Exhibit A
Series G Cumulative Convertible Preferred Stock
Of
GENESIS HEALTH VENTURES, INC.
RESOLVED, that, pursuant to authority expressly granted to and
vested in the Board of Directors of the Company (the "Board of Directors") by
the provisions of Article 6 of the Amended and Restated Articles of
Incorporation of the Company (the "Articles") and the provisions of Sections
1521 and 1522 of the Pennsylvania Business Corporation Law Of 1988, as amended,
the Board of Directors hereby creates a series of the Company's previously
authorized preferred stock, par value $.01 per share (the "Preferred Stock"),
and determines the designation and number of shares which constitute such series
and the relative rights, preferences and limitations of such series as follows:
SERIES G CUMULATIVE CONVERTIBLE PREFERRED STOCK
SECTION 1. Designation and Amount. The shares of such series
shall be designated as "Series G Cumulative Convertible Preferred Stock" (the
"Series G Preferred Stock") and the number of shares constituting the Series G
Preferred Stock shall be 625,000. Capitalized terms used without previous
definition herein are defined in Section 9 hereof.
SECTION 2. Dividends.
(a) Payment of Dividends. The holders of shares of Series G
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, out of the assets of the Company legally available therefor,
cumulative preferential cash dividends at the rate per annum of 5.9375% of the
liquidation preference, as may be adjusted in accordance with the provisions
hereof.
The rate per annum at which dividends on the Series G
Preferred Stock will accrue shall be increased as follows on the indicated date:
Fourth anniversary of the Issue Date...................... 6.1875%
Fifth anniversary of the Issue Date....................... 6.6250%
Ninth anniversary of the Issue Date....................... 7.0625%
Eleventh anniversary of the Issue Date.................... 7.5000%
Thirteenth anniversary of the Issue Date.................. 7.9375%
Dividends shall be payable in arrears on each March 31, June
30, September 30 and December 31, commencing on the last day of the first full
calendar quarter after the Issue Date (each such date being hereinafter referred
to as a "Dividend Payment Date"). The first dividend payment shall be for the
period from the date of original issuance of the Series G Preferred Stock (the
"Issue Date") to December 31, 1998 and each dividend payment thereafter shall be
for the period from the most recent Dividend Payment Date on which dividends
have been paid to but excluding the first Dividend Payment Date thereafter. Each
quarterly period beginning on January 1, April 1, July 1 and October 1 in each
year and ending on and including the day next preceding the first day of the
next such quarterly period shall be a "Dividend Period". Dividends (or amounts
equal to accrued and unpaid dividends) payable on Series G Preferred Stock for
any period less than a full quarterly Dividend Period will be computed on the
basis of a 360-day year of twelve 30-day months and the actual number of days
elapsed in any period less than one month. The Board of Directors may fix a
record date for determination of holders of Series G Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be no less than 30 and no more than 60 calendar days prior to the
date fixed for the payment thereof.
Dividends on the Series G Preferred Stock will accrue, whether
or not there are funds legally available for the payment of such dividends and
whether or not such dividends are declared, on a daily basis from the previous
Dividend Payment Date. Dividends will cease to accrue in respect of Series G
Preferred Stock on the date of the conversion thereof.
-2-
If, for four consecutive Dividend Periods, dividends are not
declared and paid or funds are not legally available for the payment of
dividends, dividends will accumulate as of the Dividend Payment Dates, but such
accumulated unpaid dividends shall not bear interest. However, if, after such
four consecutive Dividend Periods, dividends are not declared and paid or funds
continue not to be legally available for the payment of dividends, dividends
that accrue thereafter shall be payable in additional shares of Series G
Preferred Stock (the "Dividend Shares") until such time as all accrued and
unpaid dividends are paid in full in cash. To the extent dividends are payable
in whole or in part in Dividend Shares, such Dividend Shares shall be valued at
$500.00 per share with a liquidation value of $500.00 per share and shall have
all rights and preferences of the Series G Preferred Stock hereunder, including
dividends payable at the rates specified herein. Dividends on the Dividend
Shares shall accrue from the date such Dividend Shares are issued.
Dividends paid on the shares of Series G Preferred Stock in an
amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding.
