EXHIBIT 10.18
MASTER RIGHTS AGREEMENT
THIS MASTER RIGHTS AGREEMENT ("Agreement") is entered into as of August 11,
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1998, by and among Harborside Healthcare Corporation, a Delaware corporation
(the "Company) and the initial Holders identified on Schedule A hereto.
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R E C I T A L S
A. This Agreement is being entered into pursuant to the Agreement and Plan
of Merger (the "Merger Agreement") dated as of April 15, 1998 (as amended)
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between the Company and HH Acquisition Corp., a Delaware corporation
("MergerCo").
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B. Pursuant to the Merger Agreement, MergerCo will be merged into the
Company (the "Merger"), and the initial Holders identified on Schedule A hereto
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will be stockholders of the Company. The purpose of this Agreement is to grant
certain rights to such stockholders as set forth herein.
A G R E E M E N T
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the parties
hereto agree as follows:
1. CERTAIN DEFINITIONS; EFFECTIVENESS.
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1.1. The following terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. A Person will be deemed to control a
corporation if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by contract or
otherwise.
"Berkshire Stockholders" means the initial Holders identified as such
on Schedule A hereto.
"Berkshire Registrable Securities" means the Registrable Securities
held by the Berkshire Stockholders as of immediately after the Effective Time.
"Class D Investors" means, as of any date of determination, the
Holders of Class D Common Stock of the Company.
"Commission" means the Securities and Exchange Commission or any
successor organization.
"Charter" means the Amended and Restated Certificate of Incorporation
of the Company as in effect immediately after the Effective Time and as such
Amended and Restated Certificate of Incorporation may thereafter from time to
time be amended in accordance with applicable law and such certificate.
"Effective Time" means the time at which the Merger becomes effective
as specified in the Merger Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"Holders" means, as of any date of determination, the holders of
record of Registrable Securities other than any Persons to whom Registrable
Securities have been transferred who are not Permitted Assignees under Section
12.3 hereof.
"Investcorp Investors," at any date of determination, means all of the
following who are then Holders: Investcorp Bank E.C. and its Affiliates and any
other investor with whom Investcorp Bank E.C. or any Affiliate thereof has an
administrative relationship.
"Initial Public Offering" shall have the meaning ascribed to that term
in the Charter as in effect immediately after the Effective Time.
"Person" means an individual, partnership, joint venture, limited
liability company, corporation, trust, unincorporated organization or a
government or any department or agency thereof.
"register," "registered" and "registration" means a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, the declaration or ordering of effectiveness of such
registration statement by the Commission and the compliance with all applicable
state securities or blue sky laws which will permit the sale of Registrable
Stock to the public.
"Registrable Securities" means as of any date of determination: (a)
the shares of Class A Common Stock of the Company held by any of the Berkshire
Stockholders as of immediately following the Effective Time as reflected on
Schedule A hereto; (b) the shares of Class B Common Stock, Class C Common Stock
and Class D Common Stock of the Company held by Investcorp Investors outstanding
as of immediately following the Effective Time as reflected on Schedule A
hereto; (c) any additional shares of any class or series of common equity
securities of the Company (or securities convertible into or exercisable or
exchangeable for any such additional shares) acquired prior to the Initial
Public Offering by an Investcorp Investor; (d) any additional shares of any
class or series of common equity securities of the Company (or securities
convertible into or exercisable or exchangeable for any such additional shares)
acquired prior to an Initial Public Offering by a Berkshire Stockholder pursuant
to clause (ii) of Section 11.1 hereof and (e) any shares of capital stock of the
Company issued on account of any of the foregoing in connection with any stock
split or stock dividend effected after the Effective Time and any equity
securities of any other issuer issued in exchange for any of the foregoing in
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connection with any merger, consolidation, reorganization or recapitalization
involving the Company or its securityholders which is effected after the
Effective Time. Notwithstanding anything to the contrary in this Agreement, (x)
any particular Registrable Securities shall cease to be Registrable Securities
when a registration statement with respect to the sale of such securities shall
have become effective under the Securities Act and such stock shall have been
disposed of in accordance with such registration statement, or when such
securities cease to be outstanding and (y) any Berkshire Registrable Securities
beneficially owned by a Holder who beneficially holds less than 1% of the
outstanding common equity securities of the Company and can sell all common
equity securities of the Company beneficially held by such Holder pursuant to
Rule 144(k) under the Securities Act shall be excluded from the definition of
Registrable Securities.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
Certain other items are defined elsewhere in this Agreement.
1.2. This Agreement shall be deemed effective upon and only upon the
Effective Time.
2. DEMAND REGISTRATION.
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2.1. Written Request. Commencing on the earlier of (i) 90 days after
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the closing of an Initial Public Offering and (ii) the fifth anniversary of the
date on which the Effective Time occurs, Holders who are Investcorp Investors
shall have the right, exercisable for up to a total of three (3) effective
registration statements, to require the Company to register under the Securities
Act such number of Registrable Securities as such Holders shall designate for
sale in a written request to the Company (a "Demand Registration"); provided,
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however, that, the aggregate number of Registrable Securities to be so
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registered is equal to or greater than two percent (2%) of the total outstanding
common equity interests of the Company then outstanding.
