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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 15, 1999
GENESIS HEALTH VENTURES, INC.
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(Exact name of Registrant as specified in its charter)
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Pennsylvania 1-11666 06-1132947
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or Identification Number)
organization)
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101 East State Street
Kennett Square, Pennsylvania 19348
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (610) 444-6350
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Item 5. Other Events.
On November 15, 1999, Genesis Health Ventures, Inc. ("Genesis")
announced the closing of its transaction with The Cypress Group L.L.C.
("Cypress") and TPG Partners II, L.P. ("TPG") to restructure the Multicare joint
venture.
Background
In October 1997, Genesis, affiliates of Cypress, TPG and certain of its
affiliates and an affiliate of Nazem, Inc. ('Nazem") acquired all of the issued
and outstanding common stock of Genesis ElderCare Corp., a Delaware corporation.
Cypress, TPG and Nazem purchased 210,000, 199,500 and 10,500 shares of Genesis
ElderCare Corp. common stock, respectively, representing in the aggregate
approximately 56.4% of the issued and outstanding common stock of Genesis
ElderCare Corp., for an aggregate purchase price of $420 million. Genesis
purchased 325,000 shares of Genesis ElderCare Corp. common stock, representing
approximately 43.6% of the issued and outstanding common stock of Genesis
ElderCare Corp., for an aggregate purchase price of $325 million. Cypress, TPG
and Nazem are sometimes collectively referred to herein as the "Sponsors."
In connection with their investments in the common stock of Genesis
ElderCare Corp., Genesis, Cypress, TPG and Nazem entered into a stockholders
agreement dated as of October 9, 1997 (the "Multicare Stockholders Agreement"),
relating to their respective ownership interests in Genesis ElderCare Corp.
In October 1997, as a result of a tender offer and a merger
transaction, Genesis ElderCare Corp. acquired 100% of the outstanding shares of
common stock of The Multicare Companies, Inc. ("Multicare"), making Multicare a
wholly-owned subsidiary of Genesis ElderCare Corp.
On October 9, 1997, Genesis ElderCare Corp. and Genesis ElderCare
Network Services, Inc., a wholly-owned subsidiary of Genesis, entered into a
management agreement (the "Management Agreement") pursuant to which Genesis
ElderCare Network Services manages Multicare's operations.
Genesis, Cypress, TPG and Nazem also entered into an agreement, dated
as of October 9, 1997 (the "Put/Call Agreement").
Restructuring
On October 8, 1999, Genesis entered into a restructuring agreement
with Cypress, TPG and Nazem ( the "Restructuring Agreement") to restructure
their joint investment in Genesis ElderCare Corp., the parent company of
Multicare. The full text of the Restructuring Agreement is filed as Exhibit 2.1
to this report.
Amendment to Put/Call Agreement; Issuance of Preferred Stock
Pursuant to the Restructuring Agreement, the Put under the Put/Call
Agreement was terminated in exchange for:
o 24,369 shares of Genesis' Series H Senior Convertible
Participating Cumulative Preferred Stock, which was issued to
Cypress, TPG and Nazem, or their affiliated investment funds,
in proportion to their respective investments in Genesis
ElderCare Corp., and
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o 17,631 shares of Genesis' Series I Senior Convertible
Exchangeable Participating Cumulative Preferred Stock ,which
was issued to Cypress, TPG and Nazem, or their affiliated
investment funds, in proportion to their respective
investments in Genesis ElderCare Corp.
In connection with the restructuring transaction, the restrictions in
the Put/Call Agreement related to Genesis' right to take certain corporate
actions, including its ability to sell all or a portion of its pharmacy
business, were terminated. In addition, the Call under the Put/Call Agreement
was amended to provide Genesis with the right to purchase all of the shares of
common stock of Genesis ElderCare Corp. not owned by Genesis for two million
dollars in cash at any time prior to the 10th anniversary of the closing date of
the restructuring transaction. The full text of the Amended and Restated
Put/Call Agreement is filed as Exhibit 10.2 to this report.
Investment in Genesis
Each of Cypress and TPG invested, directly or through affiliated
investment funds, $25 million into Genesis in exchange for 6.25 million shares
of Genesis common stock and a ten year warrant to purchase one million shares of
Genesis common stock at an exercise price of $5.00 per share. In other words,
Cypress and TPG in the aggregate invested $50 million in Genesis for an
aggregate of 12.5 million shares of Genesis common stock and warrants to
purchase two million shares of Genesis common stock. The warrant certificate
establishing the terms and conditions of the warrants is filed as Exhibit 4.1 to
this report.
Registration Rights
Subject to limitations contained in the Restructuring Agreement, the
holders of the Genesis common stock, warrants, Series H Preferred Stock and
Series I Preferred Stock issued in connection with the restructuring transaction
and all securities issued or distributed in respect of these securities have the
right on five occasions to demand registration under the Securities Act of these
securities. Genesis is required to pay all registration expenses, subject to
limitations contained in the Restructuring Agreement. In addition, holders of
the Genesis common stock, warrants, Series H Preferred Stock and Series I
Preferred Stock issued in connection with the restructuring transaction and all
securities issued or distributed in respect of these securities have "piggyback"
registration rights under which they have the right to include these securities
in a registered offering of securities of Genesis effected on behalf of Genesis
or another selling shareholder, subject to reduction by the managing underwriter
of that offering, if any, if marketing factors so require.
Amendment to Stockholders Agreement
On November 15, 1999, the Multicare Stockholders Agreement was amended
to:
o provide that all shareholders will grant to Genesis an
irrevocable proxy to vote their shares of common stock of
Genesis ElderCare Corp. on all matters to be voted on by
shareholders, including the election of directors;
o provide that Genesis may appoint two-thirds of the members of
the Genesis ElderCare Corp. board of directors;
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o omit the requirement that specified significant actions
receive the approval of at least one designee of each of
Cypress, TPG and Genesis;
o permit Cypress, TPG and Nazem and their affiliates to sell
their Genesis ElderCare Corp. stock, subject to certain
limitations contained in the Amended and Restated Stockholders
Agreement;
o provide that Genesis may appoint 100% of the members of the
operating committee of the board of directors of Genesis
ElderCare Corp.; and
o eliminate all pre-emptive rights.
The full text of the Amended and Restated Stockholders Agreement is filed as
Exhibit 10.1 to this report.
Irrevocable Proxy
Cypress, TPG and Nazem and their affiliated investment funds gave to
Genesis an irrevocable power of attorney directing Genesis to cast for, against
or as an abstention in the same proportion as the other Genesis voting
securities are cast, the number of shares of securities of Genesis so that
Cypress, TPG and Nazem together will not have the right to vote more than 35% of
the total voting power of Genesis in connection with any vote 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. This power of
attorney will terminate upon the existence of the circumstances that would cause
the standstill to terminate as described below under "-- Standstill."
Directors of Genesis
Pursuant to the terms of the Series H Preferred Stock, Cypress and TPG,
acting jointly, or in the event that only one of Cypress and TPG then owns or
has the right to acquire Genesis common stock, Cypress or TPG, as applicable,
are entitled to designate a number of directors of Genesis representing at least
23% of the total number of directors constituting the full board of directors of
Genesis. However, for so long as the total number of directors constituting the
full board of directors of Genesis is nine or fewer, Cypress and/or TPG are only
entitled to designate two directors on the Genesis board of directors. Cypress
and TPG have this right to designate directors so long as they own any
combination of Genesis voting securities or securities convertible into Genesis
voting securities constituting more that 10% of Genesis' total voting power. For
this purpose, the Series I Preferred Stock and the non-voting common stock
issued upon conversion of the Series I Preferred Stock will be considered voting
securities.
Each committee of the Genesis board of directors will include at least
one director designated by Cypress and/or TPG unless applicable law or the rules
or regulations of the primary exchange or quotation system on which Genesis'
common stock is then listed or quoted prohibits the appointment of a Cypress
and/or TPG designated director to a particular committee.
For so long as Cypress and/or TPG have the right to designate directors
on the Genesis board of directors, Genesis shall not, without the consent of at
least two of the Cypress/TPG designated directors:
o enter into any transaction or series of transactions which
would constitute a change in control, as defined in the
Restructuring Agreement; or
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o engage in a "going private" transaction.
Pre-emptive Rights
As a result of the restructuring transaction, Cypress and TPG each have
a right, subject to the limitations contained in the Restructuring Agreement, to
participate in future offerings of any shares of, or securities exchangeable,
convertible or exercisable for any shares of, any class of Genesis' capital
stock. However, Cypress' and TPG's right to participate will not apply to the
following:
o sales of securities in underwritten public offerings;
o sales of warrants offered in connection with sales of debt
securities pursuant to Rule 144A of the Securities Act;
o the issuance of securities in exchange for assets or all of
the stock of another company;
o issuances and sales of securities to employees and directors
pursuant to benefit plans; and
o issuances and sales of securities in connection with joint
ventures or other strategic relationships relating to a
Healthcare Related Business, as such phrase is defined in the
Restructuring Agreement; provided that the securities issued
do not represent more than 5% of the total voting power of
Genesis.
Standstill
The Sponsors have agreed that neither they nor their affiliates will,
without Genesis' prior written consent, either alone or as part or a group,
acquire any voting securities of Genesis, except for the voting securities to be
issued in the restructuring transaction and pursuant to stock splits, stock
dividends or other distributions or offerings made available to holders of
Genesis voting securities generally. However, these restrictions will terminate
if:
o the Genesis board of directors approves a transaction with any
person which would result in that person:
o beneficially owning securities representing more than
35% of the total voting power of Genesis; or
o owning all or substantially all of Genesis' assets;
o any person, other than Genesis in the case of an exchange
offer, has commenced a tender or exchange offer for Genesis
voting securities or securities exchangeable, convertible or
exercisable for Genesis voting securities where all of these
voting securities represent more than 35% of the total voting
power of Genesis; or
o Cypress and TPG no longer have the right to designate
directors on the Genesis board of directors as described above
under "-- Directors of Genesis Upon the Consummation of the
Restructuring Transaction."
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Item 7. Financial Statements and Exhibits.
(a) Financial Statements
None.
(b) Pro Forma Financial Information
Pro forma financial information related to the Multicare restructuring
transaction is incorporated by reference from Genesis' Definitive Proxy
Statement filed with the Securities and Exchange Commission on October
13, 1999.
(c) Exhibits
2.1 Restructuring Agreement dated October 8, 1999 among The
Cypress Group L.L.C., TPG Partners II, L.P., Nazem, Inc.,
Genesis and the other signatories thereto.
3.1 Amendment to Genesis' Amended and Restated Articles of
Incorporation.
4.1 Certificate of Designations for Genesis' Series H Senior
Convertible Participating Cumulative Preferred Stock.
4.2 Certificate of Designations for Genesis' Series I Senior
Convertible Exchangeable Participating Cumulative Preferred
Stock.
4.3 Form of Warrant issued in connection with the Multicare
restructuring transaction.
10.1 Amended and Restated Stockholders Agreement dated November 15,
1999 by and among Genesis ElderCare Corp., The Cypress Group
L.L.C., TPG Partners II, L.P., Nazem, Inc., Genesis and the
other signatories thereto.
10.2 Amended and Restated Put/Call Agreement dated November 15,
1999 among The Cypress Group L.L.C., TPG Partners II, L.P.,
Nazem, Inc., Genesis and the other signatories thereto.
99.1 Press Release dated November 15, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENESIS HEALTH VENTURES, INC.
By:/s/ IRA C. GUBERNICK
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Vice President - Office of the Chairman
and Corporate Secretary
Date: November 29, 1999
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EXHIBITS INDEX
Exhibit No. Description
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2.1 Restructuring Agreement dated October 8, 1999 among The
Cypress Group L.L.C., TPG Partners II, L.P., Nazem, Inc.,
Genesis and the other signatories thereto.
3.1 Amendment to Genesis' Amended and Restated Articles of
Incorporation.
4.1 Certificate of Designations for Genesis' Series H Senior
Convertible Participating Cumulative Preferred Stock.
4.2 Certificate of Designations for Genesis' Series I Senior
Convertible Exchangeable Participating Cumulative
Preferred Stock.
4.3 Form of Warrant issued in connection with the Multicare
restructuring transaction.
10.1 Amended and Restated Stockholders Agreement dated November
15, 1999 by and among Genesis ElderCare Corp., The Cypress
Group L.L.C., TPG Partners II, L.P., Nazem, Inc., Genesis
and the other signatories thereto.
10.2 Amended and Restated Put/Call Agreement dated November 15,
1999 among The Cypress Group L.L.C., TPG Partners II,
L.P., Nazem, Inc., Genesis and the other signatories
thereto.
99.1 Press Release dated November 15, 1999.
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Exhibit 2.1
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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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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS.......................................................................................................1
1.1 Certain Defined Terms...............................................................................1
ARTICLE II
AMENDMENT OF PUT/CALL AGREEMENT...................................................................................6
2.1 Modification of Put/Call Agreement..................................................................6
2.2 Issuance of Preferred Securities....................................................................6
ARTICLE III
PURCHASE AND SALE OF GENESIS COMMON STOCKAND WARRANTS TO
PURCHASE GENESIS COMMON STOCK ....................................................................................7
3.1 Agreement to Purchase and Sell; Purchase Price......................................................7
ARTICLE IV
CLOSING...........................................................................................................7
4.1 Closing.............................................................................................7
4.2 Closing Obligations.................................................................................7
ARTICLE V
ADDITIONAL AGREEMENTS.............................................................................................9
5.1 Additional Voting Right.............................................................................9
5.2 Stockholders Agreement.............................................................................10
5.3 Irrevocable Proxy..................................................................................10
5.4 Pre-emptive Rights.................................................................................10
5.5 Standstill Obligations.............................................................................11
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF GENESIS........................................................................11
6.1 Organization and Good Standing.....................................................................11
6.2 Capitalization.....................................................................................12
6.3 Issuance of Securities.............................................................................12
6.4 Authority..........................................................................................13
6.5 No Conflicts.......................................................................................13
6.6 Required Filings; Consents and Approvals...........................................................13
6.7 SEC Filings; Financial Statements..................................................................13
6.8 Listing of Genesis Common Stock....................................................................14
6.9 Rights Plan........................................................................................14
6.10 Inapplicability of Antitakeover Statutes or Provisions............................................14
6.11 Compliance With Securities Law....................................................................15
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE SPONSORS...................................................................15
7.1 Organization and Good Standing.....................................................................15
7.2 Authority..........................................................................................15
7.3 No Conflicts.......................................................................................15
7.4 Required Filings; Consents and Approvals...........................................................16
7.5 Purchase for Investment............................................................................16
ARTICLE VIII
CONDITIONS TO CLOSING............................................................................................16
8.1 Conditions to Obligation of Each Party to Effect the Transactions..................................16
8.2 Conditions to Obligation of the Sponsors to Effect the Transactions................................17
8.3 Conditions to Obligation of Genesis to Effect the Transactions.....................................18
ARTICLE IX
COVENANTS OF GENESIS.............................................................................................19
9.1 Further Assurances.................................................................................19
9.2 Operation of Business; Certain Negative Covenants..................................................20
9.3 Stockholder Vote...................................................................................20
9.4 No Acts or Omissions...............................................................................20
9.5 Notice to Sponsors.................................................................................20
9.6 Public Announcements...............................................................................21
9.7 Reservation of Securities..........................................................................21
9.8 Certificates of Designations; Amendment to Articles................................................21
9.9 Disclosure.........................................................................................21
9.10 Fees and Expenses.................................................................................22
9.11 No Amendment......................................................................................22
9.12 Tax Treatment of Preferred Stock..................................................................22
9.13 Appointment of Sponsor Directors..................................................................22
ARTICLE X
COVENANTS OF THE SPONSORS........................................................................................22
10.1 Further Assurances................................................................................22
10.2 No Acts or Omissions..............................................................................23
10.3 Public Announcements..............................................................................23
10.4 Restriction on Sales..............................................................................23
ARTICLE XI
REGISTRATION RIGHTS..............................................................................................24
11.1 Incidental Registration...........................................................................24
11.2 Registration on Request...........................................................................25
11.3 Registration Procedures...........................................................................27
11.4 Indemnification...................................................................................30
ARTICLE XII
INDEMNIFICATION..................................................................................................33
12.2 Procedure for Indemnification.....................................................................33
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ARTICLE XIII
MISCELLANEOUS....................................................................................................35
13.1 Notices...........................................................................................35
13.2 Severability......................................................................................37
13.3 Entire Agreement..................................................................................37
13.4 Amendment and Modification........................................................................37
13.5 Termination.......................................................................................38
13.6 Assignment; Binding on Transferees................................................................38
13.7 Legend............................................................................................38
13.8 Governing Law.....................................................................................39
13.9 Headings..........................................................................................39
13.10 Counterparts.....................................................................................39
13.11 Submission to Jurisdiction; Waivers..............................................................39
13.12 WAIVERS OF JURY TRIAL...........................................................................S-1
EXHIBITS
Exhibit A - Form of Amended and Restated Put/Call Agreement
Exhibit B - Form of Certificate of Designations for Series H Senior Convertible
Participating Cumulative Preferred Stock
Exhibit C - Form of Certificate of Designations for Series I Senior Convertible
Participating Cumulative Preferred Stock
Exhibit D - Form of Warrant
Exhibit E - Form of Amended and Restated Stockholders Agreement
Exhibit F - Form of Irrevocable Proxy and Power of Attorney
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RESTRUCTURING AGREEMENT
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.
