the proposed registration is to be underwritten (whether
on a "best efforts" or a "firm commitment" basis), the managing underwriter
shall have the right to exclude shares of Covered Common Stock from such
registration if such underwriter advises New Hillhaven in writing that such
exclusion is necessary to avoid interfering with the successful marketing
of the underwritten portion of the offering, provided that (A) such
-------- ----
exclusion applies on a proportional basis not only to the shares of Covered
Common Stock but also to all other shares of New Hillhaven Common Stock
proposed to be included other than those for which New Hillhaven initiated
the registration and which are being sold by New Hillhaven and (B) in no
event shall any shares of Covered Common Stock be excluded if, following
such exclusion, the number of shares of Covered Common Stock included in
the registration would be less than 10% of the total number of shares of
New Hillhaven Common Stock covered by the registration.
(c) There shall be no limit on the number of registrations in which NME or
any affiliates of NME may participate pursuant to Section 2.
Section 3. Certain Covenants of New Hillhaven. (a) In connection
----------------------------------
with any registration of Covered Common Stock undertaken by New Hillhaven
pursuant to Section l and, if and to the extent appropriate, Xxxxxxx 0, Xxx
Xxxxxxxxx shall:
(i) prepare and file with the Commission a registration
statement with respect to such shares and use its best efforts to cause
such registration statement to become effective;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement current for such period not to exceed 90 days as NME shall
request and to comply with the provisions of the Act with respect to the
sale of all New Hillhaven Common Stock covered by such registration
statement during such period;
(iii) provide NME and its counsel a reasonable opportunity to
review and, in the case of registrations
22
effected pursuant to Section 1, approve prior to filing (A) any
registration statement filed by New Hillhaven in connection with a
registration effected pursuant to Section 1 or in which NME or any
affiliate is participating pursuant to Section 2 and (B) any amendment to
supplements to such registration statement and an prospectus used in
connection therewith;
(iv) furnish to NME and its counsel such of conformed copies of
such registration statement of each such amendment and supplement thereto
(in case including all exhibits), such number of copies the prospectus
included in such registration stat (including each preliminary prospectus
and prospectus supplement), in conformity with the requirements of the Act,
and such other documents as NME or its counsel may reasonably request in
order to facilitate the sale of the Covered Common Stock covered by such
registration statement;
(v) use its best efforts to register or qualify the Covered
Common Stock to which such registration statement relates under such other
securities or blue sky laws of such jurisdictions as NME or its counsel
shall reasonably request, and do any and all other acts and things which
may be reasonably necessary or advisable to enable NME to consummate the
sale in such jurisdictions of such shares; provided that New Hillhaven
--------
shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not
but for the requirements of this Paragraph (v) 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;
(vi) notify NME, at any time when a prospectus relating to the
Covered Common Stock to which such registration statement relates is
required to be delivered under the Securities Act, of New Hillhaven's
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 any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances
then existing, and at the request of NME promptly prepare and furnish to
NME a reasonable number of copies of a prospectus supplemented or amended
so that, as thereafter delivered to the purchasers of such shares, such
prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the
23
statements therein not misleading in light of the circumstances then
existing;
(vii) use its best efforts to cause all the Covered Common Stock
to which such registration statement relates to be listed on each
securities exchange on which such stock is then listed or, if there shall
then be no such listing, to be accepted for quotation on NASDAQ;
(viii) provide a transfer agent and registrar for the Covered
Common Stock to which such registration statement relates not later than
the effective date of such registration statement; and
(ix) enter into such agreements (including an underwriting
agreement in customary form) and take such other actions as NME reasonably
requests in order to expedite or facilitate the disposition of such shares;
provided that (A) in respect of a registration effected pursuant to
--------
Xxxxxxx 0, Xxx Xxxxxxxxx and NME shall each select one managing underwriter
(with NME determining which of such managing underwriters shall "run the
books") and (B) in respect of a registration in which NME or any affiliate
participates pursuant to Xxxxxxx 0, Xxx Xxxxxxxxx shall select the managing
underwriter or underwriters.
