Exhibit 10.24
GENESIS HEALTH VENTURES, INC.
REGISTRATION RIGHTS AGREEMENT
Dated October 2, 2001
TABLE OF CONTENTS
Page
1. Introduction...................................................................................1
2. Registration under Securities Act, etc.........................................................1
2.1 Registration on Request...............................................................1
2.2 Incidental Registration...............................................................4
2.3 Registration Procedures...............................................................5
2.4 Underwritten Offerings................................................................9
2.5 Preparation; Reasonable Investigation................................................10
2.6 Indemnification......................................................................11
2.7 Adjustments Affecting Registrable Securities.........................................14
2.8 Nomination of Directors..............................................................14
3. Definitions...................................................................................14
4. Rules 144 and 144A............................................................................17
5. Amendments and Waivers........................................................................17
6. Nominees for Beneficial Owners................................................................17
7. Notices.......................................................................................17
8. Assignment....................................................................................19
9. Descriptive Headings..........................................................................19
10. GOVERNING LAW.................................................................................19
11. Counterparts..................................................................................19
12. Entire Agreement..............................................................................19
13. SUBMISSION TO JURISDICTION....................................................................19
14. Severability..................................................................................20
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REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
October 2, 2001, between Genesis Health Ventures, Inc., a Pennsylvania
corporation (the "Company"), and Goldman Sachs & Co., a Delaware corporation,
and Highland Capital Management L.P. (each an "Investor" and together, the
"Investors").
1. Introduction. Pursuant to the Joint Plan of Reorganization
of Genesis Health Ventures, Inc. and its affiliated Debtors and Debtors in
Possession (the "Plan"), dated July 6, 2001, the Company has agreed, among other
things, to issue 41,000,000 million shares of new common stock, par value $0.02
per share of the Company (the "Common Stock"). This Agreement shall become
effective upon the issuance of such securities pursuant to the Plan. Certain
capitalized terms used in this Agreement are defined in Section 3 hereof;
references to sections shall be to sections of this Agreement.
WHEREAS, the Company has agreed to grant to Investors the
registration rights set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties agree as follows:
2. Registration under Securities Act, etc.
2.1 Registration on Request
(a) Request. An Investor holding at least
4,100,000 shares of Common Stock which constitute Registrable Securities, or
Investors holding at least 8,200,000 shares of Common Stock which constitute
Registrable Securities in the aggregate, of the outstanding Common Stock of the
Company, subject to Section 2.1(c) hereof, may request, in writing, registration
under the Securities Act, of all or part of their Registrable Securities. Within
10 days after receipt of any such request, the Company will give notice of such
request to the other Investors. Any Investor that sells or disposes of
securities pursuant to a registration statement of the Company is referred to
herein as a "Participating Investor." The Company will use all commercially
reasonable efforts to effect the registration on an appropriate form under the
Securities Act and will include in such registration, subject to Section 2.1(c)
hereof, all Registrable Securities held by any Participating Investor with
respect to which the Company has received a written request for inclusion
therein within 15 days after the receipt of the Company's notice. All
registrations initiated by a Participating Investor pursuant to this Section
2.1(a) are referred to herein as "Demand Registrations."
(b) Priority in Registration. If the Company
includes in any underwritten Demand Registration any securities which are not
Registrable Securities and the Managing Underwriters advise the Company in
writing that in their opinion the number of Registrable Securities proposed to
be included exceeds the number of Registrable Securities and other securities
which can be sold in such offering, the Company will include in such
registration: (i) first, the Registrable Securities requested to be included
which, in the opinion of such underwriters, can be sold, by the Participating
Investor or Investors pro rata based upon the total number of Registrable
Securities which such Investor proposes to include in such registration and (ii)
second, the securities proposed to be included in such registration by any other
holders as determined by the Company and the Managing Underwriters.
(c) Registration Statement Form. Registrations
under this Section 2.1 shall be on such appropriate registration form of the
Commission (i) as shall be selected by the Company and, as shall be reasonably
acceptable to each Participating Investor and (ii) as shall permit the
disposition of such Registrable Securities in accordance with the intended
method or methods of disposition specified in their request for such
registration. If, in connection with any registration under this Section 2.1
which is proposed by the Company to be on Form S-3 or any similar short form
registration statement which is a successor to Form S-3, the Managing
Underwriters, if any, shall advise the Company in writing that in their opinion
the use of another permitted form is of material importance to the success of
the offering, then such registration shall be on such other permitted form.