(b) Payment of Dividends on Junior Stock. As long as any
Series G Preferred Stock is outstanding, no dividends or other distributions for
any Dividend Period (other than dividends payable in shares of, or warrants,
rights or options exerciseable for or convertible into shares of, common stock,
par value $.02 per share, of the Company (the "Common Stock") or any other
capital stock of the Company ranking junior to the Series G Preferred Stock as
to the payment of dividends and the distribution of assets upon liquidation
("Junior Stock"), and cash in lieu of fractional shares of such Junior Stock in
connection with any such dividends) will be paid on any Junior Stock unless: (i)
full dividends on all outstanding shares of Preferred Stock that by its terms
-3-
ranks pari passu with the Series G Preferred Stock with respect to the payment
of dividends ("Parity Preferred Stock"), and the Series G Preferred Stock have
been paid, or declared and set aside for payment, for all Dividend Periods
terminating on or prior to the payment date of such Junior Stock dividend or
distribution and for the current Dividend Period, to the extent such Parity
Preferred Stock dividends are cumulative; (ii) the Company has paid or set aside
all amounts, if any, then or theretofore required to be paid or set aside for
all purchase, retirement and sinking funds, if any, for any outstanding shares
of Parity Preferred Stock; and (iii) the Company is not in default on any of its
obligations to redeem any outstanding shares of Parity Preferred Stock or Series
G Preferred Stock.
In addition, as long as any Series G Preferred Stock is
outstanding, no shares of any Junior Stock may be purchased, redeemed or
otherwise acquired by the Company or any of its subsidiaries (except in
connection with a reclassification or exchange of any Junior Stock through the
issuance of other Junior Stock (and cash in lieu of fractional shares of such
Junior Stock in connection therewith) or the purchase, redemption or other
acquisition of any Junior Stock with any Junior Stock (and cash in lieu of
fractional shares of such Junior Stock in connection therewith) or in accordance
with the Put/Call Agreement, or outstanding call options) nor may any funds be
set aside or made available for any sinking fund for the purchase or redemption
of any Junior Stock unless: (i) full dividends on all outstanding shares of
Parity Preferred Stock and Series G Preferred Stock have been paid, or declared
and set aside for payment, for all dividends periods terminating on or prior to
the date of such purchase, redemption or acquisition and for the current
Dividend Period, to the extent such Parity Preferred Stock dividends are
cumulative; (ii) the Company has paid or set aside all amounts, if any, then or
theretofore required to be paid or set aside for all purchase, retirement and
sinking funds, if any, for any outstanding shares of Parity Preferred Stock; and
(iii) the Company is not in default on any of its obligations to redeem any
outstanding shares of Parity Preferred Stock or Series G Preferred Stock.
-4-
Subject to the provisions described above, such dividends or
other distributions (payable in cash, property or Junior Stock) as may be
determined from time to time by the Board of Directors may be declared and paid
on the shares of any Junior Stock and from time to time Junior Stock may be
purchased, redeemed or otherwise acquired by the Company or any of its
subsidiaries. In the event of the declaration and payment of any such dividends
or other distributions, the holders of such Junior Stock will be entitled, to
the exclusion of holders of any outstanding Parity Preferred Stock or Series G
Preferred Stock, to share therein according to their respective interests.
(c) Payment of Dividends on Parity Preferred Stock. As long as
any Series G Preferred Stock is outstanding, dividends or other distributions
for any Dividend Period may not be paid on any outstanding shares of Parity
Preferred Stock (other than dividends or other distributions payable in Junior
Stock and cash in lieu of fractional shares of such Junior Stock in connection
therewith), unless either: (i) (A) full dividends on all outstanding shares of
Parity Preferred Stock and Series G Preferred Stock have been paid, or declared
and set aside for payment, for all Dividend Periods terminating on or prior to
the payment date of such Parity Preferred Stock dividend or distribution and for
the current Dividend Period, to the extent such Parity Preferred Stock dividends
are cumulative; (B) the Company has paid or set aside all amounts, if any, then
or theretofore required to be paid or set aside for all purchase, retirement and
sinking funds, if any, for any outstanding shares of Parity Preferred Stock; and
(C) the Company is not in default on any of its obligations to redeem any
outstanding shares of Parity Preferred Stock or Series G Preferred Stock; or
(ii) any such dividends are declared and paid pro rata so that the amounts of
any dividends declared and paid per share on outstanding Series G Preferred
Stock and each other share of such Parity Preferred Stock will in all cases bear
to each other the same ratio that accrued and unpaid dividends (including any
accumulation with respect to unpaid dividends for prior Dividend Periods, if
such dividends are cumulative) per share of outstanding Series G Preferred Stock
and such other outstanding shares of Parity Preferred Stock bear to each other.