2.2. Demand Registration.
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2.2.1. If the Demand Registration is requested pursuant to
Section 2.1 hereof, the Company agrees to use its reasonable best efforts to
cause to be filed at the earliest possible date, and in no event later than 60
days from the receipt of such request, and declared effective within 120 days of
such request a registration statement covering such Registrable Securities as
are designated for sale in such Demand Registration request on an appropriate
registration form pursuant to the Securities Act. A registration shall not count
as a Demand Registration until it has become effective; provided that all of the
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other obligations of the Company to the Holders of Registrable Securities
included therein will remain in effect whether or not such registration is
counted as a Demand Registration; and provided, further, that, after the filing
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of a registration statement pursuant to a Demand Registration request until such
time as such registration statement becomes effective, the holders of a majority
of the Registrable Securities included therein pursuant to the demand rights
granted under this Section 2 may, by written notice to the Company, request that
such registration statement be withdrawn, and the
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Company shall thereafter promptly notify the appropriate staff of the Commission
that such registration statement (and any request for acceleration of
effectiveness thereof) is being withdrawn.
2.2.2. The Company shall be entitled to postpone for a reasonable
period of time (not to exceed six (6) months) the filing of a registration
statement pursuant to the Demand Registration if, within 10 business days after
the Company receives the Demand Registration request, the Company shall furnish
to the Holders making such request a certificate signed by an executive officer
of the Company stating that in the good faith belief of a majority of the Board
of Directors, it would be in the best interests of the Company and its
stockholders to defer the filing required hereunder. Such certificate shall
summarize the reasons for such good faith belief, and such Holders shall be
entitled to discuss the reasons given with the entire Board of Directors.
2.2.3. At least 30 days before the anticipated filing date of the
Demand Registration, the Company shall give written notice of such proposed
filing to each Holder of Berkshire Registrable Securities and such notice shall
offer each such Holder the opportunity to include in such registration statement
the Registrable Securities then owned by such Holder, as such Holder may request
in writing within 15 days after receipt of the Company's notice (which request
shall specify the number of Registrable Securities to be included in such
registration statement and the intended method of disposition), up to an amount
equal to the number of Registrable Securities held by such Holder multiplied by
the quotient of the number of Registrable Securities to be registered by
Investcorp Investors and the total number of Registrable Securities held by
Investcorp Investors.
2.2.4. The Company will not, without the written consent of a
majority in interest of the Investcorp Investors, include in any Demand
Registration securities for sale for the account of any Person other than
Investcorp Investors or the Holders of Berkshire Registrable Securities.
2.2.5. In the event that a Demand Registration is proposed to be
effected through an underwritten offering, (x) the provisions of Section 3.1.1
or 3.1.2, as applicable, shall govern such Demand Registration, (y) (I) the
Company shall have the right in its sole discretion to select the managing
underwriter if 50% or more of the shares to be included in such offering will be
sold for the account of the Company and (II) in connection with any other Demand
Registration which is to be an underwritten offering, the Investcorp Investors
joining in such Demand Registration, by action of the Investcorp Investors
holding a majority in interest of the common equity interests to be included in
such offering, shall have the right in their sole discretion to select the
managing underwriter, and (z) the Company shall make its senior management
available to provide reasonable and customary assistance to the underwriters in
connection with the marketing of the securities included therein.
2.2.6 Prior to the Initial Public Offering, the demand rights granted
pursuant to this Section 2 (and any rights incident thereto) shall be
exercisable by the holders of a majority of the outstanding shares of Class D
Common Stock of the Company.
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3. COMPANY REGISTRATION.
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3.1. If the Company proposes to file a registration statement with
respect to common equity securities of the Company (other than a Demand
Registration or a registration statement on Form S-8 or S-4 or comparable
successor forms or a registration statement relating to a dividend reinvestment
plan) which is available for use for the sale of Registrable Securities under
the Securities Act, then the Company shall give written notice of such proposed
filing at least 30 days before the anticipated filing date of such registration
statement to each Holder, and such notice shall offer each Holder the
opportunity to include in such registration statement the Registrable Securities
then owned by such Holder, as such Holder may request in writing within 15 days
after receipt of the Company's notice (which request shall specify the number of
Registrable Securities to be included in such registration statement and the
intended method of disposition). The Company shall include in any such
registration statement all such Registrable Securities requested to be included.