(d) Expenses. The Company will pay all
Registration Expenses in connection with any registration requested pursuant to
this Section 2.1 prior to the time at which three such registrations shall have
been effected in which all of the Registrable Securities requested to be
included in such registration shall have been registered pursuant to this
Section 2.1. The Registration Expenses (and underwriting discounts and
commissions and transfer taxes, if any) in connection with each other
registration requested under this Section 2.1 shall be paid by Investor.
(e) Effective Registration Statement. A Demand
Registration requested pursuant to this Section 2.1 shall not be deemed to have
been effected (i) unless a registration statement with respect thereto has been
declared effective by the Commission, provided that a registration which does
not become effective after the Company has filed a registration statement with
respect thereto solely by reason of the refusal to proceed of a Participating
Investor (other than a refusal to proceed based upon the advice of counsel
relating to a matter with respect to the Company) shall be deemed to have been
effected by the Company at the request of a Participating Investor unless such
Participating Investor shall have elected to pay all Registration Expenses in
connection with such registration, (ii) if, after it has become effective, such
registration becomes subject to any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for any
reason, or (iii) the conditions to closing specified in the purchase agreement
or underwriting agreement entered into in connection with such registration are
not satisfied, other than by reason of some act or omission by Investor. A
Participating Investor shall be permitted to withdraw all or any part of the
Registrable Securities from a Demand Registration at any time prior to the
effective date of such Demand Registration; provided that in the event of, and
concurrently with such withdrawal, the Participating Investor or Participating
Investors responsible for such Demand Registration shall either (x) pay or
reimburse the Company for all fees and expenses (including counsel fees and
expense) incurred by them and the Company prior to such withdrawal or (y) agree
to forfeit one of the Demand Registrations with respect to which the Company is
obligated to pay Registration Expenses pursuant to Section 2.1(d) hereof.
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(f) Selection of Underwriters. If a Demand
Registration pursuant to this Section 2.1 involves an underwritten offering, the
underwriter or underwriters thereof shall be selected by the Participating
Investors holding a majority of the Registrable Securities held by all
Participating Investors with the consent of the Company, which consent shall not
be unreasonably withheld or delayed.
(g) Exceptions to Registration on Request.
Notwithstanding anything in Section 2.1(a) above to the contrary, the Company
shall not be obligated to take any action to effect any such registration
pursuant to Section 2.1(a) above:
(i) During the period starting with the date
forty-five (45) days prior to the Company's estimated date of filing of, and
ending on the ninetieth (90th) day immediately following the effective date of,
any registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective;
(ii) During the 180-day period following the
effectiveness of a registration statement with respect to which any Investor had
a right to have its Registrable Securities included pursuant to Section 2
hereof;
(iii) If (A) the number of Registrable
Securities identified in the Demand Registration shall be less than five percent
(5%) of the then outstanding shares of Common Stock or (B) the Registrable
Securities identified in the Demand Registration shall have a current market
value as of the date of the demand of less than $30,000,000;
(iv) If the Company determines in good faith
that the registration and distribution of Registrable Securities (or the use of
the registration statement or related prospectus) resulting from a Demand
Registration would (i) materially and adversely interfere with any previously
announced business combination transaction involving the Company pursuant to
which the Company would issue, in connection with such transaction, shares of
Common Stock to some or all of the equity owners of the counter-party to such
business combination transaction, or (ii) result in the premature disclosure of
any pending financing, acquisition, corporate reorganization or any other
corporate development involving the Company or any of its subsidiaries, and, in
either such event, the Company shall promptly give Participating Investors
written notice of such determination, then the Company shall be entitled to (x)
postpone the filing of the registration statement otherwise required to be
prepared and filed by the Company pursuant to Section 2.1(a) hereof, or (y)
elect that the effective registration statement not be used, in either case for
a reasonable period of time, but not to exceed ninety (90) days after the date
that the demand by the Company of the Investor not to sell the securities was
made (a "Blackout Period"); provided that the Company may not exercise this
deferral right more than once per twelve (12) month period. Any such written
notice shall contain a general statement of the reasons for such postponement or
restriction on use and an estimate of the anticipated delay. The Company shall
promptly notify each Participating Investor of the expiration or earlier
termination of such Blackout Period.
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2.2 Incidental Registration
(a) Right to Include Registrable Securities.