-5-
In addition, as long as any Series G Preferred Stock is
outstanding, the Company may not purchase, redeem or otherwise acquire any
Parity Preferred Stock (except with any Junior Stock and cash in lieu of
fractional shares of such Junior stock in connection therewith) unless: (i) full
dividends on all outstanding shares of Parity Preferred Stock and Series G
Preferred Stock have been paid, or declared and set aside for payment, for all
Dividend Periods terminating on or prior to the payment date of such Parity
Preferred Stock purchase, redemption or other acquisition and for the current
Dividend Period, to the extent such Parity Preferred Stock dividends are
cumulative; (ii) the Company has paid or set aside all amounts, if any, then or
theretofore required to be paid or set aside for all purchase, retirement and
sinking funds, if any, for any outstanding shares of Parity Preferred Stock; and
(iii) the Company is not in default on any of its obligations to redeem any
outstanding shares of Parity Preferred Stock or Series G Preferred Stock (unless
all Parity Preferred Stock as to which such a default exists is purchased or
redeemed on a pro rata basis).
(d) Any dividend payment made on the Series G Preferred Stock
shall first be credited against the earliest accrued but unpaid dividend due
with respect to the Series G Preferred Stock.
SECTION 3. Voting Rights. The holders of shares of Series G
Preferred Stock shall have the following voting rights:
(a) The holders of the Series G Preferred Stock (in addition
to their rights set forth in this Section 3 and otherwise provided by law) shall
be entitled to such number of votes for each share held as equals the number of
shares of Common Stock into which such shares are convertible on the record date
set for determining who is entitled to vote a particular matter and shall vote
together with the holders of Common Stock (and any other class or series of
Preferred Stock, if any, similarly entitled to vote (such Preferred Stock,
together with the Common Stock, the "Voting Securities") as a single class, on
all matters to be voted on by holders of Common Stock of the Company. In
addition to such voting rights, holders of the Series G Preferred Stock shall be
-6-
entitled to vote as a separate class on matters as to which the Pennsylvania Law
requires a separate class vote of the Series G Preferred Stock, and shall have
such other voting rights as are set forth in this Section 3.
(b) Whenever dividends payable on shares of Series G Preferred
Stock as provided in Section 2 are in arrears and unpaid for four consecutive
Dividend Periods, thereafter and until all accrued and unpaid dividends, whether
or not declared, on the outstanding shares of Series G Preferred Stock shall
have been paid in full in cash or declared and cash set apart for the payment
thereof, the number of directors of the Company shall be increased by two and
the holders of the Series G Preferred Stock shall have the right, voting
separately as a class, by a vote of holders of a majority of the number of
outstanding shares of Series G Preferred Stock, to elect two directors of the
Company, and the remaining directors of the Company shall be elected by the
classes of stock entitled to vote therefor, voting together, including the
Series G Preferred Stock, at each meeting of the shareholders held for the
purpose of electing directors, all in accordance with the terms and procedures
set forth in the Company's Articles and By-Laws. The Company agrees to call a
meeting of holders of the Series G Preferred Stock in order that the Series G
Preferred Stock may be represented on the Board of Directors in accordance
hereof. At such time as the accrued and unpaid dividends shall have been paid in
full in cash or declared and cash set apart for the payment thereof, the right
of the holders to vote for directors as provided herein shall terminate and the
term of office of any director(s) then in office who were elected pursuant to
this Section 3(b) shall immediately terminate.
(c) So long as any shares of Series G Preferred Stock are
outstanding, subject to the applicable provisions of the Pennsylvania Law, the
Company shall not, without consent of the holders of at least two-thirds of the
number of shares of Series G Preferred Stock at the time outstanding, given in
person or by proxy, either in writing or by vote at a special meeting called for
the purpose, (i) increase the number of shares of authorized Series G Preferred
Stock or issue any additional shares of Series G Preferred Stock other than
-7-
Dividend Shares; (ii) amend or modify the powers, preferences or rights of the
Series G Preferred Stock or amend, alter or repeal any of the provisions of the
Company's Articles or By-Laws (including by merger or similar transaction) so as
to eliminate the Series G Preferred Stock or otherwise affect adversely the
powers, preferences or rights of the holders of Series G Preferred Stock;
provided, however, that the Company may authorize and issue classes or series of
stock ranking senior to, or on a parity with the Series G Preferred Stock either
in the payment of dividends or in the distribution of assets upon any
liquidation, dissolution or winding-up of the affairs of the Company, or that
the Company may be required to redeem or repurchase before all of the Series G
Preferred Stock has been redeemed without the consent of the holders of the
Series G Preferred Stock; or (iii) enter into any plan of complete liquidation
or dissolution or otherwise effect the voluntary liquidation, dissolution or
winding-up of the Company unless, as a result of such liquidation, dissolution
or winding-up, the liquidation preference on the Series G Preferred Stock is
satisfied in full pursuant to Section 7 hereof.