Notwithstanding the foregoing:
3.1.1. if (x) the registration statement relates to an
underwritten offering which includes shares to be offered and sold for the
account of the Company and (y) the managing underwriter of any such offering
advises the Company in writing (with a copy to the Holders and the Other Rights
Holders) that the total number of shares which the Company, the Holders, and
other Persons whose contractual rights (now existing or hereafter granted) give
them the right to be included in such registration (the "Other Rights Holders")
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intend to include in such offering is sufficiently large to affect materially
and adversely the ability of such underwriter to complete successfully an
offering that does not significantly and adversely impact the market price of
the shares being offered, then the number of shares to be included in such
registration statement and offering for the account of the Holders and the Other
Rights Holders shall be reduced pro rata so that the aggregate amount of shares
included in such registration statement and offering for the account of the
Holders and the Other Rights Holders, together with the shares to be sold for
the account of the Company, does not exceed the amount that such managing
underwriter determines in good faith can be sold in such offering without
materially and adversely affecting the ability of such managing underwriter to
complete successfully such offering without significantly and adversely
affecting the market price of the shares being offered; and
3.1.2. if (x) the registration statement relates to an
underwritten offering which does not include shares to be sold for the account
of the Company and (y) the managing underwriter advises (in writing) the Holders
and the Other Rights Holders who have requested that shares be included therein
that the total number of shares which the Holders and the Other Rights Holders
intend to include in such offering is sufficiently large to affect materially
and adversely the ability of such underwriter to complete successfully an
offering that does not significantly and adversely affect the market price of
the shares being offered, then the number of shares to be included in such
registration statement and offering for the accounts of the Holders and the
Other Rights Holders shall be reduced pro rata so that the aggregate amount of
shares included in such registration statement and offering for the accounts of
Holders and the Other Rights Holders in the aggregate does not exceed the amount
that such managing underwriters determine in good faith can be sold in such
offering without materially and adversely affecting
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the ability of such managing underwriter to complete successfully such offering
without significantly and adversely affecting the market price of the shares
being offered.
3.2. The Company may require each Holder to furnish to the Company
information regarding such Holder and the intended manner of disposition of such
Holder's Registrable Securities, and Holders shall furnish such information to
the Company and any other information as shall be required by law or by the
Commission in connection therewith.
3.3. In connection with any registration pursuant to this Section 3
which relates to a proposed underwritten offering in which 50% or more of the
shares included in such offering are to be sold for the account of the Company,
the Company shall have the right in its sole discretion to select the managing
underwriter. In connection with any other registration pursuant to this Section
3 which relates to a proposed underwritten offering, holders of a majority of
the shares to be included therein pursuant to contractual registration rights
(now existing or hereafter granted) shall have the right to select the managing
underwriter and, in the absence of such a majority designation, the managing
underwriter will be selected by the Company.
4. REGISTRATION PROCEDURES.
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4.1. If and whenever the Company is required to effect the
registration of any Registrable Securities under the Securities Act as provided
in Sections 2 or 3 hereof, the Company will, as expeditiously as possible:
4.1.1. (A) prepare and file with the Commission a registration
statement with respect to such Registrable Securities, (B) promptly respond to
all comments received with respect to such registration statement and make and
file all amendments thereto deemed necessary by the Company's legal counsel, and
(C) thereafter use its reasonable best efforts to cause such registration
statement to become effective; provided, however, that the Company shall not be
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required to cause such registration statement to become effective if the
Company's legal counsel delivers a reasoned written opinion to the Company that
it is likely that the Commission will commence proceedings either to issue an
order under Section 8(b) of the Securities Act refusing to permit such
registration statement to become effective or to issue a stop order under
Section 8(d) of the Securities Act suspending the effectiveness of such
registration statement;
4.1.2. prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement accurate and
effective and to comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities and other securities covered by
such registration statement until the earlier of such time as all of such
Registrable Securities have been disposed of by the Holder or Holders thereof
set forth in such registration statement or for the longer of (A) nine months or
(B) if the Company is eligible to conduct a continuous secondary offering
pursuant to Rule 415 under the Securities Act, two years; and will furnish to
each such Holder at least two (2) business days prior to the filing thereof a
copy of any amendment or supplement to such registration statement or
prospectus, and shall not file any such amendment or supplement to which any
such Holder shall have reasonably
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objected on the grounds that such amendment or supplement does not comply in all
material respects with the requirements of the Securities Act or of the rules or
regulations thereunder;
4.1.3. furnish to each Holder whose Registrable Securities are
included in such registration statement such number of conformed copies of such
registration statement and of each such amendment thereof and supplement thereto
(in each case including all exhibits), such number of copies of the prospectus
included in such registration statement (including each preliminary prospectus
and any summary prospectus), in conformity with the requirements of the
Securities Act, such documents, if any, incorporated by reference in such