If the Company at any time proposes to register any securities substantially
similar to the Registrable Securities under the Securities Act (other than by a
registration on Form S-4 or S-8, or any successor or similar forms and other
than securities registered to effect the acquisition of or combination with
another person or pursuant to Section 2.1 hereof), whether or not for sale for
its own account, it will each such time give prompt written notice to each
Participating Investor of its intention to do so and of such Participating
Investor's rights under this Section 2.2. Upon the written request of any
Investor made within 30 days after the receipt of any such notice (which request
shall specify the Registrable Securities intended to be disposed of by such
Participating Investor and the intended method of disposition thereof), the
Company will, subject to Sections 2.2(b) hereof, effect the registration under
the Securities Act of all Registrable Securities which the Company has been so
requested to register by such Participating Investor, to the extent requisite to
permit the disposition (in accordance with the intended methods thereof as
aforesaid) of the Registrable Securities so to be registered, by inclusion of
such Registrable Securities in the registration statement which covers the
securities which the Company proposes to register, provided that 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, the Company shall determine for any reason either not to
register or to delay registration of such securities, the Company may, at its
election, give written notice of such determination to each Participating
Investor and, thereupon, (i) in the case of a determination not to register,
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), without prejudice, however, to
the rights of any Participating Investor to request that such registration be
effected as a registration under Section 2.1, and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities, for the same period as the delay in registering such
other securities. No registration effected under this Section 2.2 shall relieve
the Company of its obligation to effect any registration upon request under
Section 2.1, nor shall any such registration hereunder be deemed to have been
effected pursuant to Section 2.1. The Company will pay all Registration Expenses
in connection with each registration of Registrable Securities requested
pursuant to this Section 2.2.
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(b) Priority in Incidental Registrations. If
(i) a registration pursuant to this Section 2.2 involves an underwritten
offering of the securities so being registered, for sale for the account of the
Company or any other entity, to be distributed (on a firm commitment basis) by
or through one or more Managing Underwriters, (ii) the Registrable Securities so
requested to be registered for sale for the account of a Participating Investor
are not also to be included in such underwritten offering (because the Company
has not been requested so to include such Registrable Securities pursuant to
Section 2.4(b) or, if requested to do so, is not obligated to do so under
Sections 2.2(b)(iii) and (iv) hereof), and (iii) the Managing Underwriter of
such underwritten offering shall inform the Company and each Participating
Investor by letter of its belief that the number of securities requested to be
included in such registration exceeds the number which can be sold in (or during
the time of) such offering, then the Company will include in such registration,
to the extent of the number which the Company is so advised can be sold in (or
during the time of) such offering, (A) first, securities proposed by the Company
to be sold for its own account and (B) second, the Registrable Securities
requested to be included in such registration, pro rata based upon the total
number of Registrable Securities which such Participating Investor requested to
be included.
2.3 Registration Procedures.
(a) If and whenever the Company is required
to effect the registration of any Registrable Securities under the Securities
Act as provided in Sections 2.1 and 2.2 the Company shall, as expeditiously as
possible:
(i) prepare and (in the case of a
registration pursuant to Section 2.1, such filing to be made within 45 days
after the initial request of Investor or in any event as soon thereafter as
possible) file with the Commission the requisite registration statement to
effect such registration (including such audited financial statements as may be
required by the Securities Act or the rules and regulations promulgated
thereunder) and thereafter cause such registration statement to become and
remain effective, provided however that the Company may discontinue any
registration of its securities which are not Registrable Securities (and, under
the circumstances specified in Section 2.2(a), its securities which are
Registrable Securities) at any time prior to the effective date of the
registration statement relating thereto, provided further that before filing
such registration statement or any amendments thereto, the Company will furnish
to the counsel selected by the Participating Investors copies of all such
documents proposed to be filed, which documents will be subject to the review of
such counsel;
(ii) prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement until such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement;
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(iii) furnish to each Participating
Investor and each underwriter, if any, such number of conformed copies of such
registration statement and of each such amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities Act,
and such other documents, as such Participating Investor and such underwriter,
if any, may reasonably request in order to facilitate the public sale or other
disposition of the Registrable Securities;
(iv) use its best efforts to register or
qualify all Registrable Securities and other securities covered by such
registration statement under such other securities laws or blue sky laws of such
jurisdictions as any seller thereof and any underwriter of the securities being
sold by such seller shall reasonably request, to keep such registrations or
qualifications in effect for so long as such registration statement remains in
effect, and take any other action which may be reasonably necessary or advisable
to enable such seller and underwriter to consummate the disposition in such
jurisdictions of the securities owned by such seller, 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 subdivision (iv) be obligated to be so qualified or to
consent to general service of process in any such jurisdiction;
(v) use its best efforts to cause all
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 seller or sellers thereof to consummate the disposition
of such Registrable Securities;
(vi) furnish to each Participating
Investor a signed counterpart, addressed to such Participating Investor and the
underwriters, if any, of (x) an opinion of counsel for the Company, dated the
effective date of such registration statement (or, if such registration includes
an underwritten public offering, an opinion dated the date of the closing under
the underwriting agreement), reasonably satisfactory in form and substance to
such Participating Investor and the underwriters, and (y) a "comfort" letter
(or, in the case of any such Person which does not satisfy the conditions for
receipt of a "comfort" letter specified in Statement on Auditing Standards No.