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"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.
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"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 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,
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operations, assets, liabilities (including contingent liabilities), financial
condition or results of operations of Genesis and its subsidiaries taken as a
whole.
"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
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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 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).
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"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.
"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 Simpson Thacher and Bartlett, 425 Lexington
Avenue, New York, New York.
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;
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(iii) the opinion of Blank Rome Comisky & McCauley LLP
described in Section 8.2(b) of this Agreement;
(iv) the officer's certificate described in Section 8.2(j)
of this Agreement;
(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;
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(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;
(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.
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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).
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
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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 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
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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 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.
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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
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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
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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, (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 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
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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 Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") 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 Comisky & McCauley 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
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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.
(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).
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(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.
(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,
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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
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.
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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 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.
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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.
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
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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.
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".
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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 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
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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 of 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.
(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 NonVoting 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'
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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 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
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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 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
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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;
(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;
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(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;
(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
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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.
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
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(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 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
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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. 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
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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 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
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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 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
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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 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
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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.
65 East 55th Street, 19th Floor
New York, NY 10022
Attention: William L. Spiegel
Telecopier: (212) 705-0199
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: William E. Curbow, Esq.
Telecopier: 212-455-2502
(ii) if to TPG, to:
TPG Partners II, L.P.
201 Main Street, Suite 2420
Fort Worth, TX 76102
Attention: Karl I. Peterson
Telecopier: 817-871-4010
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, NY 10006
Attention: Paul J. Shim, Esq.
Telecopier: 212-225-3999
(iii) if to Genesis, to:
Genesis Health Ventures, Inc.
101 East State Street
Kennett Square, PA 19348
Attention: Ira C. Gubernick, Esq.
Telecopier: 610-444-3365
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with a copy to:
Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, PA 19103
Attention: Stephen Luongo, Esq.
Telecopier: 215-569-5555
(iv) if to Nazem, to:
Nazem, Inc.
645 Madison Avenue
New York, New York 10022
Attention: Fred Nazem
Telecopier: 212-371-2150
with a copy to:
Bartoma Corporation, N.V.
Fokkerweg 26
Suite 12
Curacao, Netherlands Antilles
Attention: Marleen Janssen
Telecopier: 5999-465-39-07
(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
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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.
(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 lenders.
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
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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.
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 sue in any
other jurisdiction.
[The next page is numbered S-1.]
39
<PAGE>
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:______________________________
Name:
Title:
TPG PARTNERS II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By:______________________________
Name:
Title:
NAZEM, INC.
By:______________________________
Name:
Title:
GENESIS HEALTH VENTURES, INC.
By:______________________________
Name:
Title:
S-1
<PAGE>
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: __________________________________
Name:
Title:
CYPRESS OFFSHORE PARTNERS, L.P.
By: Cypress Associates L.P.
By: The Cypress Group L.L.C.
By: __________________________________
Name:
Title:
Affiliates of TPG PARTNERS II, L.P.
TPG PARALLEL II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By: __________________________________
Name:
Title:
TPG INVESTORS II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By: __________________________________
Name:
Title:
S-2
<PAGE>
TPG MC COINVESTMENT, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By: __________________________________
Name:
Title:
Affiliate of Nazem
GENESIS ELDERCARE PORTFOLIO K. LP
By Healthworth Associates I, L.L.C.
By: __________________________________
Name:
Title:
S-3
<PAGE>
EXHIBIT 3.1
Microfilm Number_____________ Filed with the Department of State on ___________
Entity Number________________ _______________________________________________
Secretary of the Commonwealth
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (Rev 90)
In compliance with the requirements of 15 Pa.C.S. ss. 1915 (relating to
articles of amendment), the undersigned business corporation, desiring to amend
its Articles, hereby states that:
1. The name of the corporation is: Genesis Health Ventures, Inc.
-------------------------------------------
___________________________________________________________________________
2. The (a) address of this corporation's current registered office in this
Commonwealth or (b) name of its commercial registered office provider and
the county of venue is (the Department is hereby authorized to correct the
following information to conform to the records of the Department):
(a) 148 West State Street Kennett Square PA 19348
----------------------------------------------------------------------
Number and Street City State Zip County
(b) c/o:__________________________________________________________________
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office provider,
the county in (b) shall be deemed the county in which the corporation is
located for venue and official publication purposes.
3. The statute by or under which it was incorporated is:
Act of May 5, 1933 (P.L. 364), as amended
-----------------------------------------------
4. The date of its incorporation is: May 16, 1985
------------------------------------------
5. (Check, and if appropriate complete, one of the following):
__X__ The amendment shall be effective upon filing these Articles of
Amendment in the Department of State.
_____ The amendment shall be effective on:_____________ at ________________
Date Hour
6. (Check one of the following):
__X__ The amendment was adopted by the shareholders (or members) pursuant to
15 Pa.C.S. ss. 1914(a) and (b).
_____ The amendment was adopted by the board of directors pursuant to 15
Pa.C.S. ss. 1914(c).
7. (Check, and if appropriate complete, one of the following):
<PAGE>
_____ The amendment adopted by the corporation, set forth in full, is as
follows:
____________________________________________________________________
__X__ The amendment adopted by the corporation is set forth in full in
Exhibit A attached hereto and made a part hereof.
DSCB:15-1915 (Rev 90)-2
8. (Check if the amendment restates the Articles):
_____ The restated Articles of Incorporation supersede the original Articles
and all amendments thereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer thereof this
11th day of November, 1999.
Genesis Health Ventures, Inc.
BY: /s/ Ira C. Gubernick
---------------------------------------
IRA C. GUBERNICK
TITLE: Vice President - Office of the
Chairman & Secretary
EXHIBIT A
Article 2 of the Articles of Incorporation of Genesis Health Ventures, Inc.
should be amended and restated to read in full as follows:
2. The location and address of the registered office of the corporation
is 101 East State Street, Kennett Square, Pennsylvania, 19348.
Article 5 of the Articles of Incorporation of Genesis Health Ventures, Inc.
should be amended and restated to read in full as follows:
5. The aggregate number of shares which the corporation shall have
authority to issue is two hundred and fifty million (250,000,000) shares,
consisting of (a) two hundred million (200,000,000) shares of common stock, par
value $.02 per share, as more fully described in this Article 5, (b) forty-five
million (45,000,000) shares of non-voting common stock, par value $.02 per
share, as more fully described in this Article 5, and (c) five million
(5,000,000) shares of preferred stock, as more fully described in Article 6
below.
Except as otherwise provided below in this Article 5, all shares of
common stock and non-voting common stock shall be identical and shall entitle
the holders thereof to the same rights and privileges.
Except as otherwise required by law or as otherwise provided herein, on
all matters submitted to the corporation's shareholders, (i) the holders of
common stock will be entitled to one vote per share and (ii) the holders of
non-voting common stock will have no right to vote.
When and as dividends are declared thereof, whether payable in cash,
property or securities of the corporation, the
<PAGE>
holders of common stock and the holders of non-voting common stock will be
entitled to share equally, share for share, in such dividends, provided, that if
dividends are declared which are payable in shares of common stock or non-voting
common stock, dividends will be declared which are payable at the same rate on
each of the common stock and the non-voting common stock, and the dividends
payable in shares of common stock will be payable to holders of common stock,
and the dividends payable in shares of non-voting common stock will be payable
to holders of non-voting common stock.
If the corporation in any manner subdivides, splits or combines the
outstanding shares of common stock or non-voting common stock, the outstanding
shares of the other will be proportionally subdivided, split or combined. In the
case of any other capital reorganization of the corporation, or any
reclassification or recapitalization of the capital stock of the corporation, or
any consolidation or merger of the corporation with or into another entity, or
any sale or conveyance of all or substantially all of the assets of the
corporation, or any other transaction where in any of such cases shares of stock
or other securities or property are to be received or distributed to holders of
common stock and non-voting common stock, the holders of common stock and
non-voting common stock shall participate proportionately with all other shares
of common stock and non-voting common stock.
In the event of the dissolution, liquidation or winding up of the
corporation, whether voluntary or involuntary, after payment or provision for
payment of the debts and other liabilities of the corporation and the
preferential amounts required to be paid to the holders of preferred stock, each
share of common stock and each share of non-voting common stock shall be
entitled to share ratably with all other shares of common stock and non-voting
common stock in the remaining net assets of the corporation.
<PAGE>
EXHIBIT 4.1
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 24,369; 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
<PAGE>
Series H Preferred Stock
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 Accumulation Rate.
(b) Prior to the fifth anniversary of the Issue Date (as defined
below), dividends (including accumulated and unpaid dividends) shall be payable
in shares of Series I Preferred Stock. On and after the fifth anniversary of the
Issue Date, dividends (including accumulated 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 November 15, 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
2
<PAGE>
Series H Preferred Stock
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 accumulated 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
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 accumulated and unpaid dividends for any past
Dividend Period may be declared and paid as a dividend (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 accumulate, 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 accumulate 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 accumulated 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
3
<PAGE>
Series H Preferred Stock
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
(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,
4
<PAGE>
Series H Preferred Stock
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
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 the fifth
anniversary of the Issue Date 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 accumulated and unpaid dividends payable in
cash as provided in Section 3(b) (i.e., dividends payable on and after the fifth
anniversary of the Issue Date 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.
5
<PAGE>
Series H 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 accumulated and
unpaid dividends payable in cash as provided in Section 3(b) (i.e., dividends
payable on and after the fifth anniversary of the Issue Date 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 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
6
<PAGE>
Series H Preferred Stock
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 accumulated 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 accumulated and unpaid dividends from and including the most
recent Dividend Payment Date 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
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<PAGE>
Series H Preferred Stock
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 accumulated 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 accumulated and unpaid dividends
for the period from and 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 accumulated and unpaid dividends for the period from and
including the most recent Dividend Payment Date through and including the date
of redemption.
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<PAGE>
Series H Preferred Stock
(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 accumulate 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.
(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 one 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.
9
<PAGE>
Series H Preferred Stock
(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 accumulated 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 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
10
<PAGE>
Series H Preferred Stock
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 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.
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<PAGE>
Series H Preferred Stock
(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 accumulated interest or accumulated
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,
(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
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<PAGE>
Series H Preferred Stock
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.
(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
13
<PAGE>
Series H Preferred Stock
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 Non-Voting 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.
(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
14
<PAGE>
Series H Preferred Stock
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 bill 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.
(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
15
<PAGE>
Series H Preferred Stock
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 accumulated 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
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
16
<PAGE>
Series H Preferred Stock
entitled to any distribution in the event of the liquidation, winding-up or
dissolution of the Company.
(b) For the purposes of this Section 7, none 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, shall not be reissued as shares of Series H Preferred Stock and shall
(upon compliance with any applicable provisions of the
17
<PAGE>
Series H Preferred Stock
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:
"Accumulation Rate" means 5.00%; provided, that the then effective
Accumulation Rate shall increase by 0.50% on November 15th of each year
beginning on November 15, 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 Accumulation 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
18
<PAGE>
Series H Preferred Stock
plans, provided, that such shares are issued for consideration equal to or
greater than the fair value thereof on the date of award.
"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 accumulated 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.
19
<PAGE>
Series H Preferred Stock
"Public Debt" means obligations evidenced by bonds, notes, debentures
or other similar instruments issued in an underwritten public offering
registered 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 24,369 shares of Series H Senior Convertible
Participating Cumulative Preferred Stock has been initially authorized by the
Board of Directors of said Company.
20
<PAGE>
Series H Preferred Stock
In Witness Whereof, the Company has caused this Certificate of
Designation to be signed and acknowledged by Michael R. Walker, and its
corporate seal to be hereunto affixed and attested by Ira C. Gubernick, this the
11th day of November, 1999.
Genesis Health Ventures, Inc.
/s/ Michael R. Walker
By:________________________________
Name: Michael R. Walker
Title: Chairman of the Board and
Chief Executive Officer
[CORPORATE SEAL]
Attest:
/s/ Ira C. Gubernick
By:______________________________
Name: Ira C. Gubernick
Title: Vice President - Office of
the Chairman and
Corporate Secretary
21
<PAGE>
Exhibit 4.2
GENESIS HEALTH VENTURES, INC.
CERTIFICATE OF DESIGNATION OF SERIES I SENIOR
CONVERTIBLE EXCHANGEABLE 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 I SENIOR CONVERTIBLE EXCHANGEABLE
PARTICIPATING CUMULATIVE PREFERRED STOCK
Section 1. Designation and Amount.
The shares of such series shall be designated as "Series I Senior
Convertible Exchangeable Participating Cumulative Preferred Stock" (the "Series
I Preferred Stock"), and the number of shares constituting the Series I
Preferred Stock shall be 17,631; provided, that the number of shares
constituting the Series I Preferred Stock shall be increased from time to time
as necessary for the issuance of additional shares of Series I Preferred Stock
as dividends upon the Company's Series H Senior Convertible Participating
Cumulative Preferred Stock (the "Series H 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 I 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 I Preferred Stock
as to dividend rights and rights on liquidation, winding-up and dissolution
(collectively, the "Junior Securities"). The Series I Preferred Stock shall,
with respect to dividend rights and rights on liquidation, winding-up and
dissolution, rank on a parity with the Series H 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 I 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
<PAGE>
Series I Preferred Stock
Junior Securities. The Series I 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 I 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 I Preferred Stock shall be entitled
to receive with respect to each share of Series I 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
in cash 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 Accumulation Rate.
(b) 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 I
Preferred Stock which is at least seven days after the issuance thereof. For
shares of Series I Preferred Stock issued on November 15, 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 I 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 accumulated and unpaid dividends) payable
on Series I 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 I 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
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
2
<PAGE>
Series I Preferred Stock
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 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(c).
(c) An amount equal to accumulated and unpaid dividends for any past
Dividend Period may be declared and paid as a dividend 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 I
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.
(d) Dividends on the Series I Preferred Stock will accumulate, 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 accumulate in respect of Series I Preferred Stock on the date of the
conversion, redemption or exchange thereof.
(e) Dividends paid on the shares of Series I Preferred Stock in an
amount less than the total amount of such dividends at the time accumulated 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(b).
(f) As long as any Series I 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 full cumulative dividends
accumulating from and after the fifth anniversary of the Issue Date on all
outstanding shares of Series I 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 I Preferred Stock.
(g) As long as any Series I Preferred Stock is outstanding, no shares
of any Junior Securities may be purchased, redeemed or otherwise acquired by the
Company or any of its
3
<PAGE>
Series I Preferred Stock
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 (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.
(h) As long as any Series I 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 I 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 I Preferred Stock and the liquidation preference per
share of such other outstanding shares of Parity Securities bear to each other.
(i) As long as any Series I 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 I 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 I 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 I Preferred
Stock and the liquidation preference per share of such other outstanding shares
of Parity Securities bear to each other.
(j) 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 I
Preferred Stock, to share therein according to their respective interests.
Section 4. Voting Rights.
4
<PAGE>
Series I Preferred Stock
(a) The holders of the Series I Preferred Stock shall have no voting
rights other than as set forth in this Section 4 or otherwise provided by law.