registration statement or prospectus, and such other documents as such seller
may reasonably request;
4.1.4. use its reasonable best efforts to register or qualify all
Registrable Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each Holder whose
Registrable Securities are included in such registration statement shall
reasonably request, to keep such registration or qualification in effect for so
long as such registration statement remains in effect, and do any and all other
acts and things that may be necessary or advisable to enable such Holder to
consummate the disposition in such jurisdictions of its Registrable Securities
covered by such registration statement, except that the Company shall not for
any such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not but for the requirements of
this Section 4.1.4 be obligated to be so qualified, or to subject itself to
taxation in any such jurisdiction, or to consent to general service of process
in any such jurisdiction;
4.1.5. if such registration statement relates to an underwritten
offering, obtain and furnish to each Holder whose Registrable Securities are
included in such registration statement a signed counterpart, addressed to such
Holder, of the legal opinions and accountants' comfort letters which are to be
delivered to the underwriters;
4.1.6. promptly notify each Holder whose Registrable Securities are
included in such registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, upon discovery
that, or upon the happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing, and the Company shall promptly prepare
a supplement to or an amendment of such prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
4.1.7. otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
securities holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than eighteen
months, beginning with the first month of the first fiscal
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quarter after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder;
4.1.8. if any class of equity security of the Company is listed
on a national securities exchange or quoted on Nasdaq, use its best efforts to
comply with the requirements of such exchange or Nasdaq for inclusion of the
Registrable Securities covered by such registration statement for listing on
each such securities exchange or for quotation on Nasdaq;
4.1.9. if requested by a Holder whose Registrable Securities
are included in such registration statement or the managing underwriters
retained in the case of a Demand Registration, and subject to the reasonable
judgment of the Company and its counsel and to applicable law, promptly include
in a prospectus supplement or post-effective amendment such information
concerning such Holder or such Holder's Registrable Securities covered thereby
and/or the intended method of distribution of such Registrable Securities which
is furnished to the Company by such Holder or in writing and expressly for use
in the prospectus, and promptly make all required filings of such prospectus
supplement or post-effective amendment.
5. UNDERWRITING AGREEMENT.
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5.1. If requested by the underwriters for any underwritten offering
of Registrable Securities on behalf of Holders pursuant to a registration
requested under Section 2 or 3 hereof, the Company will enter into an
underwriting agreement with such underwriters for such offering; such agreement
to contain representations and warranties by the Company and other terms and
provisions not inconsistent with this Agreement as are customarily contained in
such underwriting agreements, including, without limitation, indemnities to the
effect and to the extent provided in Section 8 hereof, and the Company will
cooperate with such Holders to the end that the conditions precedent to the
obligations of such Holders under such underwriting agreement shall not include
conditions that are not customary in such underwriting agreements and shall be
otherwise reasonably satisfactory to such Holders. Holders on whose behalf
shares are to be distributed by such underwriters shall be parties to any such
underwriting agreement, and the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such Holders. Such
Holders shall not be required by the Company to make any representations or
warranties to or agreements with the Company or the underwriters other than
reasonable representations, warranties or agreements regarding such Holders,
such Holders' Registrable Securities and such Holders' intended method or
methods of disposition and any other representations required by law or to
indemnify (or contribute with respect to an indemnifiable claim) the Company or
any underwriters of the Registrable Securities, except as set forth in Section 8
hereof.
6. LOCK-UP.
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6.1. Initial Public Offering. Holders of Berkshire Registrable
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Securities shall, if and to the extent requested in writing by the managing
underwriter of the Initial Public Offering, not sell or transfer (other than as
part of such Initial Public Offering) any common
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equity securities of the Company or any securities convertible into, or
exercisable or exchangeable for, common equity securities of the Company within
the period of 180 days after the effective date of the registration statement
relating to such Initial Public Offering or such shorter period as may be
acceptable to such managing underwriter.
6.2. Secondary Offerings. Holders of Berkshire Registrable
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Securities shall, if and to the extent requested in writing by the managing
underwriter of any underwritten offering that is not the Initial Public
Offering, with respect to a registration statement filed prior to the third
anniversary of the Initial Public Offering, not sell or transfer (other than as
part of such offering) any common equity securities of the Company or any
securities convertible into, or exercisable or exchangeable for, such common
equity securities of the Company within the period of 90 days after the
effective date of the registration statement relating to such offering or such
shorter period as may be acceptable to such managing underwriter.
7. REGISTRATION EXPENSES.
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7.1. The Company agrees to pay, in connection with each registration
of Registrable Securities requested or filed pursuant to Sections 2 or 3 hereof,
all registration expenses; provided, however, each Holder participating therein
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shall be responsible for any underwriting discounts and selling commissions in
connection with the shares of such Holder sold pursuant thereto.