72, an "agreed upon procedures" letter), dated the effective date of such
registration statement (and, if such registration includes an underwritten
public offering, a letter of like kind dated the date of the closing under the
underwriting agreement), signed by the independent public accountants who have
certified the Company's financial statements included in such registration
statement, covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in the case of
the accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to the underwriters in underwritten public
offerings of securities (with, in the case of an "agreed upon procedures"
letter, such modifications or deletions as may be required under Statement on
Auditing Standards No. 35) and, in the case of the accountants' letter, such
other financial matters, and, in the case of the legal opinion, such other legal
matters, as Investor (or the underwriters, if any) may reasonably request;
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(vii) notify each Participating Investor
and the managing underwriter or underwriters, if any, promptly and confirm such
advice in writing promptly thereafter (v) when the registration statement, the
prospectus or any prospectus supplement related thereto or post-effective
amendment to the registration statement has been filed, and, with respect to the
registration statement or any post-effective amendment thereto, when the same
has become effective; (w) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus or for additional
information; (x) of the issuance by the Commission of any stop order suspending
the effectiveness of the registration statement or the initiation of any
proceedings by any Person for that purpose; (y) if at any time the
representations and warranties of the Company made as contemplated by Section
2.4 below cease to be true and correct; and (z) of the receipt by the Company of
any notification with respect to the suspension of the qualification of any
Registrable Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation or threat of any proceeding for such purpose;
(viii) notify each Participating
Investor, 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
under which they were made, and at the request of any Participating Investor
promptly prepare and furnish to such seller or Participating Investor and each
underwriter, if any, a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such 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 under which they were made;
(ix) make every reasonable effort to
obtain the withdrawal of any order suspending the effectiveness of the
registration statement at the earliest possible moment;
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(x) otherwise use its best efforts to
comply with all applicable rules and regulations of the Commission, and make
available to its security 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 day of the Company's first full
calendar 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, and will furnish to each Participating
Investor at least five 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 thereof to which such Participating Investor shall have reasonably
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;
(xi) make available for inspection by a
representative or representatives of each Participating Investor, any
underwriter participating in any disposition pursuant to the registration
statement and any attorney or accountant retained by any Participating Investor
or such underwriter (each, an "Inspector"), all financial and other records,
pertinent corporate documents and properties of the Company (the "Records"), and
cause the Company's officers, directors and employees to supply all information
reasonably requested by any such Inspector in connection with such registration
in order to permit a reasonable investigation within the meaning of Section 11
of the Securities Act;
(xii) provide and cause to be maintained
a transfer agent and registrar for all Registrable Securities covered by such
registration statement from and after a date not later than the effective date
of such registration statement; and
(xiii) use its best efforts to provide a
CUSIP number for the Registrable Securities, not later than the effective date
of the registration statement.
(b) The Company may require each seller of Registrable
Securities as to which any registration is being effected to furnish the Company
such information regarding such seller and the distribution of such securities
as the Company may from time to time reasonably request in writing.
(c) The Company will not file any registration statement
covering the Registrable Securities or amendment thereto or any prospectus or
any supplement thereto (including such documents incorporated by reference and
proposed to be filed after the initial filing of the registration statement) to
which Investor or the underwriter or underwriters, if any, shall reasonably
object, provided that the Company may file such document in a form required by
law or upon the advice of its counsel.
(d) The Investors agree by acquisition of the Registrable
Securities that, upon receipt of any notice from the Company of the occurrence
of any event of the kind described in subdivision (viii) of this Section 2.3(a),
the Investors will forthwith discontinue their respective dispositions of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until each such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (viii) of this
Section 2.3(a) and, if so directed by the Company, will deliver to the Company
(at the Company's expense) all copies, other than permanent file copies, then in
such Investor's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
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(e) If any such registration statement to be filed pursuant to
this Agreement refers to any Investor by name or otherwise as the holder of any
securities of the Company, then such Investor shall have the right to require
(i) the insertion therein of language, in form and substance satisfactory to
such Investor, to the effect that the holding by such Investor of such
securities is not to be construed as a recommendation by such Investor of the
investment quality of the Company's securities covered thereby and that such
holding does not imply that such Investor will assist in meeting any future
financial requirements of the Company, or (ii) in the event that such reference
to such Investor by name or otherwise is not required by the Securities Act or
any similar federal statute then in force, the deletion of the reference to such
Investor.