(b) For as long as NME or any affiliate of NME shall continue to hold
any Covered Common Stock, New Hillhaven shall use reasonable efforts to file, on
a timely basis, all annual, quarterly and other reports required to be filed by
it under Sections 13 and 15(d) of the Securities Exchange Act of 1934 and the
rules and regulations of the Commission thereunder, as amended from time to
time. In the event of any proposed sale of Covered Common Stock by NME or any
affiliate of NME pursuant to Rule 144 (or any successor rule) promulgated under
the Act, New Hillhaven shall cooperate with NME or such affiliate so as to
enable such sales to be made in accordance with applicable laws, rules and
regulations, the requirements of New Hillhaven's transfer agents, and the
reasonable requirements of the broker through which the sales are proposed to be
executed.
Section 4. Expenses. (a) New Hillhaven shall pay all out-of-pocket
--------
expenses incurred by it in connection with any three registrations of Covered
Common Stock pursuant to Section 1 which are designated by NME as a registration
with respect to which New Hillhaven's obligations in this sentence shall apply.
As to any other registrations of Covered Common Stock pursuant to Section 1, NME
or any transferee of Warrants from NME shall reimburse New Hillhaven for all its
out-of-pocket expenses in
24
connection therewith. For the purposes of this Section 4, out-of-pocket expenses
shall include, without limitation, all registration and filing fees, printing
expenses and expenses, fees and disbursements of New Hillhaven's legal counsel
and accountants, transfer agents' and registrars' fees, and expenses incidental
to any post-effective amendment to any such registration statement. For purposes
of this Section 4, "out-of-pocket expenses" shall not include salaries of New
Hillhaven employees or expenses attributable to New Hillhaven's corporate
overhead.
(b) In connection with any registration pursuant to Xxxxxxx 0, Xxx
Xxxxxxxxx shall pay all registration and filing fees, underwriting discounts,
commissions and expenses (other than those attributable to Covered Common Stock
proposed to be sold by NME or any affiliate of NME), printing expenses, fees and
disbursements of New Hillhaven's legal counsel and accountants, transfer agents'
and registrars' fees and expenses incidental to any post-effective amendment to
any such registration statement. NME shall pay all other out-of-pocket expenses
attributable to the inclusion in the registration of the Covered Common Stock
being registered on its behalf, including, without limitation, registration and
filing fees and underwriting discounts, commissions and expenses attributable
thereto and fees and disbursements of NME's legal counsel and accountants.
Section 5. Indemnification. (a) In the case of each registration
---------------
effected by New Hillhaven pursuant to Section 1 or Xxxxxxx 0, Xxx Xxxxxxxxx
agrees to indemnify and hold harmless NME, its affiliates, its officers and
directors, each underwriter of the Covered Common Stock so registered and each
person who controls any such underwriter within the meaning of Section 15 of the
Act, against any and all losses, claims, damages or liabilities to which they or
any of them may become subject under the Act or any other statute or common law,
including any amount paid in settlement of any litigation, commenced or
threatened, if such settlement is effected with the written consent of New
Hillhaven, which consent shall not be unreasonably withheld, and to reimburse
them for any legal or other expenses incurred by them in connection with
investigating any claims and defending any actions, insofar as any such losses,
claims, damages, liabilities or actions arise out of or are based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in the
registration statement relating to the sale of Covered Common Stock, or any
post-effective amendment thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) any untrue statement,or alleged untrue
statement of a material fact contained in any
25
preliminary prospectus, if used prior to the effective date of such registration
statement, or contained in the final prospectus (as amended or supplemented if
Hillhaven shall have filed with the Commission any amendment thereof or
supplement thereto) if used within the period during which New Hillhaven is
required to keep the registration statement to which such prospectus relates
current pursuant to the terms of Section 3(a) (ii), or the omission or alleged
omission to state therein (if so used) a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the indemnification agreement
-------- -------
contained in this paragraph (a) shall not (x) apply to such losses, claims,
damages, liabilities or actions arising out of, or based upon, any such untrue
statement or alleged untrue statement, or any such omission or alleged omission,
if such statement or omission was made in reliance upon and in conformity with
information furnished in writing to New Hillhaven by NME or such underwriter for
use in connection with the preparation of the registration statement, any
preliminary prospectus or final prospectus contained in the registration
statement, or any amendment or supplement thereto, or (y) inure to the benefit
of any underwriter or any person controlling such underwriter, if such
underwriter failed to send or give a copy of the final prospectus to the person
asserting the claim at or prior to the written confirmation of the sale of
Covered Common Stock to such person and if the untrue statement or omission
concerned had been corrected in such final prospectus.