8. INDEMNIFICATION AND CONTRIBUTION.
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8.1. Indemnification by Company. The Company agrees to indemnify, to
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the fullest extent permitted by law, each Holder, each of its officers,
trustees, trust beneficiaries, directors, employees and partners, and each
Person who controls such Holder within the meaning of Section 15 of the
Securities Act and Section 20(a) of the Exchange Act (each, a "Stockholder
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Indemnified Party") against any and all losses, claims, damages, liabilities or
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expenses (including, without limitation, the reasonable legal fees and expenses
of legal counsel), joint or several (collectively, "Damages") to which they or
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any of them may become subject: (i) under the Securities Act, the Exchange Act,
or otherwise, insofar as such Damages (or actions in respect thereof) arise out
of or are based upon any untrue or alleged untrue statement of a material fact
contained in any registration statement, prospectus, preliminary prospectus or
any amendment to any of the foregoing, or arise out of or are based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; or
(ii) as a result of or in connection with any violation of applicable federal,
state or foreign laws or regulations (collectively, "Laws") by the Company
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(other than as a result of any act committed by or omission of a Stockholder
Indemnified Party without the Company's approval) or any of the Company's
employees, officers or directors in connection with any such registration and
the Company will reimburse any Stockholder Indemnified Party for any legal or
other expenses reasonably incurred by it in connection with investigating or
defending any such claim or threatened claim for such Damages; provided,
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however, that the Company will not be liable to a Stockholder Indemnified Party
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if any such Damages arise out of or are based upon any such untrue statement or
alleged untrue statement or
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omission or alleged omission made therein in reliance upon and in conformity
with information furnished in writing to the Company by or on behalf of such
Stockholder Indemnified Party in a signed document stating that such information
is specifically for use therein; provided, further, that the foregoing indemnity
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is subject to the condition that, insofar as it related to any untrue statement,
alleged untrue statement, omission or alleged omission made in a preliminary
prospectus but eliminated or remedied in the final prospectus (filed pursuant to
Rule 424(b) under the Securities Act), such indemnity shall not inure to the
benefit of a Holder from whom the Person asserting any Damages purchased the
Registrable Securities which are the subject thereof, if copies of such final
prospectus were delivered to such Holder on a timely basis and such Holder did
not deliver to such Person the final prospectus with or prior to the written
confirmation for the sale of such Registrable Securities to such Person. In
connection with an Underwritten Offering, the Company will indemnify the
underwriters thereof to the same extent as provided above with respect to the
indemnification of Stockholder Indemnified Parties and use its reasonable best
efforts to obtain a reciprocal and mutual indemnity from the underwriters. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Stockholder Indemnified Party and shall survive any
transfer by the same of the Registrable Securities of the Holders.
8.2. Indemnification by Holders. Each Holder whose Registrable
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Securities are included in a registration statement will furnish to the Company
in writing such information and affidavits with respect to such Holder as the
Company reasonably requests for use in connection with such registration
statement (or prospectus included therein) to be filed or used under this
Agreement, and each of them agrees to indemnify and hold harmless to the fullest
extent permitted by law, the Company, each person who signed the registration
statement, and each Person who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act (each, a
"Company Indemnified Party" and, collectively with Stockholder Indemnified
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Parties, the "Indemnified Parties") against joint or several Damages to which
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they or any of them may become subject (i) under the Securities Act, the
Exchange Act or otherwise, insofar as such Damages (or actions in respect
thereof) arise out of or are based upon any untrue or alleged untrue statement
of a material fact contained in any registration statement, prospectus,
preliminary prospectus or any amendment thereof or supplement thereto, or arise
out of or are based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
any Damages arise out of or are based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with information furnished in writing by such Holder to the
Company in a signed document stating that such information is specifically for
use therein; or (ii) as a result of or in connection with any violation of
applicable Laws by such Holder (other than as a result of any act committed by
or omission of a Company Indemnified Party) or any general or limited partners,
employees, officers or directors of such Holder in connection with any such
registration. Notwithstanding the foregoing, the liability of a Holder pursuant
to this Section 8, except for any liability resulting from the willful
misconduct or intentional action of such Holder, shall not exceed an amount
equal to the proceeds realized by such Holder of Registrable Securities sold as
contemplated herein.
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8.3. Conduct of Indemnification Proceedings. Promptly after receipt
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by an Indemnified Party under Sections 8.1 or 8.2 above of notice of the
commencement of any action, such Indemnified Party shall, if a claim in respect
thereof is to be made against the indemnifying party under such subsection,
notify each party against whom indemnification is to be sought in writing at the
commencement thereof (but the failure so to notify an indemnifying party shall
not relieve it from any liability which such party may have under this Section 8
except to the extent that the indemnifying party has been prejudiced in any
material respect by such failure or from any liability which such party may have
otherwise). In case any such action is brought against any Indemnified Party,
and the Indemnified Party notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in and to assume
the defense thereof, jointly with any other indemnifying party, if any, so
notified, 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 shall 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. Notwithstanding the foregoing, the
Indemnified Party shall have the right to employ its counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party unless (i) the employment of such counsel shall have been
authorized in writing by the indemnifying party in connection with the defense
of such action, or (ii) the indemnifying party shall not have employed counsel
to take charge of the defense of such action within a reasonable time after
notice of the commencement of the action. Anything in this subsection to the
contrary notwithstanding: (A) an indemnifying party shall not be liable for any
settlement of any claim or action effected without its written consent; and (B)
no indemnifying party shall, without the consent of the Indemnified Party,
consent to entry of any judgment or enter into any settlement that 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 to such
claim or litigation.