SECTION 4. Conversion at the Option of the Company.
(a) From and after April 26, 2001, the Company at its option
may convert the Series G Preferred Stock in whole at any time at a conversion
price equal to 100% of the Liquidation Amount, plus accrued and unpaid dividends
to the date of conversion, if the Current Market Price on the date of such
notice was in excess of 120% of the Conversion Price (as defined herein) on the
date of such notice.
(b) From and after April 26, 2002, the Company at its option
may convert the Series G Preferred Stock in whole at any time at the conversion
price set forth below, stated as a percentage of the Liquidation Amount, in each
case plus accrued and unpaid dividends to the date of conversion, if converted
during the twelve-month period beginning April 26:
-8-
Year Price
---- -----
2002................................................. 104.50%
2003................................................. 103.75%
2004................................................. 103.00%
2005................................................. 102.25%
2006................................................. 101.50%
2007................................................. 100.75%
2008 and thereafter.................................. 100.00%
(c) The conversion prices for Series G Preferred Stock set
forth in (a) and (b) above are payable by the Company solely in Common Stock.
The Company shall on the date of conversion deliver to each holder of Series G
Preferred Stock for each share of Series G Preferred Stock a number of shares of
validly issued, fully paid and nonassessable Common Stock with an aggregate
Market Price on such date equal to the applicable conversion price.
(d) At least 30 days and not more than 60 days prior to the
date of conversion, written notice (the "Conversion Notice") shall be given by
first-class mail, postage prepaid, to each holder of the Series G Preferred
Stock at such holder's address as it appears on the stock books of the Company.
The Conversion Notice shall state:
(A) Whether the conversion is pursuant to paragraph (a) or (b)
of this Section 4;
(B) the price at which the shares of Series G Preferred Stock
shall be converted;
(C) the date of conversion; and
(D) that dividends on the shares of the Series G Preferred
Stock to be converted shall cease to accumulate on such date of conversion
unless the Company defaults in the payment of the applicable conversion price.
Each holder of Series G Preferred Stock shall surrender the
certificate or certificates representing such shares of Series G Preferred Stock
to the Company, duly endorsed (or otherwise in proper form for transfer, as
-9-
determined by the Company), in the manner and at the place designated in the
Conversion Notice, and on the date of conversion the conversion price for such
shares shall be payable to the holder thereof, and each surrendered certificate
shall be cancelled and retired.
SECTION 5. Conversion at the Option of the Holders.
(a) Procedure. At the option of the holders, each share of
Series G Preferred Stock shall be convertible at any time into Common Stock at a
conversion price of $37.20 per share of the underlying Common Stock (equivalent
to a conversion rate of 13.441 shares of Common Stock for each share of Series G
Preferred Stock), such initial conversion price being subject to adjustment as
set forth below (the "Conversion Price").
(i) Conversion of Series G Preferred Stock may be effected by
delivering certificates evidencing such shares, together with written notice of
conversion and a proper assignment of such certificates to the Company or in
blank, to the office or agency to be maintained by the Company for that purpose
(and, if applicable, cash payment of an amount equal to the dividend payable on
such shares), and otherwise in accordance with conversion procedures established
by the Company. Each optional conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which the foregoing
requirements shall have been satisfied and dividends will cease to accrue in
respect of Series G Preferred Stock at such time. The conversion shall be at the
Conversion Price in effect at such time and on such date.
(ii) On and after the date of conversion, unless the Company
fails to issue certificates evidencing the Common Stock, dividends on the Series
G Preferred Stock called for conversion shall cease to accumulate on the date of
conversion, and all rights of the holders of converted shares shall terminate
with respect thereto on the date of conversion, other than the right to receive
the Common Stock into which each share of Series G Preferred Stock shall be
converted.