2.4 Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by the
Managing Underwriters for any underwritten offering by any Investor pursuant to
a registration requested under Section 2.1, the Company will enter into an
underwriting agreement with such Managing Underwriters for such offering, such
agreement to be satisfactory in substance and form to the Company, such
Participating Investors and the Managing Underwriters, and to contain such
representations and warranties by the Company and such other terms as are
generally prevailing in agreements of this type, including, without limitation,
indemnities to the effect and to the extent provided in Section 2.6. The
Participating Investors will cooperate with the Company in the negotiation of
the underwriting agreement and will give consideration to the reasonable
suggestions of the Company regarding the form thereof, provided that nothing
herein contained shall diminish the foregoing obligations of the Company. The
Participating Investors shall be party to such underwriting agreement and may,
at its option, require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit of
such Managing Underwriters shall also be made to and for the benefit of such
Participating Investors and that any or all of the conditions precedent to the
obligations of such Managing Underwriters under such underwriting agreement be
conditions precedent to the obligations of such Participating Investors. A
Participating Investor shall not be required to make any representations or
warranties to or agreements with the Company or the Managing Underwriters other
than representations and warranties contained in a writing furnished by such
holder expressly for use in such registration statement or agreements regarding
such Participating Investors, the Participating Investor's Registrable
Securities and the Participating Investor's intended method of distribution and
any other representation required by law.
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(b) Incidental Underwritten Offerings. If the Company at any
time proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or
through one or more Managing Underwriters, the Company will, if requested by an
Investor or Investors as provided in Section 2.2 and subject to the provisions
of Section 2.2(b), use its best efforts to arrange for such Managing
Underwriters to include all the Registrable Securities to be offered and sold by
any Participating Investor among the securities to be distributed by such
underwriters. Each such Participating Investor shall be party to the
underwriting agreement between the Company and such Managing Underwriters and
may, at its option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such Managing Underwriters shall also be made to and for the
benefit of any Participating Investor and that any or all of the conditions
precedent to the obligations of such Managing Underwriters under such
underwriting agreement be conditions precedent to the obligations of such
Participating Investor. A Participating Investor shall not be required to make
any representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
Participating Investor, such Participating Investor's Registrable Securities and
such Participating Investor's intended method of distribution and any other
representation required by law.
(c) Holdback Agreements. The Company agrees (x) if so required
by the Managing Underwriter not to sell, make any short sale of, loan, grant any
option for the purchase of, effect any public sale or distribution of or
otherwise dispose of its equity securities or securities convertible into or
exchangeable or exercisable for any of such securities during the seven days
prior to and the 90 days after any underwritten registration pursuant to Section
2.1 or 2.2 has become effective, except as part of such underwritten
registration and except pursuant to registrations on Form S-4, S-8, or any
successor or similar forms thereto, and (y) to cause each holder (other than a
Participating Investor) of its securities or any securities convertible into or
exchangeable or exercisable for any of such securities, in each case purchased
from the Company at any time after the date of this Agreement (other than in a
public offering) to agree not to sell, make any short sale of, loan, grant any
option for the purchase of, effect any public sale or distribution of or
otherwise dispose of such securities during such period except as part of such
underwritten registration.
(d) Participation in Underwritten Offerings. No Person may
participate in any underwritten offering hereunder unless such Person (i) agrees
to sell such Person's securities on the basis provided in any underwriting
arrangements approved, subject to the terms and conditions hereof, by each
Participating Investor and (ii) completes and executes all questionnaires,
indemnities, underwriting agreements and other documents (other than powers of
attorney) required under the terms of such underwriting arrangements.
Notwithstanding the foregoing, no underwriting agreement (or other agreement in
connection with such offering) shall require a Participating Investor to make
any representations or warranties to or agreements with the Company or the
underwriters other than representations and warranties contained in a writing
furnished by such holder expressly for use in the related registration statement
or agreements regarding such Participating Investor, such Participating
Investor's Registrable Securities and such Participating Investor's intended
method of distribution and any other representation required by law.