8.4. Contribution. In order to provide for contribution in
------------
circumstances in which the indemnification provided for in this Section 8 is for
any reason held to be unavailable or is insufficient to hold harmless an
Indemnified Party, then the indemnifying party and the Indemnified Party shall
contribute to the aggregate Damages of the nature contemplated by such
indemnification provision (including any investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted, but after deducting from Damages
suffered by the indemnifying party any contribution received by the indemnifying
party from Persons, other than the Indemnified Party, who may also be liable for
contribution, including Persons who control the indemnifying party within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act) to which the indemnifying party, on the one hand, and the Indemnified
Party, on the other hand, may be subject, in such proportions as is appropriate
to reflect the relative fault of the indemnifying party, on the one hand, and
the Indemnified Party, on the other hand, in connection with the statements or
omissions which resulted in Damages, as well as any other relevant equitable
considerations.
11
8.5. Determination of Fault. The relative fault of the parties shall
----------------------
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by a party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The parties agree that it would not be just
and equitable if contribution pursuant to Section 8.4 and this Section 8.5 was
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to above.
Notwithstanding the foregoing, (i) any underwriting agreement entered into
pursuant hereto may provide that in no case shall any underwriter (except as may
be provided in any agreement among underwriters) be liable or responsible for
any amount in excess of the underwriting discount applicable to the Registrable
Securities purchased by such underwriters, and (ii) 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. Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under Section 8.4 and this Section 8.5,
notify such party or parties from which contribution may be sought of any
obligation it or they may have under Section 8.4 and this Section 8.5 or
otherwise. No party shall be liable for contribution with respect to any action
or claim settled without its consent, which consent may not be unreasonably
withheld or delayed. Notwithstanding the foregoing, the liability of a Holder
except for any liability resulting from the willful misconduct or intentional
action of such Holder shall not exceed an amount equal to the proceeds realized
by such Holder of Registrable Securities sold as contemplated herein.
9. RULE 144 SALES.
--------------
(i) Exchange Act Compliance. The Company covenants that, so long as
-----------------------
it is subject to the reporting requirements of the Exchange Act, it will use its
reasonable best efforts to file the reports required to be filed by it under the
Exchange Act on a timely basis.
(ii) Cooperation with Holders. In connection with any sale, transfer
------------------------
or other disposition by any Holder of any Registrable Securities pursuant to
Rule 144 under the Securities Act, the Company shall, to the extent permissible
under applicable law, cooperate with such Holder to facilitate such sale,
transfer or other disposition.
10. INFORMATION RIGHTS.
------------------
10.1. From and after the Effective Time and so long as the Berkshire
Stockholders collectively and beneficially own (A) at least 90% of the common
equity securities of the Company held by such Berkshire Stockholders immediately
after the Effective Time and (B) at least five percent (5%) of the outstanding
common equity securities of the Company (clauses (A) and (B) together, the
"Retention Condition"), the Company shall, on a timely basis, furnish such
-------------------
Berkshire Stockholders with annual and quarterly reports concerning the Company,
the content of which will be substantially as would be required to be publicly
disclosed by an issuer whose securities are registered under Section 12 of the
Exchange Act.
12
10.2. So long as the Retention Condition remains satisfied, the
Company shall, on a timely basis, furnish the Berkshire Stockholders with the
written materials that the Company submits to the members of its Board of
Directors if either (A) a material default under any of the Company's material
debt agreements shall have occurred and is continuing; or (B) the fifth
anniversary of the Effective Time shall have occurred and no Initial Public
Offering shall have been consummated. To the extent such written materials
contain material, nonpublic information about the Company or information which
is otherwise marked as confidential, the Berkshire Stockholders will treat such
information as confidential.
11. FUTURE COMMON EQUITY OFFERINGS.
------------------------------
11.1. The Company agrees with the Berkshire Stockholders as follows:
In the event that, during the period beginning immediately after the Effective
Time up to but not including the Initial Public Offering, the Company intends to
engage in a New Common Equity Offering (as defined below), it shall (i) issue
all common equity interests in such New Common Equity Offering at a price that
is not less than the fair market value of such common equity interests as
determined, in good faith, by the Board of Directors of the Company, or (ii)
take steps as are necessary to enable all holders of then outstanding common
equity interests (exclusive of stock options and other stock incentive
arrangements) to participate pro rata in the New Common Equity Offering through
reasonable procedures prescribed in good faith by the Board of Directors of the
Company. For purposes hereof, a "New Common Equity Offering" means the issuance
by the Company of common equity securities, or securities convertible into, or
exercisable or exchangeable for, common equity securities other than issuance of
any common equity interests (x) in connection with stock incentive or
compensation plans approved by the Board of Directors of the Company and (y) to
sellers of businesses in connection with acquisitions of such businesses by the
Company or similar transactions by the Company (or a subsidiary of the Company).