(b) Receipt of Dividends. Holders of Series G Preferred Stock
at the close of business on a record date for any payment of declared dividends
-10-
shall be entitled to receive the full dividend payable on such shares on the
corresponding Dividend Payment Date notwithstanding the conversion of such
shares following such record date and prior to the corresponding Dividend
Payment Date. However, shares of Series G Preferred Stock surrendered for
conversion after the close of business on a record date for any payment of
declared dividends and before the opening of business on the next succeeding
Dividend Payment Date must be accompanied by payment to the Company in cash of
an amount equal to the dividend declared on such shares of Series G Preferred
Stock to be converted and to be payable on such Dividend Payment Date unless a
Conversion Notice from the Company shall have been delivered to the Holders and
the date of conversion is on or before the next succeeding Dividend Payment
Date. Holders thereof shall continue to be entitled to receive from the Company
any accrued but unpaid dividends thereon. Such accrued but unpaid dividends may
be declared and paid at any time, without reference to any regular Dividend
Payment Date. Except as provided above, upon any conversion at the option of the
holder of Series G Preferred Stock, the Company shall make no payment or
allowance for unpaid dividends for the Dividend Period during which such
conversion occurs, whether or not in arrears, on such converted Series G
Preferred Stock or for previously declared dividends or distributions on the
shares of Common Stock issued upon such conversion.
(c) Adjustment for Stock Transactions. In case the Company
shall (i) subdivide its outstanding shares of Common Stock into a greater number
of shares, (ii) combine its outstanding shares of Common Stock into a smaller
number of shares, or (iii) issue by reclassification of its shares of Common
Stock any shares of its capital stock, each such transaction being called a
"Stock Transaction"), then and in each such case, the Conversion Price in effect
immediately prior thereto shall be adjusted so that the holder of a share of
Series G Preferred Stock surrendered for conversion after the record date fixing
shareholders to be affected by such Stock Transaction shall be entitled to
receive upon conversion the number of such shares of Common Stock and/or other
capital stock which such holder would have been entitled to receive after the
happening of such event had such share of Series G Preferred Stock been
converted immediately prior to such record date.
-11-
(d) Adjustment for Dividends. In the event the Company shall
at any time or from time to time while any shares of Series G Preferred Stock
are outstanding declare, order, pay or make a dividend or other distribution
(including, without limitation, any distribution of stock or other securities or
property or rights or warrants to subscribe for securities of the Company or any
of its subsidiaries by way of dividend or distribution or evidences of
indebtedness of the Company or any other person) on its Common Stock, other than
(A) regular dividends payable in cash or (B) any dividend or distribution on the
Company's Common Stock if in conjunction therewith the Company declares and pays
or makes a dividend or distribution on each share of Series G Preferred Stock
which is the same as the dividend or distribution that would have been made or
paid with respect to such share of Series G Preferred Stock had such share been
converted into shares of Common Stock immediately prior to the record date for
any such dividend or distribution on the Company's Common Stock, then, and in
each such case, an appropriate adjustment to the Conversion Price shall be made
so that the holder of each share of Series G Preferred Stock shall be entitled
to receive, upon the conversion thereof, the number of shares of Common Stock
determined by multiplying (1) the number of shares of Common Stock into which
such share was convertible on the day immediately prior to the record date fixed
for the determination of shareholders entitled to receive such dividend or
distribution by (2) a fraction, the numerator of which shall be the Current
Market Price per share of Common Stock as of such record date, and the
denominator of which shall be such Current Market Price per share of Common
Stock less the Fair Market Value per share of Common Stock of such dividend or
distribution (as determined in good faith by the Board of Directors, a certified
resolution with respect to which shall be mailed to each holder of shares of
Series G Preferred Stock); provided, however, that in the event of a
distribution of shares of capital stock of a subsidiary of the Company (a
"Spin-Off") made to holders of shares of Common Stock, the numerator of such
fraction shall be the sum of the Current Market Price per share of Common Stock
as of the 30th trading day after the effective date of such Spin-Off and the
-12-
Current Market Price of the number of shares (or the fraction of a share) of
capital stock of the subsidiary which is distributed in such Spin-Off in respect
of one share of Common Stock as of such 30th trading day and the denominator of
which shall be the Current Market Price per share of Common Stock as of such
30th trading day. An adjustment made pursuant to this paragraph (d) shall be
made upon the opening of business on the next business day following the date on
which any such dividend or distribution is made and shall be effective
retroactively to the day immediately after the close of business on the record
date fixed for the determination of shareholders entitled to receive such
dividend or distribution; provided, however, if the proviso to the preceding
sentence applies, then such adjustment shall be made and be effective as of such
30th trading day after the effective date of such Spin-Off.