Holders of the Series I Preferred Stock shall be entitled to vote as a separate
class on matters as to which the Pennsylvania Law requires a separate class vote
of the Series I 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 I Preferred
Stock or (ii) dividends on shares of Series I Preferred Stock have not been paid
in full in cash for four consecutive fiscal quarters except to the extent that
the terms of the Company's then existing indebtedness under bank credit
facilities or Public Debt prohibits the payment of such dividends in cash,
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
accumulated and unpaid dividends payable in cash, whether or not declared, on
the outstanding shares of Series I Preferred Stock shall have been paid in full
in cash or declared and cash set apart for the payment thereof (except to the
extent that the terms of the Company's then existing indebtedness under bank
credit facilities or Public Debt prohibits the payment of such dividends in
cash), the number of directors then constituting the Board of Directors shall be
increased by two and the holders of shares of Series I Preferred Stock and, to
the extent that the Series H 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 H Preferred Stock, Series H 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 I Preferred Stock and Series H
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, 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 I
Preferred Stock and Series H 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 H 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 accumulated and unpaid dividends
payable in cash, whether or not declared, on the outstanding shares of Series I
Preferred Stock shall have been paid in full in cash or declared and cash set
apart for the payment thereof (except to the extent that the terms of the
Company's then existing indebtedness under bank credit facilities or Public Debt
prohibits the payment of such dividends in cash), then, subject to any right to
elect additional directors pursuant to Section 4(b) of the Certificate of
Designations relating to the Series H Preferred Stock, the right of the holders
of the Series I Preferred Stock and Series H 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 I
Preferred Stock and Series H 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 I Preferred Stock and
Series H
5
<PAGE>
Series I Preferred Stock
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 I Preferred Stock and
Series H 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 I Preferred Stock and Series H Preferred Stock then
outstanding addressed to the Secretary of the Company shall, call a special
meeting of the holders of Series I Preferred Stock and Series H 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 I Preferred Stock
and Series H 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 I Preferred Stock and
Series H 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 I 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 I Preferred Stock and Series H 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 I
Preferred Stock or Series H Preferred Stock or issue any additional
shares of Series I Preferred Stock or Series H Preferred Stock, other
than as contemplated by the terms of the Series I Preferred Stock or
the Series H Preferred Stock;
(ii) amend or modify the relative rights, preferences and
limitations of the Series I Preferred Stock or Series H 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 I Preferred Stock or Series H
Preferred Stock or otherwise affect adversely the relative rights,
preferences and limitations of the Series I Preferred Stock or Series H
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 I Preferred Stock (other than preferred
stock with an aggregate liquidation preference and accumulated and
unpaid dividends not exceeding $75 million at any time outstanding
ranking on a parity with the Series I 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,
6
<PAGE>
Series I Preferred Stock
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 I 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 accumulated and unpaid dividends from and including the most
recent Dividend Payment Date and (y) the Fair Market Value of the
consideration the holder of such share of Series I Preferred Stock
would be entitled to receive in respect of such share if such holder
were to convert such share into the Company's Non-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), 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) (but not including, for purposes of
this clause (i), TPG, Cypress and any investment funds under common
control with TPG or Cypress, individually or in the aggregate),
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.
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<PAGE>
Series I Preferred Stock
Section 5. Redemption.
(a) The Series I Preferred Stock shall not be redeemable except as
provided in this Section 5. At any time on or after the twelfth anniversary of
the Issue Date, the Series I Preferred Stock shall, to the extent that the
Company shall have funds legally available therefore, be redeemable in whole or
in part at the option of the holders of the Series I Preferred Stock at a
redemption price per share in cash equal to the then effective Liquidation
Preference plus accumulated and unpaid dividends for the period from and
including the most recent Dividend Payment Date through and including the date
of redemption.
(b) If any holder of Series I Preferred Stock desires to exercise such
holder's redemption right pursuant to Section 5(a) hereof, such holder shall
give written notice to the Company stating such holder's election and specifying
the number of shares to be redeemed pursuant to Section 5(a) hereof. Within 10
days after the receipt of such notice, the Company shall give written notice
(the "Redemption Notice") to such holder, by first-class mail, postage prepaid,
at such holder's address as it appears on the records of the Company,
(i) notifying such holder of the date fixed for redemption
(which shall not be later than 30 days after the receipt by the Company
of the Redemption Notice);
(ii) stating that the Series I 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 I 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 I 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 accumulate 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.
(c) The Company shall appoint one or more Redemption Agents. All funds
necessary for 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 I Preferred Stock entitled thereto, so
as to be and continue to be available therefor.
(d) If a Redemption Notice shall have been given as hereinbefore
provided, then each holder of Series I Preferred Stock shall be entitled to all
relative rights, preferences and
8
<PAGE>
Series I Preferred Stock
limitations accorded to holders of the Series I Preferred Stock until and
including the date of redemption. Provided that the Company shall have complied
with its obligations pursuant to Sections 5(b) and 5(c), from and after the date
of redemption, Series I 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. Upon redemption
of only a portion of the number of shares covered by a certificate representing
shares of Series I Preferred Stock surrendered for redemption, the Company shall
issue and deliver to or upon the written order of the holder of the certificate
so surrendered for redemption, at the expense of the Company, a new certificate
covering the number of shares of Series I Preferred Stock as to which redemption
was not elected.
(e) 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 I 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 I Preferred Stock shall have the right at
such holder's option to convert such share of Series I Preferred Stock into
fully paid and nonassessable shares of Non-Voting Common Stock, in each case, at
the Conversion Price in effect on the date of conversion. The right to convert
any shares of Series I Preferred Stock as to which a Redemption Notice or an
Exchange Notice has been delivered shall terminate at the close of business on
the Business Day prior to the date fixed for redemption or exchange, as the case
may be.
(b) Each share of Series I Preferred Stock shall be converted into a
number of shares of Non-Voting Common Stock determined by dividing (i) the sum
of the Liquidation Preference on the date of conversion plus accumulated 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 I Preferred Stock may exercise
the conversion right specified in Section 6(a) by surrendering to the Company or
its transfer agent for the Series I Preferred Stock the certificate or
certificates for the shares to be converted, accompanied by written notice
specifying the 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
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<PAGE>
Series I Preferred Stock
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 Non-Voting Common Stock to which
such holder is entitled and a check or cash with respect to any fractional
interest in a share of Non-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 Non-Voting Common Stock are to be
issued shall be deemed to have become a holder of record of such Non-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 I 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 I
Preferred Stock representing the unconverted portion of the certificate so
surrendered.
(e) No fractional shares of Non-Voting Common Stock shall be issued
upon conversion of shares of Series I Preferred Stock. If more than one share of
Series I Preferred Stock shall be surrendered for conversion at any one time by
the same holder, the number of full shares of NonVoting Common Stock issuable
upon conversion thereof shall be computed on the basis of the aggregate number
of shares of Series I Preferred Stock so surrendered. Instead of any fractional
shares of Non-Voting Common Stock that would otherwise be issuable upon
conversion of any shares of Series I 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.
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<PAGE>
Series I Preferred Stock
(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 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 Non-Voting 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 not have 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 accumulated interest or accumulated
dividends), plus the
11
<PAGE>
Series I Preferred Stock
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,
(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
12
<PAGE>
Series I Preferred Stock
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 I Preferred Stock surrendered for conversion
after such date shall be entitled to receive the number of shares of Common
Stock which such holder would have owned or been entitled to receive had such
Series I 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.
(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 Non-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 Voting 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 H 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 I
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.
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<PAGE>
Series I Preferred Stock
(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 I 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
Non-Voting Common Stock issuable (immediately prior to the time of such
consolidation, merger, sale, lease or conveyance) upon conversion of such share
of Series I 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 I 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 I Preferred Stock.
(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 I 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 bill 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 I 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 I
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 I Preferred Stock, in the manner set forth in
14
<PAGE>
Series I Preferred Stock
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 I 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
Non-Voting Common Stock upon conversion of any shares of Series I 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 I Preferred Stock in respect of which such shares are being
issued.
(k) Reservation of Shares. The Company shall reserve at all times so
long as any shares of Series I 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 I Preferred Stock, sufficient shares of Non-Voting
Common Stock to provide for the conversion of all outstanding shares of Series I
Preferred Stock.
(l) Approvals. If any shares of Non-Voting Common Stock to be reserved
for the purpose of conversion of shares of Series I 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 Non-Voting Common Stock into which the shares of Series I 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 Non-Voting Common
Stock issuable upon conversion.
(m) Valid Issuance. All shares of Non-Voting Common Stock which may be
issued upon conversion of the shares of Series I 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
15
<PAGE>
Series I Preferred Stock
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 Non-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
I 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 I Preferred Stock on liquidation, and before any
distribution to holders of any shares of the Company that are junior and
subordinate to the Series I 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 I Preferred Stock the greater of
(i) the then effective Liquidation Preference per share of Series I Preferred
Stock plus accumulated 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 I Preferred Stock if the shares of Series I Preferred Stock had been
converted into shares of Non-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 I 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 I Preferred Stock and of all other Parity Securities, the holders of
Series I Preferred Stock and all other Parity Securities shall share ratably in
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 I
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 I
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 Section 7, none 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. Exchange.
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<PAGE>
Series I Preferred Stock
(a) The Company shall have the right to exchange the Series I Preferred
Stock, in whole or in part, at any time, for Series H Preferred Stock. The
number of shares of Series H Preferred Stock to be issued in exchange for each
share of Series I Preferred Stock shall equal the then effective Liquidation
Preference of a share of Series I Preferred Stock to be exchanged plus
accumulated and unpaid dividends from and including the most recent Dividend
Payment Date through and including the date of exchange, divided by the then
effective Liquidation Preference per share of the Series H Preferred Stock,
rounded up or down to the nearest full share after taking into account all
shares of Series I Preferred Stock owned by the holder thereof; provided, that
if such quotient shall result in one-half of a share of Series H Preferred
Stock, it shall be rounded up.
(b) A notice of the Company's intent to exchange any shares of Series I
Preferred Stock (the "Exchange Notice") shall be sent by or on behalf of the
Company, by first class mail, postage prepaid, to each applicable holder of
record at such holder's address as it shall appear on the records of the
Company, not less than 30 days or more than 120 days prior to the date fixed for
exchange,
(i) notifying such holder of the election of the Company to
exchange such shares and of the date fixed for exchange;
(ii) stating the number of shares of Series I Preferred Stock
held by such holder that the Company intends to exchange;
(iii) stating the place or places at which the shares called
for exchange shall, upon presentation and surrender of the certificates
evidencing such shares, be exchanged, and the number of shares of
Series H Preferred Stock to be issued in exchange therefor; and
(iv) stating that dividends shall cease to accumulate on the
date of exchange.
(c) On or before the date fixed for exchange, each holder of Series I
Preferred Stock called for exchange shall surrender a certificate or
certificates representing at least the number of shares of Series I Preferred
Stock owned by such holder called for exchange, in the manner and at the place
designated in the Exchange Notice. As promptly as practicable after the date
fixed for exchange, the Company shall issue and deliver to or upon the written
order of such holder a certificate or certificates for the number of shares of
Series H Preferred Stock to which such holder is entitled. Such shares of Series
H Preferred Stock will thereupon be duly authorized, validly issued, fully paid
and nonassessable.
(d) The person in whose name the certificate or certificates for Series
H Preferred Stock are to be issued shall be deemed to have become a holder of
record of such Series H Preferred Stock immediately prior to the close of
business on the date fixed for exchange. Upon exchange of only a portion of the
number of shares covered by a certificate representing shares of
17
<PAGE>
Series I Preferred Stock
Series I Preferred Stock surrendered for exchange, the Company shall issue and
deliver to or upon the written order of the holder of the certificate so
surrendered for exchange, at the expense of the Company, a new certificate
covering the number of shares of Series I Preferred Stock representing the
unexchanged portion of the certificates so surrendered.
(e) If an Exchange Notice shall have been given as hereinafter
provided, then each holder of Series I Preferred Stock called for exchange
shall, with respect to such shares, be entitled to all relative rights,
preferences and limitations accorded to holders of the Series I Preferred Stock
until and including the date of exchange. From and after the date of exchange,
Series I Preferred Stock called for exchange 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 to receive shares of
Series H Preferred Stock.
Section 9. Re-issuance. Series I Preferred Stock that has been issued
and reacquired in any manner, including shares purchased, exchanged or
converted, shall not be reissued as shares of Series I 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 I Preferred Stock
issued in accordance with Section 1).
Section 10. Definitions.
For the purposes hereof, the following definitions shall apply:
"Accumulation Rate" means 5.00%; provided, that the then effective
Accumulation Rate shall increase by 0.50% on November 15th of each year
beginning on November 15, 2004 up to a maximum of 8.50%; provided, further, that
in the event that on any Dividend Payment Date occurring on or after the 2nd
anniversary of the Issue Date the exchange by the Company of any shares of
Series I Preferred Stock held by (A) Cypress Merchant Banking Partners, L.P.
("Cypress"), TPG Partners II, L.P. ("TPG") or any investment funds under common
control with Cypress or TPG or (B) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) for shares of
Series H Preferred Stock would not result in Cypress, TPG and such investment
funds or any such "person," respectively, beneficially owning Voting Stock of
the Company or securities convertible into or exercisable for Voting Stock of
the Company where all such Voting Stock represents more than 49% of the total
Voting Stock of the Company, the Accumulation Rate for all shares of Series I
Preferred Stock held by Cypress, TPG and such investment funds or any such
"person," respectively, shall be increased to the then effective Accumulation
Rate plus 8.00%; provided, further, that if at any time the Company shall be in
default of its obligation to redeem any shares of the Series I Preferred Stock,
the then effective Accumulation Rate shall be further increased by 2.00%.
Notwithstanding the foregoing, if, and for so long as, at any time on or after
the 3rd anniversary of the Issue Date, (i) there are no shares of Series H
Preferred Stock outstanding and (ii) the exchange of any shares of
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Series I Preferred Stock
Series I Preferred Stock held by Cypress, TPG and such investment funds or any
"person" for Series H Preferred Stock would result in Cypress, TPG and such
investment funds or any such "person," respectively, beneficially owning Voting
Stock of the Company or Securities convertible or exercisable for Voting Stock
of the Company where all such Voting Stock represents more than 49% of the total
Voting Stock of the Company, the Accumulation Rate for all shares of Series I
Preferred Stock held by Cypress, TPG and such investment funds or any such
"person", respectively, shall be 0.00%. For purposes of clause (i), shares of
Series H Preferred Stock called for redemption pursuant to Section 5 of the
certificate of designations relating to the Series H Preferred Stock shall not
be considered outstanding after the date fixed for redemption for such shares;
provided, and for so long as, the Company shall have complied in all material
respects with its obligations in connection with such redemption.
"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 I
Preferred Stock on the last day of such Dividend Period, divided by (b) the
Liquidation Preference of a share of Series I 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 Non-Voting Common Stock
used to determine the number of shares of Non-Voting Common Stock deliverable
upon conversion of a share of the Series I Preferred Stock, which price shall
initially be $8.75 per share, subject to adjustment in accordance with the
provisions of Section 6.
"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 Non-Voting Common Stock issued or
reserved for issuance by the Company (a) as a stock dividend payable in shares
of Non-Voting Common Stock, (b) upon any subdivision or split-up of the
outstanding shares of Non-Voting Common Stock or (c) upon conversion of shares
of Series I Preferred Stock.
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Series I Preferred Stock
"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 I Preferred Stock, plus accumulated 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, if 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 the such
security is not so quoted, the average of the closing bid and asked price of the
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.
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Series I Preferred Stock
"Public Debt" means obligations evidenced by bonds, notes, debentures
or other similar instruments issued in an underwritten public offering requested
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 I 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 17,631 shares of Series I Senior Convertible
Exchangeable Participating Cumulative Preferred Stock has been initially
authorized by the Board of Directors of said Company.
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Series I Preferred Stock
In Witness Whereof, the Company has caused this Certificate of
Designation to be signed and acknowledged by Michael R. Walker, and its
corporate seal to be hereunto affixed and attested by Ira C. Gubernick, this the
11th day of November, 1999.
Genesis Health Ventures, Inc.
/s/ Michael R. Walker
By:________________________________
Name: Michael R. Walker
Title: Chairman of the Board and
Chief Executive Officer
[CORPORATE SEAL]
Attest:
/s/ Ira C. Gubernick
By:_____________________________
Name: Ira C. Gubernick
Title: Vice President - Office of
the Chairman and
Corporate Secretary
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Exhibit 4.3
Series A Warrant Certificate
NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES
ISSUABLE UPON EXERCISE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAW, AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS.
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS
AND IS SUBJECT TO CERTAIN RESTRICTIONS AS SET FORTH IN THE RESTRUCTURING
AGREEMENT DATED AS OF OCTOBER 8, 1999, AMONG THE CYPRESS GROUP L.L.C., TPG
PARTNERS II, L.P., NAZEM, INC. AND GENESIS HEALTH VENTURES, INC. (THE
"COMPANY"), THE TERMS OF WHICH ARE INCORPORATED HEREIN BY REFERENCE AND A COPY
OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY.