12. MISCELLANEOUS.
-------------
12.1. Notices. All notices, instructions and other communications in
-------
connection with this Agreement shall be in writing and may be given by (i)
personal delivery, (ii) sent by certified mail, return receipt requested,
postage prepaid, or (iii) delivery by a nationally recognized overnight courier,
to the parties at the addresses of each as set forth on the signature pages to
this Agreement (or at such other address as the Company may specify in a notice
to the other parties or as any other party may specify in a notice to the
Company and the other parties). Notices shall be deemed to have been given (A)
when actually delivered personally, (B) the next business day if sent by
overnight courier (with proof of delivery), and (C) on the fifth day after
mailing by certified mail.
12.2. No Waiver. No course of dealing and no delay on the part of
---------
any party hereto in exercising any right, power or remedy conferred by this
Agreement shall operate as a waiver thereof or otherwise prejudice such party's
rights, powers and remedies conferred by this Agreement, or shall preclude any
other or further exercise thereof or the exercise of any other right, power and
remedy.
13
12.3. Binding Effect; Assignability. This Agreement may not be
-----------------------------
assigned by any Holder under any circumstances except to a Permitted Assignee.
As used herein, "Permitted Assignee" means (a) a Person to whom record ownership
of Registrable Securities is transferred by a Holder without violation or breach
of the Charter or any agreement restricting such transfer provided that the
--------
transferring Holder shall give at least 10 days advance notice of such transfer
to the Company and provided further that, with respect to any transfer to any
-------- -------
Person who is not an Investcorp Investor after giving effect to such transfer,
such Permitted Transferee holds no less than 25,000 shares of Class A common
stock of the Company or, if the Initial Public Offering has occurred, 25,000
shares of common stock of the Company (in each case as such amount may be
adjusted to reflect any stock split, stock dividend or similar transaction) and
all the shares so held are subject to the terms and provisions of this Agreement
or (b) any Investcorp Investor. This Agreement shall be binding upon the
Company and its successors and upon the successors and Permitted Assignees of
the Holders.
12.4. Amendment and Waiver. The rights of the Holders and the
--------------------
obligations the Company hereunder are subject to amendment upon and any non-
compliance by the Company may be waived by, the written consent of the Company
and a majority in interest of the Holders of Registrable Securities; provided
--------
that (i) no such amendment or waiver which adversely affects Holders who are
Investcorp Investors shall be effective unless a majority in interest of Holders
who are Investcorp Investors shall also give their consent thereto, (ii) no such
amendment or waiver which adversely affects Holders who are not Investcorp
Investors shall be effective unless a majority in interest of the Holders who
are not Investcorp Investors shall also give their consent thereto and (iii)
waivers and amendments of Sections 10 or 11 shall be effective only upon the
written consent of the Company and the Berkshire Stockholders. Any amendment
satisfying the foregoing requirements, as applicable, shall be binding upon all
parties and Holders, as applicable.
12.5. Governing Law; Service of Process. This Agreement shall be
---------------------------------
construed as to both the validity and performance in accordance with, and
governed by, the laws of the State of New York applicable to agreements to be
performed in New York, without regard to principles of conflict of laws. Each
of the parties hereto irrevocably consents to the jurisdiction and venue of any
state or federal court situated in the City of New York in the State of New
York, and further consents to the service of any and all process in any action
or proceeding arising out of or relating to this Agreement by the mailing of
copies of such process to such party at its address pursuant to Section 12.1
hereof.
12.6. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument, and all signatures need
not appear on any one counterpart.
12.7. Headings; Sections. All headings and captions in this
------------------
Agreement are for purposes of reference only and shall not be construed to limit
or affect the substance of this Agreement. All references to Section in this
Agreement refer to Sections of this Agreement, unless the context otherwise
expressly provides.
14
12.8. Entire Agreement. This Agreement contains, and is intended as,
----------------
a complete statement of all the terms of the arrangements between the parties
with respect to the matters provided for, and supersedes any previous agreements
and understandings between the parties with respect to those matters.
12.9. Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired in any way
thereby.
[The remainder of this page intentionally left blank]
15
IN WITNESS WHEREOF, this Agreement is entered into as of the date first
above written.
HARBORSIDE HEALTHCARE CORPORATION
By: /s/ William Stephan
-------------------
Name: William Stephan
Title: Senior Vice President and
Chief Financial Officer
Address: 470 Atlantic Avenue
Boston, MA 02210
KRUPP ENTERPRISES, L.P.
