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
Page
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 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇.
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 ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ 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
11
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
13
amended or supplemented and including all documents incorporated by reference
therein, filed since January 1, 1998, are referred to herein as the "SEC
Filings"). As of the respective dates of their filing with the SEC, the SEC
Filings complied in all material respects with the applicable provisions of
Securities Act and the Exchange Act and did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(b) Each of the historical financial statements of Genesis
(including any related notes or schedules) included in the SEC Filings was
prepared in accordance with GAAP (except as may be disclosed therein) and
complied in all material respects with the rules and regulations of the SEC.
Such financial statements fairly present the consolidated financial position of
Genesis and its subsidiaries as of the dates presented and the results of
operations, cash flows and changes in stockholders' equity for the periods
presented (subject, in the case of unaudited interim financial statements, to
normal year-end audit adjustments on a basis comparable with past periods).
Section 6.8 Listing of Genesis Common Stock. The shares of
Genesis Common Stock and Genesis Non-Voting Common Stock which constitute
Transaction Securities on the date of the issuance thereof, will be listed and
eligible for trading on the principal United States securities exchange on which
the Genesis Common Stock is then traded or on the NASDAQ National Market System,
as the case may be.
Section 6.9 Rights Plan. The Board of Directors of Genesis
has amended the Rights Agreement, dated as of April 20, 1995 (the "Genesis
Rights Agreement"), between Genesis and Mellon Securities Trust Company, as
Rights Agent, to exclude the Sponsors and the Sponsor Affiliates from the
definition of "Acquiring Person" (as such term is defined in the Genesis Rights
Agreement). Neither the execution and delivery of this Agreement nor the
transactions contemplated by this Agreement, including, without limitation, the
receipt of the Transaction Securities by Sponsors or the Sponsor Affiliates and
the issuance of Transaction Securities by Genesis, shall cause any rights under
the Genesis Rights Agreement or any other rights plan (poison pill) of Genesis
or any of its subsidiaries or its or their successors to issue or become
exercisable or result in any other adverse consequence under the Genesis Rights
Agreement or any other rights plan of Genesis to Sponsors or the Sponsor
Affiliates owning Transaction Securities.
Section 6.10 Inapplicability of Antitakeover Statutes or
Provisions. No state takeover statute or similar statute or regulation applies,
purports to apply or will, following the occurrence of any event contemplated
hereby or otherwise, apply to the transactions contemplated by this Agreement,
including, without limitation, the receipt of Transaction Securities by Sponsors
or the Sponsor Affiliates and the issuance of Transaction Securities by Genesis,
and, except as provided in this Agreement, no provision of the articles of
incorporation, bylaws or other governing documents of Genesis will, following
the occurrence of any event contemplated hereby or otherwise, restrict or impair
the ability of Sponsors or the Sponsor Affiliates or any subsequent transferee
to vote or otherwise exercise the rights of a stockholder
14
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
15
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
16
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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇") 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 ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ 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
17
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).
18
(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,
19
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.
21
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'
25
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
26
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
27
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;
28
(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
29
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
30
(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
31
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
32
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
33
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
34
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
35
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.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
(ii) if to TPG, to:
TPG Partners II, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopier: 212-225-3999
(iii) if to Genesis, to:
Genesis Health Ventures, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
36
with a copy to:
Blank Rome Comisky & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopier: 215-569-5555
(iv) if to Nazem, to:
Nazem, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Bartoma Corporation, ▇.▇.
▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ Antilles
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier: ▇▇▇▇-▇▇▇-▇▇-▇▇
(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
37
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
38
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 ▇▇▇ in any
other jurisdiction.
[The next page is numbered S-1.]
39
Section 13.12 WAIVERS OF JURY TRIAL. EACH PARTY HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement on the date first above written.
THE CYPRESS GROUP L.L.C.
By:______________________________
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
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
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