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2.5 Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, the Company will give any Participating
Investor, its underwriters, if any, and their counsel and accountants, the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and will give each of them such access
to its books and records and such opportunities to discuss the business of the
Company with its officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of such
holders' and such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
2.6 Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act, the
Company will, and hereby does agree to, indemnify and hold harmless (i) in the
case of any registration statement filed pursuant to Section 2.1 or 2.2, a
Participating Investor, its directors and officers, 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 Participating Investor or any such
underwriter within the meaning of the Securities Act, and (ii) in the case of
any registration statement of the Company, a Participating Investor, its
directors and officers and each other Person, if any, who controls such
Participating such Participating Investor within the meaning of the Securities
Act, against any losses, claims, damages or liabilities, joint or several, to
which such Participating Investor or any such director or officer or underwriter
or controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon 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 prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or 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, and the Company will reimburse each such Participating
Investor and each such director, officer, underwriter and controlling person for
any legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding, provided that the Company shall not be liable 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 an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by a Participating Investor specifically stating that it is for use in
the preparation thereof and, provided further that the Company shall not be
liable to any Person who participates as an underwriter in the offering or sale
of Registrable Securities or to any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, 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 such Person's failure to send or give
a copy of the final prospectus, as the same may be then supplemented or amended,
within the time required by the Securities Act to the Person asserting the
existence of an untrue statement or alleged untrue statement or omission or
alleged omission at or prior to the written confirmation of the sale of
Registrable Securities to such Person if such statement or omission was
corrected in such final prospectus. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of a
Participating Investor or any such director, officer, underwriter or controlling
person and shall survive the transfer of such securities by any Participating
Investor.
11
(b) Indemnification by Investor. The Company may require, as a
condition to including any Registrable Securities in any registration statement
filed pursuant to Section 2.1 or 2.2, that the Company shall have received an
undertaking satisfactory to it from each Participating Investor, severally and
not jointly, will indemnify and hold harmless the Company (in the same manner
and to the same extent as set forth in subdivision (a) of this Section 2.6),
each director of the Company, each officer of the Company and each other person,
if any, who controls the Company within the meaning of the Securities Act, with
respect to any statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereto,
if such statement or alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such Participating Investor
specifically stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement; and, subject to the limitation set forth immediately
preceding this clause, shall reimburse the Company for any legal or other
expenses reasonably incurred by the Company or any such controlling person in
connection with investigating or defending any loss, claim, damage, liability or
action in respect thereof. Any such indemnity shall remain in full force and
effect, regardless of any investigation made by or on behalf of the Company or
any such director, officer or controlling person and shall survive the transfer
of such securities by Investor.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subdivisions of this Section 2.6,
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 any indemnified party to give notice
as provided herein shall not relieve the indemnifying party of its obligations
under the preceding subdivisions of this Section 2.6, 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 shall be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified, to the
extent that the indemnifying party 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 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. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
of any such action 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, or a covenant not to sue, in respect to such claim or litigation.
No indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying party.
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(d) Other Indemnification. Indemnification similar to that
specified in the preceding subdivisions of this Section 2.6 (with appropriate
modifications) shall be given by the Company and any Participating Investor with
respect to any required registration or other qualification of securities under
any Federal or state law or regulation of any governmental authority, other than
the Securities Act.
(e) Indemnification Payments. The indemnification required by
this Section 2.6 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
(f) Contribution. If the indemnification provided for in the
preceding subdivisions of this Section 2.6 is unavailable to an indemnified
party in respect of any expense, loss, claim, damage or liability referred to
therein, then each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such expense, loss, claim, damage or liability. In determining
the amount of contribution to which the indemnified party is entitled, there
shall be considered with respect to any Persons involved the relative knowledge
and access to information concerning the matter with respect to which the claim
was asserted, the opportunity to correct and prevent any statement or omission,
and other equitable considerations appropriate under the circumstances. It is
hereby agreed that it would not necessarily be equitable if the amount of such
contribution were determined by pro rata or per capita allocation, provided that
the foregoing contribution agreement shall not inure to the benefit of any
indemnified party if indemnification would be unavailable to such indemnified
party by reason of the provisions contained in the first sentence of subdivision
(a) of this Section 2.6, and in no event shall the obligation of any
indemnifying party to contribute under this subdivision (f) exceed the amount
that such indemnifying party would have been obligated to pay by way of
indemnification if the indemnification provided for under subdivisions (a) or
(b) of this Section 2.6 had been available under the circumstances.
13
The Company and the Investors agree that it would not be just
and equitable if contribution pursuant to this subdivision (f) were determined
by pro rata allocation (even if a Participating Investor and any underwriters
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in the immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and liabilities
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth in the preceding sentence and subdivision
(c) of this Section 2.6, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim.
Notwithstanding the provisions of this subdivision (f),
neither a Participating Investor nor underwriter shall be required to contribute
any amount in excess of the amount by which (i) in the case of a Participating
Investor, the net proceeds received from the sale of Registrable Securities or
(ii) in the case of an underwriter, the total price at which the Registrable
Securities purchased by it and distributed to the public were offered to the
public exceeds, in any such case, the amount of any damages that a Participating
Investor or such underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission. 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.
2.7 Adjustments Affecting Registrable Securities. The Company
will not effect or permit to occur any combination or subdivision of shares
which would adversely affect the ability of the holders of Registrable
Securities to include such Registrable Securities in any registration of its
securities contemplated by this Section 2 or the marketability of such
Registrable Securities under any such registration.