<PAGE>
No. W-_____ ____________ Warrants
SERIES A WARRANTS
Exercisable commencing ___________, 1999
Void after Expiration Time (as defined herein)
GENESIS HEALTH VENTURES, INC., a Pennsylvania corporation (the
"Company"), hereby certifies that, for value received, ______________, or
registered assigns (the "Warrantholder"), is the owner of _______________
Warrants (as defined below), each of which entitles the Warrantholder to
purchase from the Company one fully paid, duly authorized and nonassessable
share of Voting Common Stock, at any time from and after ____________, 1999 (the
"Issue Date") and continuing up to the Expiration Time (as defined herein) at a
per share exercise price determined according to the terms and subject to the
conditions set forth in this certificate (the "Warrant Certificate"). The number
of shares of Voting Common Stock issuable upon exercise of each such Warrant and
the exercise price per share of Voting Common Stock are subject to adjustment
from time to time pursuant to the provisions of Section 9 of this Warrant
Certificate. The Warrants evidenced by this Warrant Certificate are part of a
series of warrants to purchase up to 2,000,000 shares of Voting Common Stock
(collectively, the "Warrants"), issued pursuant to a Restructuring Agreement,
dated as of October 8, 1999 (as it may be amended, supplemented or otherwise
modified from time to time, the "Restructuring Agreement"), among The Cypress
Group L.L.C., a Delaware limited liability company, TPG Partners II, L.P., a
Delaware limited partnership, Nazem, Inc., a Delaware corporation, and the
Company, and are entitled to certain rights and privileges and are subject to
certain restrictions set forth therein.
Section 1. Definitions. As used in this Warrant Certificate,
the following terms shall have the meanings set forth below:
1.1 "Articles of Incorporation" means the Amended and Restated
Articles of Incorporation of the Company, as amended from time to time.
1.2 "Board of Directors" means the board of directors of the
Company.
1.3 "Business Day" means any day, other than a Saturday,
Sunday or a day on which banking institutions in the State of New York
are authorized or obligated by law or executive order to close.
1.4 "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 any evidence of indebtedness), warrants or options
exchangeable for or convertible into such corporate stock.
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1.5 "Closing Price" means, with respect to any security, 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 sale 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 (the "NYSE"), or, if such security
is not listed or admitted to trading on the NYSE, 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 prices 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 purposes. 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.
1.6 "Common Stock" means the Non-Voting Common Stock or the
Voting Common Stock.
1.7 "Company" has the meaning set forth in the preamble
hereto.
1.8 "Constituent Person" has the meaning set forth in Section
9.3(a) hereof.
1.9 "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.
1.10 "Excluded Stock" means shares of Common Stock issued or
reserved for issuance by the Company (a) as a stock dividend payable in
shares of Common Stock, (b) upon any subdivision or split-up of the
outstanding shares of Common Stock, (c) upon conversion of shares of
Series H Preferred Stock or Series I Preferred Stock of the Company 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 the award.
1.11
"Excluded Transaction" means (i) any underwritten public offering of
Common Stock or (ii) any 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
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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.
1.12 "Exercise Price" has the meaning set forth in Section 8
hereof.
1.13 "Expiration Date" means ____________, 2009.
1.14 "Expiration Time" means 5:00 P.M., New York City time, on
the Expiration Date.
1.15 "Fair Market Value" of any securities shall mean the
Closing Price 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 property selected in good faith by the Board of
Directors.
1.16 "Fractional Warrant Share" means any fraction of a whole
share of Voting Common Stock issued, or issuable upon, exercise of the
Warrants.
1.17 "Issue Date" has the meaning set forth in the preamble
hereto.
1.18 "Non-Electing Shares" has the meaning set forth in
Section 9.3(a) hereof.
1.19 "Non-Voting Common Stock" means the non-voting common
stock, par value $.02 per share, of the Company.
1.20 "NYSE" has the meaning set forth in Section 1.5 hereof.
1.21 "Organic Change" means, with respect to any Person, any
transaction (including without limitation any recapitalization, capital
reorganization or reclassification of any class or series of Equity
Securities, any consolidation of such Person with, or merger of such
Person into, any other Person, any merger of another Person into such
Person (other than a merger which does not result in a
reclassification, conversion, exchange or cancellation of outstanding
shares of capital stock of such Person), and any sale or transfer or
lease of all or substantially all of the assets of such Person, but not
including any stock split, combination or subdivision which is the
subject of Section 9.1(c)) pursuant to which any class or series of
Equity Securities of such Person is converted into the right to receive
other securities, cash or other property.
1.22 "Person" means any individual, firm, corporation,
company, limited liability company, association, partnership, joint
venture, trust or unincorporated organization, or a government or any
agency or political subdivision thereof.
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1.23 "Restructuring Agreement" has the meaning set forth in
the preamble hereto.
1.24 "Securities Act" means the U.S. Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder.
1.25 "Trading Day" means, with respect to any security, any
day on which the NYSE is open for trading, or if the shares of such
security are not listed or admitted to trading on the NYSE, any day on
which the principal national securities exchange or national quotation
system on which the shares of such security are listed, admitted to
trading or quoted is open for trading, or if the shares of such
security are not so listed, admitted to trading or quoted, any Business
Day.
1.26 "Trigger Event" has the meaning set forth in Section
9.1(a) hereof.
1.27 "Voting Common Stock" means the voting common stock, par
value $.02 per share, of the Company.
1.28 "Warrant Certificate" has the meaning in the preamble
hereto.
1.29 "Warrant Register" has the meaning set forth in Section
2.2 hereof.
1.30 "Warrant Shares" means the shares of Voting Common Stock
issued, or issuable upon, exercise of the Warrants.
1.31 "Warrantholder" has the meaning set forth in the preamble
hereto.
1.32 "Warrants" has the meaning set forth in the preamble
hereto.
Section 2. Transferability.
2.1. Registration. The Warrants shall be issued only in
registered form.
2.2.Transfer. The Warrants evidenced by this Warrant
Certificate may be sold or otherwise transferred at any time (except as such
sale or transfer may be restricted pursuant to the Securities Act or any
applicable state securities laws) and any such sale or transfer shall be
effected on the books of the Company (the "Warrant Register") maintained at its
principal executive offices upon surrender of this Warrant Certificate for
registration of transfer duly endorsed by the Warrantholder or by its duly
authorized attorney or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer. Upon any registration of
transfer, the Company shall execute and deliver a new Warrant certificate or
certificates in appropriate denominations to the Person or Persons entitled
thereto.
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Section 3. Exchange of Warrant Certificate. Any Warrant
certificate may be exchanged for another certificate or certificates of like
tenor entitling the Warrantholder to purchase a like aggregate number of Warrant
Shares as the certificate or certificates surrendered then entitles such
Warrantholder to purchase. Any Warrantholder desiring to exchange a Warrant
certificate shall make such request in writing delivered to the Company, and
shall surrender, properly endorsed, the certificate evidencing the Warrant to be
so exchanged. Thereupon, the Company shall execute and deliver to the Person
entitled thereto a new Warrant certificate or certificates as so requested.
Section 4. Term of Warrants; Exercise of Warrants.
4.1.Duration of Warrants. On the terms and subject to the
conditions set forth in this Warrant Certificate, the Warrantholder may exercise
the Warrants evidenced hereby, in whole or in part, at any time and from time to
time after the Issue Date and before the Expiration Time. If the Warrants
evidenced hereby are not exercised by the Expiration Time, they shall become
void, and all rights hereunder shall thereupon cease.
4.2. Exercise of Warrant.
(a) On the terms and subject to the conditions set
forth in this Warrant Certificate, the Warrantholder may exercise the
Warrants evidenced hereby, in whole or in part, by presentation and
surrender to the Company of this Warrant Certificate together with the
attached Election to Exercise duly filled in and signed, and
accompanied by payment to the Company of the Exercise Price for the
number of Warrant Shares specified in such Election to Exercise.
Payment of the aggregate Exercise Price shall be made in cash in an
amount equal to the aggregate Exercise Price.
(b) On the terms and subject to the conditions set
forth in this Warrant Certificate, upon such presentation and surrender
of this Warrant Certificate and payment of such aggregate Exercise
Price as set forth in paragraph (a) of this Section 4.2, the Company
shall promptly issue and cause to be delivered to the Warrantholder, or
to such Persons as the Warrantholder may designate in writing, a
certificate or certificates (in such name or names as the Warrantholder
may designate in writing) for the specified number of duly authorized,
fully paid and nonassessable Warrant Shares issuable upon exercise, and
shall deliver to the Warrantholder cash, as provided in Section 10
hereof, with respect to any Fractional Warrant Shares otherwise
issuable upon such surrender. In the event that the Warrants evidenced
by this Warrant Certificate are exercised in part prior to the
Expiration Time, the Company shall issue and cause to be delivered to
the Warrantholder, or to such Persons as the Warrantholder may
designate in writing, a certificate or certificates (in such name or
names as the Warrantholder may designate in writing) evidencing any
remaining unexercised Warrants.
(c) Each Person in whose name any certificate for
Warrant Shares is issued shall for all purposes be deemed to have
become the holder of record of the
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Warrant Shares represented thereby on the first date on which both the
Warrant certificate evidencing the respective Warrants was surrendered
and payment of the Exercise Price and any applicable taxes was made,
irrespective of date of issue or delivery of such certificate.
Section 5. Payment of Taxes. The Company shall pay any and all
documentary, stamp or similar issue or transfer taxes and other governmental
charges that may be imposed under the laws of the United States of America or
any political subdivision or taxing authority thereof or therein in respect of
any issue or delivery of Warrant Shares or of other securities or property
deliverable upon exercise of the Warrants evidenced by this Warrant Certificate
or certificates representing such shares or securities (other than income taxes
imposed on the Warrantholder); provided that the Company shall not be required
to pay any such tax or other charge that may be imposed in connection with any
transfer involved in the issuance of any certificate for Warrant Shares or other
securities or property, or payment of cash, to any Person other than the holder
of the Warrant certificate surrendered upon exercise, and in case of any such
tax or charge, the Company shall not be required to issue any security or
property or pay any cash until such tax or charge has been paid or it has been
established to the Company's satisfaction that no such tax or charge is payable.
Section 6. Mutilated or Missing Warrant. If any Warrant
certificate is lost, stolen, mutilated or destroyed, the Company shall issue in
exchange and substitution for any mutilated Warrant certificate upon surrender
and cancellation of such mutilated Warrant certificate, or in lieu of and
substitution for any Warrant certificate lost, stolen or destroyed upon receipt
of a proper affidavit or other evidence reasonably satisfactory to the Company
and bond of indemnity in form and amount and with corporate surety reasonably
satisfactory to the Company protecting the Company, a new Warrant certificate of
like tenor and representing an equivalent number of Warrants as the Warrant
certificate so lost, stolen, mutilated or destroyed. Any such new Warrant
certificate shall constitute an original contractual obligation of the Company,
whether or not the allegedly lost, stolen, mutilated or destroyed Warrant
certificate shall be at any time enforceable by anyone. An applicant for such
substitute Warrant certificate shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may prescribe.
All Warrant certificates shall be held and owned upon the express condition that
the foregoing provisions are exclusive with respect to the replacement of lost,
stolen, mutilated or destroyed Warrant certificates, and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement of negotiable
instruments or other securities without their surrender.
Section 7. Reservation of Shares. The Company hereby agrees
that there shall be reserved for issuance and delivery upon exercise of the
Warrants evidenced by this Warrant Certificate, free from preemptive rights, the
number of shares of authorized but unissued shares of Voting Common Stock as
shall be required for issuance or delivery upon exercise of all of the Warrants
evidenced by this Warrant Certificate. The Company further agrees that it will
not, by amendment of the Articles of Incorporation or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
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covenants, stipulations or conditions to be observed or performed hereunder by
the Company. Without limiting the generality of the foregoing, the Company
agrees that before taking any action which would cause an adjustment reducing
the Exercise Price below the then-par value of Warrant Shares issuable upon
exercise hereof, the Company shall from time to time take all such action that
may be necessary in order that the Company may validly and legally issue fully
paid and nonassessable shares of Voting Common Stock at the Exercise Price as so
adjusted.
Section 8. Exercise Price. The price per share (the "Exercise
Price") at which Warrant Shares shall be purchasable upon the exercise of the
Warrants evidenced by this Warrant Certificate shall be $5.00, subject to
adjustment pursuant to Section 9 hereof.
Section 9. Adjustment of Exercise Price and Number of Shares.
The number and kind of securities purchasable upon the exercise of the Warrants
evidenced by this Warrant Certificate and the Exercise Price thereof shall be
subject to adjustment from time to time after the date hereof upon the happening
of certain events, as follows:
9.1. Adjustments to Exercise Price. The Exercise Price shall
be subject to adjustment from time to time as follows:
(a) Common Stock Issued at Less Than the Closing Price. 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 Closing Price
immediately prior to such issuance, the Exercise Price in effect
immediately prior to each such issuance shall immediately (except as
provided below) be reduced to the price determined by multiplying the
Exercise Price in effect immediately prior to such issuance by a
fraction (1) the numerator of which shall be the sum of (A) the number
of shares of Voting Common Stock and Non-Voting Common Stock
outstanding immediately prior to such issuance and (B) 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 Closing Price and (2) the denominator
of which shall be the total number of shares of Voting Common Stock and
Non-Voting Common Stock outstanding immediately after such issuance.
For purposes of any adjustment of the Exercise Price
pursuant to this subsection (a), the following provisions shall be
applicable.
(i) 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 for such shares
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.
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(ii) Consideration Other Than Cash. In the
case of the issuance of shares of any class of Common Stock
(otherwise than upon conversion of shares of Capital Stock 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.
(iii) Options and Convertible Securities. In
the case of the issuance of (x) options, warrants or 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 not have
been made pursuant to Section 9(d)(iv) hereof), (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),
(A) the aggregate maximum number of
shares of Common Stock deliverable upon exercise of such
options, warrants or 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 price (determined in the manner
provided in the immediately preceding subclauses (i) and (ii)
of this Section 9.1(a)), 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,
(B) 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 dividends), plus
the additional consideration (determined in the manner
provided in the immediately preceding subclauses (i) and (ii)
of this Section 9.1(a)), 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,
8
<PAGE>
(C) 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 Exercise Price pursuant to the provisions of this
Section 9.1), the Exercise Price as then in effect shall
forthwith be readjusted to such Exercise 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,
(D) 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
Exercise Price shall have been adjusted upon the issuance
thereof, the Exercise Price shall forthwith be readjusted to
such Exercise Price as would have been obtained had an
adjustment been made upon the issuance of such options,
warrants or 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
(E) if the Exercise Price shall have
been adjusted upon the issuance of any such options, warrants
or rights or convertible or exchangeable securities, no
further adjustment of the Exercise Price shall be made for the
actual issuance of Common Stock upon the exercise, conversion
or exchange thereof.
(b) 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 9.1(a) hereof.
(c) Stock Dividends, Subdivisions, Reclassifications or
Combinations. If the Company shall declare a dividend or make a
distribution on the Common Stock in shares of Common Stock, then the
Exercise Price in effect at the time of the record date for such
dividend shall immediately be reduced to a price determined by
multiplying such Exercise Price by a fraction (i) the numerator of
which shall be the number of shares of Voting Common Stock and
Non-Voting Common Stock outstanding at the close of business on such
record date and (ii) the denominator of which shall be the sum of such
number of shares of Voting Common Stock and Non-Voting Common Stock
outstanding
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<PAGE>
and the total number of shares of Voting Common Stock and Non-Voting
Common Stock constituting such dividend or distribution. If the Company
shall split, subdivide or reclassify (including by way of merger,
consolidation or otherwise) the outstanding shares of Common Stock into
a greater number of shares of Common Stock, the Exercise Price in
effect at the opening of business on the day following the day upon
which such split, subdivision or reclassification becomes effective
shall immediately be proportionately reduced, and, conversely, if the
Company shall combine or reclassify (including by way of merger,
consolidation or otherwise) the outstanding shares of Common Stock into
a smaller number of shares of Common Stock, the Exercise Price in
effect at the opening of business on the day following the day upon
which such combination or reclassification becomes effective shall
immediately be proportionately increased. Successive adjustments in the
Exercise Price shall be made whenever any event specified above shall
occur.
(d) 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 of (i) shares of any class other than the Common
Stock, (ii) evidences of indebtedness of the Company or any subsidiary,
(iii) 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 9.1(c)
hereof), or (iv) options, warrants or other rights, in each such case
the Exercise Price in effect immediately prior thereto shall be reduced
immediately thereafter to the price determined by dividing (x) an
amount equal to the difference resulting from (1) the number of shares
of Voting Common Stock and Non-Voting Common Stock outstanding on such
record date multiplied by the Exercise Price per share of Voting Common
Stock on such record date, less (2) the Fair Market Value of such
shares or evidences of indebtedness, assets, property, options,
warrants or rights to be so distributed, by (y) 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. 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 (A) are deemed to be transferred with
such shares of Common Stock, (B) are not exercisable and (C) are also
issued in respect of future issuances of Common Stock, including shares
of Common Stock issued upon exercise of the Warrants evidenced by this
Warrant Certificate, in each case in clauses (A) through (C) 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.