(b) In the case of each registration effected by New Hillhaven
pursuant to Section 1 or Section 2, NME, any affiliate of NME participating in
any such registration and each underwriter of the Covered Common Stock to be
registered (each such party and such underwriters being referred to~severally in
this paragraph (b) as the "indemnifying party") shall agree in the same manner
and to the same extent as set forth in paragraph (a) of this Section 5 to
indemnify and hold harmless New Hillhaven, each person who controls Hillhaven,
the directors of New Hillhaven and those of its officers who shall have signed
any such registration statement, with respect to any untrue statement or alleged
untrue statement in, or omission or alleged omission from, such registration
statement or any post-effective amendment thereto or any preliminary prospectus
or final prospectus (as amended or as supplemented, if amended or supplemented
as aforesaid) contained in such registration statement, if such statement or
omission was made in reliance upon and in conformity with information furnished
in writing to New Hillhaven by such indemnifying party for use in connection
with the preparation of such registration statement or any
26
preliminary prospectus or final prospectus contained in such registration
statement Or any such amendment or supplement thereto.
(c) Each indemnified party shall, with reasonable promptness after
its receipt of written notice of the commencement of any action against such
indemnified party in respect of which indemnity may be sought from an
indemnifying party on account of an indemnity agreement contained in this
Section 5, notify the indemnifying party in writing of the commencement thereof.
In case any such action shall be brought against any indemnified party and it
shall so notify an Indemnifying party of the commencement thereof; the
indemnifying party shall be entitled to participate therein and, to the extent
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action
-------- -------
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there are likely to be
substantial legal defenses available to it and/or the other indemnified parties
which are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to assert such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and the approval of such counsel, the
indemnifying party shall (except as provided in the preceding sentence) not be
liable to such indemnified party under this Section 5 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. The indemnity
agreements in this Section 5 shall be in addition to any liabilities which the
indemnifying parties may have pursuant to law.
Section 6. Modification of Certain Registration Rights. If NME shall
-------------------------------------------
transfer to any entity other than in a public offering all or any part of (i)
the Covered Common Stock or (ii) the Warrants, the transferee of such Covered
Common Stock and/or Warrants shall be entitled to the same registration rights
as NME is entitled to under this Agreement unless the number of shares of New
Hillhaven Common Stock held by such transferee, or the number of shares of New
Hillhaven Common Stock issuable upon the exercise of Warrants held by such
transferee, is less than 100,000 shares; provided, however that New Hillhaven
-------- -------
shall not be obligated to effect in the aggregate more than three registrations
pursuant to Section 1 without reimbursement for its out-of-pocket expenses.
27
ARTICLE III
GENERAL
Section 1. Notices, etc. All notices, consents, requests,
------------
instructions, approvals and other communications hereunder shall be in writing
and shall be deemed to have been duly given, if delivered in person or by
courier, telegraphed, telexed or sent by facsimile transmission or mailed, by
certified or registered mail, postage prepaid at the following address (or at
such other address provided by one party to the other parties in writing):
If to NME:
National Medical Enterprises, Inc.
0000 Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Treasurer
Telecopy No.: (000) 000-0000
with a copy to:
National Medical Enterprises, Inc.
0000 Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
If to New Hillhaven:
The Hillhaven Corporation
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000-0000
Attention: President
Telecopy No.: (000) 000-0000
with a copy to:
The Hillhaven Corporation
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000-0000
Attention: General Counsel
Telecopy No.: (000) 000-0000
28
If to the Warrant Agent,
Manufacturers Hanover Trust Company
of California
00 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Corporate Trust Department
Section 2. Supplements and Amendments. New Hillhaven and the Warrant
--------------------------
Agent may from time to time supplement or amend Article I or Article III of this
Agreement without the approval of any holders of Warrant Certificates in order
to cure any ambiguity, to correct or supplement any provision contained therein
which may be defective or inconsistent with any provisions herein, or to make
any other provisions in regard to matters or questions arising thereunder which
New Hillhaven and the Warrant Agent may deem necessary or desirable and which
shall not adversely affect the interest of the holders of Warrant Certificates.