2.8 Nomination of Directors. Goldman Sachs & Co. ("Goldman")
shall have the right so long as Goldman maintains beneficial ownership of at
least ten percent (10%) of the then outstanding Common Stock to nominate one
person to serve on the Board of Directors of the Company (the "Company Board");
provided, however, Goldman shall not have the right to nominate such person to
serve on the Company Board for so long as the number of shares of Common Stock
beneficially owned by Goldman is less than ten percent (10%) of the then
outstanding Common Stock. Subject to the terms of this Section 2.8 and the
fiduciary duties of the Board as required under applicable law, the Company
agrees to cause such nominee to be included in the Company Board and management
slate of nominees presented to stockholders of the Company for election as
directors and to recommend to stockholders their election to the Company Board.
Notwithstanding any provisions to the contrary in this Agreement, Goldman's
right to nominate one person to serve on the Company Board is not assignable and
any purported assignment of such right shall be null and void.
14
3. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
Agreement. As defined in the introductory paragraph
of this Agreement.
Blackout Period. As defined in Section 2.1(f).
Commission: The Securities and Exchange Commission or
any other Federal agency at the time administering
the Securities Act.
Common Stock: As defined in Section 1.
Company: As defined in the introductory paragraph of
this Agreement.
Company Board. As defined in Section 2.8.
Exchange Act: The Securities Exchange Act of 1934, or
any similar Federal statute, and the rules and
regulations of the Commission thereunder, all as the
same shall be in effect at the time. Reference to a
particular section of the Securities Exchange Act of
1934 shall include a reference to the comparable
section, if any, of any such similar Federal statute.
Goldman: As defined in Section 2.8.
Inspector. As defined in Section 2.3.
Investor: As defined in the introductory paragraph of
this Agreement.
Managing Underwriters: Any investment banker or
investment bankers and manager or managers that
administer the offering of Registrable Securities
covered by any registration statement.
Person: A corporation, an association, a partnership,
an organization, business, an individual, a
governmental or political subdivision thereof or a
governmental agency.
Plan: As defined in Section 1.
15
Records. As defined in Section 2.3.
Registrable Securities: Any shares of Common Stock
issued to any Investor pursuant to the Plan, any
shares of Common Stock issuable upon conversion of
convertible preferred stock issued to any Investor
pursuant to the Plan and any securities issued or
issuable with respect to any Common Stock referred to
above by way of stock dividend or stock split or in
connection with a combination of shares,
recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular
Registrable Securities, once issued such securities
shall cease to be Registrable Securities when (a) a
registration statement with respect to the sale of
such securities shall have become effective under the
Securities Act and such securities shall have been
disposed of in accordance with such registration
statement, (b) they shall have been distributed to
the public pursuant to Rule 144 (or any successor
provision) under the Securities Act, (c) they shall
have been otherwise transferred, new certificates for
them not bearing a legend restricting further
transfer shall have been delivered by the Company and
subsequent disposition of them shall not require
registration or qualification of them under the
Securities Act or any similar state law then in
force, (d) they shall be sold by the applicable
Investor to the public pursuant to Section 1145 of
title 11 of the United States Code, as amended, or
(e) they shall have ceased to be outstanding.
Notwithstanding anything herein to the contrary, the
registration rights granted hereunder shall terminate
as to each Investor and with respect to such
Securities upon the date that such Common Stock is no
longer Registrable Securities.
Registration Expenses: All expenses incident to the
Company's performance of or compliance with Section
2, including, without limitation, all registration,
filing and NASD fees, all stock exchange listing
fees, all fees and expenses of complying with
securities or blue sky laws, all word processing,
duplicating and printing expenses, messenger and
delivery expenses, the fees and disbursements of
counsel for the Company and of its independent public
accountants, including the expenses of any special
audits or "cold comfort" letters required by or
incident to such performance and compliance, the
reasonable fees and disbursements of one (1) counsel
representing all Investors and accountants retained
by Investors, premiums and other costs of policies of
insurance against liabilities arising out of the
public offering of the Registrable Securities being
registered and any fees and disbursements of
underwriters customarily paid by issuers or sellers
of securities, but excluding underwriting discounts
and commissions and transfer taxes, if any, provided
that, in any case where Registration Expenses are not
to be borne by the Company, such expenses shall not
include salaries of Company personnel or general
overhead expenses of the Company, auditing fees,
premiums or other expenses relating to liability
insurance required by underwriters of the Company or
other expenses for the preparation of financial
statements or other data normally prepared by the
Company in the ordinary course of its business or
which the Company would have incurred in any event.