(e) Minimum Adjustment Requirement. No adjustment shall be
required unless such adjustment would result in an increase or decrease
of at least $0.01 in the
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<PAGE>
Exercise Price then subject to adjustment; provided, however, that any
adjustments that are not made by reason of this subsection (e) shall be
carried forward and taken into account in any subsequent adjustment. In
case the Company shall at any time issue shares of Common Stock by way
of dividend on any stock of the Company or split, subdivide or
reclassify the outstanding shares of any class of Common Stock, or
combine the outstanding shares of Common Stock, said amount of $0.01
specified in the preceding sentence (as theretofore increased or
decreased, if said amount shall have been adjusted in accordance with
the provisions of this subsection (g)) shall forthwith be
proportionately increased in the case of such a combination or
decreased in the case of such a split, subdivision or reclassification
or stock dividend so as appropriately to reflect the same.
(f) Calculations. All calculations under this Section 9.1
shall be made to the nearest $0.01 or to the nearest one ten thousandth
of a share, as the case may be.
(g) Certificate. Whenever an adjustment in the Exercise Price
is made as required or permitted by the provisions of this Section 9.1,
the Company shall promptly prepare a certificate of an authorized
officer of the Company setting forth (i) the adjusted Exercise Price as
provided in this Section 9.1 and a brief statement of the facts
requiring such adjustment and the computation thereof and (ii) the
number of shares of Voting Common Stock (or portions thereof)
purchasable upon exercise of a Warrant after such adjustment in the
Exercise Price in accordance with Section 9.2 hereof and the record
date therefor, and promptly after preparing such certificate shall mail
or cause to be mailed a notice of such adjustment to each Warrantholder
at his or her last address as the same appears on the Warrant Register.
(h) Notice. In case:
(i) the Company shall declare any dividend or any
distribution of any kind or character (whether in cash,
securities or other property) on or in respect of shares of
any class of Common Stock or to the shareholders of the
Company (in their capacity as such), excluding any regular
periodic cash dividend paid out of current or retained
earnings (as such terms are used in generally accepted
accounting principles); or
(ii) the Company shall authorize the granting to the
holders of shares of Common Stock of rights to subscribe for
or purchase any shares of capital stock or of any other right;
or
(iii) of any reclassification of shares of any class
of Common Stock (other than a split, subdivision or
combination of outstanding shares of any class of Common
Stock), or of any consolidation or merger to which the Company
is a party and for which approval of any shareholders of the
Company is required, or of the sale or transfer of all or
substantially all of the assets of the Company; or
11
<PAGE>
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall cause to be mailed to the Warrantholders, at
their last addresses as they shall appear upon the Warrant Register, at
least ten days prior to the applicable record date hereinafter
specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution or rights or, if a
record is not to be taken, the date as of which the holders of shares
of Common Stock of record to be entitled to such dividend, distribution
or rights are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and, if
applicable, the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange shares of any class of
Common Stock for securities or other property (including cash)
deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up. Failure to give any
such notice, or any defect therein, shall not affect the validity of
the proceedings referred to in clauses (i), (ii), (iii) and (iv) above.
(i) Section 305. Anything in this Section 9.1 to the contrary
notwithstanding, the Company shall be entitled, but not required, to
make such reductions in the Exercise Price, in addition to those
required by this Section 9.1, as it in its discretion shall determine
to be advisable, including, without limitation, in order that any
dividend in or distribution of shares of Common Stock or shares of
capital stock of any class other than Common Stock, subdivision,
reclassification or combination of shares of Common Stock, issuance of
rights or warrants, or any other transaction having a similar effect,
shall not be treated as a distribution of property by the Company to
its shareholders under Section 305 of the Internal Revenue Code of
1986, as amended, or any successor provision and shall not be taxable
to them.
(j) When Adjustment Not Required. If the Company shall take a
record of the holders of any class of Common Stock for purposes of
taking any action that requires an adjustment of the Exercise Price
under this Section 9, and shall, thereafter and before the effective
date of such action, legally abandon its plan to take such action, then
thereafter no adjustment shall be required by reason of the taking of
such record and any such adjustment previously made in respect thereof
shall be rescinded and annulled.
9.2.Adjustment to Number of Warrant Shares. Upon each
adjustment of the Exercise Price pursuant to Section 9.1 hereof, the number of
Warrant Shares purchasable upon exercise of a Warrant outstanding prior to the
effectiveness of such adjustment shall be adjusted to the number, calculated to
the nearest one-hundredth of a share, obtained by (a) multiplying the number of
Warrant Shares purchasable immediately prior to such adjustment upon the
exercise of a Warrant by the Exercise Price in effect prior to such adjustment
and (b) dividing the product so obtained by the Exercise Price in effect after
such adjustment of the Exercise Price.
12
<PAGE>
9.3. Organic Change.
(a) Company Survives. Upon the consummation of an Organic
Change (other than a transaction in which the Company is not the
surviving entity), lawful provision shall be made as part of the terms
of such transaction whereby the terms of the Warrant Certificates shall
be modified, without payment of any additional consideration therefor,
so as to provide that upon exercise of Warrants following the
consummation of such Organic Change, the Warrantholders of such
Warrants shall have the right to purchase only the kind and amount of
securities, cash and other property receivable upon such Organic Change
by a holder of the number of Warrant Shares into which such Warrants
might have been exercised immediately prior to such Organic Change,
assuming such holder of Warrant Shares (i) is not a Person with which
the Company consolidated or into which the Company merged or which
merged into the Company or to which a sale, transfer or lease of all or
substantially all of the assets of the Company was made, as the case
may be (a "Constituent Person"), or an affiliate of a Constituent
Person, and (ii) failed to exercise his rights of election, if any, as
to the kind and amount of securities, cash and other property
receivable upon such Organic Change (provided that if the kind and
amount of securities, cash and other property receivable upon such
Organic Change is not the same for each share of Common Stock held
immediately prior to such Organic Change by Persons others than a
Constituent Person or an affiliate thereof and in respect of which such
rights of election shall not have been exercised ("Non-Electing
Shares"), then for the purpose of this subsection (a) the kind and
amount of securities, cash and other property receivable upon such
Organic Change by each Non-Electing Share shall be deemed to be the
kind and amount so receivable per share by a plurality of the Non-
Electing Shares); provided, however, that no adjustment shall be made
as a result of such Organic Change to the Exercise Price or the number
of Warrant Shares notwithstanding any provision of Section 9 hereof
unless any event requiring any such adjustment shall have occurred or
shall occur prior to, upon or after such Organic Change. Lawful
provision also shall be made as part of the terms of the Organic Change
so that all other terms of the Warrant Certificates shall remain in
full force and effect following such an Organic Change. The provisions
of this Section 9.3(a) shall similarly apply to successive Organic
Changes.
(b) Company Does Not Survive. The Company shall not enter into
an Organic Change that is a transaction in which the Company is not the
surviving entity unless lawful provision shall be made as part of the
terms of such transaction whereby the surviving entity shall issue new
securities to each Warrantholder, without payment of any additional
consideration therefor, with terms that provide that upon the exercise
of the Warrants, the Warrantholders of such Warrants shall have the
right to purchase only the kind and amount of securities, cash and
other property receivable upon such Organic Change by a holder of the
number of Warrant Shares into which such Warrants might have been
exercised immediately prior to such Organic Change, assuming such
holder of Warrant Shares (i) is not a Constituent Person or an
affiliate of a Constituent Person and
13
<PAGE>
(ii) failed to exercise his rights of election, if any, as to the kind
and amount of securities, cash and other property receivable upon such
Organic Change (provided that if the kind and amount of securities,
cash and other property receivable upon such Organic Change is not the
same for each Non-Electing Share, then for the purpose of this
subsection (b) the kind and amount of securities, cash and other
property receivable upon such Organic Change by each Non-Electing Share
shall be deemed to be the kind and amount so receivable per share by a
plurality of the Non-Electing Shares); provided, however, that no
adjustment shall be made as a result of such Organic Change to the
Exercise Price or the number of Warrant Shares notwithstanding any
provision of Section 9 hereof unless any event requiring any such
adjustment shall have occurred or shall occur prior to, upon or after
such Organic Change. The certificate or articles of incorporation or
other constituent document of the surviving entity shall provide for
such adjustments which, for events subsequent to the effective date of
such certificate or articles of incorporation or other constituent
document, shall be equivalent to the adjustments provided for in
Section 9.1 hereof.
9.4. Statement on Warrants. The form of Warrant Certificate
need not be changed because of any adjustment made pursuant to Section 9.1 or
Section 9.2 hereof, and Warrants issued after such adjustment may state the same
Exercise Price and the same number of Warrant Shares as are stated in this
Warrant Certificate.
Section 10. Fractional Interests. The Company shall not be
required to issue Fractional Warrant Shares on the exercise of the Warrants
evidenced by this Warrant Certificate. If any Fractional Warrant Share would,
but for the provisions of this Section 10, be issuable on the exercise of the
Warrants evidenced by this Warrant Certificate (or specified portions thereof),
the Company shall pay an amount in cash equal to the fraction of a Warrant Share
represented by such Fractional Warrant Share multiplied by the Closing Price on
the day of such exercise.
Section 11. No Rights as Shareholder. Nothing in this Warrant
Certificate shall be construed as conferring upon the Warrantholder or its
transferees any rights as a shareholder of the Company, including the right to
vote, receive dividends, consent or receive notices as a shareholder with
respect to any meeting of shareholders for the election of directors of the
Company or any other matter.
Section 12. Successors. All the covenants and provisions of
this Warrant Certificate by or for the benefit of the Company or the
Warrantholder shall bind and inure to the benefit of their respective successors
and permitted assigns hereunder.
Section 13. Governing Law; Etc. The validity, construction and
performance of this Warrant Certificate shall be governed by, and interpreted in
accordance with, the laws of New York without reference to its conflict of laws
rules. Each of the parties hereto irrevocably consents to the service of process
in any action or proceeding hereunder by the mailing of copies thereof by
registered or certified airmail, postage prepaid, if to (i) the Company, at 148
West State Street, Kennett Square, Pennsylvania 19348, Attention: General
Counsel, or at such other address specified by the
14
<PAGE>
Company in writing to the Warrantholder, and (ii) any Warrantholder, at the
address of such Warrantholder specified in the Warrant Register. The foregoing
shall not limit the rights of any party hereto to serve process in any other
manner permitted by the law or to obtain execution of judgment in any other
jurisdiction. The parties agree to waive any and all rights that they may have
to a jury trial with respect to disputes arising out of this Agreement.
Section 14. Benefits of this Agreement. Nothing in this
Warrant Certificate shall be construed to give to any Person other than the
Company and the Warrantholder any legal or equitable right, remedy or claim
under this Warrant Certificate, and this Warrant Certificate shall be for the
sole and exclusive benefit of the Company and the Warrantholder.
[remainder of page intentionally left blank]
15
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed, as of this ____th day of ______________, 1999.
GENESIS HEALTH VENTURES, INC.
By:
Name:
Title:
Attest:
- ------------------------------
16
<PAGE>
ELECTION TO EXERCISE
(To be executed upon exercise of Warrants)
To GENESIS HEALTH VENTURES, INC.:
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant Certificate for, and to purchase
thereunder, _________ Warrant Shares, as provided for therein, and tenders
herewith payment of the purchase price in full in the form of cash in the amount
of $_________.
Please issue a certificate or certificates for such Warrant Shares in
the name of, and pay any cash for any Fractional Warrant Shares to (please print
name address and social security or other identifying number)*:
Name:
Address:
- --------
* The Warrant Certificate contains restrictions on the sale and other transfer
of the Warrants evidenced by such Warrant Certificate.
<PAGE>
Soc. Sec.:
AND, if said number of Warrant Shares shall not be all the shares purchasable
under the within Warrant Certificate, a new Warrant Certificate is to be issued
in the name of the undersigned for the balance remaining of the Warrant Shares
purchasable thereunder rounded up to the next higher whole number of Warrant
Shares.
Signature:**
- --------
** The above signature should correspond exactly with the name on the face of
this Warrant Certificate or with the name of the assignee appearing in the
assignment form below.
<PAGE>
ASSIGNMENT FORM
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
(Name and Address of Assignee must be Printed or Typewritten)
Warrants to purchase ___________________ Warrant Shares of the Company,
evidenced by the within Warrant Certificate hereby irrevocably constituting and
appointing __________________ Attorney to transfer said Warrants on the books of
the Company, with full power of substitution in the premises.
Dated:___________________________, ____
______________________________
Signature of Registered Holder
______________________________
Signature Guaranteed: Signature of Guarantor
- --------
* The above signature should correspond exactly with the name on the face of
this Warrant Certificate.
1
<PAGE>
Exhibit 10.1
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
DEFINITIONS..............................................................................................1
Section 1.1 Certain Defined Terms..................................................................1
ARTICLE II
BOARD OF DIRECTORS AND OFFICERS..........................................................................4
Section 2.1 Board of Directors.....................................................................4
Section 2.2 Officers...............................................................................4
ARTICLE III
RESTRICTIONS ON TRANSFERS OF STOCK.......................................................................4
Section 3.1 Restrictions on Transfer...............................................................4
Section 3.2 Offer..................................................................................5
Section 3.3 Option to Genesis Stockholders.........................................................5
Section 3.4 Delivery after Exercise................................................................6
Section 3.5 Right to Transfer......................................................................6
ARTICLE IV
OTHER ARRANGEMENTS.......................................................................................7
Section 4.1 Irrevocable Proxy. ....................................................................7
ARTICLE V
SUBORDINATION............................................................................................7
Section 5.1 General Subordination..................................................................7
Section 5.2 Payment Blockage.......................................................................7
Section 5.3 Distributions..........................................................................8
Section 5.4 Distributions to be Held in Trust......................................................8
Section 5.5 Continuing Subordination...............................................................8
Section 5.6 Subrogation............................................................................9
Section 5.7 Relative Rights of Creditors..........................................................10
Section 5.8 Subordinated Obligations; Rights of Senior Creditors as to Security...................10
Section 5.9 Undertakings in Insolvency Proceedings................................................10
Section 5.10 Further Assurances....................................................................10
Section 5.11 Specific Enforcement; Remedies........................................................11
ARTICLE VI
MISCELLANEOUS...........................................................................................11
Section 6.1 Legend. .............................................................................11
Section 6.2 Notices...............................................................................12
Section 6.3 Severability. .......................................................................15
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 6.4 Entire Agreement......................................................................15
Section 6.5 Amendment and Waiver..................................................................15
Section 6.6 Consent to Specific Performance.......................................................15
Section 6.7 Assignment; Responsibility for Affiliates.............................................16
Section 6.8 Variations in Pronouns................................................................16
Section 6.9 Term..................................................................................16
Section 6.10 Governing Law.........................................................................16
Section 6.11 Further Assurances....................................................................16
Section 6.12 Headings..............................................................................16
Section 6.13 Counterparts..........................................................................16
</TABLE>
ii
<PAGE>
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
This Amended and Restated Stockholders Agreement ("Agreement") is made
and dated this day of November 15, 1999 by and among Genesis ElderCare Corp.
(formerly known as Waltz Corp.), a Delaware corporation ("Corporation"), The
Cypress Group L.L.C., a Delaware limited liability company ("Cypress"), TPG
Partners II, L.P., a Delaware limited partnership ("TPG"), Genesis Health
Ventures, Inc. a Pennsylvania corporation ("Genesis"), Nazem, Inc., a Delaware
corporation ("Nazem") and the other signatories hereto.
WITNESSETH
Cypress, TPG, Genesis and Nazem and/or their Affiliates own in the
aggregate 745,000 shares of Common Stock, par value $.01 per share (the "Common
Stock"), of the Corporation, which Common Stock constitutes all of the issued
and outstanding capital stock of the Corporation.
Pursuant to the Agreement and Plan of Merger, dated as of June 16, 1997
(the "Merger Agreement"), by and among the Corporation, Genesis ElderCare
Acquisition Corp. (formerly known as Waltz Acquisition Corp.), a Delaware
corporation, and a wholly owned subsidiary of the Corporation ("Acquisition
Corp."), Genesis and The Multicare Companies, Inc., a Delaware corporation
("Multicare"), Acquisition Corp. was merged with and into Multicare with
Multicare being the surviving corporation and a wholly owned subsidiary of the
Corporation (the "Merger").
On October 9, 1997, the Cypress, TPG, Genesis and Nazem entered into a
Stockholders Agreement (the "Stockholders Agreement") which imposed certain
restrictions and obligations on themselves and/or their Affiliates, as
applicable, and on the shares of capital stock of the Corpora tion. The parties
now desire to restructure their joint investment in the Corporation. In
connection therewith, the parties desire to amend and restate such Stockholders
Agreement to read in full as set forth below.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and intending to be legally bound hereby, the parties 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.