(e) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
such price; provided, however, that any adjustments which by reason of this
paragraph (e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment and provided, further, that any
adjustment shall be required and made in accordance with the provisions of this
Section (other than this paragraph (e)) not later than such time as may be
required in order to preserve the tax free nature of the distribution to the
holders of shares of Common Stock. All calculations under this Section 5 shall
be made to the nearest one-hundredth of a share.
If any action or transaction would require adjustment to the
Conversion Price pursuant to more than one paragraph of this Section 5, only one
adjustment shall be made and such adjustment shall be the amount of the
adjustment that has the highest absolute value.
(f) Fractional Shares. No fractional shares or scrip
representing fractional shares of Common Stock shall be issued upon the
conversion of any share of Series G Preferred Stock. If the conversion thereof
results in a fraction, an amount equal to such fraction multiplied by the
-13-
Current Market Price per share of Common Stock as of the conversion date shall
be paid to such holder in cash by the Company. If more than one share shall be
surrendered for conversion at one time by or for the same holder, the number of
full shares of Common Stock issuable upon conversion thereof shall be computed
on the basis of the aggregate number of Series G Preferred Stock so surrendered.
(g) Capital Reorganizations; Change in Control. In the event
of any capital reorganization or reclassification of outstanding shares of
Common Stock (other than a reclassification covered by paragraph (c) of this
Section 5), or in case of any merger, consolidation or other corporate
combination of the Company with or into another corporation, or in case of any
sale or conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety (each of the foregoing being referred
to as a "Transaction"), each share of Series G Preferred Stock shall be
exchanged for a new series of preferred stock of the Surviving Person, or in the
case of a Surviving Person other than a corporation, comparable securities of
such Surviving Person, in either case having economic terms as nearly equivalent
as possible to, and with the same voting and other rights as, the Series G
Preferred Stock; except that any holder of Series G Preferred Stock shall be
entitled to receive, upon conversion subsequent to the consummation of such
Transaction, the kind and amount of shares of stock and other securities and
property receivable (including cash) upon the consummation of such Transaction
by a holder of that number of shares of Common Stock into which one share of
Series G Preferred Stock was convertible immediately prior to such Transaction.
Notwithstanding the foregoing, upon a Change in Control (as defined below) at
the option of the holder of any shares of Series G Preferred Stock the holder
thereof shall be entitled to receive, upon presentation of the certificates
therefor to the Surviving Person subsequent to the consummation of such
Transaction, cash equal to the Liquidation Amount as of the consummation of such
transaction. If necessary, appropriate adjustment (as determined by the Board of
Directors in good faith) shall be made in the application of the provisions set
forth in this Section 5 with respect to the rights and interests thereafter of
the holders of shares of Series G Preferred Stock to the end that the provisions
-14-
set forth herein for the protection of the conversion rights of the Series G
Preferred stock shall thereafter be applicable, as nearly as reasonably may be,
to any such other shares of stock and other securities and property deliverable
upon conversion of the shares of Series G Preferred Stock remaining outstanding
(with such adjustments in the Conversion Price and number of shares issuable
upon conversion and such other adjustments in the provisions hereof as the Board
of Directors in good faith shall determine to be appropriate). In case
securities or property other than Common stock shall be issuable or deliverable
upon conversion as aforesaid, then all references in this Section 5 shall be
deemed to apply, so far as appropriate and as nearly as may be, to such other
securities or property.
Notwithstanding anything contained herein to the contrary, the
Company will not effect any Transaction unless, prior to the consummation
thereof, (a) proper provision is made to ensure that the holders of shares of
Series G Preferred Stock will be entitled to receive the benefits afforded by
this paragraph (i) and (b) if, following the Transaction, one or more entities
other than the Company shall be required to deliver securities or other property
upon the conversion of the Series G Preferred Stock, such entity or entities
shall assume, by written instrument delivered to each holder of shares of Series
G Preferred Stock the obligation to deliver to such holder the securities and
property to which, in accordance with the foregoing provisions, such holder is
entitled.
"Change in Control" means (A) when the shareholders of Gemini
approve an agreement or plan (i) to merge or consolidate Gemini with or into
another company (other than a merger or consolidation which would result in the
Voting Securities outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting power of the voting
securities of Gemini or such surviving entity outstanding immediately after such
merger or consolidation), or (ii) to sell, or otherwise dispose of, all or
substantially all of Gemini's property and assets, or (B) when Gemini is the
subject of a transaction pursuant to Rule 13e-3 under the Exchange Act.