16
Securities Act: The Securities Act of 1933, or any
similar Federal statute, and the rules and
regulations of the Commission thereunder, all as of
the same shall be in effect at the time. References
to a particular section of the Securities Act of 1933
shall include a reference to the comparable section,
if any, of any such similar Federal statute.
4. Rules 144. The Company shall use its best efforts to file
in a timely manner the reports required to be filed by it under the Securities
Act and the Exchange Act (including but not limited to the reports under
sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c) of
Rule 144 adopted by the Commission under the Securities Act) and the rules and
regulations adopted by the Commission thereunder (or, if the Company is not
required to file such reports, will, upon the request of any Participating
Investor, make publicly available other information) and will take such further
action as such Investor may reasonably request, all to the extent required from
time to time to enable such Participating Investor to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the Commission. Upon the request of any Investor, the
Company will deliver to such Investor a written statement as to whether it has
complied with the requirements of this Section 4.
5. Amendments and Waivers. This Agreement may be amended and
the Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have obtained
the written consent to such amendment, action or omission to act, of each
Investor. Investors shall be bound by any consent authorized by this Section 5,
whether or not such Registrable Securities shall have been marked to indicate
such consent.
6. Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election, be treated as the holder of
such Registrable Securities for purposes of any request or other action by any
holder or holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable Securities
held by any holder or holders of Registrable Securities contemplated by this
Agreement. If the beneficial owner of any Registrable Securities so elects, the
Company may require assurances reasonably satisfactory to it of such owner's
beneficial ownership of such Registrable Securities.
17
7. Notices. Except as otherwise provided in this Agreement,
all notices, requests and other communications to any Person provided for
hereunder shall be in writing and shall be given to such Person (a) in the case
of the Company, addressed in the manner set forth below, or (b) in the case of
any other Person, at the address that such Person shall have furnished to the
Company in writing.
If to the Company:
Genesis Health Ventures, Inc.
101 East State Street
Kennett Square
Pennsylvania
Facsimile:
Attn: James J. Wankmiller, Esq.
If to the Investors:
At the address provided to the Company:
[Address]
Facsimile:
Attn:
Each such notice, request or other communication shall be effective (i) if given
by mail, 72 hours after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid or (ii) if given by any other
means (including, without limitation, by air courier), when delivered at the
address specified above, provided that any such notice, request or communication
to Investor shall not be effective until receipt is acknowledged in a writing
reasonably satisfactory to both parties.
8. Assignment. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their respective
successors and assigns. This Agreement shall not be assigned by any Investor,
provided that an Investor shall have the right, upon prior written notice to the
Company, to assign its rights and obligations under the Agreement to a purchaser
of Registrable Securities from such Investor that purchases either (1) the
entire amount of such Investor's initial issuance of Common Stock under the Plan
or (2) a number of shares of Common Stock equal to at least three and a half
percent (3.5%) of the then outstanding shares of Common Stock.
18
9. Descriptive Headings. The descriptive headings of the
several sections and paragraphs of this Agreement are inserted for reference
only and shall not limit or otherwise affect the meaning hereof.
10. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE PRINCIPLES OF
CONFLICTS OF LAWS. THE PARTIES HERETO WAIVE THEIR RIGHT TO A JURY TRIAL WITH
RESPECT TO DISPUTES HEREUNDER.
11. Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original, but all such counterparts shall together constitute one and the same
instrument.
12. Entire Agreement. This Agreement embodies the entire
agreement and understanding between the Company and Investor relating to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
13. SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY HEREBY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS AND APPELLATE COURTS FROM ANY THEREOF. THE
COMPANY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF TO THE COMPANY BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, RETURN
RECEIPT REQUESTED, TO THE COMPANY AT ITS ADDRESS SPECIFIED IN SECTION 7. THE
COMPANY HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
14. Severability. If any provision of this Agreement, or the
application of such provisions to any Person or circumstance, shall be held
invalid, illegal or unenforceable the remainder of this Agreement, or the
application of such provision to Persons or circumstances other than those to
which it is held invalid, illegal or unenforceable, shall not be affected
thereby.
19
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officers thereunto duly authorized
as of the date first above written.
GENESIS HEALTH VENTURES, INC.
By /s/ James V. McKeon
-------------------------------------
Name: James V. McKeon
Title: Senior Vice President
GOLDMAN SACHS & CO.
By /s/ John Urban
-------------------------------------
Name: John Urban
Title: Managing Director
HIGHLAND CAPITAL MANAGEMENT L.P.
By /s/ Mark K. Okade
-------------------------------------
Name: Mark K. Okade CFA
Title: Executive Vice President
Highland Capital Management L.P.
20