"Board of Directors" means the Board of Directors of the Corporation.
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"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in the City of New York are required or permitted by
law to close.
"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 that refinance any of the indebtedness
under the aforementioned agreement, in each case, as the same may be amended,
restated, modified and/or supplemented from time to time.
"Genesis Stockholders" means, as of any date, the collective reference
to Genesis and its Affiliates then owning one or more shares of Stock.
"Insolvency Proceeding" means any bankruptcy, reorganization,
arrangement, composition, insolvency, liquidation or other proceeding for relief
by or against Genesis or any Affiliate of Genesis under any Federal or state
bankruptcy or similar law relating to the relief of debtors or the readjustment
of indebtedness.
"Non-Genesis Stockholders" means, as of any date, the collective
reference to Persons, other than Genesis Stockholders, then owning one or more
shares of Stock.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization or other
entity or a country or government or any agency or political subdivision or
instrumentality thereof or of such subdivision.
"Put/Call Agreement" means the "Put/Call Agreement" dated October 9,
1997, as amended and restated as of the date hereof, by and among the
Stockholders.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Loan" means, collectively, all obligations of the Corporation,
Multicare or any of their respective affiliates or co-borrowers under or in
respect of any or all of the Credit Agreement, dated as of October 9, 1997, as
amended, by and among The Multicare Companies, Inc., certain Subsidiaries of
Multicare, the Lenders referred to therein, Mellon Bank, N.A. as Issuer of
Letters of Credit, Mellon Bank, N.A. as Administrative Agent, Citibank, N.A. as
Syndication Agent, First Union National Bank as Documentation Agent and
Nationsbank N.A. as Syndication Agent together with any agreements that
refinance any of the indebtedness under the aforementioned agreement, in each
case, as the same may be amended, restated, modified and/or supplemented from
time to time.
"Senior Creditor" means each Person entitled to the benefits of any of
the Senior Obligations as described in clauses (1) through (4) of the definition
of Senior Obligations below.
2
<PAGE>
"Senior Obligations" means all liabilities or obligations of any type
or nature, whether for principal, interest and fees (including, without
limitation, interest accruing after the initiation of any Insolvency Proceeding)
charges and expenses, and without limitation as to amount or terms thereof,
presently owing or hereafter created or due from Genesis and/or any of its
Affiliates, and their respective successors and assigns, (1) to the Agents,
Issuer and/or Lenders (as defined in the Credit Agreement), and their respective
successors, assigns and participants, arising under or incidental to the Credit
Agreement, (2) to the participants under the Synthetic Lease Facility, and their
respective successors, assigns and participants, arising under or incidental to
the Synthetic Lease Facility, (3) to any other lender or lenders or other
creditors and its or their respective successors, assigns and participants,
under any credit arrangement that replaces all or any part of the indebtedness
or other obligations of Genesis or its Affiliates under the Credit Agreement or
the Synthetic Lease Facility, or (4) to any counterparty in connection with any
interest rate swap, hedging or similar obligation in respect of all or any
portion of the liabilities described in clauses (1), (2) or (3).
"Stock" means all shares of all classes of the capital stock of the
Corporation now or hereafter owned or held by the Stockholders or any other
Person including, without limitation, the Common Stock.
"Stockholders" means the collective reference to Non-Genesis
Stockholders and Genesis Stockholders.
"Subordinated Notes" means the 9% Senior Subordinated Notes due 2007
issued pursuant to the Indenture dated August 11, 1997 by and between
Acquisition Corp., PNC Bank, National Association, as trustee, and Banque
Internationale a Luxembourg S.A., as paying agent.
"Subordinated Obligations" means any obligations of Genesis, whether
liquidated or unliquidated, and without limitation as to amount, whether payable
in cash or other property (other than Genesis common stock), to the Subordinated
Creditors arising out of or in respect of the Put/Call Agreement.
"Synthetic Lease Facility: means the Amended and Restated Lease and
Agreement dated as of October 7, 1996, and any sublease thereunder, between
Lessor and Lessee, as the same may be amended, modified or supplemented from
time to time.
"Transfer" means to sell, give, transfer, assign, pledge, hypothecate
or otherwise dispose of all or a portion of an interest (legal or equitable) by
any means, direct or indirect, absolute or conditional, voluntary or
involuntary, including, but not limited to, by court order, operation of law,
settlement, exchange, waiver, abandonment, gift, alienation, bequest or
disposal, or to contract or agree to do any of the foregoing.
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ARTICLE II
BOARD OF DIRECTORS AND OFFICERS
Section 2.1 Board of Directors. The Board of Directors shall consist of
six directors. During the term of this Agreement, Genesis shall be entitled to
nominate four directors to the Corporation's board of directors and Genesis
agrees to vote the proxies granted pursuant to Section 4.1 hereof to elect such
nominees. During the term of this Agreement and for so long as Cypress or any of
its Affiliates owns Stock, Cypress will be entitled to nominate one director to
the Corporation's board of directors and Genesis agrees to vote the proxies
granted pursuant to Section 4.1 hereof to elect such nominee. During the term of
this Agreement and for so long as TPG or any of its Affiliates owns Stock, TPG
will be entitled to nominate one director to the Corporation's board of
directors and Genesis agrees to vote the proxies granted pursuant to Section 4.1
hereof to elect such nominee. In the event of any vacancy on the Board of
Directors, Genesis agrees to vote the proxies granted pursuant to Section 4.1
hereof for the person nominated by the Person who was entitled to nominate the
director for whom the vacancy exists.
Section 2.2 Officers. The officers of the Corporation shall consist of
a President and Chief Executive Officer, two Vice Presidents, a Treasurer and a
Secretary and such other officers as the President of the Corporation may from
time to time establish.
ARTICLE III
RESTRICTIONS ON TRANSFERS OF STOCK
Section 3.1 Restrictions on Transfer. No Non-Genesis Stockholder may
Transfer Stock except as provided in the Put/Call Agreement and except a
Non-Genesis Stockholder may Transfer its Stock in strict accordance with the
terms and conditions of this Article III. Notwithstanding any of the provisions
of this Agreement to the contrary:
(a) Cypress, TPG and Nazem and their Affiliates may Transfer
any shares of Stock to any Person who agrees to be bound
to this Agreement and to the Put/Call Agreement by
executing and delivering to Genesis a Joinder hereto in
the form of Exhibit "A" hereto, the Irrevocable Proxy in
the form of Exhibit "B" hereto and a Joinder to the
Put/Call Agreement in the form of Exhibit "A" thereto,
provided that such Transfer (either by itself or when
taken together with other Transfers under this Article
III) if consummated would not constitute a "change in
control" of the Corporation as such term is defined in
the Indenture governing the Subordinated Notes, the
credit agreements governing the Senior Loan, and any
other agreements to which the Corporation is bound (the
parties acknowledge that there are no such agreements as
of the date hereof);
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(b) a Genesis Stockholder may Transfer any shares of Stock
(1) to any Person who agrees to be bound to this
Agreement by executing a Joinder hereto in the form of
Exhibit "A" hereto, provided that such Transfer (either
by itself or when taken together with other Transfers
under this Article III) if consummated would not
constitute a "change in control" of the Corporation as
such term is defined in the Indenture governing the
Subordinated Notes, the credit agreements governing the
Senior Loan and any other agreements to which the
Corporation is bound (the parties acknowledge that there
are no such agreements as of the date hereof) or (2)
pursuant to any pledge agreement securing any or all of
the Senior Obligations to the pledgee of such pledge
agreement or any assignee of such pledgee as a result of
such pledge (a "Pledge Transferee"); but each Pledge
Transferee (A) shall be bound by the terms, other than
Article V, and shall be entitled to the benefits, of
this Agreement to the same extent as a Genesis
Stockholder, and (B) shall have no obligation or
liability with respect to the obligations of Genesis
under the Put/Call Agreement. In connection with any
sale of Stock to a third party, no Pledge Transferee
shall be required to make any representations or
warranties to the third party other than customary and
reasonable representations and warranties as to (1) its
ownership of Stock, (2) its authority to transfer such
Stock, (3) the absence of conflicts arising under such
Pledge Transferee's constituent documents as a result of
such transfer of Stock, (4) the absence of liens on such
Stock created by such Pledge Transferee, and (5) the
absence of any requirement on the part of such Pledge
Transferee to obtain any third party consents (other
than those which have been obtained) in connection with
such transfer;
(c) the limited partners of TPG and Cypress (or their
Affiliates owning Common Stock) may transfer their
limited partnership or other ownership interests in TPG
and Cypress (or their Affiliates owning Common Stock);
and
(d) the parties hereto consent to the pledge existing on the
date hereof by the limited partner of the Affiliate of
Nazem owning Common Stock of its limited partnership
interest in such Affiliate and agree that such limited
partner may transfer such limited partnership interest
to such pledgee or any assignee of such pledgee.
Any Transfer of Stock in violation of this Agreement shall be void ab initio. No
Stockholder may do indirectly, through a sale of its Stock or other equity
interest or otherwise, that which is not permitted by this Section 3.1.
Section 3.2 Offer. If a Non-Genesis Stockholder, other than Cypress,
TPG, Nazem or any of their Affiliates ("Selling Stockholder"), determines to
sell all or any part of its Stock ("Offered Stock"), the Selling Stockholder
must first offer (the "Offer") to sell the Offered Stock to
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the Genesis Stockholders, in accordance with Section 3.3 herein, by giving
written notice ("Notice") to the Corporation and to the Genesis Stockholders
setting forth the proposed terms of such sale (the "Offer Terms").
Section 3.3 Option to Genesis Stockholders. The Genesis Stockholders
shall have the option to purchase all, or any part, of the Offered Stock on the
Offer Terms and may exercise their options by giving written notice of exercise
to the Selling Stockholder and the other Genesis Stockholders, within thirty
(30) days after the date of the Notice of the Offer. The notice given by each
Genesis Stockholder shall state the maximum number of shares of the Offered
Stock which it is willing to purchase. Each Genesis Stockholder shall have the
option to purchase that proportion, rounded to the nearest whole number to
eliminate fractional shares, of the Offered Stock which the number of shares of
Stock held by such Genesis Stockholder bear to the number of shares of Stock
then held by all Genesis Stockholders. If a Genesis Stockholder does not
exercise its option to purchase its full proportionate share of the Offered
Stock, the Genesis Stockholders who have exercised their options may purchase
the Stock not purchased by such Genesis Stockholder in such proportions as they
shall agree upon or, failing such agreement, pro rata as provided above, by
giving written notice of the exercise of their options to the Selling
Stockholder within forty (40) days after the date of the Notice of the Offer.
Section 3.4 Delivery after Exercise. If the Genesis Stockholders shall
have exercised their option to purchase all or any part of the Offered Stock,
closing on the sale of such Offered Stock shall occur, and all certificates for
such Offered Stock (or, if such Offered Stock is subject to pledge,
hypothecation or other encumbrance, evidence of the Selling Stockholder's rights
therein) shall be delivered to the purchaser(s) thereof, duly endorsed for
transfer, at the earlier of fifty (50) days after the date of the Notice of the
Offer or ten (10) days after the exercise of the option to purchase the Offered
Stock (the "Transfer Date") at the then principal office of the Corporation.
Section 3.5 Right to Transfer. If all the Offered Stock is not
purchased, the Selling Stockholder may, for a period of forty-five (45) days
following the final date for acceptance under Section 3.3 herein, enter into a
binding agreement (subject to customary conditions) to sell any balance of the
Offered Stock to a third party ("Third Party Purchaser"); provided, however,
that (a) the proposed sale to the Third Party Purchaser must be approved by
Genesis prior to any offer of the Offered Stock to a Third Party Purchaser (with
such approval not to be unreasonably withheld or delayed, provided, that it
shall not be unreasonable for Genesis to withhold its consent to any Transfer
which, either by itself or taken together with other Transfers under this
Article III, would result in a "change in control" (or similar concept) under
the Indenture governing the Subordinated Notes, the Credit Agreement or any
other agreement to which the Corporation is a party), (b) such Stock is sold to
the Third Party Purchaser upon terms not more favorable to the Third Party
Purchaser than the Offer Terms and (c) the Third Party Purchaser agrees to be
bound to this Agreement and to the Put/Call Agreement by executing and
delivering to Genesis a Joinder hereto in the form of Exhibit "A" hereto and a
Joinder to the Put/Call Agreement in the form of Exhibit "A" thereto. If the
Selling Stockholder wishes to sell its Stock on other than the Offer Terms or
has not sold such Stock on the Offer Terms within that thirty (30) day period,
it shall be obligated to make
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new offers and re-offers to the Genesis Stockholders, in accordance with
subsections 3.3 and 3.4 herein, before it shall be permitted to offer to
Transfer its Stock, or any part thereof, to any Person.
ARTICLE IV
OTHER ARRANGEMENTS
Section 4.1 Irrevocable Proxy. Each Non-Genesis Stockholder hereby
agrees to grant to Genesis an irrevocable proxy and power of attorney
substantially in the form of Exhibit "B"attached hereto.
ARTICLE V
SUBORDINATION
Section 5.1 General Subordination. Genesis and each of the Non-Genesis
Stockholders acknowledge and agree that the Subordinated Obligations are and
shall be subordinate and subject in right of payment to the prior indefeasible
payment in full in cash of the Senior Obligations to the extent, and in the
manner, set forth in this Article V. Genesis agrees that it shall not, and shall
not cause, permit or suffer any Affiliate of Genesis to, impair in any manner
the rights of the Senior Creditors to enforce or otherwise receive the benefits
of the subordination set forth in this Article V.
Section 5.2 Payment Blockage.
(a) Unless the Senior Obligations shall have been indefeasibly
paid in full in cash, and except as otherwise provided in subsection (b) below,
no payment or distribution of any of the assets of Genesis or any Affiliate of
Genesis shall be made by Genesis or any Affiliate of Genesis, or received or
accepted by any Subordinated Creditor, in respect of the Subordinated
Obligations:
(1) at any time there shall have occurred and be
continuing any default (a "Payment Default") in the payment when due (at
maturity, upon acceleration, upon mandatory prepayment or otherwise) of any
amount owing in respect of any of the Senior Obligations, unless such default
shall have been cured or waived in writing by or on behalf of the Senior
Creditors; or
(2) at any time there shall have occurred, and
Genesis and the Subordinated Creditors shall have received notice (a "Deferral
Notice") of such occurrence, and be continuing any default or event of default
in respect of the Senior Obligations other than a Payment Default (a
"Non-Payment Default"); provided, however, that the prohibition on any payment
or distribution in respect of the Subordinated Obligations in the event of any
Non-Payment Default shall apply only for a period (the "Payment Blockage
Period") commencing upon the receipt by Genesis and the Subordinated Creditors
of a Deferral Notice and continuing until the earlier of (i) the date on which
such Non-Payment Default shall have been cured, waived in writing, by or on
behalf of the Senior Creditors, or otherwise cease to exist, or (ii) 179 days
after the Deferral Notice, or (iii) the date such Payment Blockage Period and
any other Payment Blockage Period initiated during
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such period have been terminated by written notice to Genesis and the
Subordinated Creditors from or on behalf of the Senior Creditors.
Notwithstanding any other provision of this Agreement, in no event shall a
Payment Blockage Period extend beyond 179 days from the date of receipt by
Genesis or the Subordinated Creditors of a Deferral Notice (the "Initial
Blockage Period"). Any number of Deferral Notices may be given during the
Initial Blockage Period; provided that during any 365-day consecutive period
only one such period may commence and the duration of such period may not exceed
179 days. No Non-Payment Default which existed and was continuing on the date of
the commencement of any Payment Blockage Period shall be made the basis for the
commencement of a second Payment Blockage Period, whether or not within a period
of 365 consecutive days, unless such default shall have been cured or waived for
period of not less than 90 consecutive days.
Section 5.3 Distributions. In the event of any distribution, division
or application, partial or complete, voluntary or involuntary, by operation of
law or otherwise, of all or any part of the assets or property of Genesis or any
Affiliate of Genesis or the proceeds thereof, to creditors of Genesis or any
Affiliate of Genesis, or upon any repayment of indebtedness of Genesis or any
Affiliate of Genesis, by reason of (1) the liquidation, dissolution or other
winding up, partial or complete, of Genesis or any Affiliate of Genesis or its
or their respective business, or (2) any Insolvency Proceeding, then, and in any
such event, any payment or distribution of any kind or character, whether in
cash, securities or other property which but for this Article V would be payable
or deliverable to any Subordinated Creditor on account of the Subordinated
Obligations (whether or not such payment or distribution shall have been made in
accordance with any plan approved in an Insolvency Proceeding), shall instead be
paid or delivered directly to the Senior Creditors for application to the Senior
Obligations, whether then due or not due, until the Senior Obligations shall
have been indefeasibly paid in full in cash; provided that, for purposes of
determining whether the Senior Obligations have been indefeasibly paid in full
in cash, the Senior Creditors shall be required to use reasonable efforts to
sell all securities and other property received by virtue of this provision for
cash at fair market value.