-15-
(h) Notice of Certain Events. In case at any time or from time
to time, the Company shall pay any dividend or make any other distribution to
the holders of its Common Stock, or shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or any
other right, or there shall be any capital reorganization or reclassification of
the Common Stock of the Company or merger, consolidation or other corporate
combination of the Company with or into another corporation, or any sale or
conveyance to another corporation of the property of the Company as an entirety
or substantially as an entirety, or there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company, then, in any one or more
of said cases the Company shall give written notice at the same time as, or as
soon as practicable after, such event is first communicated (including by
announcement of a record date in accordance with the rules of any stock exchange
on which the Common Stock is listed or admitted to trading) to holders of Common
Stock, but in any event within 30 days of occurrence of such event (the time of
mailing of such notice shall be deemed to be the time of delivery thereof) to
the registered holders of the Series G Preferred Stock at the addresses of each
as shown on the books of the Company maintained by the transfer agent thereof of
the date on which (i) the books of the Company shall close or a record shall be
taken for such stock dividend, distribution, subscription rights or Repurchase
or (ii) such reorganization, reclassification, merger, consolidation, corporate
combination, sale or conveyance, dissolution, liquidation or winding-up shall
take place, as the case may be. Such notice shall also specify the date as of
which the holders of the Common Stock of record shall participate in said
dividend, distribution, subscription rights or Repurchase or shall be entitled
to exchange their Common Stock for securities or other property deliverable upon
such registration, reclassification, merger, consolidation, corporate
combination, sale or conveyance or participate in such dissolution, liquidation
or winding-up, as the case may be, as well as the Conversion Price and the
number of shares into which each share of Series G Preferred Stock may be
converted at such time, failure to give such notice shall not invalidate any
action so taken.
-16-
(i) Reservation of Common Stock. The Company shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the conversion of the shares
of the Series G Preferred Stock, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series G Preferred Stock; and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of all then outstanding shares of the Series G
Preferred Stock, at the Company will take such corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose.
SECTION 6. Liquidation Preference. (a) The Series G Preferred
Stock will rank on a parity as to preference on distribution of assets upon
liquidation with each other series of Parity Preferred Stock then outstanding,
and with any future Preferred Stock issued by the Company that by its terms
ranks pari passu with the Series G Preferred Stock with respect to distribution
of assets upon liquidation.
(b) The Series G Preferred Stock will be subordinate as to
preference on distribution of assets upon liquidation of dividends to each other
series of existing and future Preferred Stock issued by the Company that by its
terms is senior to the Series G Preferred Stock with respect to distribution of
assets upon liquidation.
(c) In the event of the liquidation, dissolution or winding-up
of the business of the Company, whether voluntary or involuntary, the holders of
Series G Preferred Stock then outstanding, after payment or provision for
payment of the debts and other liabilities of the Company and the payment or
provision for payment of any distribution on any shares of the Company having a
preference and a priority over the Series G Preferred Stock on liquidation, and
before any distribution to holders of any shares of the Company that are junior
and subordinate to the Series G Preferred Stock on liquidation shall be entitled
to be paid out of the assets of the Company available for distribution to its
-17-
stockholders the Liquidation Amount, plus an amount equal to all accrued and
unpaid dividends thereon, and shall, after the holders of Common Stock have
received an amount per share of Common Stock equal to the amount paid per share
of Series G Preferred Stock, be entitled to participate on a pro rata basis with
the holders of Common Stock. In the event the assets of the Company available
for distribution to the holders of the Series G Preferred Stock upon any
dissolution, liquidation or winding-up of the Company shall be insufficient to
pay in full the liquidation payments payable to the holders of outstanding
Series G Preferred Stock and of all other series of Preferred Stock that rank on
a parity with the Series G Preferred Stock in the event of liquidation, the
holders of Series G Preferred Stock and of all other series of such parity
Preferred Stock shall share ratably in such distribution of assets in proportion
to the amount which would be payable on such distribution if the amounts to
which the holders of outstanding Series G Preferred Stock and the holders of
outstanding shares of such Parity Preferred Stock were paid in full. Except as
provided in this Section 6, holders of Series G Preferred Stock shall not be
entitled to any distribution in the event of liquidation, dissolution or
winding-up of the affairs of the Company.