Article II of this Agreement may be supplemented or amended only by NME and New
Hillhaven.
Section 3. Successors and Assigns. This Agreement and all of the
----------------------
provisions hereof shall be binding upon and inure to the benefit of the parties
and their respective successors and permitted assigns.
Section 4. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of California.
Section 5. Assignment. This Agreement may not be assigned in whole
----------
or in part without the prior written consent of the parties hereto, provided
--------
that NME may assign its rights under Articles I and II of this Agreement.
Section 6. Titles and Headings. Titles and headings to sections
-------------------
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
Section 7. Entire Agreement. This Agreement sets forth the entire
----------------
agreement and understanding of the parties with respect to the transactions
contemplated hereby and supersedes all prior agreements, arrangements and
understandings relating to the subject matter hereof. No representation,
promise, inducement or statement of intention has been made by any party hereto
which is not embodied in this Agreement or the Exhibit hereto, or the written
statements or other documents delivered pursuant hereto, and no party hereto
shall be bound by or liable for
29
any alleged representation, promise, inducement or statement of intention not so
set forth.
Section 8. Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
NATIONAL MEDICAL ENTERPRISES,
INC.
By /s/ Xxxxxx X. Xxxxxx
---------------------------
Name: XXXXXX X. XXXXXX
Title: SENIOR VICE PRESIDENT
THE HILLHAVEN CORPORATION
By /s/ Xxxxxxxxxxx X. Xxxxxx
---------------------------
Name: XXXXXXXXXXX X. XXXXXX
Title: PRESIDENT
MANUFACTURERS HANOVER TRUST
COMPANY OF CALIFORNIA,
as Warrant Agent
By /s/ Xxxxx Xxxxx
---------------------------
Name XXXXX XXXXX
Title: ASSISTANT VICE PRESIDENT
30
Exhibit A
Form of Warrant Certificate
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT IN COMPLIANCE WITH
SAID ACT AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER AND APPLICABLE
STATE SECURITIES LAWS.
VOID AFTER JANUARY 31, 2000
This certificate represents __________ of an aggregate of 30,000,000 Warrants.
Warrant Certificate
THE HILLHAVEN CORPORATION
(a Nevada corporation)
THIS CERTIFIES THAT or registered assigns is the
registered owner of the number of Warrants set forth above, each of which
entitles the owner thereof to purchase at any time after January 31, 1990, and
prior to 5:00 P.M., Los Angeles time, January 31, 2000, at the principal office
of Manufacturers Hanover Trust Company of California, a California corporation
(the "Warrant Agent"), or its successor as Warrant Agent, in San Francisco,
California, one fully paid and nonassessable share of the Common Stock, par
value $0.15 ("New Hillhaven Common Stock"), of The Hillhaven Corporation, a
Nevada corporation ("New Hillhaven"), for each Warrant represented hereby at a
purchase price ("Purchase Price") of 125% of the fair market value of a share of
New Hillhaven Common Stock on the Distribution Date (as defined in the Agreement
hereinafter referred to), determined as provided in Section 6(b) of the
Agreement, upon presentation and surrender of this Warrant Certificate with the
Form of Election to Purchase duly executed, together with an amount equal to any
applicable transfer taxes. The number of Warrants evidenced by this Warrant
Certificate (and the number of shares of New Hillhaven Common Stock which may be
purchased upon exercise hereof) set forth above, and the Purchase Price per
share set forth above, are the number and Purchase Price as of the Distribution
Date, based on the shares of New Hillhaven Common Stock as constituted at such
date.
A-1
As provided in the Agreement, the Purchase Price and the number of
shares of New Hillhaven Common Stock which may be purchased upon the exercise of
the Warrants evidenced by this Warrant Certificate are, upon the happening of
certain events, subject to modification and adjustment.