Section 5.4 Distributions to be Held in Trust. Unless and until the
Senior Obligations shall have been indefeasibly paid in full in cash, if any
payment, distribution of security or proceeds of any security are received by
any Subordinated Creditor upon or in respect of the Subordinated Obligations
which are not permitted to be paid in accordance with the provisions of this
Article V, such Subordinated Creditor will forthwith deliver the same to the
Senior Creditors in precisely the form received (except for the endorsement or
assignment of such Subordinated Creditor where necessary), for application to
the Senior Obligations, whether then due or not due, and, until so delivered,
the same shall be held in trust by such Subordinated Creditor as property of the
Senior Creditors. In the event of the failure of any Subordinated Creditor to
make any such endorsement or assignment, the Senior Creditors or their agent, or
any of its or their officers or employees, are hereby irrevocably authorized to
make the same.
Section 5.5 Continuing Subordination. The subordination effected by
this Article V is a continuing subordination, and each Subordinated Creditor
hereby agrees that at any time and from time to time, without notice to it:
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(a) the time, place or manner for payment or performance by
Genesis or any Affiliate of Genesis of, or compliance with any of its agreements
or instruments evidencing, the Senior Obligations may be extended or waived by
the Senior Creditors;
(b) any act permitted to be taken by Genesis, any Affiliate of
Genesis or any Senior Creditor under agreements or instruments evidencing the
Senior Obligations may be so taken;
(c) any of the agreements or instruments evidencing the Senior
Obligations may be amended, or modified in any manner, including for the purpose
of adding any provisions thereto, increasing the amount of, or changing the
terms of, the Senior Obligations, adding or releasing any security or collateral
therefor, or changing in any manner the covenants or rights of the Senior
Creditors or Genesis or any Affiliate of Genesis or any other Person thereunder;
(d) the maturity of any of the Senior Obligations may be
accelerated;
(e) any or all collateral security for the Senior Obligations
may be exchanged, sold, surrendered, released or otherwise dealt with;
(f) Genesis or any Affiliate of Genesis, any co-borrower with
Genesis or any Affiliate of Genesis, any guarantor or any other Person may be
released of its obligations in respect of the Senior Obligations, whether or not
in connection with any Insolvency Proceeding;
(g) payments received by any Senior Creditor from any source
which could lawfully be applied to payment, in full or in part, of the Senior
Obligations, but which could also lawfully be used for some other purpose may be
used for such other purpose with or without the consent of the Senior Creditors;
and
(h) any other event which could, but for this provision, be
used as a defense to the obligations of the Subordinated Creditor hereunder may
occur; all without impairing or affecting the obligations of the Subordinated
Creditors or the rights of the Senior Creditors hereunder. The rights and
remedies of the Senior Creditors hereunder shall be irrevocable and shall remain
in full force and effect notwithstanding (i) any lack of validity or
enforceability of the Senior Obligations, (ii) any circumstance which might
constitute a defense available to, or the discharge of, Genesis in respect of
the Senior Obligations, or (iii) the occurrence of any of the circumstances
described in clauses (a) through (h) of the preceding sentence. The provisions
of this Article V shall continue to be effective or be reinstated, as the case
may be, if at any time any payment in respect of the Senior Obligations is
rescinded or must otherwise be returned by any Senior Creditor in any Insolvency
Proceeding, all as though such payment had not been made.
Section 5.6 Subrogation. No payment or distribution to the Senior
Creditors pursuant to the provisions of this Article V shall entitle the
Subordinated Creditors to exercise any rights of subrogation in respect thereof
(and any such rights existing under law are hereby waived) until such time as
the Senior Obligations have been indefeasibly paid in full in cash. After the
Senior
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Obligations have been indefeasibly paid in full in cash and until the
Subordinated Obligations are paid in full, the Subordinated Creditors shall be
subrogated to the rights of the Senior Creditors to receive distributions
applicable to the Senior Obligations to the extent that distributions otherwise
payable to the Subordinated Creditors have been applied to the payment of Senior
Obligations. A distribution made under Section 5.3 of this Agreement to the
Senior Creditors which otherwise would have been made to the Subordinated
Creditors is not, as between Genesis and the Subordinated Creditors, a payment
by Genesis on the Senior Obligations.
Section 5.7 Relative Rights of Creditors. The provisions of this
Article V are intended only for the purpose of defining the relative rights of
the Senior Creditors, on the one hand, and the Subordinated Creditors, on the
other hand. Nothing herein is intended to, nor shall the subordination
provisions of this Article V, impair, as between Genesis, its creditors other
than the Senior Creditors and the Subordinated Creditors, the obligation of
Genesis to pay to the Subordinated Creditors the Subordinated Obligations or any
other amounts due to Subordinated Creditors under the Put/Call Agreement as and
when the same shall become due and payable, or to affect the relative rights of
the Subordinated Creditors and creditors of the Company other than the Senior
Creditors nor shall the foregoing or provisions to implement the foregoing
prevent the Subordinated Creditors from exercising all remedies otherwise
permitted by applicable law upon any breach of the Put/Call Agreement, subject
to the rights contemplated herein of the Senior Creditors.
Section 5.8 Subordinated Obligations; Rights of Senior Creditors as to
Security.
(a) The Subordinated Creditors and Genesis acknowledge and
agree that the Put/Call Agreement evidences the full and complete obligations of
Genesis comprising the Subordinated Obligations, and Genesis shall not issue any
further instrument or agreement in respect of the Subordinated Obligations. All
certificates evidencing the stock of Genesis ElderCare Corporation to which are
attached or associated any rights of the Subordinated Creditors under the
Put/Call Agreement shall contain a legend to the effect that, the payment
obligations of Genesis thereunder are expressly subordinated and junior in right
of payment to the Senior Obligations as provided in this Agreement. The
Subordinated Creditors and Genesis shall not amend, or modify or supplement the
Put/Call Agreement without the written consent of the Senior Creditors, except
for such amendments, modifications or supplements which could not reasonably be
expected to have a material adverse effect on any Senior Creditor.
Section 5.9 Undertakings in Insolvency Proceedings. In furtherance of
the subordination provided herein, each of the Subordinated Creditors, for
itself, its successors and assigns, agrees that in any Insolvency Proceeding, it
shall not vote is claim(s) or take any other consensual actions in a manner
inconsistent with the terms of this Agreement.
Section 5.10 Further Assurances. The Subordinated Creditors agree that
(a) promptly upon the written request of the Senior Creditors, such Subordinated
Creditor shall take such other action, at Genesis' expense, as may be reasonably
requested by the Senior Creditors for the protection of the rights of the Senior
Creditors under this Agreement or to effectuate the
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subordination provided herein, and (b) payment of the Subordinated Obligations
shall not at any time be secured by any lien or security interest on property of
Genesis or any Affiliate of Genesis.
Section 5.11 Specific Enforcement; Remedies. The Senior Creditors are
hereby authorized to demand the specific performance of this Article V, whether
or not Genesis shall have complied with any provisions hereof applicable to it,
at any time when the Subordinated Creditors (or any of them) shall have failed
to comply with the terms hereof, and the Subordinated Creditors hereby waive any
objection or defense in any action for the specific performance hereof based
upon the adequacy of any remedy at law; but nothing herein shall limit the right
of the Senior Creditors to seek damages at law for any failure by the
Subordinated Creditors or Genesis to perform their respective obligations
hereunder. In any action or suit for the enforcement of any right or remedy
under this Agreement, the parties acknowledge and agree that a court may assess
reasonable costs, including reasonable attorneys fees, against any party
litigant in such action, having due regard for the merits and good faith of the
claims or defenses made by such party.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Legend. Each certificate representing shares of Common
Stock hereafter acquired shall bear the following legend (until such time as
subsequent transfers thereof are no longer restricted in accordance with the
Securities Act or this Agreement):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT DATED AS OF NOVEMBER15,
1999 (THE "STOCKHOLDERS AGREEMENT") AND AN AMENDED AND RESTATED
PUT/CALL AGREEMENT DATED AS OF NOVEMBER 15, 1999(THE "PUT/CALL
AGREEMENT") AMONG, INTER ALIA, GENESIS ELDERCARE CORP. (THE "COMPANY"),
THE CYPRESS GROUP L.L.C., TPG PARTNERS II, L.P., NAZEM, INC. AND
GENESIS HEALTH VENTURES, INC. A COPY OF THE SHAREHOLDERS AGREEMENT AND
THE PUT/CALL AGREEMENT ARE ON FILE WITH THE SECRETARY OF THE COMPANY.
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE GIVEN, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, HYPOTHECATED, OR OTHERWISE DISPOSED OF
UNLESS SUCH GIFT, SALE, ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE STOCKHOLDERS
AGREEMENT AND THE PUT/CALL AGREEMENT.
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,
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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."
Section 6.2 Notices. Notices hereunder shall be given only by personal
delivery, registered or certified mail, return receipt requested, overnight
courier service, or by telecopy (and subsequently confirmed by any other
permitted means hereunder) and shall be deemed transmitted when personally
delivered or deposited in the mail or delivered to a courier service or sent by
telecopy (as the case may be), postage or charges prepaid, and addressed to the
particular party to whom the notice is to be sent as follows:
(a) in the case of the Corporation:
Genesis ElderCare Corp.
101 East State Street
Kennett Square, PA 19348
Telecopier No.: 610-444-3365
Attention: Ira C. Gubernick, Esquire
with a copy to:
Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, PA 19103
Telecopier No.: (215) 569-5555
Attention: Stephen E. Luongo, Esquire
(b) in the case of Cypress:
The Cypress Group L.L.C.
65 East 55th Street, 19th Floor
New York, NY 10022
Telecopier No.: (212) 705-0199
Attention: William L. Spiegel
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with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Telecopier No.: (212) 455-2502
Attention: William E. Curbow, Esquire
(c) in the case of TPG:
TPG Partners II, L.P.
201 Main Street, Suite 2420
Fort Worth, Texas 76102
Telecopier No.: (817) 871-4010
Attention: Karl I. Peterson
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, NY 10006
Telecopier No.: (212) 225-3999
Attention: Paul J. Shim, Esquire
(d) in the case of Genesis:
Genesis Health Ventures, Inc.
101 East State Street
Kennett Square, PA 19348
Telecopier No.: 610-444-3365
Attention: Ira C. Gubernick, Esquire
with a copy to:
Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, PA 19103
Telecopier No.: (215) 569-5555
Attention: Stephen E. Luongo, Esquire
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(e) in the case of Nazem:
Nazem, Inc.
645 Madison Avenue
New York, NY 10022
Telecopier: (212) 371-2150
Attention: Fred Nazem
with a copy to:
Bartoma Corporation, N.V.
Fokkerweg 26
Suite 12
Curacao, Netherlands Antilles
Telecopier: 5999-465-39-07
Attention: Marleen Janssen
(f) in the case of the Senior Creditors:
Mellon Bank, N.A., as Administrative Agent and
Synthetic Lease Agent
Street Address:
AIM 199-5220
Mellon Independence Center
701 Market Street
Philadelphia, Pennsylvania 19106
Mailing Address:
AIM 199-5220
P.O. Box 7899
Philadelphia, Pennsylvania 19101-7899
Telecopier: (215) 553-4789
Attention: Linda Sigler, Loan Administration
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with a copy to:
Mellon Bank, N.A.
One Mellon Bank Center
Room 151-4440
Pittsburgh, PA 15258-0001
Telecopier: (412) 236-0287
Attention: Marsha Wicker, Vice President
with a copy for notices respecting assignments to:
Mellon Bank, N.A.
One Mellon Bank Center
43rd Floor
Pittsburgh, PA 15258-0001
Telecopier: (412) 236-9176
Attention: Dean Hazelton
(g) in the case of any other Person, to the address of such Person set
forth on the Joinder hereto executed by such Person.
or to such address as a party may instruct by notice hereunder.
Section 6.3 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 6.4 Entire Agreement. This Agreement, together with the other
agreements referred to herein, is the entire Agreement among the parties, and,
when executed by the parties hereto, supersedes all prior agreements and
communications, either verbal or in writing between the parties hereto with
respect to the subject matter contained herein.
Section 6.5 Amendment and Waiver. This Agreement may not be amended,
modified or supplemented unless consented to in writing by the Genesis
Stockholders and a majority (by voting power) of the Non-Genesis Stockholders.
Any amendment, modification or supplement so consented to shall be binding upon
and inure to the benefit of any subsequent Stockholder. Any waiver or failure to
insist upon strict compliance with any obligation, agreement or condition herein
shall not operate as a waiver of, or estoppel with respect to, any such
subsequent or other failure.
Section 6.6 Consent to Specific Performance. The parties hereto declare
that it is impossible to measure in money the damages which would accrue to a
party by reason of failure to perform any of the obligations hereunder.
Therefore, if any party shall institute any action or
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proceeding to enforce the provisions hereof, any party against whom such action
or proceeding is brought hereby waives any claim or defense therein that the
other party has an adequate remedy at law.
Section 6.7 Assignment; Responsibility for Affiliates. The provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors. No party may assign to any Person any of
its rights or obligations hereunder. Notwithstanding the foregoing provision, a
Genesis Stockholder may assign any of its rights hereunder pursuant to any
security agreement or pledge agreement entered into for the benefit of Genesis'
senior lenders.
Section 6.8 Variations in Pronouns. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine or neuter, singular
or plural, as the identity of the antecedent person or persons or entity or
entities may require.
Section 6.9 Term. This Agreement shall terminate upon the earlier to
occur of (i) the mutual written agreement of the Stockholders; or (ii)
consummation of the exercise of the Call Option pursuant to the Put/Call
Agreement, without any default in connection therewith.
Section 6.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
Section 6.11 Further Assurances. Each of the parties shall execute such
documents and other papers and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby.
Section 6.12 Headings. The headings in this Agreement are intended
solely for convenience of reference and shall be given no effect in the
interpretation of this Agreement.
Section 6.13 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.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date first above written.
GENESIS ELDERCARE CORP.
By:
THE CYPRESS GROUP L.L.C.
By:
TPG PARTNERS II, L.P.
BY: TPG GenPar II, L.P.
BY: TPG ADVISORS II, INC.
By:_______________________________________
GENESIS HEALTH VENTURES, INC.
By:_______________________________________
NAZEM, INC.
By:_______________________________________
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The foregoing provisions of this Agreement applicable to Affiliates of
Stockholders owning Common Stock 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:
Name:
Title:
CYPRESS OFFSHORE PARTNERS L.P.
By: Cypress Associates L.P.
By: The Cypress Group L.L.C.
By:
Name:
Title:
Affiliates of TPG PARTNERS II, L.P.
TPG PARALLEL II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By:
Name:
Title:
TPG INVESTORS II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By:
Name:
Title:
[Signatures continued on following page]
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TPG MC COINVESTMENT, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By:
Name:
Title:
Affiliate of Nazem
GENESIS ELDERCARE PORTFOLIO K. LP
By: Healthworth Associates I, L.L.C.
By:
Name:
Title:
Acknowledged and accepted with respect to Article V:
MELLON BANK, N.A., as Administrative Agent under the Credit Agreement and Agent
under the Synthetic Lease Facility
By:
Name:
Title:
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<PAGE>
EXHIBIT A
Joinder
The undersigned hereby agrees to be bound to the attached Amended and
Restated Stockholders Agreement as a Non-Genesis Stockholder in accordance with
the terms thereof.
The address for notices or other communications to the undersigned
under the Amended and Restated Stockholders Agreement is:
[ ]
[ ]
[ ]
Attention:
Telecopier:
[ ]
Title:
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<PAGE>
EXHIBIT B
Irrevocable Proxy
[ ] (collectively, "Stockholder") hereby grant to and appoint Genesis
Health Ventures, Inc. ("Genesis"), Stockholder's irrevocable proxy and
attorney-in-fact (with full power of substitution) to vote in their sole
discretion all the shares of common stock, par value $.01 per share (the "Common
Stock"), of Genesis ElderCare Corp. now or hereafter owned by Stockholder with
all powers Stockholder would possess if acting personally. Stockholder intends
this proxy to be irrevocable and coupled with an interest and hereby revokes any
proxy previously granted by Stockholder with respect to the Common Stock owned
by Stockholder.
Stockholder 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 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 Stockholder may have in any
such matter. Genesis shall not have any fiduciary or other duty to Stockholder.