(d) For the purposes of this Section 6, none of the following
shall be deemed to be a voluntary or involuntary liquidation, dissolution or
winding-up of the Company:
(i) the sale, lease, transfer or exchange of all or
substantially all of the assets of the Company; or
(ii) the consolidation or merger of the Company with one or
more other corporations (whether or not the Company is the corporation
surviving such consolidation or merger).
SECTION 7. Non-Transferability. No holder of the Series G
Preferred Stock shall transfer the Series G Preferred Stock without the consent
of the Company until one year after the effective date of the agreement and plan
of merger dated as of April 26, 1998 by and among the Company, Vitalink Pharmacy
Services, Inc. and V Acquisition Corporation; provided however, Manor Care, Inc.
may not transfer any shares of Series G Preferred Stock held, directly or
-18-
indirectly, whether acquired in connection with the consent of the Company or
until the filing by the Company of a registration statement with the Securities
and Exchange Commission covering the sale of Series G Preferred Stock held by
Manor Care, Inc.
SECTION 8. Re-issuance. Series G Preferred Stock that has been
issued and reacquired in any manner, including shares purchased, exchanged or
converted, shall not be reissued as shares of this Series G Cumulative
Convertible Preferred Stock and shall (upon compliance with any applicable
provisions of the laws of the Commonwealth of Pennsylvania) have the status of
authorized and unissued shares of the Preferred Stock undesignated as to series
and may be redesignated and reissued as part of any series of Preferred Stock.
SECTION 9. Definitions.
For the purposes hereof, the following definitions shall
apply:
"Closing Price" of publicly traded shares of Common Stock or
any other class of capital stock or other security of the Company or any other
issuer for a day shall mean the last reported sales price, regular way, or, in
case no sale takes place on such day, the average of the reported closing bid
and asked prices, regular way, in either case as reported on the New York Stock
Exchange -- Composite Transactions Tape or, if such security is not listed or
admitted to trading on the New York Stock Exchange, on the principal national
securities exchange on which such security is listed or admitted to trading or,
if not listed or admitted to trading on any national securities exchange, on the
NASDAQ National Market System or, if such security is not quoted on such
National Market System, the average of the closing bid and asked prices on each
such day in the over-the-counter market as reported by NASDAQ or, if bid and
asked prices for such security on each such day shall not have been reported
through NASDAQ, the average of the bid and asked prices for such day as
furnished by any New York Stock Exchange member firm regularly making a market
in such security selected for such purpose by the Board of Directors or a
-19-
committee thereof. If the Common Stock or other class of capital stock or
security in question is not publicly held or so listed or publicly traded,
"Closing Price" shall mean the Fair Market Value thereof.
"Current Market Price" per share of Common Stock on any date
shall be deemed to be the average of the daily Closing Prices per share for the
20 trading days ending on the trading day immediately preceding the date in
question.
"Fair Market Value" of any consideration other than cash or of
any securities shall mean the amount which a willing buyer would pay to a
willing seller in an arm's length transaction as determined by an independent
investment banking or appraisal firm experienced in the valuation of such
securities or property selected in good faith by the Board of Directors or a
committee thereof.
"Liquidation Amount" per share shall be $500.00.
"Market Price" per share at any date shall be the Closing
Price on the specified date.
"Surviving Person" shall mean the continuing or surviving
Person of a merger, consolidation or other corporate combination, the Person
receiving a transfer of all or a substantial part of the properties and assets
of the Company, or the Person consolidating with or merging into the Company in
a merger, consolidation or other corporate combination in which the Company is
the continuing or surviving Person, but in connection with which the Series G
Preferred Stock or Common Stock of the Company is exchanged, converted or
reclassified into the securities of any other Person or cash or any other
property; provided, however, if such Surviving Person is a direct or indirect
subsidiary of a Qualified Person, the parent entity that is a Qualified Person
shall be the Surviving Person.
"Qualified Person" shall mean any Person that, immediately
after giving effect to the applicable Transaction, (i) is a solvent corporation
or other entity organized under the laws of any state of the United States of
America having its common stock or, in the case of an entity other than a
corporation, equivalent equity securities, listed on the New York Stock Exchange
-20-
or the American Stock Exchange or quoted by the NASDAQ National Market System or
any successor thereto or comparable system and such common stock or equivalent
equity security continues to meet the requirements for such listing or quotation
and (ii) is required to file, and in each of its three fiscal years immediately
preceding the consummation of the applicable Transaction (or, if sooner, since
its inception) has filed, reports with the Securities and Exchange Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (the "Exchange
Act").
"Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.
-21-