This Warrant Certificate is subject to all of the terms, provisions and
conditions of a Warrant and Registration Rights Agreement dated as of January
31, 1990 (the "Agreement") among National Medical Enterprises, Inc., New
Hillhaven and the Warrant Agent, which Agreement is hereby incorporated herein
by reference and made a part hereof and to which Agreement reference is hereby
made for a full description of the rights, limitations of rights, obligations,
duties and immunities hereunder of the Warrant Agent, New Hillhaven and the
holders of the Warrant Certificates. Copies of the Agreement are on file at the
above-mentioned office of the Warrant Agent.
This Warrant Certificate, with or without other Warrant Certificates,
upon surrender at the principal office of the Warrant Agent, may be exchanged
for another Warrant Certificate or Warrant Certificates of like tenor and date
evidencing Warrants entitling the holder to purchase a like aggregate number of
shares of New Hillhaven Common Stock as the Warrants evidenced by the Warrant
Certificate or Warrant Certificates surrendered shall have entitled such holder
to purchase. If this Warrant Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Warrant Certificate
or Warrant Certificates for the number of whole Warrants not exercised.
No fractional shares of New Hillhaven Common Stock will be issued upon
the exercise of any Warrant or Warrants evidenced hereby, but in lieu thereof a
cash payment will be made, as provided in the Agreement.
No holder of this Warrant Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of New Hillhaven
Common Stock or of any other securities of New Hillhaven which may at any time
be issuable on the exercise or conversion hereof, nor shall anything contained
in the Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of New Hillhaven, any right to vote
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issue of stock, reclassification of stock, change of par value, consolidation,
merger, conveyance, or otherwise) or, except as provided in the Agreement, to
receive notice of meetings, or to receive dividends or subscription rights or
otherwise, until the Warrant or Warrants evidenced by this Warrant
A-2
Certificate shall have been exercised as provided in the Agreement.
This Warrant Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Warrant Agent.
IN WITNESS WHEREOF, a duly authorized officer of New Hillhaven has
executed this Warrant Certificate, and its Secretary or one of its Assistant
Secretaries has affixed its seal, this ___ day of ____ , 19___.
THE HILLHAVEN CORPORATION
By ______________________
Name:
Title:
ATTEST:
___________________________
Countersigned:
__________________________, as Warrant Agent
By _______________________
Authorized Signature
A-3
FORM OF ASSIGNMENT
[To be executed by the registered holder if such
holder desires to transfer this Warrant Certificate.)
FOR VALUE RECEIVED ___________________________________________________
hereby sells, assigns and transfers unto _______________________________________
(Please insert social Security of other identifying number)
________________________________________________________________________________
(PLEASE PRINT NAME AND ADDRESS OF TRANSFEREE)
________________________________________________________________________________
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
__________________________________ Attorney, to transfer the within Warrant
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: _______________________ 19
Signature__________________________________
Signature Guaranteed:
_________________________________
NOTICE
The signature to the foregoing Assignment must correspond to the name
as written upon the face of this Warrant Certificate in every particular,
without alteration or enlargement or any change whatsoever.
A-4
FORM OF ELECTION TO PURCHASE
(to be executed by the registered holder if such holder
desires to exercise this Warrant Certificate.)
THE HILLHAVEN CORPORATION:
The undersigned hereby irrevocably elects to exercise _____________________
Warrants represented by this Warrant Certificate to purchase the shares of New
Hillhaven Common Stock issuable upon the exercise of such Warrants and requests
that certificates for such shares be issued in the name of:
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
________________________________________________________________________________
(PLEASE PRINT NAME AN ADDRESS)
If such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, a new Warrant Certificate for the balance remaining of such
Warrants shall be registered in the name of and delivered to:
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
________________________________________________________________________________
(PLEASE PRINT NAME AND ADDRESS)
________________________________________________________________________________
Dated: ______________________________ 19
___________________________________
SIGNATURE
(THE SIGNATURE TO THE
FORGOING ELECTION MUST
CORRESPOND TO THE NAME AS
WRITTEN UPON THE FACE OF
THIS WARRANT CERTIFICATE
IN EVERY PARTICULAR
WHATSOEVER, WITHOUT
ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATSOEVER)
Signature Guaranteed:
___________________________________________________
A-5