By: KGP-1 Incorporated
its General Partner
By: /s/ Douglas Krupp
-----------------
Name: Douglas Krupp
Title: Chairman
Address: 470 Atlantic Avenue
Boston, MA 02210
THE BERKSHIRE COMPANIES
LIMITED PARTNERSHIP
By: KGP-1 Incorporated
its General Partner
By: /s/ Douglas Krupp
-----------------
Name: Douglas Krupp
Title: Chairman
Address: 470 Atlantic Avenue
Boston, MA 02210
THE GEORGE KRUPP 1994 FAMILY TRUST
By: /s/ Lawrence I. Silverstein
---------------------------
Name: Lawrence I. Silverstein
Title: Trustee
By: /s/ Paul Krupp
--------------
Name: Paul Krupp
Title: Trustee
By: /s/ M. Gordon Ehrlich
---------------------
Name: M. Gordon Ehrlich
Title: Trustee
Address: 470 Atlantic Avenue
Boston, MA 02210
THE DOUGLAS KRUPP 1994 FAMILY TRUST
By: /s/ Lawrence I. Silverstein
---------------------------
Name: Lawrence I. Silverstein
Title: Trustee
By: /s/ Paul Krupp
--------------
Name: Paul Krupp
Title: Trustee
By: /s/ M. Gordon Ehrlich
---------------------
Name: M. Gordon Ehrlich
Title: Trustee
Address: 470 Atlantic Avenue
Boston, MA 02210
BALLET LIMITED
By: /s/ H. Richard Lukens, III
------------------------------
DENARY LIMITED
By: /s/ H. Richard Lukens, III
------------------------------
HIGHLANDS LIMITED
By: /s/ H. Richard Lukens, III
------------------------------
GLEAM LIMITED
By: /s/ H. Richard Lukens, III
------------------------------
NOBLE LIMITED
By: /s/ H. Richard Lukens, III
------------------------------
OUTRIGGER LIMITED
By: /s/ H. Richard Lukens, III
------------------------------
QUILL LIMITED
By: /s/ H. Richard Lukens, III
-------------------------------
RADIAL LIMITED
By: /s/ H. Richard Lukens, III
-------------------------------
SHORELINE LIMITED
By: /s/ H. Richard Lukens, III
-------------------------------
ZINNIA LIMITED
By: /s/ H. Richard Lukens, III
-------------------------------
INVESTCORP INVESTMENT
EQUITY LIMITED
By: /s/ Sydney J. Coleman
-------------------------------
ANDOVER LIMITED
By: /s/ Kenneth V. Shanahan
-------------------------------
CORDAVILLE LIMITED
By: /s/ Kenneth V. Shanahan
-------------------------------
QUILL LIMITED
By: /s/ H. Richard Lukens, III
----------------------------------
RADIAL LIMITED
By: /s/ H. Richard Lukens, III
----------------------------------
SHORELINE LIMITED
By: /s/ H. Richard Lukens, III
----------------------------------
ZINNIA LIMITED
By: /s/ H. Richard Lukens, III
----------------------------------
INVESTCORP INVESTMENT EQUITY
LIMITED
By: /s/ Sydney J. Coleman
----------------------------------
The Director Ltd., Director
ANDOVER LIMITED
By: /s/ Kenneth V. Shanahan
----------------------------------
Martonmere Services Ltd., Director
CORDAVILLE LIMITED
By: /s/ Kenneth V. Shanahan
----------------------------------
Martonmere Services Ltd., Director
FOXBORO LIMITED
By: /s/ Kenneth V. Shanahan
-----------------------------------
Martonmere Services Ltd., Director
PATTENVILLE LIMITED
By: /s/ Kenneth V. Shanahan
-----------------------------------
Martonmere Services Ltd., Director
HBRS LIMITED
By: /s/ Sydney J. Coleman
-----------------------------------
The Director Ltd., Director
Exhibit A
to
Master Rights Agreement
Initial Berkshire Stockholders
------------------------------
Name Number and Class of Shares
---- --------------------------
The George Krupp 1994 Family Trust [217,840] shares of Class A Common Stock
The Douglas Krupp 1994 Family Trust [217,841] shares of Class A Common Stock
Initial Investcorp Investors
----------------------------
Name Number and Class of Shares
---- --------------------------
Andover Limited 1,485,000 shares of Class B Common Stock
Cordaville Limited 1,485,000 shares of Class B Common Stock
Foxboro Limited 1,485,000 shares of Class B Common Stock
Pattenville Limited 1,485,000 shares of Class B Common Stock
HBRS Limited 640,000 shares of Class C Common Stock
Ballet Limited 1,840 shares of Class D Common Stock
Denary Limited 1,840 shares of Class D Common Stock
Highlands Limited 1,840 shares of Class D Common Stock
Gleam Limited 1,840 shares of Class D Common Stock
Noble Limited 1,840 shares of Class D Common Stock
Outrigger Limited 1,840 shares of Class D Common Stock
Quill Limited 1,840 shares of Class D Common Stock
Radial Limited 1,840 shares of Class D Common Stock
Shoreline Limited 1,840 shares of Class D Common Stock
Zinnia Limited 1,840 shares of Class D Common Stock
Investcorp Investment Equity Limited 1,600 shares of Class D Common Stock
22