This proxy shall be valid and in effect for so long as Stockholder
shall own any shares of Common Stock (which may be longer than three years),
notwithstanding any earlier termination of the Amended and Restated Stockholders
Agreement, dated November , 1999, by and among Genesis ElderCare Corp., The
Cypress Group L.L.C., TPG Partners II, L.P., Genesis, Nazem, Inc. and the other
signatories thereto.
THIS PROXY SHALL BE GOVERNED BY THE LAW OF THE STATE OF DELAWARE.
By:___________________________________
Name:
Title:
By:
Name:
Title:
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Exhibit 10.2
AMENDED AND RESTATED PUT/CALL AGREEMENT
Among
The Cypress Group L.L.C.,
TPG Partners II, L.P.,
Nazem, Inc.,
The Other Signatories Hereto
And
Genesis Health Ventures, Inc.
Dated
November 15, 1999
<PAGE>
AMENDED AND RESTATED PUT/CALL AGREEMENT
AMENDED and RESTATED PUT/CALL AGREEMENT, dated as of November 15, 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"), the other signatories hereto, and Genesis Health
Ventures, Inc., a Pennsylvania corporation ("Genesis").
WITNESSETH
WHEREAS, Genesis and the Sponsors or their affiliated investment funds
own all of the issued and outstanding common stock, par value $.01 per share
(the "Common Stock") of Genesis ElderCare Corp., a Delaware corporation
("Parent").
WHEREAS, on October 9, 1997, Genesis and the Sponsors entered into a
Put/Call Agreement (the "Original Put/Call Agreement") related to the Common
Stock.
WHEREAS, the parties hereto desire to amend and restate the Original
Put/Call Agreement.
NOW, THEREFORE, in consideration of the mutual covenant 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" is defined in the preamble hereto.
"Business Day" means any day other than a Saturday, Sun day or other
day on which commercial banks in the City of New York are authorized or required
by laws to close.
"Call Option" means the collective reference to the options granted
pursuant to Section 2.1.
"Call Optionee" means each Person who is or becomes a signatory hereto
if such Person owns Common Stock subject to the Call Option on the Notification
Date.
"Call Option Exercise Price" is defined in Section 2.1(a).
"Common Stock" is defined in the recitals hereto.
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"Common Stock Transferee" means each Person other than an Affiliate of
Genesis who acquires shares of Common Stock from a Sponsor or an Affiliate of a
Sponsor or any other Common Stock Transferee.
"Cypress" is defined in the preamble hereto.
"Exercise Date" means the date specified for the closing of the
exercise of the Call Option, as set forth in a notice given pursuant to Section
2.1(b).
"Genesis" is defined in the preamble hereto.
"Nazem" is defined in the preamble hereto.
"Notification Date" means the date notification is given by Genesis
under the Call Option in accordance with Section 2.1(b).
"Parent" is defined in the recitals hereto.
"Person" means any individual, corporation, partnership, joint venture,
trust, business, unincorporated organization or other entity.
"Sponsors" is defined in the preamble hereto.
"Stockholders Agreement" means the Stockholders Agreement, dated
October 9, 1997, among Cypress, Genesis, Nazem, Parent, and TPG, as amended.
"TPG" is defined in the preamble hereto.
ARTICLE II
CALL OPTION
Section 2.1 Call Option
(a) On the terms and subject to the conditions set forth herein, each
Sponsor, each Affiliate of a Sponsor owning Common Stock, and each Common Stock
Transferee hereby grants to Genesis an irrevocable option exercisable beginning
on the date hereof and ending on the tenth anniversary of the date hereof, to
purchase (and, upon exercise of such Call Option in accordance herewith, each
such Person irrevocably agrees to sell to Genesis), all, but not less than all,
of the Common Stock owned by such Person on the Notification Date; provided,
that Genesis shall be entitled to exercise the Call Option with respect to
shares owned by any Call Optionee on the Notification Date only if Genesis shall
exercise the Call Option with respect to shares of Common Stock owned by each
other Call Optionee on the Notification Date. The aggregate purchase price with
respect to all the shares of Common Stock subject to the Call Option shall be
equal to Two Million Dollars, subject to adjustment pursuant to Section 5.1(c)
(the "Call Option Exercise Price"). The Call Option Exercise Price shall be paid
in cash. The consideration to be paid for each share of Common Stock shall equal
the Call Option Exercise Price
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<PAGE>
divided by the aggregate number of shares of Common Stock subject to the Call
Option on the Exercise Date.
(b) Genesis shall give each Call Optionee written notice of exercise of
the Call Option no less than 60 days prior to the Business Day specified in such
notice for exercise of the Call Option. A notice of exercise of the Call Option
shall irrevocably commit Genesis and each Call Optionee to the purchase and sale
of the Common Stock in accordance with the Call Option. The closing of the Call
Option shall take place as provided in Article III.
ARTICLE III
CLOSING
Section 3.1 Payment of the Option Price. The closing of the purchase
of Common Stock pursuant to the exercise of the Call Option as provided in
Section 2.1 shall take place on the Exercise Date. At the closing, Genesis shall
deliver cash in immediately available funds to, or upon the order of, each Call
Optionee against delivery of certificates representing the shares of Common
Stock sold by such Call Optionee, duly endorsed in blank or accompanied by duly
executed stock powers.
Section 3.2 Time and Place of Closing . The closing of the purchase of
the Common Stock shall be held at the offices of Blank Rome Comisky & McCauley
LLP, One Logan Square, Philadelphia, Pennsylvania, 19103 on the Exercise Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Parties. Each of
Cypress, TPG, Nazem and Genesis represents and warrants as follows:
(a) This Agreement has been duly executed and delivered by such Person
and constitutes the legal, valid and binding obligation of such Person,
enforceable against such Person 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
(b) The execution and delivery of this Agreement by such Person does
not, and the performance by it and its Affiliates of its and their obligations
under this Agreement will not, violate, conflict with or constitute a breach of,
or a default under, any material agreement, indenture or instrument to which
such Person is a party or which is binding on such Person, and will not result
in the creation of any lien on, or security interest in, any of the assets of
such Person.
Section 4.2 Representations and Warranties of Genesis. Genesis
represents and warrants to the Sponsors as follows:
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<PAGE>
(a) No consent, approval or authorization of, or filing, registration
or qualification with, any court, governmental, administrative or judicial
authority or regulatory body is required on the part of Genesis for the
execution, delivery and performance of this Agreement.
(b) As of the Exercise Date there will be no action or proceeding or
investigation pending or, to the best knowledge of Genesis, threatened against
Genesis or any of its subsidiaries which, if determined adversely could
adversely affect the consummation of the transactions contemplated by this
Agreement. There are no actions or proceedings challenging or seeking to
restrain, materially limit or prohibit the consummation of the transactions
contemplated hereby.
(c) 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.
Section 4.3 Representations and Warranties of the Sponsors. Each of the
Sponsors represents and warrants to Genesis as follows:
(a) On the Exercise Date, such Person and its Affiliates, if any, owing
Common Stock will have good and valid title to the shares of Common Stock owned
by it, free and clear of all liens, encumbrances, equities and claims (other
than the Call Option).
(b) No consent, approval or authorization of, or filing, registration
or qualification with, any court, governmental, administrative or judicial
authority or regulatory body will be, as of the Exercise Date, required on the
part of such Person or any of its Affiliates owning Common Stock for the valid
sale and delivery of the Common Stock then owned by such Person or any of its
Affiliates to Genesis as contemplated herein.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Further Assurances.
(a) Subject to the terms and conditions hereof, Genesis and each Person
then subject to the Call Option agrees to use its best efforts to take, or cause
to be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective, reasonably promptly the transactions contemplated by this Agreement.
(b) Promptly following the Notification Date, Genesis and each Person
then subject to the Call Option shall prepare and file all applications and
other notices required in connection with, and use their best efforts to obtain
promptly and comply with all conditions contained in, all necessary regulatory
approvals and any other consent, approval or other actions by, or notice to or
registration or filing with, any governmental or administrative agency or
authority required or necessary to be made, obtained or complied with, as the
case may be, by any such Person in connection with the performance of the
transactions contemplated by this Agreement, including without limitation any
premerger notifications pursuant to the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "HSR Act"). Genesis agrees (i) to enter into with the Federal
Trade Commission and/or the Department of Justice such decrees,
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<PAGE>
consent orders and/or hold separate undertakings, and (ii) to effectuate any
divestitures, in each case involving assets or operations of either Parent or
Genesis or its Affiliates or both, as may be necessary in order to enable
Genesis to purchase, as soon as practicable following the Notification Date and
in any event no later than the Exercise Date, the Common Stock subject to the
Call Option.
(c) Genesis agrees to pay the Call Optionees' reasonable expenses
(including attorney fees) in connection with the transactions contemplated by
this agreement. Genesis shall be permitted to deduct, up to a maximum aggregate
amount of $200,000, the reasonable expenses paid pursuant to this Section 5.1(c)
from the Call Option Exercise Price upon exercise of the Call.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Notices
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 any Common Stock Transferee at the address
of such Person, set forth on the Joinder hereto executed by such Person (the
form of which is attached hereto as Exhibit "A") pursuant to the Stockholders
Agreement or to Cypress, TPG, Genesis or Nazem at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to Cypress, to:
The Cypress Group L.L.C.
65 East 55th Street - 19th Floor
New York, NY 10022
Attention: William L. Spiegel
Telecopier: (212) 705-0199
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: William E. Curbow, Esquire
Telecopier: (212) 455-2502
5
<PAGE>
(b) if to TPG, to:
TPG Partners II, L.P.
201 Main Street - Suite 2420
Fort Worth, TX 76102
Attention: Karl I. Peterson
Telecopier: (817) 871-4010
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, NY 10006
Attention: Paul J. Shim, Esquire
Telecopier: (212) 225-3999
(c) if to Genesis, to:
Genesis Health Ventures, Inc.
101 East State Street
Kennett Square, PA 19348
Attention: Ira C. Gubernick, Esquire
Telecopier: (610) 444-3365
with a copy to:
Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, PA 19103
Attention: Stephen Luongo, Esquire
Telecopier: (215) 569-5555
(d) if to Nazem, to:
Nazem, Inc.
645 Madison Avenue
New York, NY 10022
Attention: Fred Nazem
Telecopier: (212) 371-2150
6
<PAGE>
with a copy to:
Bartoma Corporation, N.V.
Fokkerweg 26 - Suite 12
Curacao, Netherlands Antilles
Attention: Marleen Janssen
Telecopier: 5999-465-39-07
Section 6.2 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 6.3 Entire Agreement. This Agreement (including the documents
and 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 6.4 Amendment and Modification. This Agreement may be amended,
modified or supplemented only by a written agreement signed by Genesis and each
other Person then subject to the Call Option. Any waiver or failure to insist
upon strict compliance with any obligation, agreement or condition herein shall
not operate as a waiver of, or estoppel with respect to, any such subsequent or
other failure.
Section 6.5 Assignment; Binding on Transferees. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors. Cypress and TPG may assign any of their rights
and obligations hereunder to any of their respective Affiliates owning capital
stock of Parent. Neither Genesis nor Nazem may assign any of its rights and
obligations hereunder to any Person without the written consent of Cypress and
TPG, acting jointly, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing provision, Genesis may assign any of its rights
and obligations hereunder to any of its Affiliates and may assign its rights
hereunder pursuant to any security agreement or pledge agreement entered into
for the benefit of its senior lenders without the written consent of Cypress and
TPG.
Section 6.6 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.
7
<PAGE>
Section 6.7 Headings. This 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 6.8 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 6.9 Specific Performance; Remedies. The parties hereto each
acknowledge that, in view of the uniqueness of the transactions contemplated
hereby, the other parties would not have an adequate remedy at law for money
damages if this Agreement has not been performed in accordance with its terms.
Each party therefore agrees that the other parties shall be entitled to specific
performance of the terms hereof. Any such remedy shall be in addition to any
other remedy that may be available at law or in equity.
Section 6.10 Submission to Jurisdiction; Waivers. Each of the parties
hereto hereby irrevocably submits in any legal action or proceeding relating to
or arising out of this Agreement, or for recognition and enforcement of any
judgment in respect thereof, to the jurisdiction of the United States District
Court for the Southern District of New York, and appellate courts thereof. Each
of the parties hereto further: (i) consent that any such action or proceeding
may be brought in such court and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in such court or
that such action or proceeding was brought in an inconvenient court and agrees
not to plead or claim the same; (ii) 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 6.1 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 sue in any other
jurisdiction.
Section 6.11 WAIVERS OF ANY 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.
Section 6.12 SUBORDINATION. THE RIGHTS OF THE SPONSORS, THE
AFFILIATES OF THE SPONSORS EXECUTING THIS AGREEMENT AND THE COMMON STOCK
TRANSFEREES (THE "SUBORDINATED PARTIES") HEREUNDER ARE SUBORDINATED AND LIMITED
AS PROVIDED IN THE STOCKHOLDERS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE
PAYMENT OBLIGATIONS OF GENESIS UNDER THIS AGREEMENT ARE EXPRESSLY SUBORDINATE
AND JUNIOR IN RIGHT OF PAYMENT TO THE SENIOR OBLIGATIONS (AS SUCH TERM IS
DEFINED IN THE STOCKHOLDERS AGREEMENT). THE STOCKHOLDERS
8
<PAGE>
AGREEMENT IS AND SHALL BE BINDING UPON EACH OF THE SUBORDINATED PARTIES AND EACH
ASSIGNEE OF ANY OF THE RIGHTS OF THE SUBORDINATED PARTIES.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date first above written.
THE CYPRESS GROUP L.L.C.
By:__________________________
Name:________________________
Title:_______________________
TPG PARTNERS II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By:__________________________
Name:________________________
Title:_______________________
[SIGNATURES CONTINUED ON NEXT PAGE]
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<PAGE>
NAZEM, INC.
By:__________________________
Name:________________________
Title:_______________________
GENESIS HEALTH VENTURES, INC.
By:__________________________
Name:________________________
Title:_______________________
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<PAGE>
The foregoing provisions of this Agreement applicable to Affiliates of
Sponsors owning Common Stock 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:__________________________________
Name:________________________________
Title:_______________________________
CYPRESS OFFSHORE PARTNERS L.P.
By: Cypress Associates L.P.
By: The Cypress Group L.L.C.
By:__________________________________
Name:________________________________
Title:_______________________________
Affiliates of TPG Partners II, L.P.
TPG PARALLEL II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By:__________________________________
Name:________________________________
Title:_______________________________
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TPG INVESTORS II, L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By:__________________________________
Name:________________________________
Title:_______________________________
TPG MC COINVESTMENT L.P.
By: TPG GenPar II, L.P.
By: TPG Advisors II, Inc.
By:__________________________________
Name:________________________________
Title:_______________________________
Affiliate of Nazem
Genesis ElderCare Portfolio K, LP
By: Healthworth Associates I, L.L.C.
By:__________________________________
Name:________________________________
Title:_______________________________
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<PAGE>
EXHIBIT A
Joinder
The undersigned hereby agrees that the provisions of the Amended and
Restated Put/Call Agreement attached hereto applicable to Common Stock
Transferees, Call Optionees or Persons subject to the Call Option shall be
binding on, and inure to the benefit of, the undersigned in accordance with the
terms thereof.
The address for notices or other communications to the undersigned
under the Amended and Restated Put/Call Agreement is:
[ ]
[ ]
[ ]
Attention:
Telecopier:
[ ]
_____________________________
Title:
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<PAGE>
EXHIBIT 99.1
PRESS RELEASE
Genesis Health Ventures Announces Closing of Multicare Revision Transaction
KENNETT SQUARE, PA-(BW Health Wire)-November 15, 1999--Genesis Health
Ventures, Inc. (NYSE:GHV news) announced the closing of its transaction with The
Cypress Group (Cypress) and the Texas Pacific Group (TPG) to restructure its
Multicare joint venture.
GHV Chairman and CEO, Michael Walker, said, "The closure of this
transaction is an important step for Genesis and its shareholders. In looking
ahead, the enhanced financial flexibility for the company will strengthen our
position as a leader in the provision of eldercare."
Genesis Health Ventures provides eldercare in the eastern US through a
network of Genesis ElderCare skilled nursing and assisted living centers plus
long term care support services nationwide including pharmacy, medical equipment
and supplies, rehabilitation, group purchasing, consulting and facility
management.
The Cypress Group, based in New York City, manages private equity funds
with more than $3.5 billion in commitments. Texas Pacific Group, based in San
Francisco and Fort Worth, manages private equity funds in excess of $4 billion.
Statements in this press release which are not historical facts are
forward-looking statements. The company cautions investors that any
forward-looking statements made by the Company involve risks and uncertainties
and are not guarantees of future performance.
Numerous factors exists which, in some cases have affected, and, in the
future, could cause results to differ materially from these expectations,
including the factors as detailed from time to time in the Company's filings
with the Securities and Exchange Commission.
